Australian Plantation Sees Major Income From CarbonWestern Australia-based APT has a market value of A$284.8 million (US$164 million). It owns 75,000 hectares of land, planted or intended for planting with trees in the states of Western Australia, South Australia and Victoria. Great Southern Plantations Ltd. is the only bigger non state-owned plantation operator.
``These trees could eventually be worth more in the carbon market,'' said Paul Brazenor, APT deputy managing director. ``And we would like to be the leaders in that market.''
The United Nations 1997 convention on climate change, known as the Kyoto Protocol, outlined targets for individual countries' future carbon dioxide emissions. Companies producing carbon dioxide are now considering how to control their emissions.
One method raised at Kyoto was absorbing greenhouse gases through planting trees in order to obtain the right to continue emitting. The amount of carbon dioxide absorbed gives what is termed a ``Carbon Credit'' and the buying and selling of these credits is known as carbon trading.
Signatory countries to the Kyoto protocol will meet in The Hague in November to discuss how to implement the accord. It will be ratified only when 55 nations, accounting for 55 percent of total greenhouse emissions from industrialized nations, approve its directives.
Growing Market
The market for trading emission reductions will grow regardless of the Kyoto protocol, said Brazenor, who will probably attend the November conference. He said the protocol is likely to be implemented even if it is delayed by the European Union.
``Even if there is a hold-up it will only be temporary,'' he said. ``We are confident enough to devote resources to the carbon trading market.''
They are not the only ones. Earlier this year, Tokyo Electric Power Co., a company accounting for about 7 percent of Japan's carbon dioxide emissions, agreed to pay Australia's New South Wales state government to grow trees.
The arrangement will see the state government plant up to 40,000 hectares of trees in Australia over a 10-year period, to offset some of Tepco's carbon dioxide emissions in Japan.
Other energy utilities and oil companies are also starting to hedge the risk that carbon dioxide emissions may eventually attract hefty fines or even cause operations to be shut down.
Separate Unit
APT does not yet have a strategy on how to profit from the carbon trading market. Still, Brazenor said the company has been approached by organizations wishing to offset their emissions. He said, if demand is strong, APT may end up with a separate division for carbon trading.
``The potential is there for that to happen and we are in consultation,'' he said.
Still, if the carbon market doesn't eventuate, rising demand for wood products in Asia is expected to increase the value of Australian forestry exports to about A$1.4 billion in 2000-2001, the Australian government's commodity forecaster, Abare, said.
Meantime, the New South Wales state government is also banking on a strong timber market and the potential for carbon trading. The state government said in its fiscal 2001 budget it would allocate A$38 million for timber plantations.
``Our plantation investment complements other reforms, which are placing the native timber industry onto a sustainable footing and providing opportunities for private sector investment in forestry,'' said Kim Yeadon, state forestry minister. ``The government is also developing investment opportunities for businesses to offset environmental problems such as salinity and greenhouse'' gases.
Australian Plantation Timber shares fell 2 cents, or 1 percent, to A$2.10.