Carbon Conscious will plant more than six million trees over the first three years of the agreement (2009, 2010 and 2011). In return, Origin will pay Carbon Conscious a total of approximately $26 million, by way of planting fees payable over three years and licence and management fees payable over the 15 year term of the arrangement. In addition, Origin acquires options to increase the number of trees planted from 2010 to 2014, once regulatory certainty surrounding the CPRS has been provided. The face value of these additional plantings is up to $143 million and would be paid in a combination of planting and ongoing licence and management fees. If these options are fully exercised by Origin, the deal would represent what the parties believe will be the largest carbon forest sink development program in Australia to date with a value of up to $169 million to be paid over the 15 year life of the project.
Origin Executive General Manager, Policy and Sustainability, Mr Carl McCamish said, “The fully exercised project would potentially provide for the plantation of more than 30 million Mallee Eucalypt trees and sequester approximately six million tonnes of carbon (CO2-e). This demonstrates Origin’s support for a broad range of compliance options under the CPRS and is also aligned with Origin’s commitment to sustainability.”
Over its growing life, the Mallee Eucalypt will ‘sequester’ or store carbon from the atmosphere, creating ‘carbon sinks’ that offset the effects of greenhouse gas emissions.
Mr McCamish said this agreement reiterated Origin’s continued support for the CPRS and the importance for businesses to prepare for the introduction of the Scheme despite current uncertainty around legislation.
“The agreement with Carbon Conscious forms part of our overall portfolio approach to managing Origin’s ongoing liability under the proposed CPRS. The combination of strong environmental outcomes and a well constructed investment project provides us with an ideal opportunity in Australia’s forest sink market, positioning us well with options and flexibility for various regulatory outcomes,” Mr McCamish said.
If the CPRS is delayed or does not proceed, the credits generated under the agreement with Carbon Conscious will be used to provide Origin customers with voluntary carbon offsets. Origin is one of the largest providers of voluntary carbon offsets in Australia.
Carbon Conscious CEO, Mr Peter Balsarini said, “Origin is a great Australian company and an ideal working partner for Carbon Conscious. The transaction with Origin sets the industry benchmark and is perhaps the most remarkable example in Australia so far of taking environmental action and on-the-ground work with farmers. It is a fine example of enterprise and best practice.
“This project is good for farmers, good for the land and good for the rural economy. It will soak up millions of tonnes of atmospheric carbon and is a great example of how multiple stakeholders can work together to achieve a common favourable outcome,” Mr Balsarini said.
In the 2009 season all Mallee Eucalypt trees will be planted on less productive agricultural land in the wheat-belt areas of Western Australia with options for future plantations to be located throughout NSW, Victoria, Queensland and South Australia.
