A potential inclusion of oil seed tree harvesting into the remake of an expiring Australian Carbon Credit Unit (ACCU) method could bring much-anticipated support to Australia's nascent biofuels sector.
Australia's Department of Climate Change, Energy, the Environment and Water (DCCEEW) has recently advised industry proponents to investigate the potential of adding oil seed harvesting to the remake of the Reforestation and Afforestation 2.0 method, US agricultural innovation firm Terviva senior manager of commercialisation Kevin Swanepoel told Argus on 27 June.
The method credits emission reductions to forest growers and landholders who establish and maintain trees on land previously used for agricultural purposes. It will expire on 30 September 2025, and Terviva and its partner, Japanese refiner Idemitsu Kosan, will participate in the consultation processes around a potential remake of the method.
Idemitsu and Terviva, alongside Australian mining company Stanmore Resources, have been working on a trial plantation of pongamia trees in Queensland. The companies are eyeing the crop as a potential feedstock for sustainable aviation fuel (SAF). They are also exploring the use of pressed pongamia oilseed cake as livestock feed, as well as the potential creation of ACCUs from the carbon sequestration of the trees.
The firms ultimately aim to convert the carbon sequestration benefits of pongamia into ACCUs, Idemitsu said in a separate statement. But no approved methodology currently exists within the ACCU framework to support this pathway, the firm added.
Proponent-led pathway
The industry had high expectations about an expression of interest submitted by mining firm Rio Tinto in 2024 for the creation of an ACCU method under the new proponent-led model. The proposed "Sequestration of Carbon from Oil Seed Trees" method would involve planting perennial oil seed tree species and crediting the carbon sequestration associated with living biomass and potentially soil carbon. The proposal would use pongamia as an example species, with other oil seed species to be included over time. The oil seeds resulting from these plantations would be harvested and used in biofuel production.
The Emission Reduction Assurance Committee (Erac) considered the proposal to have "excellent alignment" and deemed it "ready for imminent development", but noted support for development would come only "if or when resources permit". The Australian government prioritised four other methods instead, but said expressions of interest could be re-submitted in the next rounds under the proponent-led pathway.
The DCCEEW did not reply to questions on when the next round will be opened or whether there would be a minimum or maximum number of methods to be prioritised. Industry participants said no dates have been indicated by the government.
Options outside the proponent-led route
Rio Tinto also did not comment on its next steps for the proponent-led pathway, although it has been progressing with a pilot study to explore the potential of pongamia seed oil as a feedstock for renewable diesel output. The pilot, in partnership with Australian wood-fibre processor and exporter Midway, involved the acquisition of approximately 3,000 hectares of land in north Queensland and the planting of pongamia saplings.
Support is required to incentivise the production and use of biofuels at scale to grow the industry in Australia, Rio Tinto said in 2024 in a paper about diesel transition. One of the options would be creating pathways for renewable diesel farming projects to be recognised under the ACCU scheme.
"This could serve the dual purpose of supporting development of Australia's biofuels industry, while expanding ACCU supply to help meet expected demand from facilities under the safeguard mechanism," it added.
Remaking expiring methods offers the government the opportunity to add new activities to be credited under the ACCU scheme outside the proponent-led route, Midway carbon projects manager John Lawson said. The reforestation and afforestation method has a limited number of projects over its history, so adding seed oil crops and harvest activities could improve uptake of the method with minimal changes to the method required, he added.
"There is a growing group of project developers interested in and actively working on options for implementing changes like these," he said.
