Australia can expect to see a voluntary biodiversity market emerge in the not-too-distant future whether the government is successful at passing its nature repair market legislation or not, experts told a conference this week.

Last month the government’s nature repair market legislation, designed to create a framework for a voluntary government-backed nature restoration scheme, was put on ice, after the Senate committee scrutinising the bill was granted further time to consult.

This was interpreted by some as being the end of the matter, given the wide-ranging issues some environmental groups and academics had with the existing legislation, particularly around biodiversity certificates generated under the scheme being used for offsetting purposes.

Some groups have argued that the government should focus on reforming the Environmental Protection and Biodiversity Conservation (EPBC) Act, before pursuing market-based mechanisms.

However, Jay Hender, executive manager at carbon project developer Climate Friendly, told the Nature Based Solutions conference in Brisbane this week that a voluntary market was coming, irrespective of the fate of the government’s bill.

“If the nature repair market does not pass, or the EPBC reforms don’t pass, it does not mean there is no nature repair market, there already is one, and the [Taskforce for Nature-Related Financial Disclosures (TNFD)] is coming,” he said.

“It will just mean the relative drives from regulatory, voluntary, and government demand would be different… will the scale of the market be as big? No, but it will still be there and it will still be growing.”

Accounting for Nature APAC Regional Director Rachael Marshall told the session that the world was going through a “paradigm shift”, where both governments and corporates were recognising that a healthy society and economy rely heavily on the services provided by nature.

“We’re recognising the importance of nature as an asset to be managed and protected rather than something to just be exploited for our needs,” she said.

Accounting for Nature has developed a framework and standard to measure and verify biodiversity gains, which the TNFD has acknowledged as a valid tool for making disclosures, according to Marshall.

The TNFD is expected to release its final risk management and disclosure framework in September, after releasing a final draft in March, to help organisations report and act on nature-related risks along their supply chains.

Marshall said that Accounting for Nature had already registered 49 accounts, and had certified eight accounts covering 6.2 million hectares in Australia. It has also accredited 21 individual methods, across native vegetation, fauna, water and soil, accredited 89 experts and auditors to assist in the creation of accounts, and trained over 600 people through workshops.

The company is also being used to underpin subsequent payments of the Queensland government’s Land Restoration Fund’s co-benefit scheme.

BUILD IT AND THEY WILL COME

Climate Friendly’s Hender argued it would be better for the nature repair market legislation to pass, given that there would be clear regulation underpinning the voluntary scheme, and noted it would also create more sources of demand from within the market.

However, Hender said the major question mark surrounding the market was what the financial returns could possibly be.

“If anyone says they know what this market is worth, or the scale, or values of certificates, I wouldn’t trust them,” he said.

“We know that there is value, and we know that it will come, but the market hasn’t formed to a point where we really have clear price signals, that will come over the coming months and years.”

Hender went on to say that he had spoken with at least 20 corporates to understand their interest in the market, saying that they would want significant investment in monitoring and evaluation to ensure the integrity of certificates generated, if they were going to invest.

Marshall said that the lack of governance and unified standards was making it challenging for the market to verify nature positive claims.

“The market needs confidence that claims arising from investment in biodiversity restoration are trustworthy and not misleading or deceptive,” she said.

However, Hender noted the “considerable” political uncertainty surrounding both the nature repair market and the EPBC legislation, which would require time to resolve.

Jeremy Thomas, environmental markets director at the Department of Climate Change, Energy Environment and Water, told the conference that the Senate committee would be consulting on the nature repair market legislation further, and has been given until the end of the calendar year to deliver its findings.

He said further public hearings on the legislation were expected to be held between now and then, and it was unlikely that the bill would be considered by the Senate until “late this year”.

Thomas emphasised that further information around the operationality of the market would emerge through subsequent legislation, regulation, and methods that would be developed, if the legislation is passed.

“I think the one thing to understand is that the nature repair market is supposed to be a ‘coat-hanger’ piece of legislation. So what that means is that the framework for the scheme will be set up, but it’ll be a matter for the laws that fall under the subordinate legislation for some of the details,” he said.

“I would say that this is a piece of legislation that has had extraordinary level of interest in Parliament.”

By Mark Tilly – mark@carbon-pulse.com

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