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1 Heading to Presentation

2 Carbon Sequestration Forestry Project Pollution stems from a fundamental failure of markets to incorporate the full cost of economic activities G Hardin (1968)

3 CO2 Australia: A carbon sink forestry business Presented by Aaron Soanes 13th Sep 2005

4 MAIN HEADING IN CAPITALS 24pt Aim of today: Give you an insight into the CO2 Australia business and its carbon credit program Discuss potential opportunities within the Australian forest industry Explore the carbon trading market

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6 Who is CO2 Australia? Private, commercial forestry business operating in the NSW wheatbelt Dedicated to the creation of carbon credits Wholly owned subsidiary of the public company CO2 Group Offices in Melbourne, Perth and Wagga Wagga. Operations are run out of Wagga Wagga. JV with Oil Mallee Company of WA Mallee Plantings for Kansai Electric Power Company

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8 The Barstool of Wisdom E N V I R O N M E N T A L S Australian agricultural landscape O is in dire need of perennial systems that can cope with C the variable climate. I am amazed by how tight the site preparation I and sowing window is in cereal cropping. A We need the farmers as much L as they need us, not planting fence E to fence like its done in the higher rainfall parts of southern Australia. Carbon constrained economy, able to offer farmers an environmentally sustainable product that is also a commercial business on a large scale. C O N O M I C

9 What have we done so far The CO2 timeline? We have come a long way in 18 months. 1.Idea/Business Model 2. Appointment of Directors 3. Joint Venture with OMC 4. Accreditation under NSW Gas Abatement Scheme 5. Contract Negotiation with Corporations 6. Research and trial sites

10 What have we done so far The CO2 timeline? (cont.) We have come a long way in 18 months. 7. Negotiation of further contracts Country Energy 8. Continually talking with interested landholders 9. Development of procedures and continual development of model 10. CO2 Australia s first planting season (In process) AND THE CO2 AUSTRALIA STORY CONTINUES...

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17 It s a land of opportunity but not without issues! Value of land, the state of equity in the bush. The number of farms available has decreased according to the Australian Bureau of Statistics Farming in Brief Report A lot of talk about helping the environment that most times is not followed through with. Has the Landcare movement laid the foundations by educating and facilitating change?

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19 How are landowners involved? Land is required for mallee eucalypt plantations The mallee plantations are integrated with farming activities. The trees are planted in tree belts within cropping systems providing other benefits In return for the use of the land CO2 make payment to the landholder for use of the planted area

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26 Main Heading Type size 25pt/30pt

27 Why do we use the Mallee species? The root system of a mallee provides for the efficient capture of carbon It is well suited to the soils of NSW Mallees require minimal maintenance The CO2 trial sites have shown excellent survival rates through harsh conditions (i.e. drought) Solution to dry land salinity? No irrigation or fertilisers required

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30 Australia s Plantations Hardwood 675,900 ha Eucalyptus spp. nitens, globulus (21%), grandis, hybrids. Softwood 988,200 ha Pinus spp. radiata (49%), pinaster, elliottii, tropical hybrids. Araucaria spp. (3%) 100% 80% 60% 40% 20% 41% 59% Total 1,665,693 ha 0% Softwood Hardwood

31 Hardwood Plantations 140,000 Expansion and Policy National Forest Policy Statement (1992) CRA CARS - RFA s Cleared ag. land 2020 Vision (1997) 366,000ha since 1999 Private investment Hectares Plant 120, ,000 80,000 60,000 40,000 20, Year Sources: National Plantation Inventory Australia 2004 Update Australia s State of the Forests Report 2003

32 The Australian Carbon Market Commonwealth has committed A$1.8b to Australia s climate change strategy. Australia is on target to meet its KP target - due only to a one off change in land clearing policy and NSW Benchmark Scheme. Predominantly electricity/power sector affected by mandatory schemes. Continuing growth in emissions from energy sector forecast - 46% above 1990 level by Estimated market size current mandatory schemes A$8.0 billion. Market in Australia expected to increase significantly even without KP ratification. Increasing voluntary actions by corporates.

33 European Union Emission Trading Scheme World s largest; 28 countries, 14,000 installations 2005 to per tonne; 2008 to per tonne Pre-compliance trading during 1994 equated to 9.2 million tonnes ( 79.2m) Significant volume traded last few months of 2004 and over 7 million tonnes in January mill tonnes to be sourced offshore during mkt size of 3.6billion to 4.3billion

34 Summary The NSW Greenhouse Gas Abatement Scheme is leading the world. It is a model that can be improved. CO2 Australia has made significant progress in supplying emitters of greenhouse gases with a way to offset their emissions. Rural decline needs commercial innovation more than innovation. There is real opportunity now, Corporate Australia is aware of its need to participate in the climate change answer. Sustainable land uses - Kaiangoroa Forest.

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