Australia has seen a record rise in new forestry-based carbon credit projects this year, driven by big emitters and an impending expiration of an existing method. According to the Clean Energy Regulator (CER), environmental planting (EP) project registrations increased from 11 in 2021 to 80 by mid-September 2024.
View from below of Eucalyptus regnans trees in the Styx Valley, Tasmania - the tallest hardwood trees on Earth, reaching incredible heights. AI-generated picture.
The surge comes ahead of the September expiration of the current EP method, which has no immediate replacement. The method generates Australian Carbon Credit Units (ACCUs) through permanent plantings of native tree species on agricultural land. Developers are rushing to register projects, fearing delays in finalising the new method, which remains in development.
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The market has also been affected by the expiration of the popular Human-Induced Regeneration (HIR) method in 2023, which focused on restoring native forests. The replacement method, Integrated Farm and Land Management (IFLM), is not expected until late 2025, creating a gap in vegetation-based carbon credit options.
Large emitters, including companies like Woodside, Mitsui, and Tokyo Gas, have been actively buying land to set up their own EP projects, partly to ensure lower prices for ACCUs. However, project developers face rising land costs and reluctance from buyers to pay high premiums for credits, leading some emitters to create their own supply.
The profitability of EP projects varies significantly, with ACCU yields ranging from 10 to 50 per hectare depending on soil and weather conditions. Despite these challenges, the sector remains attractive to private investors and asset managers.
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DGB Group is committed to driving global reforestation efforts and addressing the devastating effects of deforestation on our planet and its biodiversity. We invite you to join us in our mission to protect the Earth. Through innovative nature-based carbon projects and strategic partnerships, we are making meaningful progress in preserving ecosystems. Our high-quality carbon units not only support companies in achieving their net-zero targets but also contribute to positive environmental and community impacts. Preventing deforestation and promoting biodiversity remain at the heart of what we do, as we work toward a sustainable, thriving future for all.
