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The Commonwealth Bank of Australia (ASX: CBA) has put its weight behind Perth-based plant nutrition company RLF AgTech (ASX: RLF), backing an innovative pilot program to generate soil carbon credits through its technology as an alternative to existing carbon sequestration methods.
As part of a strategic alliance, CBA will pre-pay $1 million for 50,000 Australian soil carbon credit units (ACCUs) - the first units of their kind for RLF AgTech, which will be conducting the pilot program over four seasonal periods with commercial grain farming operations in Western Australia.
Pilot participants will use RLF AgTech's plant nutrition products and provisionally patented Accumulating Carbon in Soil System (ACSS), which can add value for grain farmers by stimulating the growth of roots, developing larger root systems, and generating more microbial activity.
This allows crops to increase soil soil nutrient levels to further drive yields and sequester more carbon dioxide.
Related story: In a food industry rife with fertiliser inefficiency, RLF AgTech primed to lift yields after IPO
Through the agreement, CBA will be entitled to purchase additional ACCUs generated by the pilot program at a discount to spot market rates at the time, and there is potential for a much larger scaling up of the technology's deployment to help offset Australian and global emissions.
"Our clients tell us financing is the biggest barrier to mobilising carbon credit supply, with capex needed to support the development of emerging carbon sequestration methods and technologies," says CBA group chief executive for institutional banking and markets, Andrew Hinchliff.
"A thriving carbon market is a significant economic opportunity for Australia and will play a vital role in the path to net zero.
"We want to play a leadership role in the development of this market and we look forward to collaborating with Australian innovators to support piloting and scaling carbon projects across the country."
CBA's managing director for global carbon, Dr Yasmina Elshafei, says soil carbon is a strategic point of focus for the bank to enable its agricultural client base access to carbon markets in a way that enhances and complements what they’re already doing, without out-competing for agricultural land.
"CBA is supporting the pilot by prepaying for carbon credits. The upfront funding we’re providing will assist participating farmers with covering the costs of registration, management and measurement that are associated with the project," says Elshafei.
RLF AgTech chief executive officer Ken Hancock said that the team is very excited to be working with CBA as one of Australia’s leading banks to make the generation of ACCUs at scale a reality.
"We are delighted to have signed this agreement with CBA. We look forward to delivering the potential of our products, technology and system," says Hancock.
"Because soils have such a large storage capacity, holding three times the amount of carbon currently in the atmosphere and almost four times the amount held in living matter, soil carbon has a very important role to play in the world’s journey to net zero.
"If our relationship with CBA proves out the potential of our technology to generate carbon credits in the Australian grain industry, we look forward to deploying our products globally to make a significant impact in making farmers more efficient, profitable and to help in the fight against climate change."
The latest agreement builds on RLF AgTech's March announcement of a pilot program on 5,000 of prime agricultural land with carbon project specialist Carbon West; a program that RLF will apply to have registered as an Emission Reduction Fund Project with the Clean Energy Regulator (CER), for the purpose of earning ACCUs.
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