Australian agricultural fund eyes biodiversity, carbon credits
By Stian Reklev
Natural capital investor Kilter Rural will this month launch an A$500-million ($333.7 mln) sustainable agriculture fund that will buy and develop 21,000 hectares of farmland in Southeastern Australia, creating biodiversity and carbon credits in the process.
Initially, the fund will buy up some 7,000 ha of farmland across the southern Riverina, before tripling that amount over the next 24 months.
“Balancing agriculture with environmental protection, the land will be managed to meet COP15 Global Biodiversity Framework targets, with 30% of the land to be re-forested, also generating high-integrity carbon credit units for sale in rapidly growing carbon markets,” the company said in a press release Thursday.
Speaking to the Financial Standard, CEO Cullen Gunn said Kilter will also be working to develop biodiversity credits.
Australia’s domestic carbon market is dominated by land-based projects, and Kilter has already had a soil carbon project approved to generate Australian Carbon Credit Units (ACCUs) by the Clean Energy Regulator, though none have materialised so far.
The new fund will utilise existing and emerging technology to achieve carbon sequestration at scale in the production of sustainable food, according to Gunn, as the fund will be lining up more soil carbon projects.
In March, the Australian government introduced legislation to parliament that would establish its planned nature repair market, a scheme designed to allow landholders and others earn biodiversity credits.
The proposed regulations specifically allow farmers and other landowners to operate projects that can earn carbon and biodiversity projects on the same plots of land.
“This fund will deliver sustainable food and fibre underpinned by scaled natural capital impact via biodiversity protection, scaled reforestation, and regenerative soil management that deliver climate change mitigation services,” the company said.
Kilter Rural projected annual returns of around 10% for the new fund, comprising a combination of capital growth and yield.
The investor, formed in 2004, has A$280 mln in funds under management.