WHEN former stockbroker Chris Main and green energy consultant Shaun Colley decided there had to be a new way to invest in agriculture, the Carbon Farming Initiative (CFI) looked like being a key.
The company they formed, AgriCarbonInvestments, was built around a perversity of the CFI concept: if it includes soil carbon, it could reward farmers who have depleted soil carbon from their land, giving them the opportunity to earn credits by restoring carbon levels.
On the other hand, farmers who have built up their soil carbon levels through careful management may have much less capacity to earn credits through the CFI because gains are harder to make in soils already relatively rich in carbon.
So, the partners thought, why not buy hard-pushed farmland and rebuild fertility and carbon levels using regenerative farming techniques like managed grazing?
They reasoned that the investment should repay itself in traditional ways, through farm output and capital gains on improvement; but the additional hook for investors would be the earnings from carbon credits via the CFI.
"The problem is the practicality of the CFI, and having that as a revenue stream for the farmers," Mr Main told Fairfax Agricultural Media.
Even if a CFI soil carbon methodology was available - which it isn't - the "100 year rule" turns a cold shower on any investor interest. Under the rule, gains in soil carbon would have to be retained for a century.
"If we have to maintain soil carbon levels over 100 years, it makes it very difficult to be confident that you could sell the land because of the liability that would go with it," Mr Main said.
"We'd want to buy land, fix it up, and in time - say seven or 10 years - we'd sell it to recycle the capital into more land."
AgriCarbonInvestments has been talking to an investment bank with a portfolio of super investors wanting to invest in carbon-related products.
The realisation that the CFI couldn't deliver, and may not for the forseeable future, meant AgriCarbonInvestments had to re-write its prospectus around more traditional ways of earning a return.
The CFI bristles with integrity, but that has set some extremely high hurdles for would-be carbon innovators to clear.
Radio National's Background Briefing program recently reported that 5000 square kilometre Henbury Station in the Northern Territory may also be running into difficulty with the CFI process.
Henbury was bought by R.M. Williams Agricultural Holdings in 2011 for $13 million - except that taxpayers footed $9 million of the bill on the agreement that Henbury would be destocked and become part of the National Reserve System.
R.M. Williams planned to earn revenue by growing vegetation in the absence of livestock and claiming credits on carbon stored in wood and roots.
To do so, it needs a methodology approved through the tortuously rigorous process overseen by the Domestic Offset Integrity Committee (DOIC).
According to the ABC's Caddie Bain, R.M. Williams and some partners have submitted a "meth" along these lines, but so far it hasn't surfaced from within the CFI system, even for public comment.
Until a suitable methodology is made available through the CFI, Henbury will have to rely on the voluntary carbon market, which is unlikely to deliver anything like the $23 a tonne for carbon available through the CFI.
However, according to Background Briefing, Qantas has said it will take all the voluntary credits that Henbury can produce.
Meanwhile, AgriCarbonInvestments is regrouping.
It is sticking with its original model, which is to have investments in run-down farmland managed by farmers with the proven ability to regenerate farming landscapes. It has put together an advisory board that reflects the same interests and capabilities.
For now, building soil carbon won't provide the benefit of an extra income stream. But building carbon remains a key objective of AgriCarbonInvestments.
"The guys we talk to say they are already making money out of the increased carbon in their soils, through increased water holding capacity, better mineral cycling, greater climatic resilience," Mr Main said.
"That's more than enough good reasons to do it."