Australia’s green bank, Clean Energy Financing Corporation (CEFC), has committed A$200m (€120m) as part of a programme with Rabobank Australia to help reduce upfront costs for farmers undertaking environmental planting projects under the Australian Carbon Credit Units (ACCU) Scheme.
The CEFC investment will support Rabobank in providing a discount of 1% on the special green loans to help ease initial borrowing costs for eligible activities, including feasibility assessments and planting costs. Rabobank will contribute a further discount of up to 0.15% for these loans.
CEFC head of natural capital, Heechung Sung said: “This investment creates the opportunity to have a significant impact on Australia’s farming sector by engaging farmers and landowners in carbon markets to support the transition to a low carbon economy.
“The farming sector is in the early stages of its decarbonisation journey, and capital is required to tackle emissions reduction and take a sustainable approach to farmland development. This program provides a way for the farming sector to help reduce emissions through carbon sequestration and to potentially create an additional income stream for farmers.”
Sung said carbon sequestration had a significant role to play in Australia’s decarbonisation pathway. Environmental planting projects could sequester carbon and introduce important co-benefits, including biodiversity and improved soil quality.
“These projects can have meaningful upfront costs, so this investment helps to provide a financing solution for farmers in the early capital-intensive years associated with environmental planting projects, where there can be a 2-3 year gap from planting to when income can potentially be generated from ACCUs.”
Rabobank general manager country banking Australia, Marcel van Doremaele said: “Initiatives like this help to create more pathways for farmers to support their sustainability strategies which have positive impacts on nature complimentary to their existing farming operations.”
Environmental planting projects involve planting and maintaining mixed native vegetation on land that has been clear of forest cover for the last five years.
The CEFC sees natural capital assets as a strategic priority in a low-carbon future and has committed more than A$440m to the agricultural and forestry sectors.
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