Frequently asked questions
Below are common questions collated from workshops and previous enquiries. If your question hasn’t been answered below, please email the team at carbonfarming@des.qld.gov.au
Carbon farming
Will carbon farming negatively impact agricultural production?
Carbon farming projects and agricultural production are complementary land management activities. Many carbon farming methods are designed specifically for agricultural activities such as plantation forestry, livestock management or cotton production. Under certain vegetation methods, landholders can graze in a carbon project area. For all Land Restoration Fund (LRF) projects, active management of the land is needed to meet both the requirements of the carbon method and to generate the co-benefits.
How can carbon farming work without impacting the income from my other farming business?
Carbon farming projects can complement and supplement farm business income. For example, carbon farming projects may provide an additional income stream from land that may be marginal or non-viable for other farming purposes. As it is a commercial decision to undertake a carbon farming project, landholders are strongly encouraged to seek independent legal and financial advice.
How is carbon sequestration measured? How are Australian Carbon Credit Units (ACCUs) calculated?
Trees and other parts of our environment (wetlands, soil) absorb carbon dioxide (CO2) from the atmosphere during the process of photosynthesis to create biomass. This process of obtaining carbon from the atmosphere and holding it in solid form is referred to as carbon sequestration.
One ACCU represents one tonne of carbon dioxide equivalent (CO2-e) greenhouse gas that is not released into the atmosphere. The instructions and details on each carbon credit generating method, as administered by the Clean Energy Regulator, will guide the measurement and modelling required for a project type.
The Clean Energy Regulator issues ACCUs under the Carbon Credits (Carbon Farming Initiative) Act 2011. See the Clean Energy Regulator’s website for further information.
How will carbon contracts impact the value of my land?
Carbon farming contracts will be factored into land and agribusiness valuations using evidence from market transactions. The LRF supports work with the land valuation sector to better understand carbon farming and the benefits that it brings, as part of broader work on valuing natural capital.
Does a Land Restoration Fund contract transfer to new owners if a property is sold?
No.
LRF contracts do not automatically transfer. The LRF enters into a Project Investment Agreement (PIA) with the project applicant/proponent which may be different to a landholder.
The implications of selling a property would depend on whether the applicant/proponent who signed the PIA is the landholder. If the property is sold, the applicant/proponent would need to advise the LRF and ensure the project still meets the requirements of the Clean Energy Regulator.
Generating and selling carbon credits
How do I know if my land is suitable for carbon farming?
CSIRO provides a free online tool called LOOC-C that helps landholders to estimate the carbon potential of their properties. For properties in Queensland, the tool also identifies the potential for generating different environmental co-benefits. This information can help land managers get a preliminary understanding of whether their property is suitable for a carbon farming project before seeking professional advice. LOOC-C is currently limited to Human Induced Regeneration and Environmental Plantings assessments.
What's the minimum number of ACCUs necessary to be able to sell to the Land Restoration Fund? What is the smallest area for a project to be viable?
There is no minimum number of ACCUs for a LRF project. Rather, the project would need to be at a size large enough to make it financially viable for the landholder and to justify the time and expense involved in the administration of the project by the LRF.
The project proponent proposes how many ACCUs they wish to sell to the LRF (up to a maximum of 80% of the estimated ACCUs likely to be issued for the project). The total volume of ACCUs proposed to be contracted to the LRF will need to be considered when costing a project in the application stages.
When would I get paid for ACCUS and co-benefits?
On-delivery Payments will be made following each delivery of ACCUs to the LRF, in accordance with the agreed project payment schedule and terms of the Project Investment Agreement (PIA) (the contract between yourself and the LRF).
Once all conditions precedents* of the PIA have been met, the project payment schedule will commence. If negotiated through the application stages and if stated in the PIA, an Upfront Payment will also occur at this time. Subsequent Annual Payments will occur on the anniversary of this date, subject to the requirements of the PIA.
*conditions precedents are the requirements to be met before the contract’s sunset date and before the contract takes full effect. Check the standard terms and conditions in the Project Investment Agreement template for details.
Do all ACCUs generated by a Land Restoration Fund project have to be returned to the Queensland Government?
No.
The applicant will propose how many ACCUs they wish to sell to the LRF. This may be all or a portion of the ACCUs generated by the project. The LRF will only contract up to 80% of the estimated ACCUs likely to be issued for the project after 5% buffer and Permanence Period discounts are applied. Any remaining ACCUs may be sold to the Australian Government under the Australian Carbon Credit Unit Scheme or to other purchasers in the voluntary market.
LRF Co-benefits
How does the Land Restoration Fund price ACCUs and co-benefits?
See ‘Pricing ACCUs with co-benefits’ on the Investment Rounds Report webpage.
How do I, as a proponent, cost the co-benefits?
Projects need to be financially viable for the landholder and represent value for money for the LRF. Applicants submit an overall project price which is considered by the LRF Investment Panel when making investment decisions. The co-benefit costing forms part of a proponent’s commercial proposition.
To support proponents in their thinking, some statistics from pricing in previous Investment Rounds has been published in the LRF’s Investment Rounds Report.
Would the Land Restoration Fund purchase co-benefits only from a carbon farming project (allowing the landholder to sell their ACCUs on the spot market or retain them to offset farm activities)?
No. The LRF only purchases co-benefits associated with ACCUs generated by the contracted project.
If the Land Restoration Fund only certifies the co-benefits it is buying, how do I certify my remining co-benefits?
Certifying co-benefits you are not selling to the LRF can be done by using another appropriate and approved co-benefits certification method from another provider.
How will Land Restoration Fund co-benefits work with the Australian Government Biodiversity Certificates / Nature Repair Market?
The Australian Government passed the Nature Repair Act 2023 which established a framework for a voluntary national Nature Repair Market. This would see a biodiversity certificate issued to projects that enhance or protect native biodiversity (by meeting legislated biodiversity integrity standards) but which do not need to generate ACCUs. The biodiversity certificate would be tradable personal property; able to be owned and traded separately from land.
In contrast, LRF projects must generate:
- ACCUs by registering with the Clean Energy Regulator and following a verified carbon method, in addition to
- LRF co-benefits by completing activities and reporting as per the LRF Co-benefit Standard .
The Australian Government is consulting the Queensland Government as part of its work to establish the Nature Repair Market and determine how the different schemes will interact.
Contracts
What if a project falls short of meeting the carbon abatement or co-benefits required under the contract?
Under the LRF’s Project Investment Agreement (PIA) there are provisions to deal with projects that do not meet their carbon abatement or co-benefit commitments.
Project proponents should consider the risk of non-delivery when nominating how many ACCUs they will sell to the LRF. For example, project proponents may wish to provide for a 'risk buffer' or percentage of credits that they hold back to manage the risk of reduced supply.
What is the length of a contract and what happens when a contract ends?
LRF contracts are between 5 to 15 years in length.
Applicants should consider what length contract period will best suit their project. In making this decision, applicants need to be familiar with the rules established by the Clean Energy Regulator for generating ACCUs including permanence period requirements, crediting periods, and rate of ACCU generation, particularly from vegetation projects.
What is the difference between contract period, crediting period and permanence period?
Contract period: the time agreed to supply credits for purchase. The LRF is offering contracts between 5 to 15 years.
Crediting period: the time over which a project can generate ACCUs. Emission avoidance projects have a crediting period of seven years. Sequestration (carbon storage) projects have a crediting period of 25 years. This means that, in many instances, after a LRF contract has ended the project will still be able to generate ACCUs. Landholders can then investigate other opportunities for selling those ACCUs on the voluntary market.
Permanence period: applies only to sequestration (carbon storage) projects. Permanence periods refer to the Clean Energy Regulator’s assessment of the duration of time it will take for vegetation or soil to remove carbon from the atmosphere. There are two options for permanence periods: 25 or 100 years.
The Clean Energy Regulator provides detailed information on permanence and crediting periods.
Will there be an opportunity for a cooperative of landholders to be involved in future Land Restoration Fund programs?
The carbon market has mostly seen large projects that can generate economic returns that cover their risks, and the transaction and compliance costs don’t change significantly with scale.
Aggregation, such as smaller landholders forming partnerships to make a larger project, or a larger landholder with multiple methods active on the one farm, may be possible if it is financially viable and all eligible parties are willing to provide consent.
The Land Restoration Fund currently has a contract with one aggregated project in Far North Queensland, the Tablelands Regional Integrated Agriculture Carbon Project.
Are Land Restoration Fund reporting requirements the same as the Clean Energy Regulator’s reporting requirements?
No. LRF projects are required to meet the different reporting requirements of both the LRF and the Australian Government’s Australian Carbon Credit Unit Scheme.
LRF projects must undertake regular monitoring, reporting and auditing requirements to the standards set by:
- the Clean Energy Regulator for certification of ACCUs, and
- the LRF Co-Benefits Standard for verification of co-benefits. Some co-benefits may require third-party assurance, as described in the LRF Co-benefits Standard.
Will a change in State Government affect my Land Restoration Fund contract?
A LRF contract (known as a Project Investment Agreement) is between the project proponent and the Queensland Treasury Corporation as Trustee of the special purpose Land Restoration Fund Trust. The contract will contain the conditions under which the project could be terminated. The Project Investment Agreement template can be used to assist in seeking independent legal advice on undertaking a carbon farming project.
Can the landholder of two separate properties aggregate them for a project?
Yes, as long as the project meets Clean Energy Regulator eligibility criteria and the eligibility requirements of the LRF.
Can you get additional funding to support a carbon project apart from that provided by the Land Restoration Fund contract?
Yes. Landholders are free to participate in other funding opportunities and to seek partnerships and contributions to deliver their LRF projects provided that:
- ACCUs and co-benefits contracted to the LRF are delivered to the LRF and the LRF only.
- Commercial arrangements and partnerships affecting the LRF project are raised in the application stage.
- The project meets the Clean Energy Regulator eligibility, additionality and newness requirements.
Land Restoration Fund Investment Rounds
Who can apply to the Land Restoration Fund?
Any Queensland land manager, who has the legal right to do so, can lodge an application with the LRF either themselves or via an authorised agent. A land manager is a person or corporate entity that has the capacity to obtain the legal right to run a carbon project on land in Queensland. Further information about legal right is available from the Clean Energy Regulator website.
Please also refer to the eligibility criteria specific for each LRF investment round. Previous investment round information can be found in the Investment Application Guidelines .
How will my application be assessed?
Applications are assessed on the criteria set out in the Investment Application Guidelines including how well it aligns to the LRF Investment Priorities as outlined in the Priority Investment Plan and how it provides value for money to the State. Subject matter experts within the Queensland Government and across a range of departments will review and assess applications based on the criteria set out in the Investment Application Guidelines . This assessment is then provided to an independent LRF Investment Panel, who ultimately select projects for contracting through a Project Investment Agreement.
How many applications can I make?
A single application per project site is allowed. Applicants can make multiple applications provided that each application is for a separate project site.
Is each Investment Round different?
As the carbon market evolves, the LRF continues to update its investment round criteria. The investment application process and guidelines are reviewed to ensure they provide detail and clarity for applicants and the LRF Co-Benefit Standard is updated to better target outcomes and reflect changes such as method amendments as made under the Australian Carbon Credit Unit Scheme. Investment priorities, as set out in the Priority Investment Plan, are reviewed to ensure the LRF invests in a diverse portfolio of projects across geographies, carbon farming methods and project size, as well as the co-benefits that will be delivered.
How does the LRF Co-benefits Standard Version 1.4 differ from Version 1.3?
The LRF Co-benefits Standard was updated to Version 1.4 in April 2023.
For an overview of the changes and updates from Version 1.3 to 1.4, please read the Supplement to the LRF Co-benefits Standard v1.4 .
Project proponents are now required to use the version of the Co-benefits Standard that is current at the time their project is contracted (rather than at the time it is registered). This allows for projects to not be unduly disadvantaged due to any updates made to the Co-benefits Standard between contracting and registration.
Is the Land Restoration Fund looking into developing alternative carbon methods?
The LRF works with the Clean Energy Regulator to develop new and revise existing carbon methods under the Australian Government’s ACCU Scheme. This included participation by the LRF to co-design the first blue carbon method for Australia that was released in January 2022.
Read more about LRF’s research, innovation and market development activities.
What happens if the Clean Energy Regulator produces new carbon methods?
The LRF considers any changes in the carbon market such as new or updates to carbon methods as they align to the priority investment areas in the Priority Investment Plan. Updates are then made to the investment application process and LRF Co-benefits Standard.
Has the Land Restoration Fund refined its assessment process following the findings of the Independent Review of Australian Carbon Credit Units?
The LRF considers any change in the carbon market and updates the investment application process and LRF Co-benefits Standard as needed. For example, the Independent Review of Australian Carbon Credit Units recommended no further Avoided Deforestation projects, which is a method largely applicable to NSW.
In Queensland, Avoided Clearing is a similar method that has different eligibility requirements and is not subject to any claims about integrity. As such, Avoided Clearing projects can still be contracted under the LRF.
The Avoided Clearing method is still in force, only the Avoided Deforestation method has been closed.
Other considerations
What are the tax implications for income generated by ACCUs?
At this time, carbon farming or ACCU income is not classed as agricultural or primary production income. It is recommended that landholders contemplating a carbon farming project access independent financial advice on the tax implications of undertaking a carbon farming project.
For more information, refer to the Australian Carbon Credit Unit Scheme website.
Do eligible interest-holders have the capacity to legally stop landholders from pursuing a carbon project?
An eligible interest-holder under the Australian Carbon Credit Unit Scheme is a person or organisation that has a specific legal interest in the land on which a carbon project is being, or will be, conducted. For example, an eligible interest-holder includes a bank or mortgagee.
In some circumstances eligible interest-holders will not grant consent for a project to take place on land in which they have an interest. In these cases, the project may need to be varied or voluntarily revoked.
For more information, please read the Clean Energy Regulator’s webpage on Eligible Interest Holder Consent, which includes information on what happens if consent is not granted, or is delayed.
Will the Land Restoration Fund pay for the cost of obtaining eligible interest-holder consent?
Projects proposed for consideration by the Land Restoration Fund need to be financially viable for the project proponent and represent value for money for the Queensland Government.
As part of the application process, proponents submit an overall project price which is considered by the independent Land Restoration Fund Investment Panel when making investment decisions. This overall project price should take into account all of the costs required to establish and deliver the proposed project and can include reasonable costs associated with obtaining eligible interest-holder consent. Outside of this avenue, the Land Restoration Fund has no obligation or funding allocation to assist with these costs.