AU$80 Million Investment from BHP, Rio Tinto and Qantas Fuels Australian Carbon Credit Fund

BHP (ASX:BHP,NYSE:BHP,LSE:BHP), Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) and Qantas Airways (ASX:QAN,OTC Pink:QUBSF) have committed a combined AU$80 million as early investors in an Australian carbon credit fund.

The fund, which is managed by Silva Capital — a joint venture between Roc Partners and C6 Investment Management — aims to support the country's carbon-reduction efforts by investing in reforestation projects.

In total, Silva Capital is looking to raise AU$250 million for the fund, with the money to be used to generate and manage Australian Carbon Credit Units (ACCUs). ACCUs are issued by the Australian government's Emissions Reduction Fund, a US$3 billion initiative aimed at reducing the nation's carbon emissions by 43 percent from 2005 levels by 2030.

ACCUs can be earned via projects that avoid deforestation, regenerate native forests or capture methane from landfills.

As part of their emissions-reduction strategies, companies in high-emissions industries like mining and aviation are increasingly turning to carbon credits. By investing in the fund, BHP, Rio Tinto and Qantas are making strategic moves to secure stakes in the growing carbon credit market, while contributing to broader environmental goals.

According to Raphael Wood, co-managing director of Silva Capital, the fund, known as the Silva Carbon Origination Fund, will focus on acquiring farmland to develop large-scale carbon sequestration projects.

“This fund represents not only an investment in carbon abatement but a significant milestone in Australia’s carbon market, that will, importantly, support the long-term success of our farming communities and nature repair,” he said.

The Australian carbon credit market, though still in its early stages, presents significant opportunities for growth.

With ACCU prices currently at their lowest level in over a year, the fund is looking to capitalise on the market's potential for appreciation as the country intensifies its efforts to meet its climate targets.

The Australian government’s Clean Energy Regulator, a statutory body focused on reducing carbon emissions, is currently developing an Australian Carbon Exchange to consolidate ACCUs in a centralised and regulated marketplace.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.