Firms chasing carbon dollars

While the federal government's proposed emissions trading scheme has become a major worry for many industries, a growing number of companies are seeing the carbon offset credit market as a big opportunity.

A number of Western Australian companies have entered the carbon offset industry, estimated to be worth $64 billion globally in 2007, in recent months, even though the legislative framework for the trading scheme is yet to be finalised.

The newest entrant is Wisper Forestry Services, a sister company of established sandalwood company WA Sandalwood Plantations, which offers a variation on the standard tree-planting offset concept.

After releasing its 10th sandalwood project earlier this year, the directors of WA Sandalwood this week launched their new business, which will offer a bundled sandalwood/carbon offset product to corporate and institutional investors.

Wisper joins five other WA-based carbon offset companies.

CO2 Australia Ltd is the largest offset provider through tree planting in Australia, with clients including Woodside, INPEX, Qantas and the WA government's State Fleet.

Other WA companies in this space include Carbon Neutral and Elementree, which have offset products for households and small to medium-sized organisations, and AusCarbon, chaired by former environment minister Ian Campbell.

ASX-listed Carbon Conscious Ltd, chaired by former state Liberal leader Matt Birney, is another recent addition, listing on the stock exchange in May.

Wisper director Keith Drage said unlike other carbon offset products, the company offered investors a tailored product with a mix of sandalwood and carbon sink projects according to the offset required and the investor's desired rate of return.

The eucalyptus plantings, to create the carbon sinks, will be undertaken by an accredited offset provider under the government's Greenhouse Friendly scheme, while WA Sandalwood will mana-ge the sandalwood plantation component.

Mr Drage said the product was best suited to corporations or institutions with a minimum of 5,000 tonnes of carbon dioxide emissions a year.

He said the product could be an economically attractive investment, both in reducing a company's carbon footprint and also investing in a high value natural resource asset of Australian sandalwood.

"A lot of people are doing it [offering offsets], but our unique selling point offers diversity in forestry assets," Mr Drage said.

"In WA, you have companies with significant carbon emissions...that have decided the best way to offset their emissions is to plant trees.

"They're medium to large companies that are big net emitters and want to be seen to have an environmental strategy."

There are now close to 50 carbon offset providers operating in Australia, according to the Carbon Offset Guide register, with about six of those based in WA.

Prices for offsets range from $10 a tonne of CO2 up to about $50/t, depending on the quality of the offset project and volume.

The sector was given a boost by the Australian Tax Office in June after it introduced tax concessions for investments in qualifying carbon sink projects, offering tax deductibility to investors for the first five years.

But buying carbon credits to offset their carbon footprint isn't the only reason why corporations are choosing to enter the voluntary offset market, ahead of the introduction of a national carbon trading scheme in 2010.

Mr Drage said organisations could buy carbon credits today as a hedge at what could prove to be historically low prices, with those credits able to be traded on the secondary market possibly at a premium, depending on the future carbon price.