this morning, transcript:Company gears up for carbon tradingDate...

this morning, transcript:

Company gears up for carbon trading

Date : 17/06/2007

Reporter: Jayne Edwards

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JAYNE EDWARDS, REPORTER: As the picture becomes clearer for corporate Australia on carbon emissions trading, the small-listed company CO2 is going full steam ahead. The business plants native trees to create carbon sinks, and its potential market has just exploded in size.

ANDREW GRANT, MANAGING DIRECTOR, CO2 AUSTRALIA: Any doubt that people had about there being a carbon price and the emergence of a bigger carbon economy in Australia has been washed away.

JAYNE EDWARDS: CO2 Australia has been in business nearly four years, with botanist Andrew Grant at the helm. It came about when the western Australian minerals explorer Revesco experienced a tree change, joint venturing on a carbon offset project planting mallee eucalypts, and recognising the longer term potential of the business.

ANDREW GRANT: It certainly took courage and a belief that this was a global trend that would manifest in Australia and there was good commercial opportunity. And our view was the external pressures were so great, the climate science was demanding action and change and the business community was, I think, becoming accepting of the carbon risk and carbon pricing and we've been very successful to date. We now think we can go into full escalation.

JAYNE EDWARDS: There's been a sharp increase in interest in the business in the past fortnight, since the national emissions trading scheme was announced.

ANDREW GRANT: It clearly provides a price signal for business, it creates a start date, it supports carbon sinks in early action. I think the uncertainty is around the penalty price and the level of change the industry has to undertake and for us that will dramatically influence the demand.

JAYNE EDWARDS: Three new major clients have come on board this week, joining existing customers that include NSW power companies and a large fund manager.

ANDREW GRANT: Most of our work has been directed towards people who had a liability under the NSW greenhouse gas abatement scheme and that's approximately 20 companies. And overnight the liable parties will increase to at least 1,000 companies.

JAYNE EDWARDS: Clients are charged an up-front fee plus ongoing management expenses.

ANDREW GRANT: We establish the projects, get them accredited under trading schemes, undertake their carbon accounting and the ongoing risk management and record keeping for these plantings, and create the carbon credits on behalf of the emitter or the investor.

For landholders who partner with us, we meet all the costs of establishing the trees, we pay them for the area of land that we use which, again, gives them a good passive income off their land and landholders get the mitigation of dry land salinity, it prevents soil erosion, it gives shelter for their grazing animals and actually improves the microclimate for growing their crops.

JAYNE EDWARDS: So far, around 12 million trees have been planted across the grain belts of western Australia and NSW.

ANDREW GRANT: Climate change is a function of deforestation and the increased combustion of fossil fuels so it’s logical that part of the solution is reforestation. And Australia has a tremendous opportunity to be a leader in this industry, and done well we think it can make a major contribution.

I think we would be close to one of the most audited businesses that I've ever been involved in. To create a carbon credit we've got to prove not only that we've established the forest, but that we can confirm that the trees have sequestered the amount of carbon. So it's... 90 per cent of our work is in record-keeping and proving and measurement, 10 per cent is in establishing and maintaining the trees.

JAYNE EDWARDS: Running a business servicing the big end of town is a long way from Andrew Grant's early working life setting up national parks and working in remote locations.

But he says he's no less of a greenie and still helping to save the environment.

ANDREW GRANT: This is a period of human development without precedent. Our children will look at us and say well, you know, you created the problem, what have you done to solve it and what kind of legacy have you passed onto us?