Highlights:
Potential Windfall from New Carbon Credit Scheme
Fortescue Metals Group Ltd (ASX: FMG) could earn at least $50 million annually through Australia’s new federal carbon credit scheme, known as Safeguard Mechanism Credits (SMCs), as it pursues its goal of zero carbon emissions by 2030. The scheme rewards companies for cutting emissions faster than required, allowing them to sell credits to those falling short. However, Fortescue’s chairman Andrew Forrest has voiced skepticism over carbon offsets, labeling them a "scam," and is hesitant to rely on them.
Fortescue’s Emissions Target and Offsets Debate
Fortescue aims for zero Scope 1 and Scope 2 emissions at its iron ore mines by 2030. If it achieves this, the company could earn around 1.4 million SMCs annually, based on its current production rates. Analysts estimate that selling these credits could generate between $50 million and $150 million annually by 2030.
Carbon Credits Trading Set to Begin
The Albanese government’s Safeguard Mechanism will begin trading SMCs early next year. At the time of writing, the ceiling price for carbon credits is set at $75 per tonne, indexed to the Consumer Price Index plus 2%. While Fortescue has expressed reluctance to rely on offsets, the company acknowledges the potential revenue and is evaluating its position on the implications of the reformed mechanism.
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