Carbon credit integrity.

TLDR - don’t underestimate where ACCU prices could be in the future and to differentiate where credits come from.

Right now, LGI mostly sells credits at or around the spot price. But not all ACCU’s are created equal. Methane abatement is permanent and permanency in carbon credits is a big deal and usually attracts a premium. The Australian carbon market is still on training wheels. Theres a fair chance ACCU pricing becomes more divergent between methods in time. There’s also a chance our carbon credit market is opened up to the international market, where prices of high integrity units is much higher and in demand. Lots of countries simply don’t have the natural capital resources to create carbon credits themselves.

Another advantage of LGI’s credit generation is the predictability and consistent flow. Other methods can be very hard to forecast and issuance can take years. This is great for longer term contracts with off takers, forward selling and other hedging strategies that other market participants would find harder to access.

If you’re not familiar with the carbon credit space.

Australia runs a mixed compliance / voluntary market. Most of the demand is coming from compliance buyers under the safeguard mechanism, which is bipartisan and considered necessary for Australia to meet our climate commitments. Demand is expected to grow as baselines for safeguard mechanism facilities increase, meaning they need to cut or offset emissions at an increasing rate towards 2050. But this increased demand may or may not be offset by ACCU method developments. E.g. proposed changes to savanna burning.

Not exactly a highly liquid company. Most days I think a few thousand to tens of thousands of units trade hands.

This morning, 4 buy orders totally 5.5 million shares. ChatGPT:

Percentage of 88.8m shares (commsec shares outstanding):

(5,500,000 / 88,800,000) x 100 = 6.2% of the company

Identical size to Washington H Soul's position but could be a coincidence.

Quickly getting outside of my circle of competence, but simply a substantial holding changing hands?

This was an interesting chat, and great to see the business standing on its own feet in terms of cash flows nd profits (especially in what is a somewhat capital intensive endeavour).

The recording is in the usual place, and the transcript is here for anyone that is interested: LGI Transcript.pdf

I've paste the The AI summary of the meeting below, but for me a few things that stood out were:

• Growth is not capped by capital, per se, but rather the pace of deployment is throttled by the bureaucratic process of working through council processes.
• They have identified 200 odd suitable sites across australia, with only 34 operating sites at present
• Carbon credits and renewable incentives are half their revenue (roughly) -- so there is some regulatory/government risk if things change there. But it seems like it's good going for the moment
• They seem to have built up a good body of IP and know-how over the years -- not just the engineering know-how, but internally built software for managing power generation and trading.
• I suspect the pace of growth has the potential to be decent, but I wouldn't expect it to be sustained at a very high rate. It just takes time to secure sites and deploy infrastructure. And then there are variables around electricity and credit pricing. Not saying this is a bad thing, but worth appreciating the reality.
• It was funny that the main reason they're not (yet) pursuing bitcoin mining as a means to monetise their electricity capacity is purely due to investor perceptions. Mainly because BTC mining is (mistakenly) seen as environmentally harmful and wasteful, which is at odds with their green credentials. It's a shame, but perceptions will eventually change.

AI Notes

What LGI does:

• Captures methane from landfill, turning a harmful greenhouse gas into renewable electricity and carbon credits. Runs 34+ sites across Australia, focusing mainly on the East Coast.

Company origins & journey:

• Founded 2009; listed on ASX in late 2022. Currently making ~$30m+ in annual revenue, notably cashflow positive and profitable — rare in this sector.

Why landfill gas matters:

• Methane has ~28x the warming potential of CO₂. Capturing it not only reduces emissions but provides a useful energy source (methane = main component of natural gas).

How they make money:

• Three revenue streams:
• Selling electricity (to grid or direct to big customers)
• Generating Australian Carbon Credit Units (ACCUs)
• Service fees for installing & managing landfill gas systems

Customer pitch to landfills:

• We help you meet environmental obligations, improve community relations, and share in the revenue — all without upfront cost.

Market opportunity:

• ~1,000 landfills in Australia; ~200 suit LGI’s model. They’re currently at ~34 sites, so big runway ahead.

Margins & financials:

• Carbon credits = highest-margin part. Flaring-only projects can pay back CapEx (~$500–750k) within ~3 years.
• Power stations cost ~$3.5m per MW initially but scale better over time. Construction services generate ~50% margin but are smaller overall.

Tech & operations:

• Landfills are “living” systems — gas production varies over decades. LGI’s internal “DACS” software dynamically adjusts operations to match gas availability + electricity price fluctuations, boosting returns by 12–15%; with batteries, even higher.

Bitcoin mining question:

• They’ve considered using landfill gas to power Bitcoin mining (noting Daniel Batten’s research on methane mitigation), but optics around Bitcoin + renewables can be tricky. They’re keeping it as a future option.

Capital and growth plans:

• Aim to triple MW capacity over the next few years, funded carefully (cashflow, debt, and ACCUs on balance sheet). They’re cautious about raising capital prematurely, wanting to maintain a “deliver-what-we-say” reputation.

Carbon credit outlook:

• ACCUs currently make up ~half of revenue. Government reviews ongoing; current expectation is ~10–12 years of future revenue, but they’re not banking on it forever — hence the push to grow the energy side.

Competitive edge:

• Vertically integrated — they design, install, operate, and trade everything in-house (drill rigs, flares, generators, trading desks). Competitors outsource more, making LGI’s pitch stronger to councils.

Challenges & learnings:

• Jarryd openly acknowledged not everything goes to plan; values managing expectations and being upfront about setbacks.

Final tone:

• Jarryd comes across as technically sharp but balanced, focused on disciplined growth, reputation, and long-term value — not just chasing hype.

LGI is founder lead business that recently IPO in October 2022. LGI is a renewable energy and carbon abatement company which specialises in the engineering of, and delivery of, solutions in the management, capture and beneficial use of biogas from landfills. 

https://youtu.be/_ak3P3Q-OlI

In Australia there are more than 1,100 operating landfills. Of Australia’s large-sized landfills, LGI understands that more than 60% currently recover biogas. There are currently 117 landfill projects registered under the ERF recovering biogas, of which 58 are understood to have biogas-to-energy generation plants installed. LGI's estimates, some 200 landfill sites where biogas recovery systems may be commercially feasible and have not yet been installed, and around another 100 that are yet to be assessed as to their size.

Overview Landfill Gas

Landfills are highly engineered, excavated pits designed to store the waste produced from consumption that isn’t easily reused, recycled or recovered. Landfills are regulated and designed to limit the risk of pollution into the surrounding environment. 

Biogas is a natural by-product of the decomposition of organic waste in landfills. Once buried, organic material, such as food, garden, paper, cardboard and wood residues, begin to decompose. The anaerobic (oxygen- depleted) conditions in a landfill lead to digestion of this organic waste by methane-producing bacteria. The resulting ‘biogas’ is composed of approximately 50% methane (CH4), 50% carbon dioxide and a small number of other trace gases and organic compounds. Landfills contribute around 11% of global methane emissions. Methane is a potent greenhouse gas that is 28 to 36 times more effective than carbon dioxide at trapping heat in the atmosphere, over a 100-year timescale. Even after being closed, landfills can generate harmful methane Gas for decades. 

A landfill will generate biogas for a prolonged period of time, even after waste has stopped being deposited, depending on various factors such as local climate and site operational practices. Biogas can be produced from waste deposits for more than 30 years. A biogas extraction system can be installed in both closed and active (operating) landfills.

Today LGI has 46 employees and support 26 Bio gas projects on the East Coast of Australia. The majority of LGI customers are Australian local councils. These contracts are long-term contacts usually 20 years plus.

https://youtu.be/WPluuBOXYqE

Management

Landfill Gas Industries Pty Ltd was founded in 2009 by now Co-CEO Adam Bloomer business, initially focused on designing and installing biogas extraction systems for landfill owners with a small installation team.

In 2011, Timothy McGavin joined Adam as an LGI Shareholder and Company Director, providing commercial expertise and insight to financial markets.

LGI commissioned its first biogas-to-energy facility on the South Brisbane Landfill in Brisbane in 2012, receiving revenue from both wholesale power and LGCs. With the introduction of the Government’s Carbon Farming Initiative in 2011, LGI engaged Jessica North to begin building the company’s portfolio of carbon abatement projects and ACCU revenue streams. LGI registered its first carbon abatement project in 2012. Jessica became a Director and Chair of the LGI Board in 2013, and later took the role of Chief Executive Officer. 

Inside Ownership                   Ordinary Shares    % LGI Issued          Net Value at $2.56

Adam Bloomer                        17,593,232                  19.92%                $45m

Co-CEO and Founder

Dr Jessica North                      1,299,200                    1.47%                 $3.33m

Co-CEO

Timothy McGavin                   13,282,930                  15.04%                 $34m

Andrew Peters                        500,858                       0.56%                  $1.28m

Vik Bansal                               500,000                       0.56%                  $1.28m

Abigail Cheadle                       80,000                         ~                          $205K

Total                                       33,256,220                  37.66%                $85.14m