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ABC News
ABC News
Business
business reporter Daniel Ziffer

Dropping seeds by drone, Telstra starts carbon farming to offset its emissions

Telstra is planting and reforesting 240 hectares of land at Yarrowyck in northern NSW, to store greenhouse gas emissions. The project is located in the traditional lands of the Anaiwan, Kamilaroi/Gomeroi First Nations peoples. (Supplied)

Telecommunications giant Telstra is starting its own carbon farm, growing trees to reduce its emissions.

Big polluters that want to move towards net zero emissions need to buy carbon credits to offset what they put into the atmosphere.

But not enough carbon credits exist in Australia, so Telstra boss Andy Penn is becoming a farmer.

"A carbon farmer," he laughed.

The telecommunications company – more used to data farms storing information – is getting into the business of dirt, using internet-linked drones to plant and maintain 158,000 native trees in a 240-hectare trial site at Yarrowyck in northern NSW.

The project will take carbon out of the atmosphere, help improve sensors, robotics and artificial intelligence (AI) technology in the field, and set the company up to take advantage of the growing carbon abatement industry.

"What sparked this was feedback from my team, that we were seeing challenges in getting access to carbon credits on a reliable basis to meet our commitment to be a carbon-neutral company, which we are," Mr Penn said.

Telstra CEO Andy Penn: "the fundamental point is we need to reduce our absolute emissions". (AAP: James Ross)

The problem behind that is there are not enough projects either avoiding carbon emissions or getting carbon out of the atmosphere, at a scale that meets the needs of big corporate emitters like Telstra – one of largest companies listed on the Australian stock market.

Credit crash

The announcement comes in the wake of a surprise government decision that crashed the carbon market, making polluting cheaper.

Private companies were contracted to supply Australian Carbon Credit Units (ACCUs) – representing one tonne of emissions removed or avoided – to the government at $12 a unit.

But the creation of a new type of 'optional' contract, allowing them to be sold either at $12 to the government or to the open market, coincided with a one-year 200 per cent boom where units topped $55 each.

That gap was described by the Clean Energy Regulator as "unsustainable" as companies were considering breaking their contracts, paying penalties, and still making more money than they would have under the existing deals.

Energy Minister Angus Taylor recently gifted a multi-billion-dollar windfall to private companies by letting them break the long-standing government supply contracts (at $12) to cash in on the soaring market.

Professor Bruce Mountain from the Victoria Energy Policy Centre at Victoria University called it a "very bad deal" that had completely up-ended that market. 

Victoria University researcher Bruce Mountain: "This is a chaotic mess". (ABC News)

There are two ways to reduce carbon emissions, something the Australian government has committed to do to 'net zero' by 2050.

Companies can change what they do or buy credits to cover what they cannot or will not change.

By flooding the market, the price of credits dropped to around $30 a unit. This has made polluting cheaper, because it reduces the financial incentive for companies to change products and processes that emit carbon. Instead, they can buy credits to offset their emissions.

Additionally, the change means when taxpayers must buy ACCUs in future, they will likely pay a rate closer to the market rate – far higher than $12 a unit.

Yesterday, 15 organisations including farmers, land managers and Traditional Owners joined the industry's peak body – the Carbon Market Institute – in calling on the Australian government to push back changes "abruptly announced" without industry consultation.

The organisations represent about a quarter of contracted carbon abatement projects and most of the open market. They want the changes deferred to at least July 1 to allow the industry to prepare.

Telstra's challenge

The volatility of the market, and ministerial interventions, has come up against the desire of companies like Telstra to meet ambitious commitments to reduce carbon emissions – aiming to stem climate change.

Telstra is one of the biggest energy users in the nation. ( ABC North Coast: Hannah Ross)

Telstra's operations became carbon neutral 'net zero emissions' in 2020. The farming project is by no means a solution to reduce the company's absolute emissions in half by 2030. But it is a start.

"This is equivalent to about 160,000 carbon credits over 25 years, and we need a couple of million a year. So this is not going to solve our problem," Mr Penn said.

Reducing emissions – including through power use – may reduce the need for carbon credits to 'offset' the pollution Telstra creates, even as demand for its networks rises 30 to 40 per cent per year.

"Climate change is going to require everybody to make a contribution," Mr Penn added.

"And that includes individuals as well, because Telstra's demand or requirements for power and our carbon footprint, it's a function of the customers that we're serving, that have got a demand for an accelerating digital economy.

"We can't afford necessarily just to clearly wait for the regulatory environment, or other factors to tell us what we need to do, when. I mean, we're big enough to work it out ourselves".

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