The federal government-funded Clean Energy Finance Corporation (CEFC) is to make its first forestry investment, to demonstrate the capacity of timber plantations as carbon sinks.
The investment has a target of achieving carbon abatement of a million tonnes over the next decade through sequestration in timber.
CEFC has committed $75 million to the Australian New Zealand Landscapes and Forestry Fund, which is managed by New Forests. The investment will support the development of new plantations, and the conversion of existing hardwood plantations to softwood with long rotation periods. It will also support downstream timber processing and agricultural projects. Most of the projects will be in Australia.
CEFC said the fund will not harvest native forests and all its operations will be compliant with the highest globally recognised sustainability standards. The plantations will have the potential to generate additional revenue through Australian Credit Carbon Units (ACCUs) which will support Australia’s growing carbon credits market.
CEFC chief executive Ian Learmonth said: “As Australia steps up its efforts to reach net zero emissions by 2050, we must tackle those sectors where the emissions challenge is greatest and capitalise on our competitive advantages, including our abundant and rich natural capital assets.
“This milestone CEFC investment commitment mobilises the forestry sector to help unlock the supply of carbon credits and accelerate carbon sequestration opportunities, ensuring we make the best use of our land as we decarbonise our economy.”
The CEFC investment is part of a $600 million equity raise in which German pension fund Bayerische Versorgungskammer (BVK) and one of Europe’s largest pension funds Andra AP-fonden (AP2) are also participating.
CEFC says its investment has spurred the inclusion of ambitious sustainability measures by the Australian New Zealand Landscapes and Forestry Fund to demonstrate decarbonisation strategies at scale. In addition to investing in new plantations, this will include transitioning vehicles and farm machinery to electric power or renewable fuels, working with suppliers to achieve Scope 3 emissions reduction and ongoing engagement to trial and promote emerging technologies to reduce emissions intensity in the forestry sector.
Image: CEFC recognises timber as a renewable resource that also provides for carbon abatement.