Australian farm owners – including media mogul Rupert Murdoch – are earning money for putting carbon into their soil. But New Zealand farmers are at a weird disadvantage, as Eloise Gibson reports.

It’s September 2022, the end of New Zealand’s warmest winter on record, and Guy Hudson is sitting on a park bench in central Sydney, pointing at an ordinary-looking slice of Australian dirt.

This particular piece of earth has been revealed by a small digger, which is cutting a trench in this city park so that workers can get to pipes underneath.

The ground is littered with cigarette butts and pigeon poo. Outwardly, there’s nothing to suggest that it’s anything more than typical city dirt, squashed by foot traffic and surrounded by heavy concrete roads.

But to Hudson, chief executive of agricultural start-up Loam Bio, all soil holds potential.

Hudson won’t divulge all the secrets to finding valuable soil microbes, but one of his US staff found a specimen outside his childhood bedroom window. One tip is to look for a healthy plant. “In a drought there’ll be certain plants that look healthier than the others, and you can’t quite work out why. Those are the ones you want to isolate from,” he says.

Investors are persuaded. Loam has raised more than $100m to bring its concoction of soil microbes to farmers. Its secret sauce is a fungal seed coating, which the company says boosts plants’ ability to suck carbon into the soil. It’s worked well enough that growers of crops like barley and canola have used the product to get into the carbon market.

In any country, boosting soil carbon is good for productivity and the climate. But in Australia, soil carbon is also a cash crop in its own right.

A quick reminder: Plants breathe in carbon dioxide, using sunlight to convert the carbon into material to build their bodies. When they die, some of this plant material remains in the ground, along with organic carbon from dead microbes and other critters.

Australian farmers can get paid for making changes such as converting land from growing crops to permanent pasture (which keeps more carbon in the ground), or tending their pastures better (ditto).

According to S&P Global, as of February 2023, Australia’s Clean Energy Regulator (CER) had registered 433 soil carbon-sucking projects as being eligible for carbon credits, which farmers can sell for anywhere up to $50 a tonne.

Even Rupert Murdoch, possibly Australia’s most infamous enabler of climate change denial, is in line for a slice of the pie. His New South Wales sheep station last year made a deal with Microsoft under a voluntary US scheme to earn around $500,000 for sequestering soil carbon (the deal was later criticised for overconfident maths).

New Zealand tends to assume it’s ahead of Australia and it’s coal-fired economy when it comes to tackling climate change.

Yet New Zealand doesn’t have a similar scheme.

On its face, this seems surprising, given that New Zealand has higher soil carbon, on average, than its neighbour.

Huge potential. Major risk

While cars and factories get more attention, about 12% of the carbon dioxide released by humans globally has been from disturbing the soil.

The world’s soils hold an incredible amount of carbon – more than the atmosphere and all the plants on the planet combined. They gain it slowly, but bleed it fast, making soil carbon both a possible climate fix and a risk.

In the right conditions, soil carbon can stay put for decades or hundreds of years.

Senani Karunaratne, a Senior Research Scientist and team leader in Carbon Accounting and Functions at Australia’s CSIRO, explains that organic soil carbon is divided into two main types (there’s also a third one, but it’s less relevant to this topic).

At first, soil holds a more transient form (a compost-like material made from recognisable bits of plants, known as Particulate Organic Carbon, or POC). As it breaks down further and binds to mineral particles in the soil it becomes a more resilient type, which can last 100 a years or more. This is called HOC – humus organic carbon (not to be confused with hummus, the tasty chickpea dip).

A living, growing system needs both. But clumpier HOC is more protected from attack. “It’s locked up and harder for the microbes to eat,” says Budiman Minasny, a leading soil researcher at the University of Sydney.

By stopping plants from growing while microbes keep munching, dry conditions can cause a carbon bleed.

But people have the power to rebuild it.

How much? Well, at the peak of soil carbon fever, in 2015 (the International Year of Soils, if you missed it), France led a campaign with the astonishing claim that boosting soil organic matter by just 4 parts per thousand (0.4%) a year could absorb almost the equivalent of the carbon dioxide being added to the atmosphere each year. In other words, it could halt climate change.

In New Zealand, researchers once estimated increasing soil carbon under pasture by just 1% a year – or one tonne of carbon per hectare – could (at least temporarily) counterbalance the entire country’s fossil fuel emissions.

These kinds of numbers are theoretical – “aspirational”, in the words of Minasny

“It’s probably impossible [to achieve that] for all places in the world,” Minasny says of the French 4/1000 goal.

But buzz around these targets helped prompt scientists to start calculating what might be genuinely achievable.

In Australia, after factoring in economics, the figure was put at anywhere from 5-29 million tonnes a year until 2050.

Natural limits

How much room there is to add carbon depends on the carrying capacity of the soil, amongst other things.

Even with perfect farming practices, each type of soil has a natural limit. Light, sandy soils, for example, hit their limit sooner than heavy clayish ones.

How much carbon is actually stored under that limit – and how long for – depends on a delicate balance of rainfall, temperature, microbes, plant health, soil nutrients and other factors.

Because the gains level off as soil approaches its limit, soil could never completely fix climate change. All it can do is buy us time while countries plug their sources of carbon dioxide.

But it’s time that governments could do with.

According to the Intergovernmental Panel on Climate Change, emissions are now so massive that there is no pathway left to staying within 1.5C (the safer zone most governments have committed to), without sucking carbon dioxide back out of the atmosphere.

Big hole, big profits?

With carbon forestry looking set to hit the limits of available land for tree-planting, soil might be the next frontier.

New Zealand farmers are set to face a price on animals’ methane and nitrous oxide emissions from 2025 or 2030, depending on who wins October’s election.

Many farmers are looking for ways to offset the cost of their greenhouse gases, using carbon sequestration on the farm. In Australia, farmers can use their soil carbon credits to offset their own emissions, or sell them on the carbon market.

The Lucky Country’s embrace of soil carbon hasn’t been trouble-free, though.

There was an infamous moment in 2021, when former Australian Prime Minister Scott Morrison announced a ‘net zero’ plan for the country which required sucking carbon into soil at rates well outside the boundaries of physical reality.

And although the government has touted more than two billion dollars in potential benefits, a recent S&P global report found a 1,000-acre farm would earn only about US$6,000 a year for credits, based on generating around 200 credits, each valued at $40 (after taking into account third-party fees).

At times, regulator the CER was accused of being far too loose on approvals (mainly for forest regeneration projects, mind you).

Then it tightened up – only to face accusations that compliance cost farmers more than doing the projects themselves.

Now it has reached a compromise. It lets farmers use a mix of modelling (cheaper, but more uncertain) and field measurements (accurate, but costly) to estimate their carbon gains. There’s a penalty for farmers whose estimates have a wide margin of error.

The price of carbon credits is expected to rise, while compliance costs should fall under a new government focus. Karunaratne says scientists are also finding ways to bring the costs of measurements down.

But in general, scientists say the system is fairly robust now.

“It’s very detailed, and people complain that it’s too detailed, and it’s too hard,” says Paul Mudge, a top soil science researcher at New Zealand’s Manaaki Whenua – Landcare Research.

“But it is pretty rigorous.

“If farmers want to do this, it’s all laid out,” he says.

“And New Zealand has definitely gone ‘no, we’re not going near that’.”

Finding the elusive “something else”

If New Zealand did want to go near it, there’s no reason why it couldn’t adapt the Australian rules, he says.

But first, we’d need evidence of what works in New Zealand conditions. The Aussies have that. We don’t, he says.

“We do not yet have any strong evidence that if you do X, Y or Z you will definitely increase soil carbon in New Zealand under constant land use,” says Mudge.

“We don’t have evidence to say, if you go from ryegrass and clover pasture to a more diverse pasture, you will gain 10 tonnes of carbon.”

So, have the Aussies really beaten us on a climate action policy, and why?

“I think they’re ahead of us in research in soil carbon in general,” Mudge says.

“And I think that they have just had some very active people that have pushed for this, and their government has embraced it and invested, obviously a lot of money in going through a very, very detailed… determination (of the rules).”

But the dusty country has another, more counter-intuitive advantage that is nothing to do with investment, according to Sydney’s Minasny.

Its soil is simply more trashed than ours. And that gives farmers more room to improve.

Least improved

To earn a credit in Australia, a farmer has to do something extra. They can’t earn credit for farming-as-usual, or natural variations that happen independently.

Compared with New Zealand, Aussie soil has been cultivated for longer, says Minasny (the University of Sydney researcher), and it has more cropland (which is usually depleted, compared with pasture).

Even Australian pastures are often different from New Zealand’s – bigger and less closely-tended. That means finding something to boost soil carbon is easier.

For example, since both over- and under-grazing can hurt soil carbon, New Zealand’s close system of rotational grazing of dairy land tends to perform better already. (It’s also possible one reason Aotearoa’s dairy farms do well is because they’re often on already high-carbon volcanic soil. Teasing this out is one of the many areas of research).

“Australia is huge, and there are not many people rotational-grazing,” says Minasny. “To make that work in a huge operation is [difficult]. There are also many, many unimproved pastures (in Australia) that are not well managed.”

New Zealand farmers are also helped by a temperate climate and plentiful (albeit sometimes too much) rain.

“For well-managed pasture, as you have in New Zealand – and even for Australian well-managed pasture – it’s difficult to get to the next level, because it’s high already,” says Minasny.

“That means that you need to do something else that’s different to get to the next level.”

Just what that “something else” might be, has been studied for years, without generating obvious solutions.

Ideas explored so far include adding phosphorus fertiliser (no clear benefit shown), adding nitrogen (no strong evidence in New Zealand conditions) and irrigation (which, weirdly, may possibly reduce soil carbon, despite making the grass grow faster – but the jury is still out on that one).

A newer strain of studies are testing so-called regenerative agriculture techniques, such as planting more diverse, deep-rooted pasture (which makes sense, but isn’t yet backed by strong evidence in New Zealand).

Biggest survey of Kiwi soil

A year before I sat on the Sydney park bench with Hudson, Mudge and veteran University of Waikato soil scientist Louis Schipper gave advice to the government/farming climate partnership He Waka Eke Noa on what it would take to get a soil carbon credit system running in New Zealand.

They laid out a substantial list of work, noting that much of the critical research was still reliant on short term funding.

One example is a major survey Mudge is leading – the biggest soil carbon test New Zealand has done.

Designed as a 12-year monitoring project, it involves scientists gathering tubular sections of soil down to 60cm deep on 500 plots, representing the five main types of farmland.

Currently, the Government assumes, without comprehensive evidence, that farm soils don’t gain or lose any carbon unless somebody completely changes what they farm on top of them – going from forest to farmland, for example, or from grass to cropping.

The one dramatic exception is drained peat soil, mainly found in dairying land in Waikato and Southland, which makes up less than 1% of New Zealand’s land, but loses as much carbon annually as is pumped out by the Huntly fossil fuelled power station. Re-wetting this peat could stem the losses, but for most soils there’s less certainty.

By measuring how other farmed soils are changing already, scientists will get a better idea of whether certain kinds of management can make a difference. There have been studies before, says Mudge, but the sampling tended to be clustered around scientific centres in Hamilton, Christchurch and Palmerston North.

The intention was to sample the same plots nationally every four years. But Covid slowed the first round, so the initial measurements will take around six years.

They’re on track to finish the first round of samples this year, Mudge says – and they’ll also start re-sampling for the second round of measurements by the end of 2023.

At this point, the project only has funding until 2025 – not long enough to finish the second round of measurements.

At the same time, various Government- and industry- funded projects are testing different management tactics.

“If it came out with really strong evidence, there’d be a much stronger case for farmers to say, hey, we should be credited for this,” says Mudge.

Keeping it in the ground

Over the ditch, meanwhile, the next big challenge is proving the carbon will stay in the ground for a long time.

Once again, Australia is ahead of us in studying this.

Loam, for example, markets its seed coating based on claims it boosts the plant’s ability to store a long-lived form of carbon, which can remain in the ground for hundreds or even thousands of years. The company has a team of researchers studying the mechanisms for turning short- into long-lived.

Karunaratne says the difference between can be stark when it comes to losing new carbon storage. “Imagine you have a good couple of years, it’s raining, everyone is happy, and then you get a drought hit. If your soil contains a lot of POC (the more vulnerable form), the chances of losing it are much higher,” he says.

Australia’s carbon credit system doesn’t distinguish between carbon types, but Karunaratne says there may be interest in changing that, as understanding increases.

Research he was involved in tested hundreds of samples and found some had 50% of total carbon in POC, while some had only 25%.

There are different theories about what boosts conversion from short to longer-lived, however the researchers say it’s most likely an interaction between many things, potentially including fungi and other microbes and root systems.

While New Zealand hasn’t focussed much on the different forms, Mudge says there’s no reason why it wouldn’t be just as relevant here.

“If it’s all in particulate organic matter and you get a change in climate or management or something, you could quite easily lose some of that carbon,” he says.

Given the risks that the gains could be lost, should New Zealand even try to follow Australia?

Mudge stresses he’s no policy guy, but he doesn’t see any scientific reason why not – when and if the evidence is behind it.

He doesn’t think storing carbon in soil is any less reliable than storing it in trees, something New Zealand’s Emissions Trading Scheme routinely grants credits for.

“People will say, ‘oh soil carbon is uncertain’, but I would say, ‘what about forests?’” says Mudge. “It’s much more likely that your forest is going to get a disease or burn down, than that carbon stored in the soil is going to be lost.”

“In the Australian system they do have a buffer pool (of surplus credits)… so you don’t get penalised if there is a natural event outside your control.”

“Of course it doesn’t work if it’s a climate change-related event that affects the whole continent,” he adds.

How climate change will affect soil carbon remains to be seen, he says.

But that’s no reason not to try to make things better, says Mudge.

“You might actually have a management practice that means that you lose less carbon during a drought, and that’s still a good thing.”

In time, New Zealand will have enough information to say if its soil can help the climate – while possibly giving farmers a welcome new revenue stream.

So longer as climate change itself doesn’t mess things up.

This story was reported with travel funding from the Aotearoa Science Journalism Fund.