Sunday, August 14, 2022

Carbonz – what is it and how does it work?

NZ’s first native carbon credit marketplace hopes to democratise the trading of carbon credits.

Largely credited to the rising value of carbon, the rate of land use conversion to monocrop plantations in New Zealand has increased exponentially, bringing with it concerns of loss of biodiversity, among other things. 

Because the current Emissions Trading Scheme (ETS) incentivises the planting of fast-growing, high carbon-absorbing trees such as pines, there is little incentive for farmers to support regenerative native forest. 

In response to this, in late June Carbonz was founded – it’s the country’s first voluntary carbon credit marketplace designed specifically for the trading of traceable native carbon credits. 

It was founded by climate change PhD candidate Finn Ross, who says he hopes the platform will encourage investors and landowners to think more holistically about carbon sequestration.

“The foundation of the business is rooted in allowing Kiwi businesses and investors to maximise the impact of their carbon offsets via supporting native forest,” Ross said.

As well as this, he said that it is giving everyday people the opportunity to buy and sell native carbon credits, noting that previously this was very difficult given the way the ETS is set up. 

“Carbon markets are currently gate kept in New Zealand and most Kiwis don’t understand how credits work or their ability to access and trade them,” he said.

“All Kiwis can get on the carbon credit train now by making small purchases, you don’t need to be a large corporation contributing tens of thousands of dollars.”

The platform currently allows individuals and entities to buy and sell two types of carbon units: their own Carbonz Native New Zealand Unit (NZU) and the Native CarbonCrop Unit (CCU). 

The Carbonz Native NZU’s are the same as any other NZU traded in the ETS, although the catch is they are only from native forest, and are traceable back to the exact coordinates of that forest. 

The Native CarbonCrop Unit (CCU) on the other hand is a voluntary carbon offset, meaning they are not recognised by the ETS, and are issued exclusively to qualifying native forests not recognised by the ETS. 

These credits are issued by CarbonCrop, a Nelson-based company which uses AI technology to assess carbon sequestration levels in forests, and more recently native forests. 

Carbonz recently partnered with CarbonCrop to trade these credits on the platform, although have come under fire recently due to accusations of the CCU’s not meeting the guidelines of the Ministry for the Environment. 

An important aspect of the MfE guidelines states that forest owners can only earn and sell carbon offsets if they undertake additional action, for example introducing pest control or planting seedlings. 

The additionality guideline is used to ensure that emissions reductions or removals are a direct result from intervention, and would not have occured in business as usual activities. 

Landowners issued CCU’s are not required to meet these standards. 

CarbonCrop clearly outlines their stance on their website, stating that they think the current ETS additionality guidelines are highly subjective. 

“We think additionality tests are notoriously unreliable and inaccurate,” it said.

“While CCUs issued to our projects do not always meet the strict definition of additionality, in our view this is also true in practice for offsets issued under various methodologies of many major compliance and voluntary carbon standards.” 

The Native CCUs are currently trading on the Carbonz website at $50/tonne, whereas the Carbonz Native NZUs are trading at $100/tonne. 

The Carbonz platform sold $140,000 of carbon credits in pre-launch sales, and Ross says that a number of high-profile businesses have signed onto the platform, including Christchurch International Airport, Ecoya, Heilala Vanilla and Les Mills. 

“Carbonz provides a solution for Kiwis who want to know where their carbon credits are coming from and know that they’re contributing to the regeneration of native biodiversity,” he said. 

“It’s a win-win for farmers, businesses and New Zealand.”

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