Fortescue Metals Group Considers $50 Million Carbon Credit Boost Amid Offset Debate

Highlights:

• Potential $50 Million Revenue: Fortescue Metals Group Ltd (ASX: FMG) could earn at least $50 million annually by selling carbon credits through Australia’s new Safeguard Mechanism Credits (SMCs) scheme if it achieves zero emissions by 2030.
• Chairman’s Stance on Offsets: Despite the financial incentives, Chairman Andrew Forrest has expressed skepticism toward carbon offsets, calling them a "scam," and remains hesitant about using them to reach the company's goals.
• Carbon Credits Trading to Start in 2025: Trading of SMCs will commence early next year, and analysts predict Fortescue could make between $50 million and $150 million annually by selling the credits, depending on its emissions reductions.

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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