Land Restoration Fund – supporting carbon farming in Queensland
The Queensland Government is currently running a second investment round for the Land Restoration Fund (LRF).
The LRF has been established to facilitate a pipeline of Queensland-based carbon offset projects. It supports carbon farming research and development and has a commercial function where the LRF purchases carbon credits with co-benefits.
The LRF builds on the Commonwealth Government’s Emissions Reduction Fund (ERF), which credits Australian carbon credit units (ACCUs) for each tonne of carbon dioxide equivalent sequestered or avoided by a project. Eligible carbon farming projects for the LRF must be capable of being registered with the Clean Energy Regulator under a land sector method.
The credits purchased by the LRF are premium carbon credits, with contracted projects to be paid an ACCU with co-benefits price, for both the ACCUs generated by the project, and for demonstrated additional environmental, socio-economic, or First Nations co-benefits. The average price paid by the LRF in the first investment round was $49 per ACCU, well above the average price of $15.99 paid by the Clean Energy Regulator at the most recent ERF auction.
Contracted projects from Investment Round 1 include:
Applications are currently open for Investment Round 2, where the LRF is investing $25 million in carbon farming projects, with up to $5 million funding available per project.
The investment priorities for this round of funding are:
To be eligible for Investment Round 2, at least 10% of the ACCUs contracted to the LRF must come from identified Tier 1 methods. These are:
The LRF will contract for no more than 80% of the ACCUs likely to be issued for the project over its effective term, after the permanence period reduction and risk reversal buffer discounts have been applied.
Stage 1 Initial Applications for Investment Round 2 close at 2pm on Friday, 8 October 2021.
Shortlisted applicants will be notified on Monday, 6 December 2021 and asked to provide a Stage 2 Final Application, including their finalised commercial proposition and ACCU schedule, with risk identification and management. Stage 2 Final applications close at 2pm on Friday, 4 February 2022.
Successful applicants (Sellers) will need to enter into a Project Investment Agreement with the Queensland Treasury Corporation, on behalf of the Land Restoration Fund Unit Trust (Purchaser).
The Project Investment Agreement contains the agreed delivery schedule for when ACCUs are to be delivered over the term, and the co-benefits schedule which identifies the co-benefits activities that the Seller commits to perform in accordance with the Land Restoration Fund Co-benefits Standard for Land Restoration projects.
The project investment agreement has been updated from the first investment round to record pricing as a bundled ACCU with Co-Benefits Price. For the second investment round, payments are apportioned by between:
For more information about the LRF or carbon farming projects, please contact our Resources and Energy team.
Rebates are available from the Queensland Rural and Industry Development Authority for legal advice about carbon farming projects and the LRF.