The Land Restoration Fund and Australia's carbon market
Australia’s carbon market
Carbon farming in Australia is regulated by the Australian Government. The Clean Energy Regulator administers schemes legislated by the Australian Government for measuring, managing, reducing or offsetting Australia's carbon emissions, including the Australian Carbon Credit Unit (ACCU) Scheme (previously the Emissions Reduction Fund).
The ACCU Scheme is a voluntary scheme that incentivises organisations and individuals to adopt new practices and technologies that reduce emissions and generate carbon credits. These credits are known as Australian Carbon Credit Units (ACCUs). The ACCU Scheme is enacted through the Carbon Credits (Carbon Farming Initiative) Act 2011 and associated regulations and rules.
A number of emissions reduction activities that comply with legislated rules known as ‘methods’ are eligible under the ACCU Scheme to earn ACCUs. Read more about carbon farming methods for the land sector including those eligible for LRF investment.
Land sector carbon farming methods either:
- sequester carbon (remove carbon dioxide from the atmosphere) by storing it in plants, soil or coastal ecosystems, or
- avoid the release of greenhouse gas emissions through better management of fire, livestock, and fertiliser use.
One ACCU is earned for each tonne of carbon dioxide equivalent (tCO2-e) sequestered or avoided by a project. ACCUs can be retired to offset emissions or sold to generate income, either to the Australian Government through a carbon abatement contract, or in the secondary (voluntary) market.
Carbon farming methods
Under the ACCU Scheme, eligible carbon farming methods either fall into two categories:
- sequester carbon (remove carbon dioxide from the atmosphere) by storing it in plants, soil or coastal ecosystems, or
- avoid the release of greenhouse gas emissions through better management of fire, livestock, and fertiliser use.
Each ACCU represents one tonne of carbon dioxide equivalent (tCO2-e) that has been sequestered or avoided. These ACCUs can be:
- retired to offset emissions
- sold to generate income, either to the Australian Government through a carbon abatement contract, or in the secondary (voluntary) market.
Administrator of carbon credits
The Clean Energy Regulator oversees the ACCU Scheme and issues Australian Carbon Credit Units (ACCUs) under the Carbon Credits (Carbon Farming Initiative) Act 2011.
| Compliance buyers | The compliance (regulatory) market is used by entities that by law must account for their carbon dioxide emissions. For example: Safeguard mechanism: an Australian Government legislative requirement on large emitters that exceed their emissions baseline to purchase ACCUs from eligible carbon farming projects equivalent to the level of carbon emissions they have emitted above their baseline. The ACCUs are then surrendered, which means they are cancelled in the Australian National Registry of Emissions Units (ANREU) and cannot be used again. |
|---|---|
| Voluntary buyers | The voluntary market allows any government or private entity to trade and/or surrender ACCUs to meet emission reduction commitments they place upon themselves. For example: ACCU Scheme: the Australian Government purchases ACCUs via carbon abatement contracts and surrenders them to offset its own emissions. Land Restoration Fund: when running an Investment Round, the LRF buys premium carbon credits from carbon farming projects that produce ACCUs plus demonstrated additional environmental, economic, social and First Nations co-benefits. Carbon neutral programs: retail offset programs, such as those offered by airlines, purchase and surrender ACCUs against the company’s carbon emissions. |
How does the Land Restoration Fund fit with the existing ACCU Scheme?
The Land Restoration Fund (LRF) complements the ACCU Scheme because it supports projects that deliver demonstrated environmental, socio-economic and/or First Nations outcomes – called co-benefits – in addition to sequestering or avoiding carbon emissions.
The LRF pays for these priority co-benefits in the overall sum offered to landholders.
As a result, the LRF may pay more for the ACCUs generated from carbon farming projects than the ACCU Scheme.
All LRF projects need to be registered with the Clean Energy Regulator and generate ACCUs.
All LRF participants must follow an ACCU Scheme method for their carbon farming project. The methods explain how to carry out a project and measure the resulting reductions in emissions. The list of ACCU Scheme methods eligible for LRF investment will be specific to each LRF investment round. Read more about carbon farming methods.
Check your eligibility to register with the ACCU Scheme using the Interactive ACCU Scheme Eligibility Questionnaire.
| Land Restoration Fund | ACCU Scheme |
|---|---|---|
Purchases ACCUs
| YES | YES |
Pays for co-benefits in addition to carbon
| YES | NO |
Projects must register with the Clean Energy Regulator
| YES | YES |
Purchasing method | Contract for ACCUs and co-benefits through dedicated investment rounds | Contract for ACCUs through carbon abatement contracts |
Assurance method | See LRF Co-Benefits Standard and ACCU Scheme project reporting requirements |
Converting carbon to income
Domestic and international carbon markets are relatively new, and prices vary between markets and buyers. In Australia, there are several buyers of ACCUs in the marketplace including government and private investors. ACCUs are generally only tradable in Australia, but there is potential that as international markets grow, there will be arrangements for trade in ACCUs to occur on a global scale. ACCUs can generate an additional source of income for landholders, or they can be retained and surrendered to offset farm emissions.
The LRF contracts with landholders to purchase “premium” carbon credits. These are made up of ACCUs plus the co-benefits that are aligned with Queensland Government objectives set out in the Priority Investment Plan 1.7 MB). The price per ACCU (including co-benefits) takes into consideration the cost of generating those ACCUs plus co-benefits, and the benefits to the state that the project will deliver. Read more about how the LRF prices co-benefits, along with the ACCUs generated by a project on the Investments Report page.
Other environmental markets
Carbon is one commodity within a broader set of environmental markets that pay landholders for delivering measurable land management outcomes alongside normal farming operations. The carbon market is the most established example, but markets for increased biodiversity, improved water quality and broader ecosystem health are also emerging. Landholders can use the PLANR tool to help plan carbon and biodiversity projects or access environmental markets.
Most environmental markets follow a similar process. Landholders change land management practices, for example by improving groundcover, retaining native vegetation or reducing runoff, with the resulting environmental outcomes being measured and verified using an approved method. Once verified, the project can generate credits, which may be sold to government or private buyers, or retired to offset on-farm environmental goals.
Environmental markets are not one-size-fits-all. Participation can involve upfront costs, ongoing management and monitoring requirements, and long-term commitments, often over 10 to 25 years or more.
As standards, methods and buyer demand evolve, environmental markets are expected to grow and mature over time, creating new opportunities for landholders who can demonstrate credible, verified land management outcomes.
For more information: Environmental markets for graziers: Key markets, product opportunities and risks.