Green Bank, global investors pile into $450m forestry and ag raising

In addition, Mr Shelton said New Forests expected to deliver a 100-300 basis points uplift in returns from “new and emerging markets” including “carbon, biodiversity, and renewable energy such as solar and wind”.

He attributed the success of its latest raising to New Forests’ track record of delivering attractive returns and investors seeing the opportunity to participate actively in the pathway to net-zero emissions,

To support its carbon abatement efforts, the new fund will also convert hardwood plantations to softwood plantations, where the longer rotation periods (the growth period required to derive maximum value from a stand of timber) have higher carbon abatement potential.

There is also an economic rationale to growing more softwood. It is used for structural timber in the building industry, where there is a domestic shortage and where Australia is a net importer.

Mr Shelton said growing more structural timber would not be possible without a carbon credits market.

Not a single week goes by without an inquiry from someone wanting to participate in the carbon market, he said.

The CEFC – which has a very specific mandate “to facilitate the achievement of Australia’s greenhouse gas emissions reduction targets” – said its investment in the forestry sector is targeting carbon abatement of one million tonnes over the next decade.

By investing in the new fund, the CEFC said it would also demonstrate the power of Australia’s natural capital – its natural systems, soil, crops and landscapes – to drive down emissions through sequestration and showcase the sector as a sustainable investment asset class.

The CEFC said an added attraction of the New Forest fund was that it would not harvest native forests and will ensure that all its forestry operations are compliant with the highest globally recognised sustainability standards.

“Natural capital assets offer significant opportunities to contribute to the decarbonisation pathway for Australia and to build competitive new industries for our net-zero future,” said CEFC head of natural capital Heechung Sung.

“These require a long-term investment focus. The sooner we act, the greater the economic benefit and the more opportunity we have to mitigate the worst effects of climate change,” she said.

While the integrity of Australia’s carbon credit market has come under scrutiny, following claims of fraud and rorting last year, Mr Shelton said sequestration was easy to measure in forestry.

“Is the tree there or not, is it big or not? Other asset types have a harder time showing sequestration,” he told The Australian Financial Review.

Mr Shelton said the fund’s investments could include assets that combine forestry with agriculture.