Farmers signing up for the carbon emissions reduction fund have to meet strict guidelines but there is significant profit and energy savings to be made

This week the Clean Energy Regulator (CER) will hold the third emissions reduction fund auction and farmers across Australia will move to the forefront of efforts to rescue a “clapped-out” country.

Australian farmers have long bought and sold their wares at auction. Sale yards were the hub of country towns and the din of a moleskin-clad auctioneer shouting over the bleating and mooing of fattened livestock has long been a familiar rural backdrop.

But an overloaded agricultural system has depleted the land’s carbon content and its replenishment is vital in the face of climate change. “Farmers use the term ‘clapped-out paddock’ but we have clapped-out Australia,” says Louisa Kiely, director of Carbon Farmers of Australia. “Improving the land should be put on a war footing because food security is a real issue in the face of climate change.”

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Similar to the carbon offset programme, carbon sequestration could be a viable solution, with farmers encouraged to store carbon dioxide (CO2) in soil and trees and prevent additional emissions from animal waste methane. And again, farmers take part in an auction, albeit a more sedate, less visible one, to make it profitable.

The ins and outs of the fund take some navigation, however. At the auction, bidders undertake to store a set amount of carbon or not emit a set amount of CO2, within a fixed time period and for the lowest price they can profitably deliver carbon abatement.

Each endeavour for landowners, whether it is storing carbon or cutting CO2 emissions, is classified as a project and the methods used to deliver their outcomes are set out by the regulator. For example, a farmer who undertakes to boost his soil’s carbon content by changing his grazing practices or by increasing organic compost has to nominate a specific method to achieve the improvement.

Provability is the lynchpin of the system and navigating the stringent demands of a contract can be challenging for landowners. Kiely has been campaigning for a farm-based carbon offsets industry for many years and Carbon Farmers of Australia prepares submissions on behalf of those bidding for contracts.

Kiely says the criteria for registering and delivering a project makes the carbon credit system robust and transparent. “On the face of it, you are selling air. No one can see it, so you have to prove it. But I do think the soil-testing processes could be streamlined.”

If you want adoption of carbon neutral farming, we should have a simple system. Farmers want to make the land better. David Bruer, Temple Bruer vineyard

Core samples of soil are taken from random spots on a carbon-farmer’s land before and after a project. They are tested for carbon content and payment is made if there is an improvement.

Chloe Munro, the regulator’s chief executive, said the reporting criteria are demanding because carbon abatement processes and measuring results are so complex. “When we issue a credit we need assurance that there is genuine abatement,” Munro says. “There is a balance to be struck between maintaining the integrity of the system and the burden [of proof] on the farmer. It’s not foolproof, but we are vigilant.”

There is considerable money to be made by those who take part. The $2.55bn fund pays a sum for each tonne stored or not emitted through the currency of ACCUs (Australian carbon credit unit). Each ACCU represents one tonne and is paid when contracts are delivered. The average price paid per tonne in the first auction in April 2015 was $13.95, which fell to $12.25 at the second auction in November. Unsurprisingly, all eyes are on the price to emerge from this week’s auction.

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There are 583 projects on the register and 275 of those are under contract, which collectively promise to deliver about 93m tonnes of carbon.

Munro says the past year has been positive, though some projects have been renegotiated because farmers underestimated the time it would take to deliver. She expects a wider range of participants in this week’s auction.

David Bruer, co-founder of Temple Bruer vineyard in South Australia, runs a carbon neutral business. An ardent advocate for sustainable farming, Bruer says it is not good enough just to cut CO2 emissions and instead uses special growing methods to remove it from the atmosphere.

He plants giant cane (arundo donax), a species that captures more CO2 than any other plant, near his vineyards. Watered with the highly saline winery wastewater and then used to nourish the soil with bio-char compost, it is an innovative process.

Bruer says the regulator’s auction scheme is technically very complicated and would be “vastly assisted by a domestic price set on carbon dioxide”.

“If you want widespread adoption of carbon neutral farming, we should have a simple system. I have a great deal of faith in Australian farmers and, by and large, they want to make the land better.”

Kiely agrees, but insists that the incentives need to be meaningful. “Farmers have always been price-takers, not price-setters. It’s taking a while for the industry to come on board and you need a few leaders to set an example.

She tells of a contract-holder in Cobar, in western New South Wales, who announced to a gathering of local farmers that his first ACCU cheque was $1m. “That got them listening,” she says.