Carbon Credits - Considerations and Benefits
Considerations before entering into soil carbon credits
There are many aspects you need to consider before committing to a soil carbon project to earn carbon credit units. Every enterprise and location is different and what has worked for others may not work for you. Do your research before committing and talk to people who have nothing to gain financially from your involvement in trading soil carbon credits.
Baseline soil carbon
It can be difficult to improve soil carbon where it is already high. Understanding soil carbon on your enterprise is important to understanding the potential to earn carbon credit units.
Soil carbon permanence
Not all soil carbon is created equally. Its stability can be dependent on plant residues, particulate organic carbon, humus, and recalcitrant/inert carbon. For long-term carbon storage inert carbon forms are required. However, inert soil carbon does little for soil fertility and farm productivity. In some cases the productivity benefits from improved soil fertility of short-term soil carbon may result in greater financial returns when compared with the income generated from trading soil carbon credits from long-term storage of inert carbon.
Land use change
Long-term soil carbon storage is mainly driven by rainfall and soil fertility. In the absence of land-use change storage of long-term soil carbon might not be possible.
Climate variability
Soil carbon projects need to ensure long-term carbon storage. Extreme weather events such as drought or bushfire can cause carbon stores to fall and some schemes may require carbon credit units to be paid back if this happens.
Land value
A soil carbon credits project could be perceived poorly by potential land buyers, particularly if potential buyers don’t wish to trade soil carbon credits. This could result in a decrease in land value.
Land management practice
Not all management practices that reduce emission are officially recognised by the Australian Government’s Emissions Reduction Fund. The management practices that make sense for you may not be eligible.
Cost of activities
The activities needed to reduce emissions or store soil carbon will likely come at a cost. There are also costs to implement a soil carbon project for the purpose of selling carbon credits. Whether the income generated from soil carbon credits will offset these costs will depend on your individual circumstances.
Carbon neutral
There is growing industry and market pressure for enterprises to be carbon neutral. If soil carbon credits are sold they cannot be used to offset an enterprises own emissions which may impact the opportunity to be carbon neutral.
Loss of productive land
Generation of soil carbon credits will likely require some land-use and land management practice change. This could include the reduction of productive land to environmental or carbon plantings. Whether the income generated from soil carbon credits will offset this loss of productive land and additional management costs will depend on your individual circumstances.
Benefits to undertaking a soil carbon credit project
Under the right circumstances there can be many benefits to undertaking a soil carbon credit project. Many actions required to earn soil carbon credits may have other benefits for your enterprise:
- Income diversification. Selling carbon credits provides an alternative income.
- Improved crop or livestock productivity. Improving soil carbon can increase water holding capacity, provide drought resilience, improve soil health and nutrient availability.
- Environmental plantings. The addition of vegetation to a property has numerous benefits such as helping to conserve biodiversity, improve water quality and reduce salinity. Trees and shrubs can also provide livestock shade and shelter which can improve productivity and ultimately profitability and assist a property in meeting improved animal welfare standards.