Tasmanian soil carbon project aims to build data for investor confidence

Tasmanian Agriculture Company has become the first farm in the state to register a soil carbon project under Australia’s Emissions Reduction Fund – its owners believe it will help make the business attractive to private equity investors.

A beef farm in Tasmania has become the first in the state to register a soil carbon project under the Australian government’s A$2.55 billion ($1.8 billion; €1.6 billion) Emissions Reduction Fund.

Tasmanian Agriculture Company, which was founded in 2018 and produces grass-fed Wagyu beef, is working with soil carbon developer AgriProve on the project, which aims to generate additional financial return for the business and increase its sustainability credentials.

Tas Ag Co managing director Sam Trethewey told Agri Investor that the scheme could generate direct income of up to A$S100 per hectare within two to three years. He added that the project has the potential to generate 10 carbon credits per hectare, worth up to A$10 per credit.

Trethewey said an investor-led mindset had contributed to the decision to pursue the scheme, in addition to a desire to practise regenerative farming that benefits the environment. It has received investment from high-net-worth individuals in the past.

“We have an equity investor or two on board now and are backed by public funds in the form of a loan,” he said. “But we’ve approached this by asking how we can attract private equity investment or list on the [Australian Securities Exchange] in five to eight years.”

“If you’re an institutional investor and you want to invest in agriculture, but also something that’s really sustainable, I’d argue it’s quite difficult. The people who are truly doing regenerative farming haven’t built up much data around what they’re doing.”

Trethewey said Tas Ag Co is building data sets in three areas: soil health and soil carbon levels; animal production; and financial returns.

“How awesome will it be if we can show that we produce the same amount of food – and I think we can produce more – with a hundredth of the environmental impact, or even positively impacting the environment,” he said.

Tas Ag Co is around 10 months into the project with AgriProve, a special-purpose vehicle established by Corporate Carbon, a carbon contractor that works under the Emissions Reduction Fund. The firm has A$150 million to pay farmers who build soil carbon levels over the next decade through carbon abatement contracts backed by the federal government through the ERF.

After taking baseline samples and helping to implement increases in soil carbon on farms, AgriProve carries out further testing in the subsequent years, producing reports and generating carbon credits. The credits count towards Australia’s emissions reduction obligations under the Paris Agreement.

AgriProve managing director Matthew Wamken said more than 100 farms across Australia had registered with it to undertake soil carbon projects, which it views as a necessary step in helping to further institutionalize farmland investment.

“If you look at renewable energy, back in 1998 there was one wind turbine in Australia,” he said. “Now renewable energy is the disruptive paradigm for energy generation, and one of the key steps in that scale-up pathway was being able to get institutional finance into projects.

“That’s what we’re looking at here, and regenerative agriculture can follow a similar pathway. It’s all about data and the funding model to get institutional investment in so that farmers like [Tas Ag Co] can have access to ready finance that helps kick that practice along.

“From an institutional perspective, you’re developing trendline data about the underlying value of the asset by mapping out the soil resource, and organic carbon is directly related to productivity.”

Wamken said analysis by AgriProve suggests there is around 30 million hectares of land classified as pasture in Australia, with the potential for the abatement of 130 million tonnes of carbon per year.

“We’re talking about big numbers and this is material to Australian targets under Paris. We can expect to maintain that kind of level for 20 to 30 years before we run into any kind of peaking or hitting the maximum sequestration amount.”

Wamken said the potential figure of 10 carbon credits per hectare per annum could be achieved on farms in areas with good rainfall and with managers that were committed to the process. He added that outcomes were likely to differ depending on a range of factors.

For Trethewey, the soil carbon project will help prepare Tas Ag Co for a long-term future while contributing to the fight against climate change.

“It’s about building that data, wrapping it up, getting to the 5-8 year mark with an awesome product, then going to sophisticated investors and showing that this is de-risked,” Trethewey said.

“The only way we’re going to start farming like this en masse is to attract capital, and the only way we attract that capital is with data. What we’re looking at is trying to reverse climate change – if we just try to reduce emissions, we’ll fail. We need to take carbon back out of the atmosphere because it’s not supposed to be there – and this is a way to take carbon out and [put it] back into the soil.”