15 August 2023

How will carbon credits reshape Australian agriculture and sustainable farming practices?

Every sector is experiencing rapid change in compliance and targets, for example, carbon credits. In considering specifically agriculture, carbon credits are playing a significant role in shaping agricultural practices and sustainability efforts in Australia. Carbon credits are a market-based mechanism designed to incentivise greenhouse gas emissions reduction and carbon sequestration. They provide an alternative revenue source and financial incentives to landholders and farmers who adopt practices that reduce or offset carbon emissions, contributing to mitigating climate change. In Australian agriculture, carbon credits are impacting the industry in several ways.

Carbon farming initiatives:

The Australian government has implemented programs like the Emissions Reduction Fund (ERF) and the previous Carbon Farming Initiative (CFI) which was integrated with the ERF, to encourage farmers to adopt carbon-friendly practices. These initiatives and future programs enable farmers to generate carbon credits by implementing activities such as reforestation, improving soil carbon levels, and reducing livestock emissions.

Land management practices:

Carbon credits incentivise farmers to implement sustainable land management practices that sequester carbon and reduce greenhouse gas emissions. This includes activities like reforestation, afforestation, regenerative agriculture, rotational grazing, and the use of cover crops. By implementing these practices, farmers can earn carbon credits, which can be sold in the market.

Financial benefits:

Carbon credits provide an additional revenue stream for farmers. By generating carbon credits through sustainable farming practices, farmers can sell these credits to industries or organisations seeking to offset their own emissions. This can create a new income stream and contribute to the financial viability of agricultural operations.

Climate change adaptation:

The focus on carbon credits in agriculture encourages farmers to adapt to climate change by adopting practices that enhance resilience. For instance, implementing practices that improve soil health and water management can help farmers better cope with extreme weather events, such as droughts and floods, which are becoming more frequent due to climate change.

Market access and branding:

The demand for sustainably produced agricultural products is growing globally. Carbon credits provide a means for farmers to demonstrate their commitment to environmental stewardship and sustainable production. By participating in carbon credit programs, farmers can enhance their market access and differentiate their products by showcasing their environmental credentials.

There are several government programs available for primary producers looking to act to reduce emissions or transition into the carbon market. Victoria has the On-Farm Emissions Action Plan Pilot as part of the State Government’s commitment to provide practical information, tools, and services to support farmers to understand and reduce emissions. The Pilot will work with up to 250 farm businesses across the state to estimate their on-farm emissions profile and identify potential actions to manage and reduce emissions while maintaining productivity and profitability. For farmers in Tasmania, the Carbon Farming Advice Pilot Rebate Program provides primary producers with rebates of up to $10,000 for advice sought about the​​ costs and benefits of accessing carbon credits, auditing requirements, and on-ground actions that are eligible for carbon credits.

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