Frequently asked questions
Below are common questions collated from workshops and previous enquiries. If your question hasn’t been answered below, please email the team at natural.capital@detsi.qld.gov.au.
Carbon farming
Will carbon farming negatively impact agricultural production?
Carbon farming projects and agricultural production are complementary land management activities. Many carbon farming methods under the Australian Government’s ACCU Scheme, are designed specifically for agricultural activities such as plantation forestry or livestock management. Under certain vegetation methods, landholders can graze in a carbon project area. For all Land Restoration Fund (LRF) projects, active management of the land is needed to meet both the requirements of the carbon method and to generate the co-benefits.
How can carbon farming work without impacting the income from my other farming business?
Carbon farming projects can complement farm business operations and supplement income. For example, carbon farming projects may provide an additional income stream from land that may be marginal or non-viable for other farming purposes, or enhance overall productivity through improved soil, water and vegetation management. As it is a commercial decision to undertake a carbon farming project, landholders are strongly encouraged to seek independent legal and financial advice.
How is carbon sequestration measured? How are Australian Carbon Credit Units (ACCUs) calculated?
Trees and other parts of our environment (wetlands, soil) absorb carbon dioxide (CO2) from the atmosphere during the process of photosynthesis to create biomass. This process of obtaining carbon from the atmosphere and holding it in solid form is referred to as carbon sequestration.
One ACCU represents one tonne of carbon dioxide equivalent (CO2-e) greenhouse gas that would otherwise have been released into the atmosphere. The instructions and details on each carbon credit generating method, as administered by the Clean Energy Regulator through the ACCU Scheme, will guide the measurement and modelling required for a project type.
The Clean Energy Regulator issues ACCUs under the Carbon Credits (Carbon Farming Initiative) Act 2011. See the Clean Energy Regulator’s website for further information.
How might carbon contracts impact the value of my land?
Carbon farming contracts will be factored into land and agribusiness valuations using evidence from market transactions. The LRF supports work with the land valuation sector to better understand carbon farming and the benefits that it brings, as part of broader work on valuing natural capital.
How do I know if my land is suitable for carbon farming?
CSIRO provides a free online tool called LOOC-C that helps landholders to estimate the carbon potential of their properties for certain methods offered under the ACCU Scheme. For properties in Queensland, the tool also identifies the potential for generating different environmental co-benefits. This information can help land managers get a preliminary understanding of whether their property is suitable for a carbon farming project before seeking professional advice.
Land Restoration Fund projects
How does the Land Restoration Fund price ACCUs and co-benefits?
See ‘Pricing ACCUs with co-benefits’ on the Investment Rounds Report webpage.
Does a Land Restoration Fund contract transfer to new owners if a property is sold?
No.
LRF contracts do not automatically transfer. The LRF enters into a Project Investment Agreement (PIA) with the project applicant/proponent which may be different to a landholder.
The implications of selling a property would depend on whether the applicant/proponent who signed the PIA is the landholder. If the property is sold, the applicant/proponent would need to advise the LRF and ensure the project still meets the requirements of the Clean Energy Regulator.
How will Land Restoration Fund co-benefits work with the Australian Government Biodiversity Certificates / Nature Repair Market?
The Australian Government passed the Nature Repair Act 2023 which established a framework for a voluntary national Nature Repair Market. A biodiversity certificate is issued to projects that enhance or protect native biodiversity (by meeting legislated biodiversity integrity standards) but which do not need to generate ACCUs. The biodiversity certificate is tradable personal property; able to be owned and traded separately from land.
In contrast, LRF projects must generate:
- ACCUs by registering with the Clean Energy Regulator and following a verified carbon method, in addition to
- LRF co-benefits by completing activities and reporting as per the LRF Co-benefit Standard 2.1 MB).
The Australian Government is consulting the Queensland Government as part of its work to establish the Nature Repair Market and determine how the different schemes will interact.
Are Land Restoration Fund reporting requirements the same as the Clean Energy Regulator’s reporting requirements?
No. LRF projects are required to meet the different reporting requirements of both the LRF and the Australian Government’s ACCU Scheme.
LRF projects must undertake regular monitoring, reporting and auditing requirements to the standards set by:
- the Clean Energy Regulator for certification of ACCUs, and
- the LRF Co-Benefits Standard 2.1 MB) for verification of co-benefits. Some co-benefits may require third-party assurance, as described in the LRF Co-benefits Standard.
Will a change in State Government affect my Land Restoration Fund contract?
A LRF contract (known as a Project Investment Agreement) is between the project proponent and the Queensland Treasury Corporation as Trustee of the special purpose LRF Trust. The contract will contain the conditions under which the project could be terminated. The Project Investment Agreement template 687.7 KB) can be used to assist in seeking independent legal advice on undertaking a carbon farming project.
Other considerations
What are the tax implications for income generated by ACCUs?
At this time, carbon farming or ACCU income is not classed as agricultural or primary production income. It is recommended that landholders contemplating a carbon farming project access independent financial advice on the tax implications of undertaking a carbon farming project.
Guidance is available on the taxation of ACCUs from the Australian Taxation Office.
Do eligible interest-holders have the capacity to legally stop landholders from pursuing a carbon project?
An eligible interest-holder under the ACCU Scheme is a person or organisation that has a specific legal interest in the land on which a carbon project is being, or will be, conducted. For example, an eligible interest-holder includes a bank or mortgagee.
In some circumstances eligible interest-holders will not grant consent for a project to take place on land in which they have an interest. In these cases, the project may need to be varied or voluntarily revoked.
For more information, please read the Clean Energy Regulator’s webpage on Eligible Interest Holder Consent, which includes information on what happens if consent is not granted, or is delayed.