HSBC Australia backs blue carbon market with funding for two new projects

Each project builds on previous work funded by HSBC and aims to establish the most effective way to harness the ability of coastal ecosystems to take up carbon from the atmosphere more efficiently than forests on dry land.

According to HSBC Australia’s Head of Corporate Sustainability, Alpa Bhattacharjee, the ultimate aim of these programs is to increase the supply of projects eligible to generate Australian Carbon Credit Units (ACCUs) under the blue carbon methodology announced by the Clean Energy Regulator in January this year.

“Blue carbon has become front-of-mind for decision makers grappling with the best ways to meet the goals of the Paris Agreement. However, practical issues prevent the development of a full-scale market and our aim is to help overcome those barriers by creating financial mechanisms that can be replicated elsewhere in the world.”

“Importantly, the outcome of those mechanisms will also have flow on economic benefits to local areas and a positive impact on the environment-at-large,” Ms Bhattacharjee added.

Blue Carbon Lab: Towards blue carbon ACCUs

This two-year partnership with Deakin University’s Blue Carbon Lab, which also has the support of carbon project developer WeAct and the Great Barrier Reef Foundation, will conduct a feasibility assessment of sites within Great Barrier Reef catchments to identify pilot projects which can be prioritised for restoration and generation of ACCUs.

Director of Deakin University’s Blue Carbon Lab, Dr Peter Macreadie said: “Previously, we mapped blue carbon opportunities at the scale of the whole Great Barrier Reef catchment. In this project, we will delve into questions like ‘How amenable are landholders to blue carbon projects?’ and ‘What price would need to be charged per ACCU to make blue carbon projects cost-effective?”

The project follows an existing collaboration between Blue Carbon Lab and HSBC that seeks to build a better understanding of the potential for blue carbon in Australia and how different conditions can impact sequestration rates, as well as climate change mitigation outcomes.

Blue Carbon Covenant Fund

In this instance, HSBC will provide funding to The Nature Conservancy Australia to design the framework for a pilot Blue Carbon Covenant Fund. The fund will aggregate projects on privately-owned sites so they can be registered collectively under the Australian Emissions Reduction Fund and sell ACCUs to the Federal Government on secondary markets.

The pilot has support from the Federal, Queensland and South Australian governments.

Geoffrey Lipsett-Moore, Carbon Specialist at The Nature Conservancy Australia, said: “Coastal wetlands can offer incredible benefits in terms of carbon capture and storage, as well as habitat for fish and increased protection of coastal communities from storm surge events and erosion.

“This means these ecosystems deliver a premium carbon product and we’ve very excited to partner with HSBC to test the feasibility of this new approach.”

The fund will establish the mechanisms required to provide income to farmers as they allocate some of their coastal landholdings towards the generation of blue carbon credits. In the long-term, this will provide alternative finance in the face of loss of productivity as a result of sea level rise and climate change. It will also generate a return for investors.