Sunday, August 14, 2022

Native plantings count for credits from new startup

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Combining cutting-edge AI tech with companies’ growing desire for transparency around indigenous carbon forests has created a new income opportunity for farmers and landowners.

Nelson-based company CarbonCrop has released its inaugural native CarbonCrop units (CCU)s based entirely upon the planting of native forests for carbon sequestration, measured on a yearly basis.

Chief executive Jo Blundell said the company is not intending to compete with the Emissions Trading Scheme (ETS) but provide an opportunity for investors to receive carbon income from forests that would not otherwise be eligible for inclusion in the ETS. 

Native forests that existed prior to 1990 cannot be included in the ETS for credits, while forest land has to be at least a hectare in size and have a cover of over 30% from forest species to be eligible.

“We work with landowners to make it easy for them to choose between the two schemes. Our mapping technology determines what the best forest plantings are for their land. It will also ensure you are not entering both markets with the same piece of land,” she said.

The company has developed cutting edge land mapping techniques that incorporate machine learning AI fed by multiple data streams generated from regional climate information, satellite mapping, hydrology and remote sensing. 

It determines the ideal planting mixes for the proposed area, down to a single square metre. 

Exotic species can even be detected and excluded from the “natives only” unit area.

Investors will receive a return based on the AI’s calculation of how much carbon the forested area sequesters per year.  

At this stage there is no third-party scrutiny of the system, but Blundell said this is being sought.

“But of the areas that we have had assessed for native units over the past year we have had 100% acceptance by landowners and 95% acceptance of the forest area in their applications.”

Blundell said participants are aware of the significantly lower carbon sequestration rates for native versus exotic pine plantations. 

“By recognising native regeneration, which is not eligible for the ETS, native CCUs allow more landowners to attach a value to their regenerating native forest, and purpose driven businesses to support that restoration.”

Jo Blundell
CarbonCrop

On average, a hectare of exotics will sequester about 650t of carbon by year 28, compared to 250t for natives, although the native rate of sequestration increases more rapidly in subsequent years.

But for farmers who may have pre-1990 native forest on their property, the units provide a means to earn another income stream, based on the forest’s annual increase in sequestered carbon. 

Blundell emphasises the company is not back-dating carbon,and only per year increases are paid.

“By recognising native regeneration, which is not eligible for the ETS, native CCUs allow more landowners to attach a value to their regenerating native forest, and purpose driven businesses to support that restoration.

“For farmers this means unlocking a new revenue stream from low production land,and for all landowners it is more affordable to manage pests, plant more native trees and genuinely participate in climate change action.”

So far CarbonCrop has worked with 15 landowners and claims 5000 native CCUs have been issued for 630 hectares of native regenerating forests.

At this stage the company values those units at $50 per unit, but Blundell said there was not fixed cap on unit prices. 

From the area acquired so far the company has raised $260,000. 

More than $140,000 of native CCUs have been sold to companies seeking a native based sequestration platform as they move to zero carbon goals. 

They include Les Mills, Heilala Vanilla,and Christchurch Airport.

Blundell said the company is tapping into a voluntary carbon market with significant global value.

“Worldwide the market is predicted by McKinsey to grow from $1 billion now to $50b by 2030. We believe it may end up being worth even more than that by then.”

One of the company’s first farms to get on board was Glen Dene, a 3000ha station in Otago. 

Carbon Crop identified 305ha of qualifying native forests, issuing 3100t of credits for sequestered carbon over the last four years.

Owner Richard Burdon said the process had led to a tangible financial outcome running alongside traditional farming.

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