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Carbon sink forests on the march.

- Wednesday, October 21, 2009

The Australian emissions trading legislation (the CPRS Bill) identifies clearly that the main source of offset-generated emission permits (AEUs) that will be available for major emitters who face an emissions liability will be those generated by forestry, and corporate investors are moving quickly to take early advantage of this.


Standard Bank (A South African bank) is the latest to join the rush, with Reuters Newsagency reporting that the bank has established a A$ 250 million forestry fund in Australia, which aims to grow trees and sell the AEUs earned to companies that have an emissions obligation under the CPRS. The report states that the fund will cover the planting and management of 50,000 hectares of carbon sink forests, which will be managed by the Rewards Group.

Carbon sink forestry is clearly the first option that will be available as a source of permits for many major emitters, and this and earlier announcements by Origin Energy and BP highlight the potential scale and speed of these developments.

It does raise the question of the regulatory approach that will be taken to deciding where these forests should be established, and whether they will have to buy water allocations of carry out community impact assessments before they are established. It also leads to a broader question about competition for farmland and future food production potential.

Given that the three biggest emitters in Australia (The NSW, Qld and WA Governments) are also likley to be the bodies making decisions about where and how much land should go to carbon sink forestry, real questions emerge about how much these decisions might be influenced by the needs or organisations owned by the Governments to generate emission permits.  
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