Industry giants in Australia, including BHP, Rio Tinto, and Qantas, have collectively pledged A$80 million (USD$53 million) towards Silva Capital’s Silva Carbon Origination Fund, marking the first round of investment from these key players. The fund, spearheaded by Silva Capital, a collaboration between Roc Partners and C6 Investment Management, is specifically tailored to provide access to large-scale, high-integrity carbon credits sourced from nature-based projects within Australia. These projects are predominantly focused on reforestation and sustainable agriculture initiatives.
Australian Carbon Credit Units (ACCUs) are at the core of the fund’s mission, with the aim of developing mixed-use agricultural and environmental planting projects across the country to generate ACCUs on a significant scale. These ACCUs are issued by the Australian government’s Emissions Reduction Fund (ERF), which has allocated $3 billion to aid in reducing carbon emissions by 43% from 2005 levels by the year 2030. The ERF primarily supports projects that combat deforestation, promote native forest regeneration, and capture methane emissions from landfills, granting credits that can be sold to the government or private entities striving to meet emission reduction targets.
Rio Tinto, a major player in the industry, has underscored its commitment to decarbonizing its operations by leveraging carbon credits. The company’s Chief Decarbonisation Officer, Jonathon McCarthy, emphasized that investing in the Silva Carbon Origination Fund will help Rio Tinto fulfill its compliance obligations through the acquisition of high-integrity carbon credits. With a target of retiring 3.5 million carbon credits annually by 2030, covering 10% of its baseline emissions, Rio Tinto is intensifying its focus on the Voluntary Carbon Market (VCM) to support its climate goals, particularly after acknowledging potential challenges in meeting its 2025 decarbonization targets. The company’s plans include increasing carbon credit procurement and dedicating significant land to Nature-Based Solutions (NBS) by 2025.
In its efforts to reduce emissions, Rio Tinto has allocated an estimated $750 million for decarbonization initiatives in 2024, encompassing various expenditures such as offsets and Renewable Energy Credits (RECs). However, the company has revised its total expenditure estimate for meeting its 2030 climate targets, reducing it from $7.5 billion to $5-6 billion. BHP, another industry giant, is actively pursuing structural greenhouse gas emission reductions while acknowledging the role of carbon credits in achieving its decarbonization objectives. The mining company anticipates a short-term increase in carbon emissions and recognizes the necessity of rapid technological solutions and carbon credits to reach its 2050 net zero target.
BHP aims to achieve a 30% reduction in Scope 1 and 2 emissions by 2030, focusing its investments on reducing diesel use in haul trucks, electricity, and gas emissions. The company plans to invest $4 billion towards these efforts, with a significant portion allocated to combatting its operational greenhouse gas emissions. BHP also anticipates that ACCUs will aid in meeting compliance obligations under the Safeguard Mechanism Act, further reinforcing its commitment to sustainability.
Qantas, a prominent player in the aviation sector, has decided to invest in the Silva Carbon Origination Fund to support its climate targets by securing high-quality, nature-based carbon credits. The airline is utilizing its Climate Fund, a A$400 million initiative established to bolster its decarbonization endeavors. This investment not only benefits Qantas in meeting its sustainability goals but also contributes to the growth of the Australian carbon credit market, offering social and economic advantages to local communities.
Andrew Parker, Qantas’ Chief Sustainability Officer, emphasized the importance of high-integrity carbon offsets for industries like aviation, stating that partnerships across sectors are crucial to enhancing the availability of quality carbon credits. This strategic move aligns with Qantas’ broader climate initiatives, including recent investments in sustainable aviation fuel and biofuel production facilities. The Silva Carbon Origination Fund’s strategy revolves around investing in agricultural land to develop large-scale carbon sequestration projects, combining reforestation efforts with sustainable farming practices.
These initiatives not only promote carbon credit methodologies but also enhance farming activities for local communities, while simultaneously supporting habitat restoration and biodiversity protection. Brad Mytton, Co-Managing Director at Silva Capital, highlighted the fund’s focus on sustainable agriculture and the creation of a diverse portfolio of farming land with substantial canopy cover, aimed at producing a significant volume of high-integrity carbon credits. With support from industry leaders, the Silva Carbon Origination Fund is poised to play a vital role in advancing Australia’s carbon credit market and bolstering the nation’s ambitious climate objectives.
