Article from Nature Matters 2025-02 Winter Edition.
The carbon market is one of the newest financial markets in the world. It was initially born in the early 1990s to reduce sulphur emissions through a cap-and-trade scheme. Over the years, it evolved in various countries until the Paris Agreement of 2015, when it was recognised that an international system to price and mitigate emissions was essential for reducing global warming.
The fundamental role of the carbon market is to incentivise either the removal of greenhouse gases from the atmosphere or avoid their future release into the atmosphere. The global carbon market establishes carbon credits as a mechanism for international trade between carbon emitters and carbon credit producers. The global carbon market was estimated to be worth $948 billion in 2023 and is experiencing ongoing growth.
What is a Carbon credit?
A carbon credit is a tradeable certificate (similar to a share certificate) that the owner receives for sequestering various greenhouse gas emissions from the atmosphere. A carbon credit represents the value of 1 tonne of carbon dioxide equivalent (CO2E). Different greenhouse gases have varying levels of environmental harm and are traded as the equivalent harm of 1 tonne of carbon dioxide to ensure consistent and comparable trading. It simply converts all gases into a comparable financial unit worldwide—for example, like the US dollar in current financial markets.
Different countries have different methods to produce carbon credits, and just like the share market, carbon credits are valued differently subject to the robustness and scientific quality underpinning their certification. The Australian carbon market has been identified as one of the world’s most robust and scientifically rigorous markets. It is legislated by the Carbon Credits (Carbon Farming Initiative) Act 2011 and is administered by the Clean Energy Regulator, a statutory authority created by the Act. The Act provides for the production and certification of Australian Carbon Credit Units (ACCUs) as the standard tradable carbon credit unit.
In Australia, there are numerous methods to create carbon credits, from planting and growing native trees, allowing natural generation of native trees by removing grazing pressure, improving the ecological condition of soils to absorb and store carbon, to several methods that avoid methane gas emissions from intensive agricultural production systems such as piggeries.
Each of these offset methods is defined within the Act, with robust procedures to quantify, audit and adjust the emission offsets of individual carbon projects. To generate carbon credits, a project must be established under one of these methodologies and approved and registered by the Clean Energy Regulator (CER). Nature Foundation, in partnership with the project developer Green Collar and Traditional Custodians for the region—Gawler Ranges Aboriginal Corporation (GRAC), which represents the Barngarla, Kokotha and Wirangu peoples—currently have an approved carbon offset project on Hiltaba Nature Reserve—a Human-Induced Regeneration (HIR) Carbon Offset Project that has been registered and operational since 2020.
Nature Foundation’s Hiltaba Human-Induced Regeneration Carbon Project—How does it work?
When Nature Foundation acquired Hiltaba Nature Reserve in 2012, its habitats were in poor ecological condition following many decades of overgrazing by feral goats, rabbits, and sheep. This overgrazing was compounded through grazing by native marsupial populations that had significantly increased following the establishment of stock water points and dams. This combined grazing pressure is referred to as the total grazing pressure and includes the combined impact of all herbivores, both native and introduced, on native vegetation.
Many grazing animals, particularly goats, sheep and rabbits, are known to selectively graze emerging native seedlings or native plants regenerating from “suckers” that emerge from lateral root systems. These seedlings and suckers are high in nutrients, often softer and more palatable than parent perennial trees, and allow for regeneration of overstorey plant communities as parent plants succumb to natural mortality. They provide the ecological basis for the long-term survivorship of native overstorey of vegetation communities, particularly in times of drought when larger and older plants become more susceptible to environmental moisture stress.
The Hiltaba Human-Induced Regeneration (HIR) Carbon Project aims to decrease this total grazing pressure and allow for natural regeneration of these seedlings and suckers, and the success of the project is now becoming evident. There are many locations throughout Hiltaba where emerging Black Oak (Casuarina pauper) and Bullock Bush (Alectryon oleifolius) regeneration can be observed, and stands of juvenile trees are growing beyond established groves of parent trees. These regenerating, emerging, and juvenile-growing trees are vital in facilitating biological carbon fixation through the process of photosynthesis. This process, which converts carbon dioxide into organic compounds and stores the removed CO2 in trunks, branches, and roots, is significantly hindered by overgrazing. The amount of carbon a tree removes can be measured through various scientific methods and is key in accounting for the production of ACCUs within the project. One tonne of CO2E is approximately equivalent to the impact of 50 trees growing for one year.
To achieve this, the carbon project at Hiltaba Nature Reserve has primarily by focusing on reducing total grazing pressure. The project facilitated the removal of over 20,000 goats from the landscape and the decommissioning of artificial water points. Collectively these have resulted in the widespread recovery in vegetation communities and underpinned the recovery of the nationally threatened Yellow-footed Rock-wallaby (Petrogale xanthopus) and improved the habitat of threatened Short-tailed Grasswren (Amytornis merrotsyi).
The project has maintained strong engagement with Traditional Custodians throughout, from early scoping and regular reporting to hosting a Gawler Ranges Aboriginal Corporation Women and Girls Camp at Hiltaba in November 2022, which was funded by GreenCollar and successfully delivered by the Kids on Country™ team.
How are ACCU’s issued?
ACCUs (Australian Carbon Credit Units) from the Hiltaba Carbon Project are issued based upon a 25-year abatement schedule developed by Green Collar at the commencement of the project and recorded within the project registration documentation. This abatement schedule estimates the amount of carbon that will be sequestered each year of the project based on numerous factors, including rainfall, vegetation type and soil structure.
Credits are issued annually as management data is provided to the Clean Energy Regulator. Nature Foundation reports on feral control, weed management, grazing pressure monitoring, and other land management activities. Green Collar manages the reporting and approval process with the Clean Energy Regulator before issuing ACCUs.
In addition to this annual reporting, the project is subject to a rigorous auditing process by the Clean Energy Regulator. As defined in the approved HIR method, the project is subject to five yearly “gateway audits” during the 25-year lifespan of the project. Green Collar conducts the gateway audits that include on-ground and spatial analysis to ensure appropriate management practices have been implemented and vegetation regeneration has occurred at a rate consistent with the abatement schedule described in the project registration documents. If regeneration is found to have not occurred at the rate described in the abatement schedule, future ACCU yields are adjusted and the future abatement schedule amended. Similarly, if regeneration exceeds the abatement schedule, the future abatement schedule is adjusted accordingly.
This audit process is the key to maintaining project integrity and ensuring it delivers robust carbon offsetting outcomes as seasonal conditions vary over time.
Australian carbon market — ensuring ongoing integrity
Individual carbon project audits are complimented by a continuing process of independent third-party review of the broader carbon offsetting frameworks in Australia to ensure that the Australian carbon market remains one of the world’s most robust and scientifically rigorous markets.
These reviews include independent assessments from Beare and Chamber Analysis (2021), an independent panel led by Professor Ian Chubb (2022), the Australian Academy of Science Review (2022), the Climate Change Authority (2023), and Dr Cris Brack’s ongoing HIR reviews (2023-2024). All assessments found the scheme is fundamentally ‘sound’ and producing genuine abatement. This degree of external review is vital to ensure the ongoing integrity of Australian offset methodologies and underpins the value of ACCUs in the international market.
A high-quality carbon market is vital to providing essential resources for conservation and biodiversity protection across Australian landscapes. In July 2024, the Wentworth Group of Concerned Scientists released a report highlighting the ‘Blueprint to Repair Australia’s Landscapes.’ The report modelled scenarios in which $7 billion was needed annually to fully restore Australia’s ecosystems to a healthy and functioning state within 30 years, with the carbon market contributing 7% to 15% of that funding. Additionally, the carbon market could offset 18% of Australia’s emissions over the next 30 years. By harnessing the potential of landscapes to remove carbon from the atmosphere, significant investment pathways can be opened to fund nature repair, enhance agricultural productivity, and contribute substantially to achieving net-zero emissions.
The future of the Australian carbon market
A new carbon offset project method is being realised in the near future, called the Integrated Farm-land Management Method (IFLM). This method will integrate previous vegetation and soi-related methods to reduce project registration and administration costs and provide additional revenue options for individual land managers. Nature Foundation has provided input into the development of this new method and will explore its application across Nature Foundation’s nature reserves.
Additionally, Nature Foundation is exploring the application of the new Nature Repair Market, a voluntary biodiversity market mechanism established through the Nature Repair Act (2023). The Nature Repair Market aims to mobilise private finance to repair and protect natural environments by establishing a biodiversity certification and trading framework. This will allow landowners to monetise biodiversity improvements and potentially “stack” biodiversity and carbon credit benefits and provide businesses with opportunities to invest in nature-based projects. It represents a unique opportunity for Nature Foundation to realise revenue from its conservation programs and grow the impact of its work.
Revenue streams like the carbon market provide an opportunity to fund vital environmental management efforts while reducing emissions and improving biodiversity. With adherence to established regulations and collaboration among stakeholders, these methods can evolve and contribute to large-scale environmental and land management improvements.