Go Back to Setting Up Your Project
Everyone will have different motives to undertake an Environmental Plantings project.
DISCLAIMER: This general information has been prepared by Landcare Australia (AR 1315198 of Australian Carbon Traders Pty Ltd AFSL 425512) for farmers and landholders who are eligible to be treated as wholesale clients. It does not take into account your objectives, needs or situation. ACCUs and derivatives are financial products. While we have outlined common benefits, risks and constraints here, we strongly recommend you seek independent financial and legal advice before acting on any decision to invest. Click here for further regulatory information.
The opportunities are diverse both financially and non-financially. There are also risks and barriers to look out for. Project developers will be able to assist in navigating these risks and barriers.
| Benefits | Risks | Barriers |
|---|---|---|
| Diversified Revenue Carbon farming can be considered another commodity generating enterprise, integrated into existing operations, adding to revenue streams at the farm gate and/or decarbonising production systems. If registered with the CER, ACCUs can either be sold on the open market or retired for insetting purpose, offering supply chain benefits. | Permanent Land Use Change Environmental Planting- projects require permanent land use change. In certain circumstances, this land may currently hold existing production capacity or value associated with traditional commodity production. | Implementation costs Large upfront costs for the preparation of plans, emission baselines and the purchase of any new equipment, seeds or plants to implement and maintain the project. |
| Improved Ecosystem Health and Connectivity It is now widely recognised that improved ecosystem health benefits both the natural environment and farming operations. These benefits may include shade and shelter, natural pest management, soil stabilisation, erosion control and improved water retention within the landscape. | Funding Risks Financing the project using debt finance leverages the potential downside risk. Borrowing costs against uncertain revenue and timing mismatch of repayments and receipt of ACCU revenue to need to be considered. | Management costs Management costs are incurred when you monitor, measure and report on your project. For instance, hiring a carbon developer to manage the project on your behalf. These costs may be subsidised through a percentage of the ACCUs earned on the project. |
| Improved Productivity Valuable productivity gains in grazing systems are correlated with proximity to native woody vegetation and groundcover. Introducing an Environmental Planting project on your property can stabilise soils, improve water quality and provide shade and shelter for stock at critical times, (e.g. calving and lambing seasons, extreme heat, and cold weather events). | Self-Funding Risks If you choose to self-fund a project, the total establishment and maintenance remain your responsibility. Appropriate care should be taken to ensure adequate funding and resources are available to meet the project requirements. Failure may result in the project failing an audit, and not receiving the expected ACCUs. Consideration of the funding arrangements for an Environmental Plantings project should also consider the delay before ACCUs are generated following the planting. | Permanence Selected land management change (i.e. Environmental Plantings) must be maintained for the duration of the project and to the end of the permanence period. Knowledge and expertise on how to plant and maintain plantings over 25+ years. |
| Soil Stabilisation and Remediation Environmental Plantings moderate wind flows, stabilise eroding watercourses, and prevent or halt erosion across the landscape. This reduces the loss of productive topsoil. | Regional Variances in ACCU Production ACCU generation varies by location, influenced primarily by soil type, vegetation and rainfall, all of which impact the number of ACCUs produced. Since no two project sites are identical, each project will yield different outcomes. Be aware of this when contracting with a project developer and make sure they are listing the assumptions they are using to project ACCU estimates. | On-Title Covenant A registered ACCU project requires a notation of the project on the property title. For Environmental Planting projects a commitment of 25 years and up to 100 Years is required. The project will remain on the title for that period. This aspect is important for landowners, especially those planning for a future sale or intergenerational succession. |
| ACCU Production for Operational Neutrality Across the primary production supply chain, producers may implement insetting or offsetting projects, depending on each agricultural business’s needs. ACCUs can either be sold on the open market (offsetting) or retired to offset a farming operation’s carbon footprint (insetting). As ACCUs are awarded throughout the project’s life, the decision on how many are to be used for offsetting or insetting can be made. I.e. it is up to the holder of the ACCUs how they are used. | Environmental Risks There are risks associated with environmental factors such as bushfire, drought, floods pests, and diseases that can impact the success of tree planting projects. These risks need to be managed to ensure the project’s viability and permanence. | |
| Improved Conservation Outcomes Environmental Planting projects can deliver outstanding conservation and biodiversity outcomes on farms. When healthy, functioning ecosystems exist alongside agriculture, input costs can be reduced, yields may rise, and resilience increases due to natural pest control and the support of pollinators15,17. | Market Fluctuations The value of ACCUs can fluctuate based on market conditions (e.g. price and liquidity), which can affect the financial returns from the project. This uncertainty can make it challenging to predict long-term profitability. ACCUs from land-based methods like Environmental Planting tend to be seen as high integrity by market players and may attract a premium. | |
| Regulatory Risk As Environmental Plantings projects are long term projects, there is risk of changes to the political and regulatory landscape impacting the financial returns from the project. |
Managing to shift the environmental plantings
Transitioning areas from agriculture that provides reliable and predictable returns to Environmental Plantings under the ACCU Scheme can result in a period of reduced returns as both the enterprise and the land adjust to the changes. Typically, there is a period of revenue reduction during this transition before any profits or gains from increasing carbon sequestration are realized. However, once the new reforestation is implemented and ACCUs generated, the on-farm benefits and co-benefits can outweigh the initial disadvantages. This transition can lead to more consistent and measurable positive outcomes for the farm.
Be aware that planting trees on land that has been deforested can be challenging and requires sound ecological knowledge of the drivers of change, key threats, soil, hydrology and predicted impacts of a warming climate on vegetation growth and survival.
Key points to consider for your ACCU project site
1. Soil Degradation
Long-term cleared land often suffers from soil degradation, including nutrient depletion, compaction and erosion. This makes it difficult for new plants to establish.
2. Climate Variability
The increasing variability in climate, including more frequent and severe droughts, can lead to high mortality rates among newly planted trees and shrubs. Young plants are particularly vulnerable to these extreme conditions.
3. Invasive Species
Cleared lands are often colonised by invasive species that outcompete native plants for resources. Managing these invasive species is crucial.
4. Seedling Quality and Availability
A supply of high-quality seedlings is essential. However, the demand for native seedlings often exceeds supply, and not all seedlings are well-suited to the specific conditions of the reforestation site. In addition, future climate change scenarios need to be considered to ensure the species planted will survive 25 years from now.
5. Pest and Disease Pressure
Native plants can be susceptible to pests and diseases, which can spread more easily in stressed environments. Effective pest and disease management strategies are necessary to protect young plants.