What Is Carbon Farming?

What Is Carbon Farming?

Carbon farming is a way for farmers to help fight climate change by capturing carbon dioxide (CO₂) from the atmosphere and storing it in plants (i.e. trees), soil, or by reducing their farm’s greenhouse gas (GHG) emissions. Think of it as “growing” a carbon crop alongside their traditional crops. Farmers who do this can earn carbon credits, with each credit representing one tonne of CO₂ (or equivalent GHGs) that’s either captured or prevented from being released. These credits can then be sold, providing an additional income stream.

This approach not only benefits the environment by making farming more sustainable but also helps farmers diversify their income, putting agriculture at the center of climate solutions.

Carbon farming involves various practices that either store carbon (known as sequestration) or prevent emissions. This article focuses on soil carbon sequestration under Australia’s Carbon Credit Units (ACCUs) scheme, which is managed by the Clean Energy Regulator (body of the Australian government). Farmers can earn ACCUs by following the “Estimating soil organic carbon sequestration using measurement and models method”.

Eligible Management Activities

In a soil carbon project, farmers must adopt at least one new eligible management activity (full list of project activities), such as:

1. Applying lime or gypsum
2. Retaining stubble
3. Addressing nutrient deficiencies
4. Reducing tillage
5. Growing legumes or cover crops

Harvesting Your Grain Crop vs. Your Carbon Crop

When farmers harvest grain, they produce something physical. Those who buy it can see, touch, and measure it to determine how much it’s worth per tonne. Carbon farming, on the other hand, is different. Carbon credits represent the process of removing carbon dioxide (CO₂) from the atmosphere and storing it in the soil. The carbon stays on the farm and the value lies in the environmental benefit, not in a physical product.

Unlike grain, carbon farming doesn’t involve a physical product that’s transported or stored. Instead, farmers measure their progress through soil sampling and analysis to prove how much carbon has been sequestered. This requires a more complex system of verification to ensure the credits represent real, measurable benefits to the environment. This makes carbon farming unique compared to traditional farming: it focuses on the value of an environmental process rather than a tangible product.

The Science Behind Carbon Farming

Building soil carbon is governed by a simple input-output equation:

Photosynthesis – Respiration = Net Sequestration

This equation encapsulates the carbon cycle in agricultural soils, influenced by many different factors, including climate (e.g., rainfall), agricultural practices (e.g., tillage), and type of soil. A simpler way of explaining this process is thinking of it like managing a bank account.

Deposits (Photosynthesis):

Plants are the depositors. During photosynthesis, green plants take in sunlight, water, and carbon dioxide (CO₂) and turn them into sugars. This carbon-rich “food” is then moved into the soil through:

1. Root Exudates: Sugary liquids that roots release into the soil.
2. Plant Residues: Decaying plant roots and shoots in the soil.

Withdrawals (Respiration):

Both plants and soil microorganisms withdraw carbon from the bank account. They use the plant’s carbon-based sugars for energy, breathing out CO₂ back into the atmosphere. The microorganisms can also break down these plant residues (roots and shoots) as an energy source.

Bank Balance (Net Sequestration):

Your account balance goes up when the deposits from photosynthesis outweigh the withdrawals from respiration. If more carbon goes into the soil than leaves it, then you get a build in soil carbon.

Soil Microorganisms

Microbes play two different roles, acting as both spenders and savers in this soil carbon economy:

• Spenders: Release CO₂ through respiration, increasing the withdrawals.
• Savers: Convert organic matter into more stable forms of soil carbon, reducing carbon loss.

Products like Loam Bio’s CarbonBuilder harness this microbial saving strategy.

The fungi in CarbonBuilder transport and store the plant carbon (deposits) in their own biomass, creating hyphal networks in the soil. Think of it like an underground web-like matrix. These structures help transport and protect carbon within soil aggregates (small soil clumps), while also helping carbon stick to soil minerals (mineral-associated organic carbon). All these things together reduce the spending of carbon through respiration, tipping the balance toward greater net sequestration.

Soil Moisture

Soil moisture acts as a crucial market condition in this carbon economy, influencing both deposits and withdrawals:

• Higher Rainfall: Enhances plant growth (increasing deposits) but also boosts microbial activity (increasing withdrawals).
• Lower Rainfall: Limited moisture can restrict both plant growth and microbial activities, leading to reduced deposits and withdrawals.

Agricultural Practices

Agricultural practices serve as financial management strategies for our soil carbon bank:

Reduced Tillage:

Acts like a savings lock on your account. When you minimize soil disturbance through no-till or reduced-till methods, you slow down the activity of soil microbes. With less oxygen available to them, these microbes can’t spend carbon as quickly by respiring it back into the atmosphere. As a result, more carbon remains stored in the soil, increasing the balance in your carbon account.

Cover Cropping:

By growing a variety of plants, you introduce different types of carbon into the soil—think of them as multiple currencies (yen, euros, dollars) that first need to be exchanged before being spent. This extra step slows down how easily microbes can break down and use the carbon. More time and complexity mean more carbon stays in the soil.

By adopting these practices, farmers can influence both the amount of carbon entering the soil and the amount being lost. This ultimately affects the overall balance of their soil carbon bank and thus the success of the carbon project.

Challenges and Solutions in Carbon Farming

Now that the underlying science of carbon farming is clear, it’s important to address a key challenge facing soil carbon projects in Australia: the risk of carbon loss during fallow periods—times when minimal plant growth occurs. When plant growth stalls, photosynthesis (carbon deposits) slows down or stops, but soil respiration (carbon withdrawals) continues (albeit at a lower rate), leading to net carbon losses.

Not All Soil Carbon Is Created Equal

One key insight is that soil carbon varies in stability. Some forms, like plant residues (e.g., visible stubble) that easily break down, can be lost between growing seasons. This temporary form of carbon is known as Particulate Organic Carbon (POC), which breaks down quickly, making it vulnerable during fallow periods.

Building More Stable Forms of Soil Carbon

Loam Bio’s CarbonBuilder technology focuses on increasing more resistant forms of soil carbon—those that are less likely to be lost during fallow periods. Soil carbon tests typically report Total Organic Carbon (TOC) as a single figure, but this total can be separated into different fractions (see details at Global Change Biology):

1. Particulate Organic Carbon (POC): The least stable and easiest for microbes to break down.
2. Aggregate Carbon (Agg-C): Carbon protected within soil aggregates, more resilient than POC.
3. Mineral-Associated Organic Carbon (MAOC): Carbon bound tightly to mineral surfaces, making it the most resistant to loss.

Field trials have demonstrated that Loam Bio’s CarbonBuilder technology can increase both Agg-C and MAOC, which are less susceptible to loss than POC (the least stable form).

_{*Agg-C is also known as occluded POC (oPOC).}

Research Validation

Researchers at Western Sydney University evaluated Loam Bio’s technology (study available at Biogeosciences).

These researchers inoculated wheat seeds with fungal isolates from Loam’s library and grew them in pots. After harvesting the wheat, soil samples were used in a 135-day soil incubation experiment. During this incubation, no new carbon was deposited, while microbial respiration (withdrawals) continued—simulating a fallow period.

They found that the soil that had been inoculated with the fungal treatments lost less carbon compared to the uninoculated controls. In fact, these treatments increased resistant soil carbon by up to 20.9% compared to the control. The study’s findings demonstrate that specific fungal treatments can improve soil carbon stability. By making the carbon more resistant, it can not only help buffer against carbon losses during the fallow but also the next cropping cycle.

The best performing isolate used in the study was isolate 12, which is the same isolate that is used in CarbonBuilder wheat and canola.

Environmental Benefits of Carbon Farming

Carbon farming is not just good for farmers, it’s essential for the planet. By capturing and storing carbon dioxide (CO₂) in agricultural soils, it helps:

1. Remove excess CO₂ from the atmosphere, reducing the impacts of climate change.
2. Make farms more resilient to changing weather patterns.

Agriculture, forestry, and land use are responsible for about 23% of human-made greenhouse gas emissions, according to the Intergovernmental Panel on Climate Change (IPCC). But there’s good news: sustainable farming practices, like carbon farming, have the potential to reverse some of this damage.

Globally, cropland soils have lost 20–60% of their total organic carbon (TOC), according to the IPCC. This loss makes farming less productive and more vulnerable to extreme weather. Carbon farming helps rebuild this lost carbon, improving soil health while tackling climate change.

As climate change threatens our food security with more extreme weather and unpredictable growing seasons, carbon farming offers a solution. By improving soil health, it increases resilience, helping farmers maintain crop yields and secure food production for the future—even under challenging conditions.

Getting Started with Carbon Farming

Starting a soil carbon project is a long-term commitment, ranging from 25 to 100 years. The length of these projects ensures that the environmental benefits are ongoing and aligned with the slow nature of soil carbon accumulation. It also provides ongoing incentives for sustainable land management practices, contributing to long-term agricultural sustainability and climate change mitigation (source).

How does a project work under the ACCU Scheme?

_{Source: Adapted from the Clean Energy Regulator Soil carbon projects Factsheet}

Where does Loam Bio fit into carbon farming?

Loam partners with farmers to run soil carbon projects under the ACCU scheme – this forms the basis of their SecondCrop offering. This program provides farmers with two options: SecondCrop Pro and SecondCrop Premium (source).

In the SecondCrop Premium option, Loam manages project registration, setup, soil sampling, analysis, and auditing for the farmer. Meanwhile, the SecondCrop Pro option requires farmers to organise and finance the ongoing soil sampling, analysis, and auditing costs themselves. Under the Premium and Pro options, growers retain 70% and 82.5% of the ACCUs generated, respectively. These ACCUs can be banked, used to offset their own emissions (insetting), or sold.

This partnership model simplifies the complexities of running a carbon project, allowing farmers to focus on their core farming business. The shared credit model aligns interests, encouraging both parties to maximise carbon sequestration.

In both SecondCrop options, farmers can access CarbonBuilder technology, which enables them to build both aggregate carbon (Agg-C) and mineral-associated organic carbon (MAOC)—the most stable forms of soil carbon. Building stable carbon is important for the long-term success of projects in the ACCU scheme, as these projects run for up to 25 to 100 years. Over these lengthy timelines, periods of below-average rainfall are almost inevitable, posing challenges to maintaining soil carbon stocks.

Research from both academic collaborations and Loam Bio’s internal studies shows the importance of building stable soil carbon to reduce losses during fallow periods. The results have demonstrated that CarbonBuilder technology decreases soil carbon losses compared to the control, meaning growers are more likely to retain more of the carbon they build.

“At Loam, we prioritise quality over quantity in carbon removal. By building the most stable forms of soil carbon, we position ourselves in the premium carbon farming segment. Carbon buyers can trust that the carbon sequestered with our technology will remain in the soil for the long term.”

Guy Hudson (Co-founder & CEO at Loam)

Conclusion

Carbon farming represents a transformative opportunity for agriculture, turning farms into carbon sinks. By sequestering carbon in soil and adopting sustainable practices, farmers not only improve their land’s productivity and resilience but also contribute to global environmental solutions. Programs like Loam Bio’s SecondCrop make carbon farming accessible and effective, providing farmers with the tools, technology, and support needed to succeed in long-term carbon projects.

As the world faces mounting climate challenges, carbon farming offers a scalable, science-backed pathway to reduce greenhouse gases, improve soil health, and secure food production for the future. By investing in stable forms of soil carbon and leveraging innovative solutions, farmers can drive meaningful change while reaping economic and environmental rewards.