SMRC auctions carbon offsets

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Perth’s Southern Metropolitan Regional Council (SMRC) is seeking tenders from parties interested in purchasing up to 91,214 tonnes of Greenhouse Friendly Approved Abatement Units, generated through its organic waste composting facility. Rated one of Australia’s few “outstanding” carbon offset providers, the sale will be a test case for how the voluntary carbon market is weathering the global financial crisis, and uncertainty about the government’s CPRS.

Last November Carbon Offset Watch, a collaboration of Choice Magazine, the Total Environment Centre and the Institute for Sustainable Futures, acknowledged the abatements offered by SMRC as “outstanding” in Australia’s first independent ranking of carbon offset providers. It was one of only five providers to get the top rating.

At the time, the council suggested this rating could “almost double our price compared to what a broker selling a generic product would get,” with the sale of carbon offsets already adding more than $1 million to the SMRC’s bottom line each year.

The composting facility takes household waste from over 380,000 residents and produces high quality compost. The process avoids the methane emissions that would have otherwise been generated by placing organic material into landfill.

SMRC’s business development manager Tim Youé says about 25-30 people have taken tender documents so far, which is “about three times the ammount of interest” compared to the last time it put credits up for sale.

The SMRC is one of the largest providers of abatement certificates under the government’s Greenhouse Friendly program, although what will happen to the voluntary carbon market when the Carbon Pollution Reduction Scheme comes into effect is still unclear.

Youé says the uncertainty surrounding this issue is one of the major variables likely to affect the price for the latest batch of abatement certficiates.

Other brokers are currently listing Greenhouse Friendly Abatement Units for around $8-10. At that level, the SMRC could expect to see at least $730,000 - $912,000 from the auction, although it will be hoping for considerably more.

The tender documents became available on Monday May 25, with expressions of interest due by next Monday, June 8. For further information, contact Tim Youé on (08) 9329 2700.