BHP, Rio Tinto, and Qantas will collectively invest A$80 million (US$52.7 million) as initial backers of an Australian carbon credits fund focused on land reforestation projects, as announced by the fund and the companies on Monday.
Managed by Silva Capital—a partnership between Roc Partners and C6 Investment Management—the fund aims to raise A$250 million to generate and manage Australian Carbon Credit Units (ACCUs) through reforestation efforts. ACCUs are issued by the Australian government’s $3 billion Emissions Reduction Fund (ERF) to help the country achieve a 43% reduction in carbon emissions from 2005 levels by 2030.
The ERF primarily grants credits to projects that prevent deforestation, restore native forests, or capture methane from landfills. These credits can be sold to the government or to companies seeking to offset their emissions.
As industries with high emissions, such as mining and aviation, increasingly seek carbon credits to meet their emissions targets, the fund’s launch marks a significant development in Australia’s carbon market.
“This fund represents not only an investment in carbon abatement but a significant milestone in Australia’s carbon market, that will, importantly, support the long-term success of our farming communities and nature repair,” Raphael Wood, Silva Capital Co-Managing Director, said in a statement.
Silva Capital has plans to invest in farmlands to develop large carbon sequestration projects that promote sustainable agricultural and land management practices, Wood added.
Brad Mytton, Silva Capital Co-Managing Director said, “Sustainable agriculture is at the forefront of our investment strategy. With the Silva Carbon Origination Fund, we aim to create a portfolio of mixed farming land with significant canopy cover, generating a large volume of high-integrity carbon credits. The Fund has been designed to appeal to both corporate investors seeking to access carbon credits and institutional investors seeking portfolio diversification, ensuring that we can maximise the volume of capital invested into the sector, capital which is needed to enable Australia to meet its decarbonisation targets.”
Rio Tinto Chief Decarbonisation Officer Jonathon McCarthy said, “We are absolutely committed to decarbonising our operations, but many of the technologies we need will take time to develop and implement. Meanwhile, our investment in the Silva Carbon Origination Fund helps us meet our compliance obligations with high-integrity carbon credits. We also believe it is important to enable more carbon projects that partner with farmers and local communities to integrate agriculture with nature repair.”
Qantas Chief Sustainability Officer Andrew Parker said, “Our investment in the Silva Carbon Origination Fund will help to meet our compliance obligations and progress our climate targets with verifiably high-integrity carbon credits. Importantly, the fund will help to scale quality, nature-based carbon credits in the Australian market with social and economic benefits for local communities.”
BHP Vice President Climate Graham Winkelman said, “The investment in Silva Carbon Origination Fund is aligned with BHP’s integrity standards on carbon credits, which prioritises nature-based solutions and carbon removal.”