Slippery soil carbon credits given unscientific cap

By Patrick Francis

In the Clean Energy Regulator’s 2026  June Quarter report contains details of a review of the soil carbon methods by the Emissions Reduction Assurance Committee’s (ERAC) . Seems some soil carbon project proposals have been claiming annual abatement exceeding what scientific research deems possible. “After reviewing initial results from some projects, ERAC concluded the method needs to be strengthened to meet the ‘Conservative’ standard. This was because reported soil organic carbon accrual rates from some projects exceeded that supported by peer-reviewed scientific literature.”

As a result DEECCW made the recommendation to “Immediately cap credited abatement to 3 tonnes carbon per hectare per year (3tC/ha/yr) after method prescribed discounts” which amount to 1 1tC/ha/yr. So maximum cap for a soil carbon project is 4tC/ha/yr.

The Department further states that “The cap is cumulative, as project time increases, the total carbon eligible to be credited will also increase. The cap functions as an absolute creditable abatement limit of 75 t C/ha (3 t C/ha/yr over 25 years) for projects with a 25-year permanence period. Projects with 100‑year permanence periods (7 out of 817 current projects) are not subject to the 20% permanence discount and therefore the calculations result in a higher crediting cap of 3.8 t C/ha/yr (equivalent to 95 t C/ha over the project crediting period)”.

Figure 1 A: ACCUs from vegetation and waste management projects dominate annual issuance reaching approximately 21 million in 2025. Source: Clean Energy Regulator  June 2026 Quarterly  Carbon Market Report (QCMR). 

Figure 1B: Farm management  to increase soil carbon has become a dominant player in ACCU projects but is a relatively small carbon credit contributor compared to revegetation methods and has questions surrounding its credibility over net increase over 25 years after prescribed discounts amount to around 25% are removed. Source: Clean Energy Regulator  June 2026 Quarterly  Carbon Market Report (QCMR). 

DEECCW seems to base its decision on the soil carbon cap on two research papers which it references:

• A 2001 world wide study of 115 soil carbon studies  wide by Conant et al which concluded that improved grassland management practices such as applying fertilizer, sowing pasture legumes, converting cropping land and native pasture to improved  pasture species, could increase soil carbon sequestration rates  from between 0.11 tonnes/ha /yr to 3.04 tonnes/ha/yr with a mean annual increase of 0.54 tonnes/ha/yr. Importantly Conant et al notes “rates of carbon sequestration …were highly influenced by (soil) biome type and climate.
• A 2021 research paper by Badgery et al based on results from 10 central west New South Wales cropping farms where management introduced either direct drilling crops, convert cropping land to improved pastures and both treatments with and without organic fertilizers.  Conversion to pasture compared to direct drilling produced a SOC sequestration rate of 1.2tC/ha/yr versus 0.28tC/ha/yr; while the addition of organic fertilisers achieved 1.14tC/ha/yr on crop land converted to pasture and 0.78tC/ha/yr on direct drill crops. The authors noted “The results require careful interpretation as rates of sequestration are likely to be lower in the longer term than initial rates of change seen in this pilot (five years), and the pilot intentionally selected sites with initially low SOC, which ensured a greater opportunity to sequester SOC”.

The problem with the cap set at 4tC/ha/yr is that no Australian scientific research quotes soil carbon sequestration rate anywhere close to that value. What the scientists keep stating is that soil carbon abatement is highly variable even within a paddock and depends on constantly varying factors outside the farmers management control,  seasonal rainfall, temperature, soil type and soil biome. Management strategies have impacts but are minor compared to nature’s influence on the carbon cycle. In contrast the Clean Energy Regulator and DCCEEW make no reference to the carbon cycle opting instead to base project sequestration on an initial measurement then using a formular based on models to predict carbon abatement in the soil which are converted in ACCUs.

Despite soil carbon abatement calculations having built-in uncertainty and prescribed discounts (around 25%)  the available science does not support achieving anywhere near the proposed annual cap. Setting a soil carbon baseline for a project is open to manipulation with commencement starting in a series of dry years coinciding with low SOC, and followup audits taken in wet years. There is also scope to take advantage of natural SOC variation across a property or even within a paddock.

The Clean Energy Regulator and DCCEEW seem to be ignoring key characteristics of soil carbon dynamics and flows treating its measurement like stable minerals such as  iron ore, coal and other minerals with time fixed composition based on source.

Firstly, soil carbon is part of a cycle which depending on a host of complex ecosystem interactions builds and losses carbon on a continuing basis, in other words soil carbon is a slippery element. How much carbon changes daily depends on seasonal conditions which are highly variable across Australia’s agricultural and pastoral zone where projects are undertaken.

Figure: A carbon cycle showing impact on the soil carbon pool. Nothing in the cycle is static.

Figure: Carbon Cycle in agriculture. The rate of microbial decomposition of soil carbon particulate and humus fractions varies with seasonal rainfall distribution and temperature. Source: Dr Richard Eckard PICC University of Melbourne webinar 2023.

Figure: According to FAO (Food and Agriculture Organization)  plants return about half their annual carbon generation to the atmosphere through respiration, while most carbon entering the soil is lost through microbial respiration with enormous variation across soil type, climate and management.

Table: Soil carbon projects calculation formulas cannot account for the huge variability of microorganisms present due  to impacts of temperature, rainfall, plant growth and soil types to provide a sufficient degree of certainty that measured SOC levels have high permanence credibility and equivalence to be used as an offset against fossil fuel CO2 emissions.

Figure: NSW DPI refers to a hierarchy of influences on soil organic carbon change, with the most influential impact being seasonal conditions (rainfall) followed by soil type and the least effective being management. Source: Dr Aaron Simmons, CAMBI Project results webinar Feb 2024.

Secondly, seasonal rainfall across Australia is highly variable with global influences such as ENSO and IOD events having significant impacts on rainfall received.  Rainfall impacts plant growth, particulate soil organic carbon, soil food web populations and respiration of soil carbon. Booms and busts are continuous making formulas on which to calculate soil organic carbon changes over 25 years or 100 years at best a guess. Using the calculated soil carbon ACCU for carbon trading based on it being equivalent to one tonne of CO2 emissions from burning fossil fuels undermines the credibility of the government’s emissions reduction policies.

Figure: Impact of ENSO (top) and IOD (lower) on rainfall across Australia. Rainfall is the single most influential factor determining SOC increase or decrease. Establishing the base line for a soil carbon project during El Nino and positive IOD events is likely to ensure greater ACCU generation if the first audit is undertaken during a La Nina or negative IOD event.

Figure: What seasonal conditions are most suitable for establishing a soil carbon project?

Because Australia is dominated by relatively low rainfall agricultural and pastoral zone, districts quickly change between boom and bust conditions with a corresponding impact on soil organic carbon levels.

Figure: In low rainfall cropping districts SOC flux is greater and plant production is highly seasonal compared with high rainfall districts where soil organic carbon is likely to be in equilibrium under long-term perennial pasture management.

Figure: The ability of most of Australia agricultural and pastoral landscapes to retain added carbon is low.

Figure: Case study farm showing changes in SOC levels in different paddocks over two years. Starting a soil carbon project in 2022 on this farm would be an advantage in terms of ACCU generation.

Thirdly, the Clean Energy Regulator and DCCEEW seem to ignore the available scientific evidence which demonstrates that management to increase SOC has a wide range of relatively low increases, and is significantly influenced by rainfall zone as well as change in carbon project management activity in particular shifting from cropping to livestock grazing pastures.

Figure: No Australian farming zone has soil carbon sequestration approaching any where near the cap being considered by DCCEEW in its soil carbon review.

Figure: Australian soil science and world soil science research suggests soil carbon sequestration rates across different farm land cover and under different management  is highly variable and mostly below 1 tonne carbon per hectare per year, suggesting the CER’s soil carbon cap of 4 t/ha/yr is misleading optimism.

Table: WA research demonstrates how SOC stocks can be altered by management change but the impacts are much lower than the CER cap and accumulation declines with time.

Figure:  Irrespective of farming method used, SOC can increase for five year then decrease for the next five years as this NSW DPI research shows. On these paddocks irrespective of management SOC stocks increased after five years – if ACCUs were sold the farm business would be a winner. By year 10 the increased SOC stocks has disappeared, the farm business would need to pay back the ACCUs generated. The same cycle is likely to continue to year 25, will that year be an ACCU winner or losser? Source: Dr Aaron Simmons, CAMBI Project results webinar Feb 2024.

Figure: In high rainfall zone perennial pasture zones soil carbon is often in long-term equilibrium with existing management embracing so-called new strategies essential to qualify for a soil carbon project.

Figure: Soil carbon project advocates provide optimistic outlooks for soil carbon ACCU generation across Australia’s rainfall and soil type zones  without reference to the impact of seasonal conditions and soil types. Note the opportunity for ACCU generation in this analysis across the cropping zone where conversion to pasture will increase and loose soil carbon depending on seasonal rainfall. The projections for soil carbon increase in high rainfall pasture zones is highly speculative as most livestock businesses would be implementing management practices needed for soil carbon increase or more likely its maintenance. Soil carbon levels reach equilibrium under long-term best practice management.

High cap consequences

Setting the soil carbon cap too high at 4t/ha/yr may have serious financial implications if that potential is not achieved. The  NSW DPI CAMBI Project soil carbon ACCU generation outcomes across three different farming methods on 11 trail sites highlight the financial risk associated with SOC variability over 10 years. After five years the project farms regardless of management system generated a positive return from trading ACCUs, but in the second period soil organic carbon dropped below the year one baseline on two of the farms.

Table:. In the CAMBI  Project what looked like be a income generation from ACCU trading at the end of five years (Period 1) became an ACCU loss compared with the baseline at year 10 (Period 2) for three of the land management treatments. Source: Dr Aaron Simmons, CAMBI Project results webinar Feb 2024.

According to CAMI Project researcher Aaron Simmons long-term SOC abatement by implementing management changes is not guaranteed because SOC can be lost due to site specific factors such as soil type and seasonal conditions regardless of the new practices adopted to qualify for a soil carbon project. He said SOC is highly variable across paddocks and it is difficult to detect net changes. Predictions of SOC change due to implementing new management practices were inaccurate.

Table: CAMBI Project predictions of SOC change due to new management practices proved to be inaccurate and misleading putting a question mark on the credibility of soil carbon offsets and trading. Source: Dr Aaron Simmons, CAMBI Project results webinar Feb 2024.

Simmons warned that the Clean Energy Regulator can force relinquishment of ACCUs which can mean the owner has to purchase ACCUs to make up for the shortfall at the end of project period. As well soil carbon projects have costs associated with engaging a project broker, auditing, legal fees and costs associated with changed management which are born by project owner even if there is no SOC increase.

If a soil science evidence based SOC cap of net one tonne CO2e/ha/yr was in place, the ACCU revenue expectation would be lower and if not achieved the financial consequences would be minimised.