Food and agriculture investor Cibus Capital is launching a fund to invest in Australian carbon projects, tapping into a carbon market it believes will become the largest in the world.
Cibus Carbon is targeting a fundraising of between A$200 million ($132 million; €112 million) and A$300 million and aims to deliver 11,250,000 Australian Carbon Credit Units over a 30-year period.
Cibus has established a new management firm for the fund, Cibus Carbon Investments, with Australia-based consultant investment director Damon Petrie co-leading the strategy.
Petrie told Agri Investor the fund strategy originated from an understanding of how to get the highest value out of properties that Cibus has built up through the work of its previous funds.
In 2024, Cibus closed two funds: its $510 million Cibus Fund II, which focuses on scaling food production, processing or distribution businesses; and its $135 million Cibus Enterprise Fund II, which invests in early-stage agritech companies.
“[When] taking a high-value farming enterprise and upscaling it into a more high-value commodity, and doing so sustainably, you learn about what your carbon footprint is of that business,” Petrie said.
“There’s always areas that you can’t plant for your crop, so it’s understanding what you do with those lower-value segments of properties, and we’ve been on a journey to understand about returning those segments back to nature.”
Cibus Carbon will look to acquire low-cost land with potential for carbon projects across the whole landscape, as opposed to other managers who opt to acquire farmland and either implement carbon projects on the fringes or integrate them with the farmland.
Rather than achieving financial returns for its investors, the fund will generate carbon credits and distribute them to investors.
Cibus Carbon will gain a performance fee for producing ACCUs below a certain cost threshold.
Petrie declined to disclose this threshold, but said the fund is looking to produce ACCUs at around the current spot price of A$37 per unit.
The fund will initially focus on a mixed-species environmental planting method under the ACCU scheme, while remaining open to variations on this method as they emerge.
“In the carbon markets, typically a mixed-species planting credit will trade at a premium to the spot price.
“However, not a lot of volume trades at those levels, so we are trying to democratize access to those high-integrity credits to a broad base of investors.”
Carbon compliance
Petrie expects a large portion of the investor pool to be corporates with obligations under Australia’s Safeguard Mechanism.
This mechanism requires industrial facilities like mines that emit more than 100,000 tonnes of CO2-equivalent per year to reduce their emissions or surrender ACCUs or Safeguard Mechanism Credit units.
Other investors could include corporates looking to voluntarily offset their emissions, or financial investors seeking exposure to the carbon market, Petrie said.
Investors have been showing a keen interest in Australian carbon credits in recent times, including Canadian public pension investment manager La Caisse and Australia’s Clean Energy Finance Corporation, which launched a A$250 million agriculture and carbon credit platform in September.
Petrie said Australia’s carbon market is attracting other institutional investors that may otherwise have invested solely in the country’s agriculture sector.
He expects Australia’s carbon market to become the largest in the world by the end of the decade, with three factors contributing to its growth:
- Strong land ownership rights, as opposed to other countries that may have cheaper project costs but weaker land title systems.
- Government-issued credits, which give the credits strong integrity compared with other schemes.
- A shift in demand, with demand previously coming mainly from voluntary buyers, but now reinforced by a reliable compliance market under the Safeguard Mechanism.
Cibus Carbon is targeting a first close “this side of Christmas” with enough fundraised to cover the first of its property acquisitions.
The fund aims to implement five projects across five properties in the next five years.
