About the Biodiversity Credits Supply Fund and Taskforce

Biodiversity credits will be easier to secure and more efficiently priced through a $106.7 million investment in the NSW Budget to establish a strategic new fund.

The Biodiversity Credits Supply Fund (the Fund) will:

  • buy credits upfront at competitive market prices based on forecast demand from major projects and infrastructure development
  • sell credits at purchase price plus a small mark up (cost recovery) to public or private proponents who need to offset biodiversity impacts
  • re-invest proceeds to buy more credits (as a revolving fund), enabling the initial investment to be used to buy and sell $200 million credits over three years.

The Fund also helps improve conservation outcomes with government able to direct efforts to more strategic sites.

The Fund will be established within the Department of Planning and Environment using existing provisions in the Biodiversity Conservation Act 2016. The Fund is expected to be operating later in 2022.

Why is the Fund needed?

New South Wales has a $110 billion infrastructure pipeline and renewed investment in housing and manufacturing.

As a result, demand for certain credit types is increasing faster than the supply, which can cause delays and increased costs for projects.

NSW Government is establishing the Fund to increase the supply of these credits and enhance confidence in the biodiversity credit market.

The Fund will deliver a significant increase in the supply of credits required for critical projects such as renewable energy zones, regional infrastructure initiatives and the expansion of housing and manufacturing.

This will reduce unnecessary project delays and costs, without compromising environmental outcomes, resulting in greater economic benefits.

When will the Credits Supply Fund start buying credits?

The Biodiversity Credits Supply Fund (the Fund) is expected to start buying credits from September 2022. More information will be made available in August 2022.

How will the Fund choose which credits to buy?

The Fund will focus on buying credits that are in-demand, as determined by expressions of interest from proponents (public and private) and other analysis. More information on in-demand credits will be published in August 2022.

Will the Fund buy all the credits from a Biodiversity Stewardship Agreement site?

If most credits from a Biodiversity Stewardship Agreement (BSA) site are in demand, the Fund will consider buying all credits from the site.

What factors are expected to be considered in buying credits?

Demand, cost and fit with strategic conservation outcomes.

What price will the Fund pay for credits?

The Fund will consider a variety of factors in deciding what it is willing to pay for credits, including value for money and market considerations. More information will be detailed in a pricing strategy that is currently being developed. This will be made publicly available.

Who makes the decision to buy credits?

This will be covered in Fund documentation that is to be published.

Will the Fund buy existing credits including those created under the BioBanking Scheme?

The Fund will generally only buy credits in demand, and only buy credits under the Biodiversity Offsets Scheme. If you hold BioBanking credits, you can seek to have these converted through a free equivalence process.

When will the Fund start selling credits?

The Fund is expected to start selling credits from September 2022. More information will be made available in August 2022.

Is it possible to seek specific types of credits from the Fund in advance?

Yes, through an expression of interest and/or a Credit Offtake Agreement.

What price will the Fund sell credits for?

Purchase price plus a mark up to cover costs (including risk) – this is generally expected to be between 7 and 10 per cent above purchase price.

Can the Fund make a profit on the credits?

The intention is for the Fund to not make a profit but there will be a small mark up and some adjustment may be needed for managing risk over the full inventory of credits held by the Fund.

Who can buy credits from the Fund?

Anyone can buy credits from the Fund. It’s expected that buyers will be public infrastructure proponents, private developers, and other entities or individuals seeking to secure conservation outcomes.

If supply of credits is limited, how will the Fund prioritise?

More information will be provided in August 2022. Credit Offtake Agreements may also guide prioritisation.

In selling credits, is the Fund competing with private suppliers?

The Fund is operating in the market and will need to comply with the NSW Government’s policy on competitive neutrality and other requirements in relation to competition. It is expected that significant activity in the biodiversity market will occur independently of the Fund.