Two global companies are getting dirt under their nails by creating forest plantations to soak up climate-warming carbon dioxide (Co2).
Sustainable Forestry Management (SFM) and international banking giant Credit Suisse Group have teamed up to provide a $US200 million ($A242.9 million) carbon fund for forestry projects in Australia and across the globe.
SFM, which invests in sub-tropical and tropical tree plantations, said the Sustainable Carbon Finance fund would seek large-scale projects designed to bring climate stabilisation, protect biodiversity, as well as reduce deforestation.
London-based SFM chief executive Alan Bernstein said the joint venture would finance the carbon element of designated forestry projects in Africa, Latin America and Australasia.
"SFM looks at the revenue streams that are capable of being generated from a broad sweep of land-use rights, starting with the more traditional forestry projects," Mr Bernstein said.
"In Australia, our focus is on dry-land restoration.
"We are looking at reafforesting those portions of degraded agricultural land that once would have had a degree of tree cover."
The projects will look to provide returns to local and international investors and communities in the developing world, he said.
SFM owns more than 2,000 hectares of tree plantations in South Australia and is targeting up to 400,000 hectors of dryland rehabilitation in southern and western Australia, of which 20 per cent will be reafforested and is expected to capture one million tonnes of Co2 over the next 30 years.
"If the quality of carbon flows is deemed to be appropriate then in effect the project will be funded by the (fund) on a loan basis, but the difference is repaid - both principle and interest - over time by the issuance of carbon credits," Mr Bernstein said.
This is similar to an "old fashioned gold bond", which was settled in gold rather than cash, or in this case settled in tonnes of carbon.
the head of Credit Suisse's carbon trading business, Paul Ezekiel, said he was pleased to be leveraging the leadership positions in carbon trading and emerging markets.
"This pioneering partnership agreement seeks to position us at the forefront of the developing forestry carbon market," he said.
Both Credit Suisse and SMP said that the projects would pass through stringent assessment standards such as those put forward by the Climate, Community and Biodiversity Alliance (CCBA).
Thi is an association of NGO's and scientific bodies which has designed a series of standards to help shape land management projects.
"We will apply these standards firstly of the host country, and in Australia there are stands which are fairly well developed in many respects," Mr Berstein said.
In Australia there are four offset accreditation schemes in operation with the NSW Greenhouse Gas Abatement Scheme (GGAS) the most used.
However, there is still much debate and speculation about carbon sink projects, forest plantations designed to absorb carbon and offset harmful greenhouse gas (GHG) emissions.
Although the World Bank says deforestation contributes about 20 per cent to global CO2 emissions, a Sydney-based environment group has questioned the value of planting trees to offset emissions.
The Total Environment Centre (TEC) released a report last week looking into the pitfalls of the Australian carbon offset market and found that some programs are "greenwash".
"Carbon sequestration offsets or tree-plantings are plagued with difficulties," TEC director Jeff Angel said.
"Accounting for the carbon varies, then there is the lack of regulation, assurance and insurance to ensure that the offset will actually deliver what it says over the entire life of the tree, regardless of weather conditions or fire."
The report said significant amounts of water required by eucalyptus trees, favoured by forestry planting operations, could kill other vegetation due to water competition.
Then there is fire, hail and other weather-related issues.
Even if one million hectors of trees were planted on Monday, less than five per cent of Australia's GHG emissions would be captured, the report said.
Mr Bernstein said the monitoring and auditing of carbon credits was not problematic, but there would always be issues in replacing that which might be lost in any particular plantation.
SFM manages the risk of its projects by pooling credits derived from all its global investments to maintain a buffer from any loss from a plantation.
"This allows us to cover for the inevitable cycles, whether it be climactic, or political risk," Mr Bernstein said.
European non-governmental organisation FERN, said that besides the major uncertainties on the scientific side, carbon sinks had swayed attention away from the most important idea of cutting emissions.
"Carbon sinks have dominated the climate change agenda, diverting attention away from the inescapable need to dramatically curb greenhouse gas emissions in industrialised countries," FERN said in a statement.
Australia's position on the issue will be more clear when a federal government's task force releases its recommendations for a carbon trading scheme on Thursday.