Australia to recognize carbon credits from new sources including blue carbon

Australia has expanded the types of projects that will be allowed to generate carbon credits under its Emissions Reduction Fund (ERF) scheme to include coastal wetland carbon sinks, plantation forestry, biomethane, and industrial fuel switching, the Minister for Industry, Energy and Emissions Reduction said in a statement Jan. 19.

Australia's carbon market identifies eligible emission avoidance or reduction projects, based on a list of recognized methods, to generate tradable Australian Carbon Credit Units or ACCUs. The ACCUs can be bought by the Clean Energy Regulator (CER), which oversees the carbon market, or sold to commercial buyers who may offer higher prices.

The new methods will help expand the supply of ACCUs to meet growing demand from companies as more entities seek to meet voluntary decarbonization targets.

One of the new methods expected to generate carbon credits is blue carbon, which refers to carbon stored in coastal and marine ecosystems.

This category will cover projects in Australia's coastal wetland ecosystems that store high amounts of organic carbon, and allow landholders, communities, and businesses to undertake projects along coastlines and earn ACCUs in exchange for the emissions avoided and carbon stored by these projects, the statement said.

Biomethane builds on existing waste management methods by including activities such as capturing and refining biogas from organic waste, animal effluent and wastewater, the ministry said.

The new Industrial and Commercial Emissions Reduction (ICER) method builds on existing industrial electricity and fuel efficiency and includes upgrading or replacing equipment and fuel switching, the ministry said.

Besides the three new methods, the ministry also expanded the scope of the forestry method to cover new plantation forestry.

The spot price of ACCUs was recorded at A$55.25/mtCO2e (approx. $39.69/mtCO2e) on Jan 17, according to latest data from Sydney-based environment consultancy Demand Manager. The ACCU price has shown significant increase in the past one year, compared to around A$17/mtCO2e at the start of 2021.