Viridios Capital

Carbon Farming Guide
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Expert author: Carbon specialist, Sarah Costello

As the world continues its push to reduce greenhouse gas emissions, the land sector has a vital role to play and is well positioned to be a primary originator of nature-based carbon offset projects. In this guide we look at: 

  • Carbon farming and why farmers should consider it. 
  • How farmers and land managers can contribute to decarbonisation.
  • How farmers can earn additional income through the carbon market.
  • Carbon farming methodologies on farmland. 
  • The process of planning for and registering carbon projects. 
  • Carbon credit quality criteria. 
  • Verification standards for carbon projects.
  • New ways to reduce emissions on cattle farms.
  • The impacts of carbon farming projects. 

Carbon farming and why farmers should consider it 

Carbon farming is a whole-of-farm or landscape scale approach to land management, which aims to implement activities that increase the carbon sequestration rates in soils and vegetation. By sequestering carbon on their land, farmers can generate carbon credits for each tonne of CO2e- removed or avoided from the atmosphere. In addition, there is a scientifically proven link between soil carbon and land productivity. Managing soil carbon increases infiltration, improves soil water holding capacity and improves nutrient availability, while reducing the erosion potential.

How farmers and land managers can contribute to decarbonisation 

With farmers and land managers controlling large land holdings in Australia and around the world, they have a significant opportunity to contribute towards global climate commitments. Following the 2015 Paris Climate Agreement, which set out the framework to avoid dangerous climate change by limiting global warming to 1.5°C by 2050, farmers can play a vital role in helping to achieve net-zero and carbon neutrality targets. For example, in Australia, farming and agricultural land covers 51% of the country’s total area. This offers huge potential for the land to be used for nature-based carbon offsetting activities, such as reforestation or regenerative agriculture projects.

How farmers can earn additional income through carbon markets 

Farmers can benefit from the increasing demand for carbon credits, which is being driven by national and corporate net-zero commitments as industries seek to offset unavoidable emissions on the path of decarbonisation. By conducting activities which improve carbon sequestration or avoid emissions, farmers can earn carbon credits for each tonne of CO2e- abatement produced. The credits can then be sold on the market to businesses or governments wanting to offset their emissions. 

To earn carbon credits, projects need to be registered under a certification standard and follow approved methodologies. These methodologies dictate the boundaries of the project, the carbon accounting framework used to measure abatement, the reporting, verification and auditing requirements. For each reporting period, the project can be issued with a number of credit units equivalent to the abatement generated by the project. These credits can be sold on the spot market, as well as a forward sale or off-take agreement. Importantly, farmers can often be remunerated beyond the costs of implementing their projects, allowing them to diversify their revenue streams.

Carbon farming methodologies on farmland 

There are a range of carbon farming methodologies which can be implemented to register carbon projects and sell carbon credits. These include:

    • Afforestation or reforestation: A natural sequestration method which involves planting seeds or seedlings for trees to create forests (key carbon sinks) which absorb carbon from the atmosphere, removing and storing it as ‘carbon stock.’
    • Avoided deforestation: An avoidance method which protects forests and ensures their ability to continue to absorb carbon from the atmosphere. It also prevents forest land being cleared and used for carbon-emitting activities. 
    • Environmental or mallee plantings: A natural sequestration method (in Australia only) which involves planting a mix of locally endemic tree, shrubs and understory species to achieve forest cover. 
    • Human-induced regeneration: A natural sequestration method which involves conducting activities to promote the regeneration of forest cover, but does not include planting. For example, stopping chemical/mechanical destruction of regrowth or fencing to prevent cattle from damaging vegetation.
    • Savanna burning: A unique emissions avoidance method, similar to ‘backburning’ which adopts First Nations People’s traditional practices of conducting low intensity burning in the early dry season, to prevent late season wildfires which produce more CO2e- emissions as well as a threat to local biodiversity.
  • Soil sequestration: A natural sequestration method involving the maintenance of soil, a natural carbon sink, to maximise its carbon absorption capacities through various processes such as cover cropping and minimal tillage. 
  • Agroforestry: Combination of methods where shrubbery and other trees are planted on farms, grazing lands or croplands, which improves soil health, biodiversity, and natural carbon sequestration.  
  • Forestry plantation: Extending the rotation periods of a forestry (timber harvesting) project at existing or new plantations, to delay the harvesting of trees.  

The most suitable methodology will vary greatly from farm-to-farm and a carbon specialist can help you determine the best approach. Some of the factors which influence which methodology to use can include the type of farm operation, its size and land type such as forest, grassland or savanna, as well as rainfall patterns and geographical location.

Process of planning for and registering a carbon project 

To begin a carbon project, farmers can start by analysing each aspect of their farm’s operations. This includes identifying activities which emit carbon and then focus on areas with great potential for reductions. Farmers need to consider how easily a carbon farming activity can be implemented, its cost and how much carbon will be avoided or removed. Once a decision has been made to proceed with a project, a farmer can seek registration from a verification body. A carbon specialist can assist with the with the project development process by helping farmers to maximise the carbon potential of their property and identifying possible co-benefits. They can also help  with the ongoing reporting and verification requirements of the project. 

Carbon credit quality criteria 

High quality carbon credits must represent at least one metric tonne of additional, permanent, and otherwise unclaimed CO2 emission reductions or removals. So when developing a carbon project, it’s important to consider carbon credit quality criteria. These include:

  • Additionality: The activities directed towards emissions reduction, avoidance or removal that would not have occurred or would not continue in the absence of the carbon markets
  • Permanence: The carbon projects must implement mitigation measures and establish ‘buffer reserves’ to mitigate the risk of reversal of GHG reductions or removal.
  • Leakage: The carbon project must prevent any unintended shift of emissions at its boundaries. The leakage may be local or international in nature. A widely cited example refers to shifting of illegal logging activities from the project area to neighbouring forests. 
  • Accurate carbon accounting: Carbon credits generated by a project need to reflect real emissions reductions. In order to ensure accurate carbon accounting, projects need to:
  1. Establish project boundaries.
  2. Estimate baseline emissions.
  3. Measure sequestered carbon according to prescribed methodologies.
  4. Ensure independent third party verification. 
  • No harm: Activities undertaken by carbon projects should not contribute to social or environmental harms. To help ensure this, an inclusive and rigorous consultation process with local communities impacted by the project must be conducted. Free, prior and informed consent (FPIC) must also be achieved. Carbon credit profits should also be shared with local communities.  

Verification standards for carbon projects

There are a number of Standards organisations that carbon farming project owners can verify or validate their projects’ carbon credits through. These include: 

  • Emissions Reduction Fund (ERF). 
  • Verra (Verified Carbon Standard) (VCS).
  • Gold Standard (GS).
  • American Carbon Registry (ACR).
  • Clean Development Mechanism (CDR).
  • Climate Action Reserve (CAR); and 
  • Plan Vivo (PV).

Farmers and project managers can work with a carbon specialist to assist with this process. 

New ways to reduce emissions on cattle farms

A recent research report from Deakin University’s Blue Carbon lab found that methane emissions can be reduced by 56% when dams on cattle farms are fenced rather than unfenced. This is because when cattle graze and tread on vegetation surrounding the dam, it kills the grasses, leaving soil exposed to rain. Precipitation then causes nutrient and manure run-off into the waterways, which causes growth of algae and other methane-producing organic material. The researchers studied more than 60 farm dams, finding that fenced dams also had 20% higher dissolved oxygen content. Dams with high dissolved oxygen content stop emitting methane, and in fact start absorbing greenhouse gases, thus becoming a carbon sink. Deakin’s Blue Carbon lab is now working with the Clean Energy Regulator to see if farm dam management could become an officially approved carbon farming methodology. 

The impacts of carbon farming projects 

Carbon farming can have significant positive impacts for farmers, land managers and the planet. Australia’s Emissions Reduction Fund (ERF) found 80 million tonnes of CO2e emissions that have been avoided or removed from the atmosphere through ERF projects generated by landholders, communities and businesses. 

Farmers can earn significant additional revenues based on the project type, sequestration amounts and co-benefits. Farm Online estimates, “a 1000-hectare wheat farm that’s sequestering three tonnes per hectare per annum is going to be making 3000 carbon credits a year.” With some analysts predicting the ACCU spot price to reach $70 by 2030, farmers have an opportunity to generate significant returns.   

To learn more about carbon farming, hear from Sarah Costello on the Reaching Net-Zero podcast or get in touch with one of our carbon specialists: [email protected].