As regulatory frameworks evolve, there is an increasing urgency for companies to purchase quality Australian Carbon Credit Units (ACCUs). For landholders interested in carbon farming, this can present a lucrative opportunity, and starting now can allow you to reap the benefits ahead of others. With human-induced regeneration credits in diminishing supply, and the tightening of Safeguard Mechanism requirements, now is the best time to start a carbon project.
- S&P analysts are predicting that within five years, Australia will face a significant shortage of ACCUs.
- A report by the Climate Change Authority projects that annual ACCU demand will begin exceeding annual issuance around 2027, primarily due to increased compliance requirements under the Safeguard Mechanism.
Source: S&P and Climate Change Authority.
These predictions highlight the urgency businesses feel to secure high-quality carbon offsets that will not only help meet regulatory targets but also deliver long-term environmental benefits.
The Dwindling Supply of Carbon Credits Creates More Opportunities for Landholders
For years, Australia’s carbon offset market has been dominated by human-induced regeneration projects, which regenerate natural landscapes through management practices. However, the availability of these credits has rapidly reduced. With increased demand and limited supply, the cost of securing these carbon credits is set to rise – creating a window of opportunity for landholders who act now.
In addition, the Australian Government’s Safeguard Mechanism regulations, which are designed to cap emissions from the country’s largest polluters, are becoming stricter. As these regulations tighten, companies will face greater pressure to offset their emissions or risk incurring penalties. In response, businesses are rushing to secure quality carbon credits, but those credits are becoming scarcer.
The Increasing Importance of Early Action Results Can Lead to Higher Returns
The current market conditions mean that companies delaying action will face not only fewer options but also increased ACCU costs. The timeframe for securing affordable and high-quality carbon offsets is shrinking as prices rise.
Carbon projects offer long-term crediting periods of up to 25-years or 100-years, providing ongoing income for landholders. As the market for carbon credits matures, the value of these long-term projects is expected to increase, making them an even more attractive for future investments. To capitalise on the growing demand for carbon credits, you need to start planning today.
The Value of High-Quality Carbon Credits and Co-benefits
There is considerable opportunity for landholders to generate carbon credits through high-quality methods such as the reforestation method, which involves the planting of mixed native species on land that does not contain forest cover.
Soil and Plantation Forestry are other alternative models that offer high-quality carbon credits. Co-benefits such as Accounting for Nature and the Nature Repair Market can also enhance the value of carbon credits by analysing environmental impacts and biodiversity improvements. As demand for credits with additional environmental benefits grows, driven by companies adopting ESG frameworks, these high-quality offsets will create premium prices, offering landholders a lucrative opportunity to maximise returns on their carbon farming projects.
What Should Landholders Do?
So, what steps can landholders take to get ahead of the curve and establish the best quality carbon credits? The first step is to understand the different carbon credit methods and figure out which is right for you. It’s essential to partner with experts who can guide you through the entire carbon credit process. This is where organisations like the CFF come in. From feasibility to reporting, CFF can help you on each step of your carbon journey. Our mission is to help landholders navigate the complexities of carbon farming, providing the knowledge, tools, and support you need to develop a successful carbon project.
