MILLIONS of dollars, and millions of trees, are poised to go into "carbon forestry" the moment Australia’s emissions trading legislation is signed off.
Carbon Conscious, a subsidiary of Western Australian sharefarming phenomenon Australian Agricultural Contracts Ltd (AACL), last week signed a deal with BP to plant up to 10 million oil mallees across Australia’s wheatbelt.
In July, the company signed a carbon sink forest deal with Origin Energy potentially worth up to $169 million.
At the time it was Australia’s largest carbon forests sink arrangment, but it may be eclipsed by last week’s announcement by South Africa’s Standard Bank, which plans to plunge up to $250m into an Australian forestry fund.
Reuters reported that Standard Bank is aiming its forestry at "compliance clients" who don’t want to manage a forest, but who need the carbon offsets a forest can supply.
The fund will cover the planting and management of 50,000ha by Perth-based agribusiness investment firm Rewards Group Ltd, Reuters said.
Forestry is the only way land managers can generate tradeable carbon offsets under the current Kyoto-compliant draft of the government’s Carbon Pollution Reduction Scheme (CPRS).
According to ABARE modelling, carbon forestry would be a competitive enterprise across 26m ha of agricultural land if carbon prices climb to around $30/tonne.
At a carbon price of about $20/t - slightly lower than the current trading rate for carbon under the European Union’s ETS - ABARE estimated that carbon forestry would be competitive across about 5.8m ha of agricultural land.
Even if the CPRS legislation is signed off in November, many questions about carbon forestry remain to be answered.
Without proper oversight, many are concerned that an investor rush into trees will take productive farmland out of use and dry out important water catchments.
"It's evident that the planning and approvals process for carbon forestry is mainly at the State and local government level, and that there is no real overview of the issue," said Australian Farm Institute executive director Mick Keogh.
"It may take a while for people to realise that we need to consider this at a catchment or multi-catchment level."
Nor is there any clear direction on ownership and whether a carbon forest, with all its rewards and liabilities, can or should be owned independently of the land.
In its recent discussion paper, The Climate Institute recommended that legislation be reviewed to minimise the "perverse outcomes" of carbon forestry.
It also suggested that carbon forests be managed by Catchment Management Authorities, and that "avoided deforestation" - land clearing - be accorded similar trading possibilities as purpose-planted trees.
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