Backing farmers, high quality carbon credits and positive environmental outcomes

The CEFC is committing up to $200 million as a part of an innovative program with Rabobank Australia (Rabobank) to help reduce upfront costs for farmers undertaking Environmental Planting projects under the Australian Carbon Credit Units (ACCU) Scheme.

The CEFC investment aims to support eligible Rabobank customers to undertake Environmental Planting sequestration activities, which can provide a range of co-benefits for farmers in addition to creating high-quality ACCUs.

The CEFC investment will support Rabobank in providing a discount of one per cent on the Environmental Plantings Carbon Farming Loans, to help ease initial borrowing costs for eligible activities, including feasibility assessments and planting costs. Rabobank will contribute a further discount of up to 0.15 per cent for these loans.

Carbon sequestration has a significant role to play in Australia’s decarbonisation pathway. Environmental planting projects can sequester carbon and introduce important co-benefits, including biodiversity and improved soil quality. - Heechung Sung, CEFC Head of Natural Capital

Rabobank and the CEFC will also produce a practical guide to help highlight some of the key considerations, requirements and opportunities for farmers navigating Environmental Planting projects under the ACCU Scheme.

Carbon sequestration has a critical role to play in helping Australia reach net zero emissions, with an estimated 4.6 gigatonnes of carbon removal required by 2050 to help reduce emissions.¹

CEFC Head of Natural Capital, Heechung Sung said: “This investment creates the opportunity to have a significant impact on Australia’s farming sector by engaging farmers and landowners in carbon markets to support the transition to a low carbon economy. The farming sector is in the early stages of its decarbonisation journey, and capital is required to tackle emissions reduction and take a sustainable approach to farmland development. This program provides a way for the farming sector to help reduce emissions through carbon sequestration and to potentially create an additional income stream for farmers.”

“Carbon sequestration has a significant role to play in Australia’s decarbonisation pathway. Environmental planting projects can sequester carbon and introduce important co-benefits, including biodiversity and improved soil quality.

“These projects can have meaningful upfront costs so this investment helps to provide a financing solution for farmers in the early capital-intensive years associated with environmental planting projects, where there can be a 2-3 year gap from planting to when income can potentially be generated from ACCUs.”

Rabobank General Manager Country Banking Australia Marcel van Doremaele said: “Rabobank Australia is pleased to be working with the CEFC on this important initiative that will give more information to farmers thinking about starting an Environmental Plantings carbon farming project and help with lowering eligible loan borrowing costs. Initiatives like this help to create more pathways for farmers to support their sustainability strategies which have positive impacts on nature complementary to their existing farming operations.”

Environmental Planting projects involve planting and maintaining mixed native vegetation on land that has been clear of forest cover for the last five years. A mixture of trees, shrubs and understory species native to the specific area can be planted with the potential to generate one ACCU for each tonne of carbon dioxide equivalent stored as the trees grow.

These projects can also provide additional benefits to farmland, including increasing biodiversity, improving productivity and land quality, providing shelter for stock and other animals, reducing soil erosion and increasing water usage efficiency².

The CEFC sees natural capital assets as a strategic priority in a low carbon future and has committed more than $440 million to the agricultural and forestry sectors. Landmark commitments include $75 million to Paraway Pastoral Company to cut on-farm methane intensity, $75 million in the Australia New Zealand Landscapes and Forestry Fund to drive down emissions through sequestration, and $50 million in the $200 million Wilga Farming sustainable agriculture platform, alongside the Canadian pension fund CDPQ to drive down emissions.

The CEFC has also released Measuring what matters: an approach for natural capital investors to provide insights into how institutional investors can enhance assessment of decarbonisation.

Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 125 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 87 branches throughout Australia and New Zealand.