Carbon credits and trading
Carbon credits & trading
Carbon farmers who use an Australian government approved carbon farming method receive one Australian Carbon Credit Unit (known as an ACCU) for each metric tonne of carbon dioxide equivalent that their project avoids emitting or stores in the land.
There are four main ways that ACCUs are sold:
Multi-year contracts with the Australian government’s Emission Reduction Fund
Multi-year contracts with a large business that want to offset their emissions
Multi-year contracts with a large business who aggregates smaller carbon farming projects and manages contract delivery risk with the Australian government
Single trades with another carbon farmer, a large business or the Australian government.
Overview of the Australian Government’s Emissions Reduction Fund
The Emissions Reduction Fund (ERF) is a central part of the Australian government’s climate policy. It is designed to allow a range of farmers, businesses and traditional custodians to participate in reducing Australia’s greenhouse gas emissions in return for a proportion of the fund. The government invested $2.55 billion in the fund, and $250,000 remains for allocation. The funding will be topped up from mid 2020 with additional funding from the new Climate Solutions Fund. Farmers, businesses and traditional custodians who are interested in participating can register carbon farming projects under an approved method, and then ‘bid’ to be part of the fund in periodic ‘reverse auctions’ similar to a tender process. The ‘bids’ are proposals to reduce emissions by a specified amount using an approved carbon farming method over a set time period (between one and ten years). Successful projects enter into a contract with the government and for each Australian Carbon Credit Unit (known as an ACCU) they deliver, they are paid a fixed amount. Payment is made only after the projects’ emissions reductions have been achieved and verified.
Since Climate Friendly was founded in 2003, we’ve helped hundreds of regional, rural and remote families and businesses understand carbon trading, and select the best way to sell their carbon credits so they can bring in a reliable income to help achieve their family, community or business goals.
As a foundation signatory of the Australian Carbon Industry Code of Conduct and an Australian Financial Services licensee, we have committed to developing and conducting our business in line with industry best practice, and interacting with our carbon farmers and partners in a professional and ethical manner.