Freehills is delighted to have provided all the legal advice necessary for the creation of Landcare CarbonSMART.
Landcare CarbonSMART is an innovative scheme which is designed to allow rural landholders to earn a steady income based on their planting and maintaining vegetation for the purpose of carbon sequestration, which can in turn be used by electricity retailers and others to offset their own emissions of carbon dioxide under the New South Wales Greenhouse Gas Reduction Scheme (GGAS). Landcare CarbonSMART (which is a wholly-owned subsidiary of Landcare Australia Limited) helps to overcome the otherwise prohibitive transaction costs that would face most landholders by buying the carbon sequestration rights directly from landholders and selling them en bloc to eligible entities under the GGAS.
Landcare CarbonSMART is being extended to other states and territories. Even though no other state or territory has a Greenhouse Gas Abatement Scheme comparable to the GGAS, Landcare CarbonSMART is initially using the carbon rights that it buys to create Verified Emissions Reductions (VER) under the Greenhouse Friendly™ scheme managed by the Australian Greenhouse Office, for purchase by companies and individuals wishing to offset their own carbon footprints.
Although Freehills and Landcare discussed the idea of creating a forestry-based carbon pool as early as 1999, it was not until 2006 that the regulatory landscape was sufficiently mature to take concrete steps to bring it into effect. After the basic mechanisms had been put in place, Landcare CarbonSMART was launched on 1 March 2007.
Freehills brought together its skills in environmental, property, corporate and revenue law to perform all the legal work involved in the creation of Landcare CarbonSMART. This work included:
- drafting the template Carbon Sequestration Right Deed between Landcare CarbonSMART and individual landholders
- setting up the corporate entity for Landcare CarbonSMART, drafting its constitution and trust document, and advising on corporate issues such as the scheme’s liability to be considered a Managed Investment Scheme
- assisting Landcare CarbonSMART with the process of becoming accredited as a sequestration pool manager with IPART, the regulatory authority for the GGAS
- advising on stamp duty and other revenue law issues, and
- arranging for the registration of carbon rights and assisting Landcare CarbonSMART to liaise with the New South Wales Department of Lands in relation to the registration of these novel forms of interest in land.
The creation of Landcare CarbonSMART is an exciting highlight in Freehills’ 15-year pro bono relationship with Landcare.
This article was written by Jason Johnston, Solicitor, Sydney.
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