Investment Rounds Report

For more information on the individual projects in each round, see the LRF Register.

How the LRF prioritises and selects investments

Projects selected through LRF Investment Rounds have been contracted on a commercial basis through the LRF Trust. Applications are assessed by the independent LRF Investment Panel (the Investment Panel), which operates at arm’s length from the Queensland Government.

The Investment Panel is made up of experts with a diverse range of backgrounds relevant to the carbon farming industry. The Panel is tasked with selecting a portfolio of projects for investment that align with the Priority Investment Plan (PDF, 1.7 MB) (PIP) and Investment Round Guidelines.

The PIP provides a guide for the Investment Panel and the market by outlining the outcomes the Queensland Government prioritises for investment. Projects are required to deliver on at least one of these priority outcomes to be eligible for investment.

The Investment Panel also considers a range of matters over and above these priorities when selecting investment, including:

• Diversity
  Creating a portfolio diverse in terms of locality, carbon farming methods, co-benefit outcomes, size of the project and the previous land use type eg. cane farming, conservation.
• Quality
  Whether the proposals present a quality outcome with a high likelihood of success (see ‘Developing a successful LRF project’ below).
• Risk
  Whether the projects presented any financial, reputational, legal or other risks to government.
• Value for money
  Whether the price offered by the applicant reflected the market for carbon credits for the method being used, the relevance of project activity costs to the delivery of outcomes, ACCU pricing compared.

Developing a successful LRF project

Projects selected by the LRF Investment Panel can demonstrate the following:

• A clear link between the activities to be undertaken and the co-benefits to be delivered. Information is supported by baseline data, site specific conditions or evidence-based land management activities suitable to the existing vegetation.
• Realistic costing and sufficient project timeframes showing how co-benefit outcomes will be delivered over time. When the link between project activities and intended co-benefits is not clear, the Investment Panel may deem the application to be not ready or not fully costed.
• One or more high value opportunity in line with Priority Investment Plan.

The Panel also prioritises projects that demonstrate improved outcomes for threatened ecosystems or unregulated vegetation (‘Category X’ under the Vegetation Management Act 1999), including protecting or enhancing regional ecosystems that are under-represented in the protected area system.

Visit the LRF Register to see a list of all LRF projects, click through to individual project pages to see contract prices and co-benefits, and read the LRF case studies for more information on successful projects currently underway.

Pricing ACCUs with co-benefits

The LRF is unique in requiring all projects to produce not just ACCUs but also verifiable co-benefits.

In order to assess the value of the project, the LRF uses benchmarked data from a global analysis of carbon prices. Carbon credit benchmark prices may vary between carbon farming methods, acknowledging higher costs (both upfront and ongoing) for delivery, varying opportunity costs relating to the value of the land and project scale.

Co-benefit values are assessed against separately sourced, benchmarked data relevant to the co-benefit claims and take into consideration higher costs of project delivery and the number and quality of the bundle of co-benefits offered by the project.

The following factors can increase the value of a project to the LRF and command a higher price per ACCU plus co-benefit:

• projects that can demonstrate the ability to deliver high quality co-benefits aligned with government priorities set out in the Priority Investment Plan
• projects with high delivery costs necessary to achieve valuable co-benefits, such as projects using the reforestation method.

Valuing co-benefits means projects that may otherwise be unviable due to factors such as their small size or high cost can be supported by the LRF.

Since Investment Round 2, the LRF has asked applicants to submit an overall project price, rather than separate prices for ACCUs and co-benefits. The LRF has contracted all co-benefits delivered under the projects but only a portion of the carbon credits for each project and this is reflected in the median price information provided below:

*The LRF attaches extra value (in dollars) to ACCUs generated by a project that also produces a prescribed co-benefit.

Read more about co-benefits.

Factors affecting long-term project viability

Projects can experience a range of issues which may delay their progression from contract to implementation stage or result in them becoming unviable. The LRF works closely with project proponents to understand and manage the complexities inherent to large-scale carbon farming projects.

Common viability issues include:

1. Obtaining consent from all eligible interest holders. An eligible interest-holder is a person or organisation that has a legal interest in the land on which a project will take place. Interest holders include financial institutions that hold a mortgage over the land, or registered native title bodies corporate. If eligible interest-holders do not grant consent for a project to take place on land in which they have an interest, the project cannot proceed.
2. Changes to a proponent’s delivery costs.
3. Changes to a proponent or landholder’s personal situation.

The LRF has been subject to volatility in the carbon market deriving from changes in national settings which have also affected viability in some instances.