Australia: Draft CFI soil carbon sequestration methodology released

Key Points:

The draft methodology documents for Sequestering Carbon in Soils in Grazing Systems are open for public consultation until 6 May 2014.

Farmers have new opportunities to benefit from the Australian Government's Carbon Farming Initiative (CFI), and, in turn, may have opportunities to benefit from the Government's Direct Action plan, with the release of a new CFI methodology for sequestering carbon in soils.

The Government proposed the use of carbon sequestration in soils when in opposition in the lead-up to the 2013 Federal Election, and it also signalled that its Direct Action plan for reducing carbon emissions (as an alternative to the existing Carbon Pricing Mechanism (CPM)) would use the CFI architecture as a legislative foundation.

Now the Government has added the sequestration of carbon in soils to the list of activities which are eligible for generation of Australian carbon credit units (ACCUs) under the CFI (known as the "Positive List"), and on 31 March it released for public comment the draft methodology documents for Sequestering Carbon in Soils in Grazing Systems. The draft methodology documents are open for public consultation until 6 May 2014.

Recap on the CFI

The CFI is a Federal Government initiative to enable land sector participants to generate revenue through the reduction of carbon emissions (via sequestration or emissions avoidance), by undertaking projects in accordance with approved project methodologies. Projects which meet the CFI criteria and are registered under the CFI, and demonstrate carbon emission reductions, are awarded a number of ACCUs which is commensurate with the extent of emissions reduction.

These ACCUs can be sold to third parties, including (in some cases) persons who have a CPM liability and want to use the ACCUs to offset that liability, or (in all cases) buyers in the voluntary carbon markets who want to offset carbon emissions. The CFI is administered by the Clean Energy Regulator (CER).

The CFI has been operating for over two years and, in this time, 22 methodologies have been approved and over 100 projects registered. Approved methodologies include increasing environmental plantings and farm forestry, reducing emissions from savannah burning, reducing methane emissions from piggeries and dairies and reducing landfill gas emissions.

One of the comments made about the implementation of the CFI to date is that rural landholders have had limited involvement. Most of the ACCUs which have been issued so far are for emissions avoidance at landfill operations.

CFI and Direct Action

The release of the draft soil carbon methodology is in line with the Government's commitment to increase the scope and application of the CFI by adding new methodologies to the scheme in preparation for the commencement of the Emissions Reduction Fund (ERF), which is the centrepiece of the Government's Direct Action plan. The Government has said it will release draft legislation for the ERF this month, and it proposes to have the legislation passed and the ERF commence operation on 1 July 2014. The Government expects the new soil carbon methodology to be approved and operational by this time.

A focus of the Government's Direct Action plan is to meet Australia's international greenhouse gas emission reduction commitments through the expansion and development of the CFI. The ERF is anticipated to fund a reverse auction of ACCUs which project proponents expect to generate from approved CFI projects.

The Government's intention to expand the number of approved methodologies under the CFI, such as soil carbon sequestration and reducing livestock emissions, will bring increased opportunity for land managers and agribusiness to generate revenue through the creation and trading of ACCUs.

Sequestering soil carbon

Soil carbon sequestration is a process in which CO2 is removed from the atmosphere and stored in the soil carbon pool. This process is primarily mediated by plants through photosynthesis, with carbon stored in the form of soil organic carbon (SOC). Restoring the levels of SOC in soil can be achieved, for example, through management of grazing systems, crop rotation, and low or no use of fertilisers. Aside from producing emission reductions, it's anticipated that sequestering soil carbon will have ancillary benefits of building farm resilience to drought and assisting with irrigation and erosion.

The inclusion of the new soil carbon methodology on the Positive List indicates that it has met the additionality test of the Carbon Credits (Carbon Farming Initiative) Act 2011 (CFI Act). This means that the approved land management actions are not "common practice" in the management of grazing systems and have been found to increase the amount of carbon stored in the soil.

Critics argue that it is difficult to achieve increased soil carbon stocks on a permanent basis. The Government has partially addressed this concern by incorporating a shortened period of permanence, from 100 to 25 years, to accommodate for projects that struggle to meet the 100 year permanence threshold. This shortened level of permanence will be reflected in the number of ACCUs that are issued for abatements achieved under the soil carbon methodology.

Proposed methodology

The draft methodology outlines the eligibility and land management requirements for soil carbon sequestration projects.

To be eligible as a project under the new soil carbon methodology, the project area must either:

  • have been under permanent pasture for a period of five years prior to the project start date; or
  • convert to permanent pasture as part of the project management actions.

The Project Area must also remain as permanent pasture for the duration of the project.

Approved land management actions may include, for example:

  • converting cropland to pasture;
  • undertaking pasture cropping; and
  • changing the pasture species mix or grazing patterns.

Several types of land management actions are excluded from the methodology, such as:

  • The permanent de-stocking of grazing systems;
  • Tillage (other than "eligible tillage");
  • Importing or applying crop residue, hay, straw or plant material (other than compost) in the project area in specified situations; and
  • Conversion of forest to pasture of other removal of woody vegetation from within the project area.

The draft methodology documents indicate that project proponents would need to measure changes in soil carbon levels to demonstrate sufficient carbon capture to justify the issue of ACCUs.

Next steps

After the period of public consultation has closed, the Department of Environment will resubmit its proposed methodology for assessment by the Domestic Offsets Integrity Committee. If it approves the methodology, it will be referred for consideration by the Minister for the Environment. If the Minister approves the methodology, it will be available for use by projects seeking to generate ACCUs.

The commencement of the ERF depends not only on the Australian Senate passing legislation to establish the ERF, but also legislation repealing the CPM. It is not clear when the Government will have the necessary support in the Senate to achieve this. In the meantime, the CFI will continue to operate and derive support from the CPM, but, given the current legislative uncertainty, it is unlikely projects will progress at this stage.

Consequently, all eyes are on the release of the draft ERF legislation and the accompanying Direct Action White Paper, which are due this month.

You might also be interested in...

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.