Over the period 2017-2030, demand is forecast to grow for high quality carbon credits as nations around the world work to meet their commitments to reduce greenhouse gas emissions under the Paris Climate Agreement. 148 nations representing 66% of global emissions have targets under the Paris Agreement with the objective of limiting global warming to 2°C.
The use of offsets will be critical to the achievement of these targets. Offsets fill the gap between emissions, required decarbonisation and other abatement opportunities. They effectively buy time for step change initiatives to become viable and cost effective. In the longer term they can be used by sectors such as aviation, which will have a limited ability to decarbonise. Currently international carbon pricing schemes are fragmented and the trade in offsets is limited. However, when the global market develops, the demand for offsets around the world is expected to dwarf demand here in Australia.
Energetics models carbon offset opportunity for Queensland
Our work describes the potential economic value to the Queensland economy of carbon offsets from the land sector, the barriers that need to be overcome and the support that needs to be achieved across government departments.
We quantified the opportunity as between $1.4 and $4.7 billion. This estimate for the period 2017 to 2030 is conservative and assumes low demand in the short term, largely due to policy uncertainty and the lead time anticipated for strengthening the Safeguard Mechanism
Our report also shows that domestic demand for land sector offsets could be much higher than forecast. If demand for land sector offsets increases, a further 270 - 502 million tonnes of abatement (MtCO2-e) is possible. This could be worth up to $8 billion to the Queensland economy. A combination of the following would need to occur:
- under-delivery of abatement by other sectors in the economy
- increased voluntary demand for offsets
- a strengthening of Safeguard Mechanism baselines
- an increase in Australia’s business as usual emissions.
The valuation of co-benefits is critical to expanding participation in carbon markets
Recognising the significant co-benefits to biodiversity, landscape protection, water quality, and financial benefit to indigenous communities that are created by land sector projects (beyond their direct economic benefits as emissions offsets) will be critical to the long term viability and attractiveness of Queensland’s carbon market to domestic and international investors.
Queensland Minister for Environment, Heritage and Protection, the Hon Steven Miles
Media statement: Carbon farming could be worth $8 billion to Queensland by 2030
Unlocking value for the Queensland economy with land and agriculture offsetsIssued: September 2017
This report which shows that from now to 2030 using a conservative approach, between $1.4 to $4.7 billion could be generated from land and agriculture sector. However, with stronger national settings and under-delivery of abatement in other sectors, land and agriculture offsets could be worth up to $8 billion by 2030 to the Queensland economy.
Global carbon offset markets analysisIssued: July 2017
This report summarises drivers of price and demand for carbon offsets, with a view to understanding the potential value to the Queensland economy from the land sector.
Related Thought Leadership
Author Dr Peter Holt, Sally Cook
Date October 2017Energetics has conducted analysis that shows a carbon offsets market based on improvements to Queensland’s land sector and agricultural practices, could lead to a revenue windfall.