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On the Pulse - Carbon Farming

Hot Topic: Carbon Farming

By Julian Nichols, Director – Specialised and Advisory

With personal experience in agriculture and an understanding of land management practices, our agribusiness team is at the forefront of the rural property market.

Carbon Farming has recently established itself as a new sector. It is the financial incentive to change agricultural practices and management of land, to increase the amount of carbon stored in the soil and vegetation (known as sequestration) in order to reduce greenhouse gas emissions.

Farm

The system allows farmers (and others) to sell Australian carbon credit units (ACCUs) to governments and companies to offset their emissions (1 ACCU = 1 tonne CO2). Currently, ACCUs can only be traded within Australia (noting carbon credits can attract higher prices internationally). Depending on the property type and land use, potential future carbon credits are calculated on the existing biomass of vegetation. In areas such as the pastoral rangelands, they can be measured by satellite.

Farmers can earn carbon credits through activities such as protecting or planting vegetation, building soil carbon, and achieving energy efficiencies. However, the future challenges, particularly on large pastoral properties is having the traditional grazing land use co-exist with carbon farming.

Presenting agricultural enterprises with opportunities to diversify their business whilst mitigating the effects of climate change, carbon farming provides a potentially favourable outlook for both enterprises and financiers.

Given the industry is in its infancy, there is currently limited availability of sales within Western Australia and broader Australia to determine the premiums paid for such carbon agreements. There is however significant investment in the industry as a whole. A carbon scheme can take up to 6 months to register and a further 18 months before a first payment is received, so it is likely to be some time yet before clear market trends are established.

As the environmental and valuation impact of carbon farming continues to evolve in Australian agriculture, the Opteon Agribusiness team bring decades of valuation expertise into this developing sector.

Meet one of our Western Australian Agribusiness Leaders:

Julian Nichols

Julian Nichols

Julian Nichols

Julian has over 29 years of experience as an Agribusiness, Commercial and Residential valuer throughout primarily Regional Western Australia. As an Agribusiness leader, he has strong expertise in undertaking valuation and consulting advice for a number of the corporate farming interests both Australian and International that own land within the Western Australia agricultural region.

Julian works with the Opteon team that have demonstrated experience in the completion of valuations with approved Carbon Farming Projects and has presented on this topic at the Elders WA Rural conference in December 2021.

Contact Julian on 0407 443 635 / julian.nichols@opteonsolutions.com

Interested in discussing your Carbon Farming challenges?

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DISCLAIMER

This material is produced by Opteon Property Group Pty Ltd. It is intended to provide general information in summary form on valuation related topics, current at the time of first publication. The contents do not constitute advice and should not be relied upon as such. Formal advice should be sought in particular matters. Opteon’s valuers are qualified, experienced and certified to provide market value valuations of your property. Opteon does not provide accounting, specialist tax, investment or financial advice.
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