Australia launches world's first legislated voluntary biodiversity credits market

Australia has officially launched its Nature Repair Market (NRM) scheme, also referred to as the biodiversity credits market, with the notification of the first method under the scheme, Clean Energy Regulator (CER) announced March 4. The NRM is the world's first market of its kind and will incentivize projects aimed at restoring and protecting the country's natural environment.

The NRM is the world's first regulated voluntary national scheme that enables participants to earn biodiversity certificates. A biodiversity certificate is awarded for enhancements to or protection of biodiversity, referred to as the biodiversity outcome of a project, by improving, maintaining, or protecting the existing habitat and by establishing or restoring habitat. Participants who implement successful projects can apply for and earn one biodiversity certificate for each project.

Stacking of ACCUs and Nature Repair Projects

The release by CER highlights that project owners will be able to earn both a biodiversity certificate and Australian Carbon Credit Units (ACCU) for the same activities by undertaking a biodiversity and carbon project on the same parcel of land.

Under the country's ACCU scheme, entities and individuals can earn carbon units, known as ACCUs, by reducing or avoiding carbon emissions. One ACCU represents one metric ton of carbon dioxide equivalent (mtCO2e) that would have otherwise been released into the atmosphere.

Similar to ACCUs, the Nature Repair Market scheme will also include methods that outline the criteria for eligible projects. The first method finalized under the scheme includes replanting native forest and woodland ecosystems, and projects under this method can earn credits by improving biodiversity by planting a mix of local species on a previously cleared area.

The notification states that the Australian Government intends to introduce new strategies to improve biodiversity outcomes, with the Department of Climate Change, Energy, the Environment, and Water leading these initiatives. Additionally, CER is developing a Biodiversity Market Register that will publish information about registered biodiversity projects and the certificates issued under the NRM scheme.

Biodiversity credits pricing

Despite being in their early stages, biodiversity credits are regarded as distinct from standard carbon credits. Their primary goal is to safeguard and improve the region's biodiversity, which allows them to command a significantly higher premium than other environmental trading credits.

Platts, part of S&P Global Commodity Insights, assessed the most competitive ACCUs, the generic ACCUs, at A$34.10/mtCO2e ($21.23/mtCO2e) on March 4. Meanwhile, the most premium environmental planting ACCUs were assessed at A$48.15/mtCO2e.

According to CER, the price of the tradable biodiversity certificates will be determined by buyers and sellers. Biodiversity certificates earned by the participants under NRM can be retained, sold, or deposited with the Clean Energy Regulator.

The New South Wales government in Australia already operates a voluntary program under its Biodiversity Offsets Scheme, which includes two types of credits: ecosystem credits and species credits.

According to the NSW government's biodiversity credits market sales dashboard, March 4, ecosystem credits are currently priced around A$212 for White Box Blakely's Red Gum Woodland projects and as high as A$37,000 for the Cumberland Plain Woodland in the Sydney Basin Bioregion. On the other hand, species credits range from A$480 to A$4,000 for the Koala and Emu populations, respectively.

As of Feb. 21, 273,948 credits had been transferred on NSW's Biodiversity credits platform, amounting to A$537,769,231.

The UK government's Department for Environment, Food & Rural Affairs on Feb. 12, 2024, had priced its biodiversity statutory credits around GBP42,000 each, ranging up to the most distinct habitats like peat lakes, costing GBP650,000.