Thinking about a soil carbon project? Here's what you need to know

Soil carbon is attracting plenty of attention, and for good reason.

Many landholders are already working to improve their soils through practices like maintaining groundcover and encouraging diverse pastures. As interest in carbon markets grows, some are asking whether those same practices could open the door to a soil carbon project.

But what exactly is soil carbon? How do carbon projects work? And what should you consider before deciding whether one is right for your property?

The good news is you don't need to be a carbon expert to understand the basics.

Want a quick overview? Check out our soil carbon factsheet for the key information at a glance.

It all starts beneath your feet

Soil carbon is the organic material stored below your feet – the decomposed remains of plants, animal matter and the billions of microbes living in the soil.

Plants capture carbon dioxide from the atmosphere through photosynthesis. That carbon enters the soil through plant roots and decomposing leaves and grasses.

From there, it takes two paths. Some is quickly used by soil organisms during the growing season. The rest becomes stable carbon, bound up with clay and minerals where it can remain in the soil for decades.

The short story? The sun and carbon dioxide feed the plant. The plant feeds the soil. The soil hangs on to a portion as long-lasting carbon.

Why does soil carbon matter?

Soil carbon plays a foundational role in how soils function.

Higher levels of soil carbon improve soil structure, support stronger pasture growth, encourage deeper root systems and help soils hold more water.

For landholders, that can mean more resilient farming systems and better ability to respond to dry conditions.

In fact, every 1% increase in soil organic matter can help soil hold an additional 90,000–180,000 litres of water per hectare.

That improved water-holding capacity is one reason building soil carbon is attracting interest from landholders looking to improve the productivity and resilience of their properties.

How does Australia's carbon market fit in?

Healthy soils have always been important for productive farming. What’s changed is that eligible landholders can now generate additional income through Australian Carbon Credit Units (ACCUs) for increasing the amount of carbon stored in their soil.

Each ACCU represents one tonne of carbon dioxide equivalent.

Australia's carbon market has grown rapidly in recent years. The number of soil carbon ACCUs issued increased from fewer than 2,000 in 2022 to more than 253,000 in 2023 alone, with Queensland becoming the national hotspot for new soil carbon projects.

ACCU spot prices have held in the $34-$40 range through 2025-26, with steady demand from the Safeguard Mechanism (which requires Australia’s largest industrial emitters to reduce their emissions), voluntary buyers and the Federal Government’s carbon abatement contracts.

While carbon credits often grab the headlines, they shouldn't be the only reason to build soil carbon. The management practices that increase soil carbon are often the same ones that improve soil health, pasture productivity and drought resilience.

So, how do you build soil carbon?

There isn't one practice that suddenly transforms a paddock.

Building soil carbon is about shifting the balance from carbon loss to carbon gain by reducing soil disturbance, keeping living roots in the ground, adding organic matter and supporting healthy soil biology.

Some practical approaches include:

Rotational grazing

Regular movement of stock allows paddocks to rest. Grasses recover, deep roots regrow and more carbon goes underground. Research has shown rotational grazing can increase soil organic carbon by 19–28% compared with continuous grazing.

Keep groundcover up

Bare soil bleeds carbon. It crusts, erodes and oxidises in the sun. Setting conservative stocking rates and regularly monitoring pasture condition are some of the fastest ways to stop ongoing carbon losses before trying to rebuild them.

Grow diverse, deep-rooted pastures

Multi-species pastures with legumes feed a wider range of soil microbes, fix nitrogen and push roots deeper into the soil profile. Perennial pastures have been shown to contain 16–23% more carbon in the top 30 centimetres of soil than monoculture annual pastures.

Reduce tillage and retain stubble

No-till or minimum till systems, combined with retaining crop stubble, help protect the carbon already stored in the soil while feeding the microbes that build more.

Add compost, manure or biochar

Well-made compost and aged manure feed soil biology while adding carbon directly to the soil. Biochar is even more durable, remaining in the soil for hundreds of years while also improving water-holding capacity.

Integrate trees, shade and corridors

Trees do more than provide shade. Agroforestry systems can store significantly more soil carbon than cropping alone, while also providing windbreaks, habitat for native wildlife and erosion control.

Many landholders are already using some of these practices as part of good farm management. Building soil carbon is often about building on what's already working.

Thinking about a soil carbon project?

If you're considering taking the next step, it pays to understand how to set your carbon project up for success.

Pick country with room to grow

The biggest gains and the best credit returns generally come from country that has been worked hard and has plenty of potential to improve. A real step change from a degraded starting point is often where the greatest opportunities exist.

Work with the weather

Rainfall is the number one driver of soil carbon—more influential than soil type, climate zone or even management practices.

Many of the projects that generated large numbers of ACCUs established their baselines during the dry years between 2016 and 2018, before three consecutive La Niña years delivered strong rainfall across eastern Australia.

While no one can predict the weather, understanding how seasonal conditions influence soil carbon can help you think about when and how to establish a project.

Commit for the long haul

Soil carbon projects require a 25-year permanence obligation. When you keep the management practices up, the carbon stays and the credits keep flowing. Management changes should be planned as long-term business decisions.

Soil carbon projects reward patience. Rather than increasing at a steady pace, soil carbon often builds slowly in the early years before gains accelerate as soil biology responds. For many projects, the biggest credit returns come between years five and fifteen before eventually reaching a point of saturation.

Set a smart baseline

Sample widely, sample deeply (at least 30 centimetres) and time your baseline so it fairly represents your starting point. A good baseline protects you in dry years and rewards you in good ones.

Budget for establishment costs

Baseline sampling, registration and project setup typically cost between $50,000 and $150,000, depending on the size of the property.

Many landholders choose to share these costs with a project developer, who typically receives a commission of around 20–30% of future revenue.

Understand the buffer

25% of credits are held in a national buffer pool and released progressively as carbon is maintained. The buffer helps protect projects against events such as drought or fire.

Get good advice early

If you’re interested in exploring a soil carbon project, speak with your agronomist, an independent adviser and other landholders already involved in soil carbon projects.

Taking the time to understand how a project works, what it requires and whether it suits your property and business can help you make the right decision.

Ready to learn more?

If you’ve been thinking about soil carbon, now is a good time to start asking questions. You don't need to commit to a project to find out more.

Free self-assessment tools

LOOC-C — CSIRO: Enter some basic information about your land to explore eligible carbon project types and receive an initial estimate of potential abatement, including possible ACCUs.

Landholder Guidance and Checklist — Carbon Market Institute: A plain-English guide covering due diligence, contracts, fees, project performance and questions to ask a project developer before entering an agreement.

The Australian Government’s Carbon Farming Outreach Program also provides free training and practical information through its online knowledge hub.

If you’d prefer to talk it through with someone local, Southern Queensland Landscapes’ Sustainable Agriculture Facilitator provides free, locally based and independent advice to help landholders understand how soil carbon projects work and whether they’re likely to suit their property.