A new fund is being launched today to produce carbon sinks on low-yield agricultural land.
A carbon sink is something that absorbs more carbon from the atmosphere than plants do.
The fund, called CQuest Forestation and Carbon Investment Fund, is asking for 15 15.2 million to buy 1,500 hectares of land to plant pine trees, and aims to give wholesale investors the opportunity to cultivate carbon credits. ۔
It is being managed by My Farm Investments, which said it will also open up to retail investment in the future.
Andrew Waters, chief executive of My Farm, said the plan was to do two things.
In 20-25 years we will cut down these trees for wood and other products.
“The advantage of the investment approach is that we can generate these credits and then sell them through the New Zealand Emissions Trading Scheme.”
Waters said there will be a good return of cash flow from five or six years to 15 or 16 years.
He said the project would look at avoiding the controversial practice of using productive land for planting.
“We are working on margins with our activities. We will be careful with the features we choose and make sure they are low quality features,” he said.
Demand for carbon credits is high and investors expect good returns, Waters said.
At the recent auction of the government’s emission trading scheme, the government allocated about 5.5 million units, valued at 50 50.
But strong demand saw prices reach 53 53.85 per unit, forcing the government to issue an additional 700,000 units in a failed bid to maintain reserve prices.
My Farm said it would initially invest in 465 hectares of former sheep and beef property in the Tarova District of the North Island.
He envisioned removing 480 tons of carbon per hectare from the atmosphere, creating carbon credits at a cost of 20 20 to 25 25 per ton.
As the trees mature, it aims to sell credit in the secondary market, where carbon credit is currently trading at 60 60 per tonne.
Early tree planting of the property is expected next year.