About the Land Restoration Fund

What’s the difference between the ERF and LRF?

All carbon farming projects generate co-benefits. The LRF differs from the ERF because it values and then prices in those co-benefits to the price it will offer to land managers.

As a result, the LRF pays more for carbon farming projects than the ERF in areas of priority for Queensland. These areas of priority are determined by location and desired outcomes.

How much is the government investing and how is it being rolled out?

The Land Restoration Fund is a $500 million investment by the Queensland Government.

In 2020, the Queensland Government is investing up to $100 million for carbon farming projects with co-benefits that meet one or more of the three priority areas identified by the Priority Investment Plan.

The 2020 Investment Round opened on 28 January 2020 and had two intakes, with the second intake closing on 29 April 2020.

Future application intakes and funding rounds will be announced on this website and via the Land Restoration Fund newsletter.

Will carbon farming negatively impact agricultural production?

Carbon farming projects and agricultural production are frequently complementary land management activities.

Carbon farming projects involve a wide range of land management and agricultural activities depending on the carbon method being used.

Many carbon farming methods are specifically for agricultural activities such as plantation forestry, livestock management, or cotton production. Under certain vegetation methods, land managers can graze in a carbon project area.

For all Land Restoration Fund 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 and supplement farming business income. For example, carbon farming projects may provide and additional income stream from land that may be marginal or non-viable for other farming purposes. As it is a business and commercial decision to undertake a carbon farming project, all potential applicants are strongly encouraged to seek independent financial advice.

How will the Land Restoration Fund benefit Queensland communities?

Active, on-ground management is crucial to maintain healthy landscapes and ensure the prosperity of regional communities. It also requires people to do it – which means jobs for regional communities. The new work and job opportunities through carbon farming are similar to existing industries in Queensland’s regional communities – managing the land, managing cattle, cropping, and forestry. In other words, carbon farming will help communities survive and thrive and maintain their connections to the land.

How will the Land Restoration Fund help Queensland land holders?

Queensland farmers are some of the best in the world, and they are doing it tough on many fronts. They’re also on the frontline when it comes to climate change.

Our farmers are fighting fires, floods and prolonged drought conditions and adjusting to generational change. Carbon farming offers farmers a tangible way to create a better future for themselves and their families.

The Land Restoration Fund will empower farmers with the support needed to generate additional, regular and diverse income streams and protect their business in tough times, through carbon farming projects.

What jobs will carbon farming create?

Carbon farming will allow people to keep jobs and/or stay working on properties that might not have been viable, without the additional income stream generated from carbon farming.

The jobs associated with carbon farming include:

• labour such as tree planting and fencing to keep cattle out of creeks and rivers
• suppliers of goods and services like fencing, irrigation and watering infrastructure, pest and weed management and fire management
• new innovation enterprises like drone services and IT infrastructure to monitor and report on project outcomes
• carbon, land management and financial advisory services
• grazing land and cattle management
• specialist services such as soil carbon measuring, water quality monitoring, and ecological surveys
• nurseries and seed collection
• carbon project developers and advisory services
• research and science such as on-the-ground research and monitoring services.

How will the Land Restoration Fund help First Nations peoples?

The Queensland Government’s Carbon Plus Fund was established in 2016 and supported Aboriginal Carbon Fund (AbCF) to support and grow Aboriginal and Torres Strait Islander peoples’ participation in carbon markets.

The Land Restoration Fund builds on this work.

Using knowledge passed down from generation to generation, Queensland’s First Nations peoples are combining Indigenous land management knowledge and science with modern technology, to create carbon offsets and new economic opportunities.

Carbon farming provides opportunities for First Nations peoples to work on Country and fulfil their desire to look after it for future generations. Income from carbon farming can support Indigenous land managers to invest in other ventures that benefit their communities.

What is the value of an Australian Carbon Credit Unit (ACCU)?

Carbon markets both domestically and internationally are relatively new, which means that prices vary significantly from market to market and buyer to buyer. In Australia there are a number of buyers of ACCUs in the marketplace including government and private investors. The motivation for buying ACCUs will range from offsetting emissions to achieving a defined emissions target to investing for future resale. Therefore, the price of ACCUs is established by the market.

For the project owner, the cost of producing an ACCU will affect the commercial outcomes. International and local assessments indicate that the lowest price abatement is rapidly being exhausted while demand remains high and is expected to continue to rise once the Paris Agreement commences.

Do all ACCUs generated by the project have to be returned to the Queensland Government?

No, the applicant will propose how many ACCUs they wish to sell to the Land Restoration Fund. This may be all or a portion of the ACCUs generated by the project. Any remaining ACCUs may be sold to the Federal Government under the ERF.

What are the tax implications for income generated by ACCUs?

There are tax implications associated with the income generated by ACCUs. It is recommended that land managers contemplating a carbon farming project access independent financial advice on the tax implications of undertaking a carbon farming project. At this time, carbon farming or ACCU income is not classed as agricultural or primary production income. This issue is known in the industry. The Carbon Market Institute, a peak body for industry and carbon service providers, is advocating to have the Australian Government review its position.

How will 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 The Land Restoration Fund and others such as the Carbon Market Institute will work with the land valuation sector to better understand carbon farming and the benefits that it brings, particularly as part of broader work on improving how natural capital is valued.

When would I get paid for ACCUS and co-benefits?

Land managers will be paid on delivery of the ACCUs to Land Restoration Fund in line with the terms of the LRF Project Investment Agreement (contract).

There are two main parts to payments under an LRF Project Investment Agreement:

1. Payment on ACCU delivery: Clean Energy Regulator credits ACCUs based on the project reports submitted. This means that the LRF will pay for the ACCUs following evidence that the ACCUs have been issued or credited by the Clean Energy Regulator.
2. Annual co-benefit payments: Co-benefits are paid annually over the term of the project with verification of co-benefit delivery via annual reports.

Additionally, successful applications can seek a payment of up to 10% of the value of the contract following registration of the project with the Clean Energy Regulator. This is a pre-payment designed to assist with the set up costs of the project and will be recouped against the future supply of ACCUs and co-benefits.

What if your project falls short of meeting the carbon abatement or co-benefits required under the contract?

Under the LRF’s Project Investment Agreement there are provisions to deal with projects that do not meet their carbon abatement or co-benefit commitments. Project proponents should consider the risk of non-delivery in how many ACCUs they offer to sell to the LRF. For example, project proponents may wish to provide for a 'risk buffer' or percentage of credits that they generate but hold back to manage risk of reduced supply.

What is the length a contract and how is it different to the project length and permanence term?

The LRF is offering contracts of up to 15 years for sequestration projects and up to seven years for emissions avoidance projects. Applicants will need to consider and decide on what contract term will best suit their project. In making this decision, applicants need to be familiar with the rules established by the methods for creating ACCU including permanence requirements, crediting periods, and rate of ACCU generation particularly from vegetation projects.

Permanence refers to the period that the Clean Energy Regulator is confident that the carbon has been removed from the atmosphere.

Crediting period refers to the amount of time a project can generate ACCUs. Emissions avoidance projects have a crediting period of seven years. Sequestration projects have a crediting period of 25 years, regardless of the permanence (except in the case of avoided deforestation projects).

More information on permanence and crediting periods is available from the Clean Energy Regulator website.

What happens when my contract ends?

Contract periods frequently differ from the two timeframes that relate to carbon farming projects, that is, crediting periods and permanence periods.

A contract period is the time agreed to supply credits for purchase. The Land Restoration Fund is offering contracts up to 15 years.

A crediting period is the time over which a project can generate credits. Emission avoidance projects have a crediting period of seven years. Sequestration (carbon storage) projects have a crediting period of 25 years.

This means that after a Land Restoration Fund contract has ended, and the project involves sequestration activities, the project will still be able to generate credits. Land managers can then investigate other opportunities for selling those credits including entering into another contract or selling on the spot market.

Permanence periods apply only to sequestration (carbon storage) projects and refer to the period time that the Clean Energy Regulator has confidence that the vegetation or soil has permanently removed the carbon from the atmosphere. There are two options for permanence periods: 25 or 100 years.

The Clean Energy Regulator provides detailed information on permanence and crediting periods.

Will a change in state Government affect my Land Restoration Fund contract?

A Land Restoration Fund contract will be with a special purpose Queensland Treasury Corporation Trust (the Land Restoration Fund Trust) and the Project Investment Agreement template (PDF, 1.1 MB) is available online. The agreement will contain the conditions under which the contract could be terminated. The Project Investment Agreement template can be used to assist in seeking independent legal advice on undertaking a carbon farming project.