Before starting, always consider your financial position and if how you would prefer to pay you baseline costs.
What are the costs involved in running a soil carbon project?
When a project is first registered, the project is required to be ‘baselined’ by onsite soil sampling. The cost to baseline is paid by you. AgriProve will arrange for and pay for all other costs related to its administration of the soil carbon project over the life of the carbon project. See below for a table of indicative cost for baseline sampling based on project areas. This is the only cost that is directly passed on to the landholder related to the administration of the soil carbon project. Under AgriProve’s success model, AgriProve will deduct 25% of ACCUs credited across the project - we only get paid if the project successfully generates carbon credits.
The costs involved in implementation of your chosen eligible activity are also payable by you. For example, if you choose to renovate pastures, or to add fencing to split paddocks to change your grazing intensity or duration.
This Chart provides an estimate of soil carbon sampling costs or get a personalised value through our free AgriProve Platform.
Can I defer the cost of baseline sampling?
There are two options for paying for baseline soil sampling. One is to pay up-front, and the other is a deferred payment option where we cover the cost with an advanced payment for future ACCUs that will be generated through the project.
Please note this must be repaid with credits within a 5-year timeframe. If sufficient credits are not created during this period, any outstanding balance must be settled in AUD. The maximum value of the deferred payment option is $50,000 per landowner (not per project) and is also conditional on the total size of the carbon project.
What are my options when I generate ACCUs?
When you generate Australian Carbon Credit Units (ACCUs) through soil carbon sequestration practices, you have several options. You could sell ACCUs on the carbon market, providing a financial return for your carbon sequestration efforts. Alternatively, you could use ACCUs to offset on farm carbon emissions from other activities, demonstrating your farm's commitment to environmental sustainability. Holding ACCUs could also enhance the value and marketability of your farm produce by showcasing your contribution to climate action and sustainable farming practices.
How this works in practice is:
As the operator of the carbon project, you have the choice of what to do with your ACCUs. The generated ACCUs are credited to the nominated ANREU account. The Australian National Registry of Emissions Units (ANREU) is administered by the Clean Energy Regulator.
- Keep/Hold: ACCUs don’t have a use by date. You can hold ACCUs in a special type of account called an ANREU account until you decide what you’d like to do with them.
- Sell: AgriProve’s sales contract has the flexibility for ACCUs to be sold several different ways – but in all cases you decide.
- Sell forward for a set price.
- Sell on the spot market.
- Sell privately at a price agreed with a buyer at the time of sale.
- Retire: Use the generated ACCUs to offset and reduce your own emissions on farm. You may even be able to achieve carbon neutrality.
Retirement is the process that any emitter goes through post the purchase/or generation of ACCUs to reduce their emissions. By retiring ACCUs, it means it has been used and the carbon benefit it represents has been claimed by the ACCU owner.
Retiring your carbon credits requires you to ensure that they are removed from the marketplace and labelled as ‘retired’ in any records or registry.
You cannot claim carbon neutrality just by owning carbon credits. The act of retirement is required to officially offset the emissions.
What are the financial risks associated with a soil carbon project?
AgriProve is listed as the project proponent for all soil carbon projects registered through us. This means that the associated compliance risks fall on us. The risk that falls onto you is the cost of baseline soil sampling, this can be deferred through future generation of ACCUs. However, if your project does not generate the amount of ACCUs required to pay back AgriProve in the first five years of the project, you are required to pay back AgriProve any outstanding balance of outstanding payment in $AUD.
If your project does not generate any ACCUs, there is no obligation to continue with the soil carbon project.
It is necessary to highlight that a soil carbon project involves keeping the land in active agricultural use during the 25 year span of a soil carbon project. For example, the area cannot be taken out of agricultural use. If land is taken out of agricultural use, or you request the project to be revoked before the completion of the 25 year permanence period, all ACCUs issued to the project will need to be returned to the CER.
We recommend that you seek independent financial advice before starting a soil carbon project.
What happens if I am paid credits, but my soil carbon levels decline?
There is no obligation to return credits to the Government if there is a measured decrease in soil carbon levels in the final measurement at the end of the 25 year project duration.
Credits under the 2021 Soil Carbon Method are issued to a high-water mark, where if there is a decline in carbon stocks within the project lifetime, no new credits will be issued to the project until the previous high-point in soil carbon is exceeded. There are also buffers (such as the Risk of Reversal and Permanence Period) that contributes to the overall carbon pool which are applied at every crediting round. This buffers against natural cycles and disasters such as bushfire and drought, which can be unavoidable.
The obligations of the operator (you) is to ensure that the property is to be maintained in an agricultural system, and there is no conduct that could intentionally result in a significant reversal in carbon stocks.
In the event that there is significant reversal in carbon stocks, the Clean Energy Regulator may request a relinquishment of ACCUs issued to the project. If this does occur, it can either be a partial relinquishment or full relinquishment of ACCUs and could happen at any point during the project lifetime. If this does occur, and there is a relinquishment request, it is the responsibility of the project proponent (AgriProve) to return those credits. The liability may be passed onto the operator (you) in the event of a breach of the Master Terms and Conditions. For more information visit ‘Relinquishing ACCUs’ on the CER website.
Does GST apply to the credits?
No, carbon credits are GST free, however, standard additional income taxes will apply when ACCUs are sold.