pre-cursor to the announcement ? The Australian is up to date, reads pretty goood !!

Commonwealth Bank does deal on carbon credits with plant nutrition company RLF AgTech, Andrew Hinchliff.

• By GLENDA KORPORAAL

  SENIOR WRITER

  @GlendaKorporaal
• 12:00AM JULY 27, 2023
• 3 COMMENTS

Commonwealth Bank has done a deal to back ASX-listed plant nutrition company, RLF AgTech, to work on a pilot program to generate soil carbon credits as part of its strategy to accelerate the development of the carbon credit market in Australia.

Under the deal, the CBA will provide financial backing for RLF AgTech to undertake a pilot program covering 5000 hectares of grain growing land, to show how its products and technologies can be used to sequester carbon.

The CBA will be prepaying for the first Australian Carbon Credit Units (ACCUs) generated by the pilot program with the hope that its technology, which aims to use less fertiliser and grow crops with longer roots, could be used on a broader scale on the 23 million hectare Australian grain market.

READ NEXT

• 
  
  INDIGENOU

CBA group executive, institutional banking and markets, Andrew Hinchliff, said the deal was strategically important for the bank.

“It is a signal of other things we are looking to do to help explore different methodologies to unlock the supply of carbon credits that we think Australia has a natural competitive advantage in generating,” he said.

The bank planned to partner with cutting-edge ventures like RLF AgTech “to be able to explore these new methodologies”.

READ MORE: CBA plants cash in native seed supplier

He said the bank liked the company’s approach as it had the potential to increase the yield of crops as well as generating carbon credits. The funding was being provided in the hope that it could have the potential to generate large-scale soil carbon which could be used to generate ACCUs.

The deal would complement other recent investments the bank has made in the carbon trading and decarbonisation market.

Andrew Hincy.

These include its recent investment in global climate specialist Wollemi Capital which was founded by Tim Bishop, the former global head of Macquarie Capital, and Paul Hunyor, the former head of Asia for BCG, which invests in climate solutions businesses. This followed its partnership in May with Greening Australia to expand native seed production.

The deal saw CBA making an equity investment in Nindethana Seed Service Pty Ltd, Australia’s largest native seed merchant.

In 2021 CBA made a $15m investment with carbon trading company Xpansiv to develop Australia’s carbon market and was one of the first investors in ACCUs on its Australian carbon trading platform when it launched in April this year.

“A thriving carbon market is a significant economic opportunity for Australia, and will play a vital role in the path to net zero,” Mr Hinchliff said.

“We want to play a leadership role in the development of this market and we look forward to collaborating with other Australian innovators to support piloting and scaling carbon projects across the country.

“Our clients tell us financing is the biggest barrier to mobilising carbon credit supply, with capex needed to support the development of emerging carbon sequestration methods.

“As the nation’s largest bank, we have a role to play to support leading thinkers with the important work of commercialising that innovation, particularly when it comes to carbon markets.”

RLF AgTech chief executive, Ken Hancock, said the carbon pilot trials would allow the company to use its accumulated carbon soil system to generate carbon credit units “while also delivering agronomical benefits for farmers and contributing to Australia’s climate change strategy.”

He said soil carbon had an important role to play in the move to net zero as soils had the capacity to hold three times the amount of carbon in the atmosphere or almost four times the amount held in living matter.

The carbon credit market in Australia is expected to develop following the stricter rules being brought in as part of the federal government’s Safeguards Mechanism to pressure the country’s largest emitters to reduce their carbon footprint.

The price of ACCUs has been falling in the short term as extra supply has come on the market.

But analysts see this as a short term adjustment with prices expected to rise as big emitters are forced to make more adjustments and the government takes more action to deliver on its promises to reduce Australia’s carbon output.

CBA’s executive general manager, commodities, trade and carbon, Alex Toone, said Australia had a unique opportunity to develop a market around sequestering carbon in soil because of the regulatory environment.

He said Australia was the only country where there was a government regulated market for carbon credits which provided for carbon credits to be generated through sequestration of carbon in soil.

GLENDA KORPORAAL

SENIOR WRITER