What are carbon credits?

In an attempt to reverse our 'carbon imprint' or negative impact on the environment, carbon credits have become the latest buzzword. Carbon dioxide is one of the greenhouse gases contributing to global warming and climate change. In fact, all living things are part of the carbon cycle. Carbon is continually turned over during the natural progression through birth, growth, death and decay. People are actually around 18% carbon, wood is around 50% and the organic matter of soils is around 58%.

When people think 'carbon' they usually think trees, but in reality 75% of carbon in the terrestrial biosphere is in the soil. Healthy grasslands may contain over 100 times more carbon in the soil than on it. It is argued that billions of tons of organic carbon have been lost from agricultural soils and continue to be lost, through inappropriate land management practises. For this and other reasons, agriculture is the second largest contributor to greenhouse gas emissions in Australia.

When carbon is removed from the atmosphere and stored in the biosphere it is said to be sequestered. Places where carbon is stored are called carbon sinks.

Carbon credits are a financial reward for activities that reduce the levels of carbon dioxide accumulating in the atmosphere. There are many different carbon trading systems and schemes some of which begun as early as 1995. One credit, as designated by an emission trading, emission reduction, renewable energy or abatement certificate, represents one tonne of carbon dioxide equivalent. Carbon credits for sequestration are a type of offset trade and the carbon storage may be leased or sold.

In Australia, the first government legislated carbon trade occurred in NSW, and was valued at over one million dollars in March 2005, between Forests NSW and Energy Australia. The carbon credits were for carbon sequestered in hardwood timber plantations in northern NSW. Carbon trading is a multi-million dollar industry in Europe and the United States. Forecasters have suggested that carbon trading is poised to become the world's largest commodity market.

Organic carbon (such as humus) has many benefits in soils, making effective carbon management the key factor for productive farms, revitalised catchments and a greener plant. Carbon credits for regenerative land management would help to 'cash flow' the multiple natural resource management and environmental benefits that accompany increased levels of carbon in soils.