Australian farmers are starting to earn carbon credits from extra plant material buried in their paddocks; it’s called soil carbon.

The Clean Energy Regulator has issued 250,000 Australian Carbon Credit Units (ACCUs), worth about $7.5 million, to six soil carbon projects, and there are another 500 projects around the country, where aggregators are helping farmers increase the carbon content of their dirt.

So there’s plenty more ACCUs where they came from.

The farmers who get the credits can either sell them for cash or hang on to them, to offset the methane emissions from their cattle.

A lot of them are going for the short-term cash, but it’s a trap: Coles and Woolworths, and other food retailers, have committed themselves to being net zero by 2050, which means they will soon be demanding their suppliers are net zero as well.

Farmers who take the quick cash from selling their credits may end up having to live off that money, because they won’t be able to sell their meat.

But should they be getting ACCUs in the first place?

After all, improving the carbon content of soil increases the yield and most decent farmers do it anyway, or at least they should, unless they’re grazing cattle in semi-desert areas and can’t – and even then improving the soil will help grow more fodder.

Farmer’s revelation

A Dungog cattle farmer named John Monaghan, who picked up 2110 soil carbon ACCUs this month, let the cat out of the bag when he told the news magazine, Beef Central, that his project was an opportunity to support the grazing practices he was already planning to implement.

Carbon sequestration, whether from extra biomass in the soil or more trees and bushes above ground, must be additional and permanent, otherwise it simply results in higher emissions, since the offsets don’t offset.

There are two fundamental problems with soil carbon. First, farmers should do it anyway and probably will; and second, as much as 90 per cent of any extra biomass in soil results from rainfall, not the 13 measures prescribed in the legislation. When there’s a drought, it simply goes away.

The other problem, more political than scientific, is that the Labor government is using the system and legislation put in place in 2021 by then energy minister Angus Taylor, which doesn’t exactly inspire confidence in its integrity.

But the government, and current Climate Change Minister Chris Bowen, have a bigger problem – most, if not all, of the big emitters caught in the safeguard mechanism will need to buy ACCUs to meet their obligation to reduce or offset their emissions by 4.9 per cent a year, at least for a while, but since the $75 cap on the price will probably limit supply there may not be enough to go around.

The pressure on the regulator to issue ACCUs is immense, but after speaking at length this week to the people at the Clean Energy Regulator in charge of issuing them, it’s clear they are not pushovers and follow the rules diligently, even if they were written under Angus Taylor.

They apply a series of discounts when issuing credits for soil carbon, including 20 per cent off for permanence, another 5 per cent for “risk of reversal” and they keep 25 per cent from the first sampling round until the next samples are taken.

Testing measures

The soil samples must be taken by independent samplers and the carbon content of them measured in certified labs. After the first baseline is established, samples have to be taken every one to five years to measure extra carbon (biomass). And to get any ACCUs, the landholder must have done one or more of the 13 measures to prove that it hasn’t just been caused by rainfall, and luck.

It may not be possible for such stores to be truly net zero, writes Alan Kohler.

All this has to go on for 25 years to show that it’s permanent, with three audits along the way. To keep getting ACCUs the landholder has to show that they have kept up the measures, and that it’s not just due to more rain.

A serious problem with the legislation, in my view, is that the regulator has no power to claw ACCUs back unless the landholder can be shown to have given false and misleading information. So even if the carbon in the soil disappears because of drought, the ACCUs stay.

Another major flaw with the Angus Taylor law is that it keeps everything secret – the regulator is not allowed to release the data even if it wants to (it does want to). Academics I’ve been speaking to who are deeply suspicious of soil carbon are keen to keep an eye on what’s going on. They complain bitterly about the lack of transparency.

Megan Crosby told me they are looking at flipping the onus, that is to release data unless there is a good reason not to; she says they would welcome more scrutiny, but there’s no sign of that happening yet.

A problem for supermarkets

Actually, farmers deciding to cash in their ACCUs and not put them aside won’t just be a problem for them – the supermarkets won’t be net zero unless their suppliers are, and when it comes to meat, you can’t make it without also making methane. You can reduce it by feeding the cattle seaweed, but some offsets will always be needed.

Likewise with a lot of the big emitters in the safeguard mechanism.

The government says the preferred way for them to meet their 4.9 per cent per year reduction targets – which are cumulative by the way, so by 2030 it’s 30 per cent – is to actually cut emissions, not to buy offsets, but for most of them the technology will take years to develop and some of them will probably never be able to do it, like cement manufacturers and airlines.

To some extent the net zero supermarkets and the problem of soil carbon and methane-emitting cows are a microcosm of the world’s climate change challenge.

Even with the highest integrity, offsets can’t get Coles and Woolies to be a true zero emissions store and nor can they save the planet – they can only buy some time while we work out how to get off fossil fuels and meat.

But eventually we’ll have to do both, as well as grow more trees and leave more carbon in the soil.

Alan Kohler writes twice a week for The New Daily. He is finance presenter on ABC News and founder of Eureka Report.