A $250 million nature-based carbon credits fund, backed by BHP, Rio Tinto, and Qantas, aims to enhance the credibility and scale of a market that has faced significant criticism over its integrity, multiple reviews, and an unsuccessful attempt to establish global standards.
The fund is managed by Silva Capital, a joint venture between agriculture-focused private capital investor ROC Capital and C6 Investment Management, a specialist in carbon assets and investments. It will seek additional capital from other companies and institutional investors while providing a marketplace for trading carbon credits.
The three major ASX-listed companies are investing $80 million into the fund. As significant emitters, they require high-quality carbon credits to supplement their direct decarbonization efforts and meet targets, given the limited availability of green fuels for heavy vehicles and aviation.
Known as the Silva Carbon Origination Fund, this initiative plans to invest in and develop reforestation projects on cleared farmland, integrating these activities with grazing to generate Australian Carbon Credit Units (ACCUs). ACCUs are carbon credits issued under the federal Emissions Reduction Fund, which has faced criticism for awarding credits for activities like “avoided deforestation” and “human-induced regeneration” that may have occurred without intervention and do not necessarily benefit the climate.
Raphael Wood, managing director of Silva Capital, has been working on the fund for four years, drawing on his experience in stockbroking and carbon markets. He emphasized that the fund aims to address these concerns by focusing on easily verifiable, targeted plantings of native tree species that restore biodiversity and rely on natural rainfall.
One potential project involves creating a tree corridor to connect two glider habitats across a cleared paddock, allowing these small, tree-dwelling marsupials to traverse the area. “You can see the transformation from a paddock to a forested area, and we’re observing gliders moving through the trees,” Wood explained. “These are tangible outcomes that can be measured and for which we can receive compensation.”
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