What are Carbon Credits

In Australia, the primary carbon credits are known as Australian Carbon Credit Units (ACCUs). ACCUs are a form of carbon offset created under the Australian Government's Emission Reduction Fund (ERF). The ERF is part of the government's broader strategy to address climate change and reduce greenhouse gas emissions.

Australian Carbon Credit Units (“ACCUs”) are a financial instrument, once they are verified and certified, they are awarded to eligible energy efficiency, renewable energy generation and carbon sequestration projects that result in a reduction of Greenhouse Gas (“GHG”) emissions.

An overview of Australian Carbon Credit Units (ACCUs):

Creation: ACCUs are generated by projects that successfully reduce or store greenhouse gas emissions. These projects can span various sectors, including agriculture, forestry, waste management, and energy.

Verification: Projects seeking ACCUs must follow approved methodologies to quantify and verify their emissions reductions. These methodologies are established by the Clean Energy Regulator, the government agency responsible for administering the ERF.

Purchase and Trading: Once a project is approved, ACCUs can be sold to the government or other entities looking to offset their emissions. The credits can also be traded on the Australian carbon market.

Stacking: ACCUs can be "stacked" when a project delivers multiple benefits. For example, a reforestation project might generate ACCUs for carbon sequestration and biodiversity benefits.

Compliance: ACCUs can be used by businesses to meet their emissions reduction obligations under the Safeguard Mechanism, a component of Australia's climate policy framework

What value is an ACCU to anyone?

ACCUs are a financial product that can reduce the total capital expenditure for your emissions reduction project. ACCUs are traded, or sold, on the national (or in some cases international) environmental commodity market, through carbon market agents to organisations looking to offset their carbon footprint, or meet emissions reductions obligations. ACCUs are also purchased by the Federal and State Governments in a commitment to decarbonise Australia’s economy through emission reduction projects, like those set out in the Information Memorandum herein.

What is 'Stacking' Carbon Credits

In the context of carbon credits and land management, the term "stacking" typically refers to the ability to generate multiple types of carbon credits or benefits from a single land management project. Different carbon credit programs may have specific rules regarding the stacking of credits, and the stacking potential often depends on the nature of the project and the methodologies used. Here are a few examples:

Land-based Carbon Credits:

Reforestation and Afforestation Credits: Planting trees on a piece of land can generate carbon credits by sequestering carbon dioxide.
Avoided Deforestation Credits: Protecting existing forests from being cut down can also earn carbon credits.

Biodiversity Credits:

Biodiversity Offsets: Some programs allow stacking with biodiversity credits, where land management practices enhance or protect biodiversity.

Agricultural Credits:

Soil Carbon Credits: Practices such as cover cropping and no-till farming can enhance soil carbon, potentially earning carbon credits.

Renewable Energy Credits:

On-site Renewable Energy Credits: If renewable energy projects (e.g., solar or wind) are implemented on the land, the generated energy can contribute to additional credits.

Methane Reduction Credits:

Methane Capture Credits: For projects that involve capturing and utilizing methane emissions (e.g., from agriculture or waste management).

It's important to note that stacking opportunities can vary based on the rules and methodologies of specific carbon credit programs. Additionally, some programs may have restrictions to prevent double counting or double claiming of benefits. It's advisable to work with accredited experts or organizations familiar with the specific carbon credit standards and guidelines applicable to the project and location.