How is the Orana Region faring in the carbon market?


20-Nov-2015

How is the Orana Region faring in the carbon market?

Regional Development Australia Orana has undertaken further analysis of the second Emissions Reduction Fund (ERF) auction, and the results might surprise some people.

“Many people believe that participation means having to “lock up” land for 100 years” said CEO, Felicity Taylor Edwards. “This is not the case. The second auction has shown an increasing preference for 25 year projects over 100 year commitments. In the first auction, just one of the 52 successful projects was for 25 years; in the second auction over half were for 25 years. While shorter projects are subject to a discounted carbon abatement volume, this is balanced by the opportunity for alternative management sooner in the future.”

“RDA Orana has for some time been promoting the opportunity for smaller holdings to participate via aggregation. So it was pleasing to see the success of an aggregation of smaller projects across the Bourke, Brewarrina, Cobar, Dubbo and Longreach local government areas. This one project will provide a total carbon abatement of 2.5 million tonnes of CO2e – accounting for 46% of the total for the 17 Orana projects” said Felicity. As the ERF is a national initiative, there is no impediment to aggregating projects across state borders.

However, bigger isn’t always better, or necessary. There is scope for participation under land-based methods across a range of property sizes and situations. The minimum requirement for participation in the auction is only 2,000 tonnes per year (on average), or 20,000 tonnes over the life of a standard ten year contract. Abatement volumes contracted by other successful Orana projects covers a wide range, from about 65,000 tonnes to over 415,000 tonnes, with an average of 317,000 tonnes.

Whether from aggregated or individual projects, the flow of carbon money into the region is significant. “By applying the reported average price of carbon abatement to the contracted volume of successful Orana projects, we have estimated that approximately $66 million will flow into the Orana Region.” Felicity said. “While this is significantly lower than the highly successful first auction of over $250 million, the cumulative effect is considerable.”

“Nation-wide, the greater variety of methods used by successful projects in the second auction indicates that non-land sector businesses are entering the carbon market and taking advantage of the opportunity to diversify income and offset costs of upgrading. New methods are being developed and priorities identified. As a result, the opportunities for participation in future continue to expand” Felicity said. “Just contact the RDA Orana office or visit our website for information on how other industry sectors can participate in the ERF.”


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