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The big end of town seeks nature-based offsets

Whilst there are recalcitrant political leaderships (like that of Australia) that are failing to adopt policies that will help mitigate against climate change, there are countries and international organisations that are recognizing that it is time to crank action. To do this, there is an acknowledgement that nature-based offsets (which focus on direct CO2 sequestration) are the preferred option to cancel out residual carbon emissions.

There is also recognition from international organisations that net zero initiatives are increasing the demand for offsets generally, so securing an ongoing source of nature-based offsets makes sound financial sense.

In this vein, two big nature-based deals were finalised this week.

Mitsubishi Corporation bought a 40% stake in Australian Integrated Carbon (AIC), an Australian nature-based developer of carbon credit projects. Meanwhile, Hartree Partners & Wildlife Works signed a landmark voluntary carbon market deal to generate over $2bn to protect threatened forests, wildlife, and improve community livelihoods in Africa, Asia, and Latin America. Hartree Partners is a leading global energy and commodities trading company and Wildlife Works is a global conservation company.

Mitsubishi Corporation said their investment in AIC “falls in step with our sustainability objectives, which include transitioning to a low-carbon society.”

AIC noted that Mitsubishi Corporation identified Australia’s expansive landscapes as offering significant potential to generate quality Australian carbon credit units (ACCUs). This, combined with the recognised integrity of Australia’s government-backed carbon market, underpinned Mitsubishi Corporation’s confidence in making this investment.

“This is a significant opportunity to join forces with a global player to originate projects in both the Australian and international carbon markets,” said AIC CEO Adam Townley.

AIC is currently developing projects across regional Australia by working with farmers to increase carbon and improve productivity. Projects have the potential to generate a substantial flow of carbon credits which can be monetised through the Carbon Farming Initiative (CFI).

Adam Townley told Everlution that AIC has made sure that its customers will continue to benefit from rising carbon offset prices and will not be locked in to set revenue streams in a rising market.

In the April 2021 ERF auction, AIC reported it secured 28% of contracts. In the September 2020 ERF auction, AIC reported it secured 34% of contracts, covering over 2 million tonnes of CO2 emissions. The projects in this particular auction are in WA and AI Carbon is using the Human Induced Regeneration method.

The Hartree/Wildlife Works project will help reduce the 13 million hectares of tropical forest, an area the size of Greece, that is currently lost to deforestation each year. It is estimated that to keep the increase in global temperature below 1.5 degrees in line with the Paris Agreement, more than three quarters of current-rate deforestation must be stopped by 2030.

Hartree’s investment is effective immediately, with the projects expected to begin delivering Verified Emission Reductions (VERs) by 2023, with a generation projection of 20 million tonnes for each year for the 30-year life of the projects. The deal will increase the availability of high-quality, verified, avoided deforestation projects by approximately 40%.

The portfolio of projects falls within the REDD+ program and will meet global best practice standards for nested projects under VERRA, including not only the Voluntary Carbon Standard (VCS), but also the Climate, Community and Biodiversity (CCB) standard at the gold level and the SD Vista standard to verify project contributions to the UN Sustainable Development Goals. Also, it can make a significant contribution to host country’s Nationally Determined Contributions (NDC) under the Paris Agreement.

The deal was facilitated by Everland, the exclusive marketing partner of Wildlife Works. The portfolio will be marketed by Everland and Vertree, a joint venture formed between Hartree Partners and sustainability leaders SYSTEMIQ.

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