Mines pay to offset their water impacts one way or another. Eco-Markets Australia CEO Goslik Schepers argues that buying water quality credits is the best option.
“If you're a company, the first thing you need to do is avoid damage to nature. If you can't do that, minimise it," explains Schepers, who is set to speak at Water in Mining Australia later this year.
When damage is unavoidable, however, the question becomes how best to offset it. "If you end up having to damage nature in some form, then you're going to have to fall into an offset scheme," Schepers argues. "Today, the offset options are: you remediate for the damage, or you pay a fine." For him, water quality credits offer a third option – one that is better for both the environment and the mining industry.
A neutral umpire
Schepers took the reins of Eco-Markets Australia in June last year. The not-for-profit, ‘for-purpose’ organisation was set up to administer markets for natural capital credits. “We have one role, and we're very clear on our objective,” Schepers explains. “That objective is to establish a marketplace, ensure that it has the highest integrity, and manage and monitor programmes that run through that marketplace.”
Founded by four organisations (The Queensland Government plus two natural resource managers and a carbon developer), Eco-Markets Australia has appointed a skills-based board to ensure independence. Its role is to set a ‘Standard’ for a marketplace – the ground rules that must be adhered to for a credit to be issued under the organisation’s ‘ENVOMARK’ certification. It does not develop the methodologies by which the Standard is met, nor does it run projects or own credits itself. Third parties might propose multiple methodologies for a given Standard and it’s the role of Eco-Markets Australia to assess the validity of those methods and the projects that use them.
“There's lots of companies that do multiple things – they will develop and sell credits and verify their own credits,” Schepers explains. “We only mark other people’s homework.”
What is a water quality credit?
Eco-Markets Australia oversees two well-established schemes, known as ENVOMARK Reef Credits and ENVOMARK Cassowary Credits.
The most relevant for Water in Mining is the Reef Credit scheme, which was established to improve the quality of water running out onto the Great Barrier Reef. Under this Standard, one Reef Credit equals a quantifiable volume of nutrient or sediment prevented from entering the Great Barrier Reef. Projects that deliver these verified outcomes following one of the four methodologies approved for this Standard (a fifth is under review) are awarded credits. These can then be sold to companies, who buy them to meet compliance offset requirements or as part of an ESG scheme.
“The reef credit scheme was set up five years ago, and it's doing what it was designed to do,” Schepers explains. “It now has about 10,000 credits coming online per year, and over 99% of those are sold to non-government organisations, so it's attracting corporate capital.”
Building on this success, Eco-Markets Australia decided to broaden its focus. “We thought, well, why wouldn't we make this available in other catchments across Australia and internationally,” Schepers reflects.
This resulted in the recent launch of the Australasian Catchment Water Improvement Standard (ACWIS), which provides a set of rules that allows proponents in different catchments to suggest a methodology to improve an outcome for that catchment.
Eco-Markets is particularly focused on driving the scheme through in Moreton Bay and the Brisbane River in Southeast Queensland, and in the Murray-Darling Basin in South Australia and New South Wales. However, it has also received interest from projects in the Swan River catchment in Perth, Ningaloo catchments, and the Birrarung (the Yarra river) in Melbourne.
Guaranteed outcomes
One of the defining features of the credit schemes overseen by Eco-Markets Australia is that they reflect outcomes that have already been achieved. Rather than representing forward-looking promises to undertake a project that might not deliver, water quality credits are guaranteed as they represent an already-measured reduction in pollution.
Projects must also have been in the scheme from the outset to qualify. “You can't claim them in retrospect,” explains Schepers. “That means you have to start the project under an approved methodology in order to get the credit.”
He goes on to outline why this approach might be attractive to the mining sector: “There's no newspaper coming onto their doorstep saying, look at this, you proposed to remediate 150 tonnes of nitrogen, and you only delivered 10.”
Buying and selling
So what does this all mean for the mining sector?
Broadly speaking, there are two ways that mining companies can engage with water quality credits: as buyers and as project developers in their own right. So far, they have engaged mostly as the former: “Mining companies have bought credits, but they haven't necessarily submitted methodologies to improve water outcomes,” Schepers explains. “We'd love to have a chat to them about how they're thinking about that.”
In terms of earning credits for delivering water quality improvements on-site at mines, Schepers explains that there has been some discussion in Queensland around establishing a market for mine water treatment based on a bioreactor-based methodology. However, to date, mining companies have primarily been buyers rather than sellers of ENVOMARK credits.
As buyers, mines can outsource to environmental services companies exactly what they need to offset for compliance. “They can say, right, we need this many credits at this time,” Schepers explains. And because of the credibility of the ENVOMARK certification, he argues that they can “feel comfortable that it's bulletproof or fully defensible.”
This, in turn, creates a strong market pull for environmental services companies. Schepers imagines a scenario where a mine asks such a company to generate and sell them 100,000 credits. “If that environmental service company makes 120,000, then the mining company is satisfied because they've got their 100,000 compliance credits and the other 20,000 can be put onto a marketplace.”
He goes on to argue that mines could do that for themselves, pointing out that many have their own environment teams. If that team runs a project under a credit scheme and produces more credits than the mine needs for compliance, they could sell the excess on the market. Alternatively, they could store the credits for a future year if they plan to expand a site. “It’s an accounting methodology for their environmental footprint,” Schepers explains.
A ‘temporal advantage’
For Schepers, credits answer a bigger question facing the mining industry: how best to offset its impacts on water catchments today. As highlighted above, Schepers points out that mines end up paying for their impacts come what may – whether through agreeing to remediation activities or being slapped with a fine.
For him, credits are the best option because they enable mines to offset their impact from day one, as they represent an uplift that has already happened. “We think that credits sit before remediation plans or fines, and the reason is that through credits you effectively remediate before you start,” he explains. “There's a temporal advantage for buying a credit.”
For Schepers, water quality credits are ultimately a smarter way for the mining industry to manage its environmental responsibilities. By enabling mines to address remediation from the outset, credits offer certainty for project planning, a stronger environmental outcome, and a growing market that rewards good practice rather than simply penalising damage.
