Plan ahead for the exciting opportunities that arise from the Nature Repair Act 2023 (Cth)

Councils are increasingly at the forefront of environmental sustainability, driving innovation in communities and through the use of their considerable landholdings.

A significant opportunity arises for Councils to further advance their efforts to preserve our environment whilst making a financial return on reserves and other open space vested in its ownership, by way of biodiversity certificates under the Nature Repair Act 2023 (the NR Act).

The National Nature Repair Market: Understanding its Value

The NR Act, establishes a national, voluntary Nature Repair Market (NRM). The NRM allows participants to undertake projects to enhance native species and habitats, which are then verified by the Clean Energy Regulator (CER). Upon verification, the CER issues a biodiversity certificate for the project. This certificate is a tradable instrument (the trading platform is expected to add these certificates later this year), and, importantly, the land itself does not need to be sold when a certificate for the project within it, is sold.

The market value of these certificates is driven by several factors:

• Corporate Environmental, Social, and Governance (ESG) Commitments: corporate entities are increasingly seeking to demonstrate positive environmental contributions, beyond carbon reduction, to meet ESG goals.
• Mandatory Climate Disclosures: new Australian Sustainability Reporting Standards (ASRS), aligned with international standards, commencing for large entities from 1 January 2025. While initially focused on climate, these standards are expected to expand to nature and biodiversity, driving demand for verifiable environmental credentials such as NRM certificates.
• Institutional Investment: large superannuation funds, also facing ESG reporting requirements, are increasingly considering nature-related risks and opportunities in their investment strategies.
• Nature Finance Council: established in 2023, this body advises the government on increasing private sector investment in projects that will benefit nature and will increase the demand for certificates.

Leveraging the NRM: Financial Returns and State Scheme Interactions

Councils can consider revenue generation by selling biodiversity certificates from NRM projects on their land. The NR Act also allows for ‘stacking’ of  biodiversity benefits with Australian Carbon Credit Units (ACCUs). This means a single project which enhances biodiversity and reduces carbon emissions could generate both NRM biodiversity certificates and ACCUs. This is important because it can significantly improve the financial viability of a project by creating multiple revenue streams from the same land management activities.

There is presently a pilot project being run in the Eyre, Northern and Yorke Peninsulas in SA which is trialling the combination of carbon abatement and biodiversity improvements to inform the operation of the NRM.

Eligible Biodiversity Projects

The current approved project type is the Replanting Native Forest and Woodland Ecosystems method. This method targets historically cleared land and aims to improve biodiversity by supporting the re-establishment of local native vegetation and supporting ecological connectivity. To be eligible, projects typically involve planting a diverse mix of native species local to the area on land that was cleared more than seven years prior to the project application. As the scheme evolves, the range of project types will expand.

Conclusion

The NR Act presents opportunity for South Australian Councils to leverage their landholdings for biodiversity conservation and the generation of new revenue streams through the sale of biodiversity certificates. By undertaking eligible projects, Councils are also contributing to national biodiversity goals while strengthening their local environments.

For further information please contact Martin Neilson on 8113 7108 or mneilson@kelledyjones.com.au or Victoria Shute on 8113 7104 or vshute@kelledyjones.com.au.