Analysis of Australia’s Carbon Farming Services Industry

Australia's carbon market has matured into a sophisticated industry supporting more than 2,800 registered carbon projects, yet relatively little attention has been paid to the businesses responsible for developing and managing those projects on behalf of landholders.

Mills Oakley has released what is believed to be Australia’s first comprehensive analysis of the carbon farming services industry, examining the commercial models, market structure and governance arrangements supporting more than 2,800 registered projects under the Australian Carbon Credit Unit (ACCU) Scheme.

Reason for Analysis

Mills Oakley acts as legal advisors for a wide range of landholders, carbon service providers (CSPs), businesses, financiers, government and other organisations in connection with the establishment of ACCU Scheme projects across Australia. A typical carbon project involves a commercial relationship between a landholder and a specialist carbon service provider.

When assisting landholders to draft and negotiate carbon service agreements with CSPs we are often asked about the various business models in the market. This analysis is an introduction to the various CSPs in the market, their preferred methods, business models and other relevant differences.

When considering a carbon project our advice to landholders is always the same – understand the opportunities and risks before you enter a 25 or 100 year binding legal relationship. While carbon projects benefit the environment and provide substantial long-term revenue they can also:

• lower the value of land (depending upon your commercial arrangements with the CSP);

• make selling land more complicated (as the buyer of land typically must accept all obligations of the selling landholder in the carbon service agreement); and

• limit how landholders manage their land. By increasing landholders’ knowledge of the market we hope to encourage more landholders to conduct carbon projects. 1

Australia’s Carbon Market - Executive Summary

The Australian carbon market is now 15 years old with established players, different business models and over 2,800 registered projects generating millions of ACCUs per year.2

Mature, Growing Market: 20+ active providers, 2,800+ registered projects, 180M+ ACCUs issued.

Market Concentration: Top 4 providers involved with ~72% of projects; top 3 providers account for approximately ~63% of projects.

Different Business Models: 50% use ACCU revenue share, 23% fee-for-service, 27% hybrid/flexible.

Legal Structure: Both “CSP as proponent” and “landholder as proponent” models are common. See Carbon Project Agreements – Landholder Risks and Recommendations for a detailed discussion of the legal issues and risks involved when commencing a carbon project.

Market Participants Legal Structure

Most carbon market specialists in Australia fall into the following categories:

1. Specialist Carbon Developers: End-to-end project management (e.g., AgriProve, Climate Friendly, GreenCollar, Select Carbon, CarbonLink, RegenCo, CarbonSync).

2. Agribusiness Service Providers: Agricultural companies expanding into carbon (e.g., Elders, Lawrie Co). 3. Environmental Consultancies: Advisory and fee-for-service (e.g., Anthesis Group, Crest Environmental, Carbon West, Planfarm Terrawise, Carbon Management Services).

4. Specialist Method Providers: Focused on specific methods or regions (e.g., Australian Natural Capital, Canopy NBS, Carbon Positive Australia). 5. Emerging Technology Providers: Developing and utilising proprietary tech (e.g., Carbon Asset Solutions, New Growth Australia)

Market Concentration

The market demonstrates significant concentration, with AgriProve representing approximately 44% of known registered projects among surveyed providers. The top 3 providers account for approximately 63% of projects and the top 4 providers account for approximately 72% of projects.

Some landholders have multiple projects over their land and holdings, so the numbers do not necessarily correlate to ACCU production or land under contract.

methodology distribution

Current geographic coverage

• National Coverage: 10 providers (e.g., AgriProve, Anthesis, Climate Friendly).

• Multi-State: 7 providers (e.g., Australian Natural Capital, Canopy NBS, Select Carbon, RegenCo, GreenCollar).

• Single State/Region: 5 providers (e.g., Carbon Sync, Crest Environmental, Planfarm Terrawise).

Business models

Business Model Distribution

• ACCU Revenue Share: 50% of providers (e.g., AgriProve, GreenCollar, Carbon Sync).

• Fee-for-Service Only: 23% (e.g., Elders, Carbon West, Planfarm Terrawise).

• Hybrid/Flexible: 27% (e.g., Anthesis, Canopy NBS, CarbonLink, New Growth Australia, Climate Friendly).

Sample Fee Structure

• ACCU Revenue Share: Typical ACCU split is 65–90% landholder / 10–35% CSP; some models include upfront fees and ongoing agronomic support.

• Fee-for-Service: Landholder retains 100% ACCUs; all fees typically paid upfront.

• Hybrid: Flexible arrangements, including turnkey solutions and advisory roles.

To illustrate the broad range of business models in this industry, below are examples of business models we have reviewed

Cost Components Analysis

Typical Costs:6

Compliance costs for registering, baselining and auditing a project vary significantly across ACCU methods. Certain methods require expensive measurement-based methods (requiring field physical sampling) while other methods only require model/desktop-based methods (utilising government software and remote sensing).

• Cost to complete registration process ($20-60k)7

• Conducting a baseline survey ($15-50k)8

• Audit ($10-30k/audit) • Compliance ($5-15k/year)

Soil carbon methods are typically the most expensive due to the need for:

• specialised GIS software and consultants;

• professional, independent drilling rigs to extract physical core soil samples down to a depth of 30cm to 1m across stratified zones;

• laboratory tests to measure total organic carbon inside samples; and

• auditors to verify subsequent samples

Vegetation and forestry methods establish baselines using satellite imagery while agricultural emission methods (methane reduction) rely on historical business records – neither involve physical field-testing costs so are cheaper than soil carbon methods.

Minimum Property Sizes:9

• Soil carbon (400-1,000 ha)

• Environmental plantings (4-1,000 ha)

• HIR10 (10,000-20,000 ha)

Advantages & Disadvantages by Provider Type

The advantages and disadvantages listed below came from our surveys and discussions with over 20 CSPs – these are anecdotal results that may be affected by various biases.

Proponent Structure 11

CSP as Proponent: 36% (CSP registers, manages, and bears compliance risk).

Landholder as Proponent: 45% (landholder registers, CSP acts as agent/advisor).

Flexible/Both: 18% (structure depends on project/landholder).

Trend: Our survey indicates there is a growing preference for landholder-as-proponent among established players.

Stakeholder Relationships

Certain prominent CSPs have significant beneficial ownership relationships with the following key stakeholders

Article references below

Authored by Matt Egerton-Warburton & Scarlett Southey of Mills Oakley

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Any reproduction, republication, distribution or other use of this material requires the prior written consent of the author and copyright owner. Publication of this article on this website does not grant any right to reproduce, republish or otherwise use the content.

To request permission or for further information, please contact:

Matt Egerton-Warburton Partner, Mills Oakley https://www.millsoakley.com.au/our-people/matt-egerton-warburton/

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Matt specialises in advising domestic and international clients on natural capital matters with a particular emphasis on the Australian ACCU Scheme and the NSW Biodiversity Offsets Scheme.

Matt’s clients include rural landholders, carbon service providers, Safeguard Mechanism participants, government regulators, industry groups, aboriginal corporations, forestry companies and other participants in the carbon and biodiversity markets.

Matt’s expertise includes:

• Natural Capital, Carbon and Biodiversity markets

• Corporate and commercial law

• Corporate governance

Recent Matters:

• Acted for Flinders Port Holdings on its acquisition of land and establishment of a carbon project in South Australia.

• Acted for multiple prominent Australian pastoral companies on the establishment of carbon projects.

• Acted for a PNG based timber company on the establishment of a Gold Standard forest preservation project.

• Acted for a Victorian wetland fund establishing a blue carbon project.

• Acted for a NSW based property fund selling species and ecosystem biodiversity credits to a renewables project.

• Acted for a WA pastoral company seeking to mediate and renegotiate its arrangements with a defaulting service provider.

• Acted for Regen Farmers Mutual on the establishment of precedent carbon agreements for their members. • Acted to establish a biodiversity fund seeking to provide liquidity, hold and trade biodiversity assets in NSW and offshore.

Scarlett is a corporate lawyer with a growing speciality in Carbon Markets, alongside experience in M&A and Corporate Governance.

1 Disclaimer: This report is prepared for information purposes only. No reliance should be placed on the contents of this report. The information has been sourced from public records and surveys with industry participants and is subject to change.

2 Data in this report is sourced from publicly available information published by government regulators and industry bodies, including the Carbon Market Institute’s Marketplace Directory

(https://carbonmarketinstitute.org/organisations/), and our direct survey of carbon service providers.

3 Rankings based on number of registered projects conducted. You can have multiple projects on the same land.

4 Market share expressed as a percentage of registered projects among surveyed providers.

5Lawrie Co acts as a referring agent and front-end advisor to landholders, utilising AgriProve as its backend service provider for project registration, monitoring, and management. It does not operate an independent carbon project capability and for the purposes of this report we report them on a combined basis with AgriProve. However, Lawrie Co's products and land management system can be used independently of any AgriProve carbon project - landholders need not be an AgriProve participant to access them. While all of Lawrie Co's registered projects to date have proceeded through AgriProve, other providers may also recommend its products for building soil carbon.

6 The comments below are indicative in nature, drawn from clients and industry participants. This is not a scientific study and should not be relied upon. Costs vary widely depending on size of project and project methods.

7 Establishing a carbon project with the CER is a significant compliance program involving the submission of management plans, baseline surveys, legal agreements and other documents.

8 A base line survey establishes the "business-as-usual" reference point against which all future carbon sequestration or emission reductions are measured.

9 Some providers aggregate small properties to achieve scale.

10 The Human-Induced Regeneration (HIR) method expired on 1 October 2023 - no new projects can be registered under this specific method.

11 Landholders and CSP can choose who becomes the Project Proponent. The Project Proponent has sole legal liability to the CER for the conduct of the Project. The Project Proponent receives all ACCUs distributed by the CER.