Discover the potential of carbon farming and soil carbon sequestration for enhanced fertility, farming resilience and profitability.

With emissions in the global spotlight, sequestering carbon in agricultural soils is seen as a solution. The words 'carbon farming' seem to be on everyone's lips. But more than an environmental obligation, carbon-rich soils are key to ongoing fertility and farming resilience. This explainer delves into the basics of soil carbon and soil carbon farming, so primary producers can learn how to harness new market opportunities and improve the productivity and profitability of their enterprises.

What is soil carbon?

We live on a carbon-based planet. Plants, animals, humans - all living things are made from it. Carbon is the main element in organic compounds and is essential to life. Thus, living, thriving soils are full of carbon.

So how does carbon get into soil? Plants use CO2 and sunlight when they photosynthesise, converting atmospheric carbon into roots, shoots and leaves. As plant matter decays, that carbon is delivered into the soil, where it feeds an abundant underground world of microorganisms and worms (also made up of carbon). These soil organisms, in turn, feed nutrients back to plants in a process called nutrient cycling. Mycorrhizal fungi (or fungi that live on and in relationship with living plants and plant roots) are particularly important in regulating the cycles of carbon in soil.

Healthy soil is crucial to life on Earth, and healthy soils need an abundance of carbon.

When functioning correctly, soil is a critical natural resource that underpins food production systems, stores and filters water, and transforms dead organisms into new life. Healthy soil is crucial to life on Earth, and healthy soils need an abundance of carbon.

The roles of organic carbon in the soil include:

  • Providing an energy source for microorganisms (which, in turn, make nutrients plant-available, increasing fertility and reducing the need for synthetic fertilisers).
  • Supporting soil structure by binding together soil particles into aggregates. This improves soil water retention (drought resilience) and prevents soil compaction.
  • Preventing the leaching of nutrients. Nutrients remain bound up in organic matter (specifically microorganisms) until they are required by plants.

When soils are depleted of organic carbon:

  • There is less organic matter to feed microorganisms causing reduced nutrient cycling, which means fewer nutrients being converted by microbes to plant-available forms.
  • This decrease in plant-available nutrients leads to lower yields of poorer quality.
  • Soil will have decreased water retention and increased compaction, which can contribute to poor drought and flood resilience, erosion and topsoil loss.

There is as much carbon on the planet today as there was millions of years ago; however, human activities have affected the distribution of carbon between the terrestrial, marine and atmospheric pools. It is estimated that 133 billion tonnes of carbon has been lost from the top two metres of global soils since the beginning of agricultural land use (Sanderman et al. 2017).

Much of this is due to practices that disturb the soil, such as ploughing, cultivation, stubble burning, annual cropping, overgrazing, monocropping and excessive use of synthetic chemicals. When these practices are employed, the soil's mycorrhizal fungal biomass is broken down, resulting in a predominance of bacteria in soil. While bacteria have an important role in soil health, they are far less efficient at metabolising and recycling carbon and can lose up to 60% of the organic matter they consume as atmospheric carbon (CO2). Therefore, for efficient carbon sequestration, a dominance of soil fungi and minimal soil disturbance is critical.

Why does it matter?

Apart from the significant benefits that organic carbon has on the fertility and resilience of arable land, there is a growing opportunity for producers to be rewarded for their efforts to sequester carbon in their soils. This is known as carbon farming. Carbon farming allows farmers to earn additional income by using practices that build carbon and improve farming productivity.

The carbon market

The carbon market refers to the production, buying and selling of carbon credits. In Australia, carbon credits are measured in Australian carbon credit units (ACCUs) which represent the avoidance or removal of one tonne of carbon dioxide equivalent (tCO2-e) greenhouse gas emissions (GHG). The value of ACCUs can fluctuate but typically sit between $25 and $35 per unit.

Australia's carbon credit scheme, the Emissions Reduction Fund (ERF), allows landholders to earn ACCUs by sequestering carbon in soil or vegetation or reducing the amount of CO2 that would ordinarily be emitted, such as methane from livestock (though this explainer focuses predominantly on sequestering carbon in soil). They can then sell these ACCUs to corporations, investors and governments or other entities who want to offset their carbon emissions.

Soil carbon farming

There are significant opportunities within the carbon market for most growers and graziers. If you're not sure whether a soil carbon project is appropriate for your enterprise, this questionnaire by the Clean Energy Regulator can help identify your eligibility. Agricultural systems including grazing, horticulture, cropping and mixed enterprises can qualify for soil carbon farming projects, so long as landholders follow the eligible practices of building soil carbon. (This explainer focuses on soil carbon sequestration on agricultural land. There are several other methods of undertaking a carbon project, each with approved eligible practices.)

When beginning a soil carbon project, landholders must decide on which eligible practice or practices they will be using to increase the stock of carbon in their soils. These management practices will need to be conducted or maintained for the duration of the project. The introduced practices must be new or different from any previous practices carried out on the land. For example, if a landholder already employs no-till practices, they cannot allocate no or low-till practices as their chosen practice.

The activities below are eligible management activities as outlined by the Emissions Reduction Fund:

  • Applying synthetic or non-synthetic nutrients to the land (from eligible sources) to address a material deficiency. For example, applying compost or manure.
  • Applying lime to remediate acid soils.
  • Applying gypsum to remediate sodic or magnesic soils.
  • Undertaking new irrigation.
  • Re-establishing or rejuvenating pastures by seeding or pasture cropping.
  • Re-establishing, and permanently maintaining, a pasture where there was previously no or limited pasture.
  • Altering the stocking rate, duration or intensity of grazing to promote ground cover and improve soil health.
  • Retaining stubble after a crop is harvested, rather than tilling or burning off stubble.
  • Converting from intensive tillage practices to reduced or no tillage practices.
  • Modifying landscape or landform features to remediate land. For example, practices implemented for erosion control, surface water management, drainage/flood control or alleviating soil compaction. Practices may include controlled traffic farming, deep ripping, water ponding or other means.
  • Using mechanical means to add or redistribute soil through the soil profile, for example, clay delving or clay spreading.
  • Using legume species in cropping or pasture systems.
  • Using cover crops to promote ground cover and improve soil health.

(Emissions Reduction Fund 2021)

After this, the carbon project can be registered and baseline testing conducted. Testing is then carried out at intervals of between six months and five years for the duration of the project. The Emissions Reduction Fund is then able to issue credits based on soil carbon gains achieved through the eligible practices.

The potential of diversified cash flow from a soil carbon project is an exciting prospect for many producers; however, additional income is simply the 'icing on the cake'. The tangible and direct benefits of building soil carbon (such as better drought resilience and soil fertility and lower reliance on inputs) have the capacity to increase the productivity and profitability of agricultural enterprises significantly.

For more information on how to plan, register, deliver and report on a soil carbon project read this step-by-step guide by the Clean Energy Regulator.


Emissions Reduction Fund (2021) 'Understanding your soil carbon project - Simple method guide',

Sanderman J, Hengl T and Fiske GJ (2017) 'Soil carbon debt of 12,000 years of human land use', Proceedings of the National Academy of Sciences, 114(36): 9575-9580, doi:10.1073/pnas.1706103114.