Why Holistic Soil Management Must Surpass Australia's Current Carbon Credit Rules
The Soil Health Opportunity Australia Is Undervaluing
Healthy soils underpin climate resilience, agricultural productivity, biodiversity, and water regulation. Around the world, regenerative land management is being recognised as a credible climate solution. But in Australia, the practical implementation of this potential is falling short. Despite the existence of the Australian Carbon Credit Unit (ACCU) scheme and Full Carbon Accounting Model (FullCAM), many of the nation's most motivated landholders are sidelined by overly complex, narrow, and scale-biased frameworks.
At SDM-X, we support the scientific integrity and economic potential of carbon farming. But our work with both businesses and landowners reveals a system that's difficult to enter, hard to trust, and often misaligned with broader environmental and community value. The current rules reward carbon quantity over ecological quality, favour monocultures over biodiversity, and exclude precisely the kind of small-scale, diversified practices that deliver lasting impact.
This article outlines why we believe a shift to holistic soil and property health is needed – and what business leaders should understand before chasing offsets or investing in land-based projects in Australia.
Soil Health: A High-Impact, Multi-Benefit Climate Solution
Research consistently shows that healthy soils sequester carbon, buffer climate extremes, boost food production, and support rich biodiversity. Practices like cover cropping, reduced tillage, composting, and diversified rotations build organic matter and improve ecosystem function. Restoring degraded soils is also a form of climate adaptation, increasing drought resilience and water retention across landscapes.
The benefits extend beyond agriculture. Soil health contributes to water purification, nutrient cycling, and local ecosystem stability. These services have economic and social value, yet they remain largely invisible in Australia's carbon credit frameworks.
The ACCU Scheme: Complex, Rigid, and Exclusionary
In principle, the ACCU scheme allows land managers to generate tradable carbon credits by sequestering carbon in soils or vegetation. But in practice, eligibility, methodology, and compliance hurdles are high.
To qualify, a project must demonstrate 'additionality' (i.e. go beyond business-as-usual) and use a narrowly defined method approved by government. For soil carbon, that includes direct soil sampling, tightly prescribed management changes, and multi-year reporting cycles. Upfront costs are significant, and full crediting often takes five years or more.
Worse, many beneficial practices are ineligible if they've already been started. This effectively penalises early adopters and discourages landholders from doing the right thing until they can be paid for it. Delaying or even stopping the deployment of holistic land management practices (and most farmers deploy new processes incrementally when budget allows, just like everybody else).
Even if a project is eligible, the process is far from simple. Registration, monitoring, third-party audits, reporting and permanence obligations add heavy administrative and financial burdens. Unsurprisingly, most projects are developed by aggregators or investors with the scale to navigate the rules.
FullCAM: A Technically Powerful Black Box
FullCAM is the official tool used to model carbon flows for ACCU projects. It combines decades of scientific data to simulate carbon changes in soil, biomass, and debris. But it was designed for national greenhouse gas inventory reporting – not for farm-level precision.
Its complexity makes it inaccessible to most landholders without specialist support. Calibration requires location-specific data, climate records, vegetation profiles, and management histories. The model's sensitivity to inputs, combined with a lack of transparency in its parameters, erodes trust and introduces risk. Landowners have been known to do the work and still receive fewer credits than expected due to discount factors and statistical adjustments. Particularly distressing when this is counter to on-the-ground improvements that can be observed.
This all adds friction, delay, and uncertainty. For most farmers and regional businesses, FullCAM is more a compliance hurdle than an enabling tool.
Unintended Land Use Outcomes: Monoculture Over Diversity
Because ACCU rules are easier to navigate with fewer variables, monoculture native plantings are disproportionately favoured. In practice, this means densely spaced rows of single-species trees planted with forestry-style methods. These maximise the modelled carbon gain – but reduce habitat complexity, displace productive agriculture, and limit the land's long-term utility.
Biodiverse restoration projects or multifunctional landscapes – those that integrate grazing, agroforestry, or community stewardship – are harder to credit because they're harder to model. Yet these are often the projects delivering real ecosystem repair, regional employment, and cultural renewal.
Put simply: the rules drive behaviour. And today, they favour carbon maximisation over long-term ecosystem health.
The Scale Barrier: A System Built for Investors, Not Communities
Participating in the carbon market makes more sense if you have scale. Large landholdings, institutional backing, and project consultants are the norm. Small-scale farmers and regional businesses rarely have the time, risk tolerance, or upfront capital to play.
The result? Many local stewards of land and knowledge – the very people who could pioneer regenerative practice – are locked out. Meanwhile, investor groups buy up large tracts of land for single-purpose carbon projects, often with limited local engagement or co-benefit.
Carbon markets weren't meant to deepen inequality. But unless reforms are made, that risk becomes real.
The Biodiversity Credit Opportunity
A more promising future may lie in recognising and rewarding the broader suite of ecosystem services delivered by land stewards. The Australian Government's emerging Nature Repair Market offers one such pathway, enabling landholders to earn credits for biodiversity outcomes in parallel with carbon sequestration.
Done right, biodiversity credits could help shift focus from monoculture plantings to multifunctional landscapes. However, care must be taken to ensure this framework doesn't replicate the same complexity and exclusion issues that hinder the ACCUs scheme today. Integrated frameworks – where biodiversity, carbon, water, and community benefits are tracked and rewarded together – will deliver better outcomes for nature and people alike.
Community-Led Stewardship as a Strategic Asset
There is untapped strategic value in community-led regenerative projects. These initiatives often combine Indigenous land care knowledge, intergenerational stewardship, and co-benefits like employment, education, and cultural renewal.
Unfortunately, current regulatory systems are geared toward industrial-scale metrics, not place-based outcomes. This is a missed opportunity. Australia's path to net zero and ecosystem recovery must include rural communities, not just capital-backed project developers. Empowering local stewards with the tools, recognition, and revenue streams to manage land regeneratively is not just fair – it's efficient, credible, and enduring.
A Smarter Path: From Offsets to Evidence-Based Action
For businesses, carbon offsets are tempting. But SDM-X recommends starting with a credible business carbon footprint. This baseline helps clarify:
Which emissions sources are material
What abatement options exist internally
What budget is available for process change, technology adoption, or offsets
With this clarity, offsets can be pursued where needed – but in context and with confidence that resources are being directed where they matter most.
Likewise, supporting regenerative land management should not be reduced to carbon credit procurement. Investing in holistic soil health and biodiversity restoration may not yield ACCUs today – but these are the foundations of long-term resilience and likely future regulatory or market value.
Toward a Simpler, More Holistic Framework
We also recognise the importance of collaborative, multidisciplinary research efforts in shaping more integrated soil management solutions. The Cooperative Research Centre for High Performance Soils (Soil CRC), for example, brings together scientists, farmers, and industry groups to develop practical tools and metrics that support soil performance and long-term land resilience.
We're not opposed to the Australian Carbon Credit Unit or Biodiversity Certificate frameworks. They're an excellent step in the right direction. But Australia now needs to integrate:
Carbon, biodiversity, and water outcomes
Scaled and smallholder pathways
Simpler, more transparent methods
Landowners should be rewarded for outcomes, not just paperwork. And businesses should be able to invest locally with trust and purpose.
At SDM-X, we help both sides of this system move forward. That includes preparing credible carbon footprint calculations for business and advocating for frameworks that reward whole-system value.
Let's not lose the forest for the trees – or the soil for the credits.
Conclusion
Australia's carbon crediting rules must evolve. The potential of holistic soil health is too great to be sidelined by modelling rigidity, administrative burden, and perverse incentives.
We believe the future lies in frameworks that reward what matters most: resilient landscapes, thriving communities, and measurable outcomes that go beyond carbon alone. To get there, we need to stop asking "How do we earn more credits?" and start asking: "How do we get more value from healthier land?"
Further Reading and Resources
Soil CRC: https://soilcrc.com.au/
Australian Carbon Credit Unit Scheme (CER): https://cer.gov.au/schemes/australian-carbon-credit-unit-scheme
FullCAM Model Information: https://www.dcceew.gov.au/climate-change/publications/full-carbon-accounting-model-fullcam
Nature Repair Market Consultation: https://consult.dcceew.gov.au/nature-repair-market
London Climate Action Week – Soil Health as a Climate Strategy: https://www.londonclimateactionweek.org/event/soil-health-as-a-climate-mitigation-and-adaptation-strategy/
Soil Carbon Project Guide (CER): https://cer.gov.au/document/understanding-your-soil-carbon-project-simple-method-guide
Open3P Data Standard: https://standard.open3p.org/2.1/
Indigenous Carbon Industry Network: https://www.icin.org.au/
This article was last updated in July 2025
