The Australian Carbon Farming Initiative, which allows landholders to earn carbon credits by participating in soil carbon projects, has opened up a promising new income stream for the farming community.

Carbon farming is a name for a variety of agricultural methods aimed at sequestering atmospheric carbon into the soil and in crop vegetation and biomass. The aim of carbon farming is to increase the rate at which carbon is sequestered into soil and plant material with the goal of improving farm productivity, increasing soil health and creating a net loss of carbon from the atmosphere.

Increasing a soil's organic matter content can aid plant growth, increase total carbon content, improve soil water retention capacity and reduce fertiliser use.

The practice of carbon farming is often done by individual land owners who are given incentive to use and to integrate methods that will sequester carbon through policies created by governments.

Sequestration of soil organic carbon (SOC) is a process that involves the net removal of CO2 from the atmosphere by plants and micro-organisms and its storage in vegetative biomass and in soil.

What is Carbon Farming?

The sequestration of Soil Organic Carbon involves three main steps:
By Jon Sullivan - PdPhoto, Public Domain, https://commons.wikimedia.org/w/index.php?curid=18858
The removal of Carbon Dioxide (CO2) from the atmosphere via plant photosynthesis.

Photosynthesis is a process used by plants and other organisms to convert light energy into chemical energy that, through cellular respiration, can later be released to fuel the organism's activities.

This chemical energy is stored in carbohydrate molecules, such as sugars and starches, which are synthesised from carbon dioxide and water.

Photosynthesis is largely responsible for producing and maintaining the oxygen content of the Earth's atmosphere, and supplies most of the energy necessary for life on Earth.

Plant leaves have small openings, called stomata, all over their surfaces. The stomata open to absorb the carbon dioxide needed to perform photosynthesis. They also open to release the oxygen produced by this process.
By At09kg, Wattcle, NefronusAt09kg: originalWattcle: vector graphicsNefronus: redoing the vector graphics - This file was derived from: Photosynthesis.gif:, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=49183032
The metabolism of Carbon Dioxide, Hydrogen and Oxygen (CO2, H+ and O2) within the plant using sunlight’s energy to make carbohydrates and retained in the form of plant biomass.

In hot and dry conditions, plants close their stomata to prevent water loss. Under these conditions, CO2 will decrease and oxygen gas, produced by the light reactions of photosynthesis, will increase, causing an increase of photorespiration and decrease in carbon fixation.

Some plants have also evolved mechanisms to increase the CO2 concentration in their leaves under these conditions.


The transfer of carbohydrates into the soil through roots (to feed fungi in return for minerals) and from plant residues into soil organic matter (SOM) where it is stored in the form of soil organic carbon.

Through these processes, carbon is made bioavailable to the microbial metabolic “factory” and subsequently is either respired to the atmosphere or enters the stable carbon pool as microbial necromass, which is the mass of dead plant material lying as litter on the ground surface.

A plant's photosynthetic efficiency varies with the frequency of the light being converted, light intensity, temperature and proportion of carbon dioxide in the atmosphere, and can vary from 0.1% to 8%.
By Dan Naylor, Natalie Sadler, Arunima Bhattacharjee, Emily B. Graham, Christopher R. Anderton, Ryan McClure, Mary Lipton, Kirsten S. Hofmockel and Janet K. Jansson - [1] doi:10.1146/annurev-environ-012320-082720, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=101300197

Agricultural Benefits of Soil Organic Matter (SOM)

Approximately 45% of Soil Organic Matter (SOM) is carbon. Without carbon there is no soil and without soil almost the entire terrestrial ecosystem collapses. In most Australian soils SOM has been steadily declining since European style agriculture began.

Carbon is at the epicentre of a complex interplay
that exists between living matter, dead matter, organic matter and mineral matter; it’s the key ingredient that makes a soil not only fertile – but healthy.

There are many benefits to increasing soil organic matter through carbon farming practices:
Increased plant available Water - PAW
Increased buffering capacity (Resisting soil acidification)
Improved nutrient cycling
Reduced frost events / severity
Greater water holding capacity, infiltration and aeration
Reduced soil loss via erosion
Reduced surface sealing following rainfall events
Reduced evaporation from the soil surface and increased evapo-transpiration
Soil Organic Matter is therefore a key indicator not only for agricultural productivity, but also soil security and landscape resilience.

The Emissions Reduction Fund (ERF) is a scheme created by the Australian Government’s Clean Energy Regulator (CER) that provides incentives for a range of organisations and individuals to adopt new practices and technologies to reduce their emissions. It is enacted through:

Carbon Credits (Carbon Farming Initiative) Act 2011

Carbon Credits (Carbon Farming Initiative) Regulations 2011

Carbon Credits (Carbon Farming Initiative) Rule 2015

This means that participants can earn Australian Carbon Credit Units (ACCUs) for their emissions reductions efforts. One ACCU is earned for each tonne of carbon dioxide equivalent (tCO2-e) stored or avoided by a project. 

ACCUs can be sold to generate income, either by the owner selling them to the government through a carbon abatement contract or in secondary markets.

The methodology currently effective for soil carbon projects under the Emissions Reduction Fund is the Measurement of soil carbon sequestration in agricultural systems method.

The Australian Emissions Reduction Fund (ERF)

Available Soil Carbon Project Support Funds in Australia

The following funds are designed to help farmers overcome financial barriers to entering the growing carbon market:
$5000 advance to support Soil Method baseline sampling costs under the Emissions Reduction Fund (National)

An advance payment of up to $5000 will be offered to eligible Emissions Reduction Fund (ERF) proponents to assist with the upfront costs of soil sampling.

Eligible soil project proponents can be offered a contract for the advance payment of Australian carbon credit units (ACCUs) worth up to $5000, to be paid back to the Clean Energy Regulator within 5 years.
The Land Restoration Fund (Queensland)

The Queensland Government’s Land Restoration Fund (LRF) is expanding carbon farming in the state by supporting land-sector carbon projects that deliver additional environmental, socio-economic and First Nations co-benefits.

The LRF supports landholders, farmers and First Nations peoples to generate new, regular income streams through carbon farming projects whilst providing valuable co-benefits such as healthier waterways, increased habitat for threatened species, and more resilient landscapes.
Western Australian Carbon Farming and Land Restoration Program

The State Government's $15 million Carbon Farming and Land Restoration Program aims to realise agriculture's potential to sequester carbon in the landscape and contribute to the growth of the Western Australian carbon farming market.

Common Modes of Operation

Landholders can choose between several common modes of operation when it comes to managing and financing their soil carbon projects:
1.) No or little upfront Investment: Landholders assume minimal financial and legal responsibility.

The aggregator manages the project, controls the trade and takes full responsibility financing and legally securing the project.

In this mode of operation, the aggregator receives the larger portion of the profit.
2.) Medium to large upfront investment: Landholders assume most or all financial and legal responsibility.

The aggregator manages the project, controls the trade but takes little to no responsibility of financing or legally securing the project.

In this mode of operation, the landholder receives the larger portion of the profit.
3.) Sole management of the entire project: Landholder manages the entire project and assumes all operating costs, financial and legal responsibility.

In this mode of operation, the landholder would receive all earnings from the project.

A detailed understanding of the carbon farming methodology of choice, as well as agronomic knowledge and an understanding of carbon markets is required.

This is just the beginning

Our team has extensive knowledge in carbon farming and is happy to assist you in your projects or complement an existing advisor’s services.