The largest carbon emitters could face bigger pollution bills than first thought, because a shortage of cheaper carbon farming credits is expected to push the cost of credits higher as demand grows.
Carbon farming credits are more attractive than government-issued units because they will trade at floating rather than fixed prices, meaning emitters expect to get them cheaper than government units, The Australian Financial Review reports.
But on present calculations the top 500 polluters in Australia must account for 350 million tonnes of carbon each year, of which 5 per cent (more than 17 million tonnes) can be offset using credits generated under the carbon farming initiative (CFI).
The chief of carbon management company Climate Friendly, Freddy Sharpe, said the shortfall had created a sellers’ market that would benefit companies such as CO2 Australia and Carbon Conscious, which plant mallee trees on marginal land.
CO2 Australia figures show the number of landholders investigating reforestation opportunities jumped more than 680 per cent in the seven months since the farming initiative was introduced.
“My very best, most aggressive estimate is that carbon farming schemes will produce about 2 or 3 million tonnes [of offset credits] from those projects,” Mr Sharpe said. “There is no way anyone can currently see that we are going to get within cooee of the 17 million tonnes per annum of supply needed to fill the 5 per cent quota.”
CO2 Australia’s Chris Mitchell said “The market is expecting a massive supply of carbon farming credits come July 1 and it’s just not going to happen.”
Source: The Australian Financial Review www.afr.com.
For further information or to discuss your carbon tax liability contact Paul Thomas at CO2 Australia on 03 9928 5111 or paul.thomas@co2australia.com.au.
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