Carbon farming has burst onto the scene of late, you’re hard pressed to attend a conference or field day without it taking centre stage. This is fuelled a by the global imperative to slow the rise of atmospheric temperatures and bring the world towards ‘net-zero’ emissions. Agriculture is uniquely positioned to play a dual role in this transition. Not only are there emission reduction solutions available, but by improving and increasing the amount of carbon sequestration into soils and vegetation, our landscapes can serve as a carbon sink for removing emissions from the atmosphere. This presents Australian farmers and landowners with a huge opportunity to capitalise on whilst pulling their weight in this global push. An opportunity that more Aussie farmers are unlocking by the year, as displayed by the below figure.

We all know that farmers care for the land they manage and strive to be the best stewards that they can be. Carbon farming and natural capital programs provide a framework for you to do just that and be rewarded for doing so. So, what exactly is the scope of the opportunity? This can be broken down into three components: productivity, futureproofing, and profitability.

Productivity
Probably the biggest misconception we encounter in this space is that carbon farming involves taking arable land out of production to plant trees. I’m here to let you know that this is absolutely not what we are pitching. When done well, carbon projects can be strategically integrated into your operation, allowing you to maintain focus on your existing enterprises whilst sequestering carbon in a mutually beneficial fashion. To provide some examples, a reforestation project can be an excellent way to make a better return on some of your non-arable or more marginal country. Think of your saline areas, lower-lying wet spots, or even just the more gutless soil that underperforms each year. Planting these areas out to trees could be more beneficial, also earning you carbon credits. Trees belts can also be strategically planted throughout your property (along existing fence lines if it suits), providing shade and shelter for your livestock.

In the case of a soil project, more carbon cycling through your soil profile is good practice in the business of producing crops and livestock, showing its’ worth in the form of increased water holding capacity, better nutrient cycling, reduced erosion, etc. These outcomes may arguably outweigh the benefit of the ACCUs you’d earn, so you can consider them a bonus! The real challenge lies in making meaningful improvements to your SOC levels and maintaining it over time.

Futureproofing
The benefits of trees on farm are well documented, they are a critical component of the landscape and when strategically planted across your property, they can help to improve the water cycle function, help to mitigate erosion and salinity issues as well as provide a home for native biodiversity. This adds layers to the environmental resilience of your farm landscape. The same goes for managing your soils to facilitate an increased average amount of carbon stored over time, the more you can shift up that dial, the more fat you’ll have built into the system to help absorb the blows for those tougher seasons. Ultimately, this could mean that you’re not stuck between a rock and as hard of a place during those times – giving you more flexibility in your management decisions.
The above are examples of environmental futureproofing, but carbon farming can also help to improve the economic resilience of your operation. Providing the opportunity to unlock a new diversified revenue stream and/or maintain market access in the low carbon marketplace of the future, but I’ll expand on this with my next point.

Profitability
Successful carbon projects will reward for your hard work with ACCUs (Australian Carbon Credit Units), think of them as a type of financial asset, kind of a like a share. You have three actions available to you with ACCUs, they can be held (stored), retired, or sold. Depending on the circumstances, you may wish to form a strategy that uses a mix of all three.
Holding on to your credits is a popular option. Retaining ownership until your project is closer to completion can help mitigate potential risks or liabilities for your business. They can then be retired, sold or even divvied up as an additional succession asset in the future.

Retiring your ACCUs is an option if you’d like to offset some of your operation’s own greenhouse gas emissions. This could be an option for some producers in the short term if they are able to secure a price premium for produce with a net zero or lower carbon emissions footprint. Others may choose to generate ACCUs to be retired in order to maintain market access in the low carbon economy of the future.
Your ACCUs can also be sold to businesses who are looking to offset their own operational emissions, (some of which are government-mandated to do so under the Safeguard Mechanism). This can take the form of private forward contract agreements, a CAC (Carbon Abatement Contract) under the Aus government’s reverse auction system, or directly on the spot market. As net zero targets and mandates are increasing, so too is the demand for quality ACCUs leading to the opportunity for extra cash in Aussie farmer’s pockets.

We appreciate that the above section skims over these concepts at a high level and perhaps through some rose-tinted glasses. All of these benefits are possible, but the reality is that carbon farming is complex and there are a number of significant risks and considerations involved. These include, but are not limited to:

• The long timeframe – seeing a project through to completion takes a minimum of 25 years.
• Building & maintaining carbon – Increasing your carbon stores over the long term isn’t a walk in the park, particularly when done in lower rainfall zones and a drying climate.
• Market considerations – just like any commodity, carbon is subject to market forces that can drive the demand (and price) up or down.

Entering a project, (or any affiliated contracts), should not be done lightly and certainly not without first going through a thorough feasibility, due diligence and project design and planning process. Rather than assessing the carbon project in isolation, it’s recommended to conduct a holistic assessment of the entire operation. This ensures understanding of how the project could impact, and be impacted by, all aspects of your operation, now and into the future. Best to measure twice and cut once!

This may sound like a lot, but the good news is that you’re not expected to navigate it alone. There are plenty of qualified and passionate service providers out there looking to help you evaluate potential carbon projects and align them to your farming operations – Planfarm Terrawise included! There have been several government and industry pilot initiatives offering support and funding opportunities, DPIRD’s Carbon Farming Land and Restoration Fund for example. Aussie banks like NAB and CommBank are introducing new streams of funding for sustainable initiatives such as carbon farming. Whilst others, like Rabo, have been working to bring clarity and understanding to landowners starting with carbon footprint accounting.

Understandably, there are a lot of producers out there sitting on the fence when it comes to all this carbon stuff. There’s nothing mandated (yet), and any number of other priorities demanding attention and daylight hours. Our advice is to not sit here for too long. Quantifying emissions and getting to net zero is an imperative that the whole world is marching towards, with other natural capital priorities following closely, it isn’t a current trend that will be soon to blow over. It’s best to develop an understanding of the system and how your business fits within it, especially as the land sector is currently offered more opportunities than mandates.

So… where should you start? If all of this is quite new to you, the best place to start is by building an understanding – get in touch with Planfarm Terrawise and we can hop on a call to understand your key drivers and spell out the core concepts and the lay of the land. We can also direct you to the cream of the crop in the growing wealth of information and resources becoming available online.

From here, there are a couple of options you can take. The first is to get started on conducting a carbon footprint assessment of your operation, something that we highly recommend. Not only will all operations need to be providing this data to maintain market access in the coming years – (might as well get a handle on it now). But it is critical information if you are looking to design and implement an informed strategy for decarbonising your operation. Understanding your carbon footprint (the net greenhouse emissions your business releases into the atmosphere), gives you a clear picture of how many emissions you would need to reduce, inset, or offset to reach net zero. This figure can then be used to assess any proposed activities to reduce these emissions. If you’re a Planfarm client, you may have run through these numbers at a high level with your consultant and received a free report, a fantastic starting point. If you would like a tailored carbon account and advice for your business, our Planfarm TerraWise team are now offering this as a service – get in touch!

The second option is to undertake a Planfarm TerraWise Carbon Opportunity Assessment. This is a natural next step from the Carbon Footprint Assessment, but by no means is it a pre-requisite. This process involves:

• an assessment of the potential for a reforestation or soil carbon project on your property,
• a detailed indicative breakdown of the potential costs vs. revenue, benefits vs. risks, timeline and practicalities,
• a tailored recommendation on whether and how to proceed with a project.

One of our friendly team will then be able to pick through the intricacies with a fine-tooth comb with you, ensuring that all has been considered and is fully understood. Our team also offer flexible project delivery services on a fee-for-service basis.

One final piece of advice is to conduct thorough due diligence and choose your project partners carefully. As outlined above, there are several risks to be considered over a potentially long timeline here, so you want to be sure of who you’re aligning yourself with. Once you’ve had a carbon opportunity assessment conducted, perhaps you should seek out one from another provider – second opinions can be valuable.

You may also want to have as many of your advisors as you can (lawyer, accountant, agronomist, etc) cast an eye over the documentation you do receive.

At Planfarm TerraWise, we’re confident that we’re a dependable partner for your scope of carbon farming activities. With 50 years of high-quality, client-centric and independent advisory services in WA agriculture, and a team of passionate carbon specialists, we are well placed to help guide your business through this next chapter in Australian farming.

If you’re interested, feel free to reach out directly via toby@nullterrawise.au, or talk to your Planfarm consultant about what’s the best first step for you.