For companies with landholdings in Australia, developing a carbon project can be an exciting opportunity to help them achieve net zero.
Companies taking initiative on climate change have found it's not enough to simply purchase carbon credits each year to offset emissions. South Pole's Climate Solutions Manager for Australia & New Zealand, Tara Oakley, explains how developing new, local carbon projects can be an important part of a company's net zero strategy.
Following the global spotlight on the COP26 international climate summit - where 151 countries submitted new 2030 carbon emissions-reduction plans - companies are increasingly acting on the science and consumer pressure to set net zero emissions goals and forge long-term strategies to meet them. These strategies include decarbonising their operations and supply chains, as well as removing any residual emissions from the atmosphere through offsetting.
In the current environment of increasing climate action, demand for high-quality carbon credits has reached unprecedented levels, pushing prices to an all time high. Companies making annual purchases of carbon credits to compensate for their emissions are well aware of rising prices.
To control a company's cost of carbon compensation and future-proof its needs for offsets, companies taking ambitious climate action in Australia are exploring options to develop carbon projects on their own landholdings and on land they can access within their supply chain.
This delivers meaningful emission reductions within the value chain, as well as providing social co-benefits to local communities, such as jobs, cleaner air or water.
As companies increasingly look to develop their own projects in Australia, it is important to ensure that these projects follow the highest levels of integrity, transparency and compliance with best-practice guidance.
Carbon Market Institute (CMI) General Manager, Brad Kerin, recently spoke at a South Pole webinar, explaining that it is critical for companies and investors to understand the environmental integrity of their projects.
"It is really technical," he said. "With carbon, you can't pick it up and touch it. There are so many unknowns about the project - how they measure, report and verify. Do they pay communities? Have they got Indigenous community consent? And if you don't understand and you make a bad decision, the scrutiny on your net zero claim is going to come down pretty hard.
This is where companies looking to develop projects can seek out experienced project developers, such as South Pole, to support them on this journey."
As a signatory of the CMI's Code of Conduct, South Pole commits to upholding strict and rigorous standards of project development that are publicly available for review and for comment.
Australia's geography and regulatory systems offer many strategic advantages for landholders and companies to develop carbon projects.
These projects can either avoid or remove carbon and both types of projects are crucial on the way to net zero and to protect the environment. Carbon avoidance projects prevent the release of carbon that would have otherwise been emitted, such as by protecting forests or improving energy efficiency. Carbon removal projects include both nature-based solutions like reforestation, soil carbon sequestration, and emerging technological carbon removal projects, like direct air capture.
We are seeing an increased interest in certain innovative nature-based project types. These include blue carbon projects which restore or protect marine ecosystems, initiatives which sequester carbon in soil through improved land management, and projects which involve feed additives that reduce livestock emissions.
The choice of the optimal project depends on the land available and the company's core business and goals. The carbon project should align with the company's overall strategy in supporting decarbonisation within their sector as much as possible to be an authentic part of climate action. For example, a food retail company can provide carbon financing to farms within its value chain to implement soil carbon projects. This would be the most impactful option the food retail company could do as it supports carbon projects that directly address emissions within their own value chain by supporting their farmers in improving farming practices.
Another rewarding project for those with access to natural capital is exploring biodiversity projects, such as the Mount Sandy conservation project in South Australia. Opportunities exist in biodiversity ventures, such as creating and restoring native ecosystems, managing endangered species habitats, and creating refuges and buffer zones. Biodiversity outcomes can be considered as part of carbon project development through co-benefit certification, which quantifies the additional environmental benefits achieved via a carbon project. Alternatively, biodiversity credits, similar to carbon credits, could be generated through standalone projects.
Carbon projects must be scrupulously designed and registered with certification bodies in order to meet appropriate standards and generate credits.
International standards that South Pole works with include the internationally regarded Gold Standard and Verified Carbon Standard. Projects in Australia are mainly registered with the Clean Energy Regulator's Emissions Reduction Fund (ERF).
When the project is up and running, it takes time for the project to yield credits — usually at least one year of operations.
Once the credits are issued, the project owner has several commercialisation options. For most companies, the priority will be to use the credits to offset some or all of their own emissions. Other options include to either sell to the many willing buyers on the voluntary market or contract to the ERF. You can explore these options with your partner.
Given the high-stakes nature of carbon project development, CMI's Mr. Kerin says it is critical to be aware of all facets of the process.
"It's really important for buyers to understand what they're investing in," he says. "You need to build your own capacity and to have relationships with experts."
At South Pole, we have experienced teams who work to design, develop and manage carbon projects in Australia and around the world. Collectively we have developed more than 700 projects.
Our climate strategy experts can also make sure that your efforts to develop a new project are aligned with and contributing to your wider climate ambition. It is this extra level of detail that will strengthen your leadership position and provide an engaging narrative for your stakeholders.
Landholders seeking to maximise the value of their asset and achieve their climate goals can get in touch with South Pole to request a feasibility assessment and take the first step on this journey with an experienced partner.
“Talk to us about getting started on your Climate Journey.”