Soil carbon farming: guidance for landholders considering participating in a soil carbon project in 2026

June 17, 2026

What is soil carbon farming

Soil carbon farming involves changing or adopting new land management practices to increase the amount of soil organic carbon (SOC). This method of farming is said to increase farm productivity as soil carbon has greater moisture holding capacity, providing greater resistance to and from drought whilst improving climate resilience by actively removing CO2 from the atmosphere.

Soil carbon farming also provides the potential for landowners to generate a new income stream as landholders participating in a registered carbon project with a measurable increase of SOC can earn Australian Carbon Credit Units (ACCUs).

Requirement for new land management activities or practices

To be eligible to participate in a project, landholders must introduce new activities or practices which have not yet started and go beyond the ordinary “business as usual” activities on the land. Examples of such activities include but are not limited to:

1. use of cover crops to promote soil vegetation cover and/ or improve soil health;
2. no-till or reduced tillage farming;
3. rotational/regenerative grazing; or
4. rejuvenating or re-establishing pasture.

Given the long-term nature of carbon projects (being either 25 years or 100 years), it is critical landholders consider how their existing agricultural enterprise will be affected by new management practices or activities and whether they will be able to operate their current enterprise concurrently with a carbon project.

Permanence Period

As mentioned above, committing to a soil carbon project is a long-term legal commitment, with only two (2) options available for the period in which landholders commit to maintaining the stored carbon, referred to as the “permeance period”. This period is either:

1. 25 years – here the project proponent will receive 80% of ACCUs earned and the remaining 20% held by the CER as a risk-of-reversal buffer; or
2. 100 years – here the project proponent will receive 100% of ACCUs earned.

Choosing the Project Proponent

Generally, the landholder will be the legal right holder to the project and can choose to either be the project proponent themselves or assign this role to a carbon service provider or developer (CSP).

The proponent is accountable to the CER for the performance and management of the project given it is the person or company who has the legal right to carry out the project under the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) (CFI Act) and the Carbon Credits (Carbon Farming Initiative) Rule 2015 (Cth) (CFI Rule).

As such, choosing whether a landholder or CSP will be the proponent is one of the most critical decisions a landholder can make during this process as it will have a significant impact on the landholders:

1. degree of legal risk and obligations under the project;
2. level of control over the project (including termination rights); and
3. earning capacity from the potential new income stream as all ACCUs generated by the project are issued by the CER to the project proponent.

Advantages of soil carbon farming

Some of the advantages offered to landholders who participate in a carbon project are:

1. Diversified revenue source: the most direct benefit is the generation of a diversified and new revenue source through the ability to earn ACCUs which can then be traded and sold to the Commonwealth Government and/ or private market. Projects in Queensland have unique access to the Land Restoration Fund where a premium is paid for ACCUs with verified and measurable economic, social and environmental “co-benefits” such as biodiversity or enhanced water quality.
2. Improved agricultural productivity: Adopting diverse land management practices can improve soil health and structure and lead to increase pasture and crop productivity which can then lead to higher carrying capacities for livestock.
3. Drought resilience: SOC significantly increases soil’s water-holding capacity and improves soil structure to create greater drought resilience. By enabling soil to retain more moisture from rain events, crops are provided critical protecting during extended dry events which are common in Queensland.

Key risks and commercial considerations for Landholders

Some of the key risks and commercial considerations for landholders are:

1. Contractual risk: Landholders will be required to enter into legal agreements regardless of whether they are the proponent or have chosen to partner with a CSP. Given the complex and legal nature of these agreements combined with the fact they “run with the land” it is extremely important for landholders to obtain independent financial and legal advice to ensure they fully understand their obligations under any agreement.
2. Climate and reversal risk: Notwithstanding the benefits of soil carbon farming, early-stage projects are highly susceptible to loss during periods of drought and low rainfall. Some studies show that 12 years of carbon accumulation can be reversed in just 3 years. A significant reversal may require a proponent to relinquish (return) ACCUs to CER.
3. Market volatility: The ACCU market can experience volatility as a result of changing regulations, compliance demand and supply constraints fluctuating the price of ACCUS and having consequential impacts on project profitability.

Next Steps for Landholders

Before committing to carbon project, landholders should carefully consider the long-term financial, legal and practical implications to their current agricultural enterprises and seek professional advice before entering into any agreement.

If you have been approached by a CSP or want to discuss whether you are eligible to apply to participate in the ACCU Scheme, please contact our property or commercial team on (07) 4671 6000.

You can access more information on the eligibility requirements for a project under the ACCU Scheme by following this link: Australian Carbon Credit Unit Scheme