The Carbon farming industry is nascent and full of potential. All shiny and new, offering old folks from the bush a degree of enthusiasm, if not hope, in the form of a Carbon Credit.

Such nuggets are the talk of big banks, a source new spring for pastoral leaseholders, the hope of emitters looking to stretch the yarn of their business model, a glistening prospect for speculators and plausibility for governments. To farm such a credit mostly means working the land, and for most of the popular methods in the Australian context, where Native Title extends.

Demand for the credits, particularly those born from the compliance and opposed to the voluntary regime, is deep. Globally, governments are demanding carbon neutrality in design of output and that is increasingly inferring if not demanding plausible, carbon friendly change in facets of end production and delivery.

Such is the scale of change, big money is flowing. In his 2024/25 budget speech the Federal Treasure Mr Jim Chalmers noted: "The world is committed to net zero by 2050. This will demand the biggest transformation in the global economy since the industrial revolution."

The Australian Carbon trading system which requires carbon unit production is a key plank in this architecture and has been attracting huge volumes of money, at remarkable value.

Some pundits, including Professor Andrew Macintosh (ANU), will point you towards problems within the Carbon Credit regime method, particularly in concern to the most popular method, Human Induced Regeneration (HIR). Simply, this method of creating carbon credits is allowing established vegetation to regenerate by removing grazing or other farming pressures. This method is no longer functional for new projects, awaiting a polish and upgrade of the rules around it.

There is some question about the legitimacy of these projects, the functional truth is the Independent Review of Australian Carbon Credit Units, December 2023, the "Chubb Review," commissioned by the Federal Government, noted: "The Panel concluded that the HIR method is sound – particularly as it is administered by a robust regulatory framework,' and "Similarly, if proponents have already commenced an activity, the Panel does not think that they should be automatically excluded from the scheme but that evidence-based baselines should be determined at the point they enter the scheme so that they are only credited for abatement generated after the project's commencement date."

The projects, implemented on vast tracks of the Australian Savanna, largely on the Indigenous Estate, on Pastoral Lease land, are proposed to move ahead if they can negotiate Indigenous consent. The notion of consent being a factor of Part 4 of the Carbon Credits (Carbon Farming Initiative) Act 2011.

Whilst many jurisdictions, have created policy statements suggesting that best practice for the form of consent is Indigenous Land Use Agreement (LIUA), the Act only requires a properly authorised signature to a standardised form. These projects are by law, at least 25 years in duration. They are therefore generational by term and require absolute adherence to the proposed program.

Such programs could include matters akin to fundamental concern and rights for pastoralists and Indigenous communities alike such as fencing, land clearing, water management, fire management, stock density and where appropriate, employment and contracting for services. This is besides the actual function being facilitated by most methods, thickening of wooded country. Consent is thereby no mere consideration and leads this author to consider whether in fact mere consent is enough.

It may be that the communities could be better suited to being a party to contract or Deed, or at least, maintain the right to review as to regular intervals over the duration of the life of program. It seems that each jurisdictional right enabling the pastoralist to undertake activity to collect the Carbon Credit, is in most cases through state permit. A staged developed, on the face of it, without Indigenous consultation. This seems to augment the recent discussions as to whether the Native Title regime is fundamentally meeting its objectives.

The industry conjecture is that Project Proponents are offering communities five per cent of the Net income from the liquidation of carbon credits and a few jobs. There is no apparent reason for the financial compensation to the communities to be set at five per cent, only industry banter about that number is muted in an early-stage planning between technical experts and bureaucracy. Interestingly though, most projects have not yet been concluded which suggests that the offer does not meet market expectation, and that promotes a few matters of significance for the industry.

The most poignant for the Directors of these firms is that the legislation accompanying only provides for a period of five years from date of project registration to conclusion of final requisite interested party sign offs, including Indigenous consent until effectively, the project is back to the drawing board.

There are actions that the proponent can make upon failing to obtain the consent, which gravitate around the notion of expensive and tiresome mediation, or the blunt instrument of requesting the regulator to remove the requirement of Indigenous consent at all. Processes that are likely to be vexed and tinged with the likelihood or troublesome unforeseen circumstances.

Coupled with that is the curious nature of capital markets. There are big bets being made by bigger players intersecting with would be capitalists seeking material wealth. Mid last year for example, KKR was sold to Canadian pension giant Ontario Teachers' Pension Plan in a deal understood to value GreenCollar (A Carbon Credit project proponent) at close to $800 million.

There are numerous examples in the Australian market of enterprising capitalists creating extraordinary value for themselves in this frontier. Significant capital is flowing to the sector at significant valuations. Even more interesting is that fact that it seems Australian Carbon Credit Units can be "accrued" on balance sheet albeit but not sold, prior to the provision of Indigenous Consent being obtained. It would be an interesting read to understand the basis for such and accrual.

Often the lost story of business seeking to gain on enterprise facing Indigenous rights is in fact the promises being made by the counterparty to the community to the capital facilitating the deal. Whilst this is an ordinary function of commerce in a market led system, failure of market ought to be managed.

The regulated and thus formal market for Australian Carbon Credit Units is presently being scrutinised and tightened by the Australian bureaucracy who are admirably attempting to underpin a very difficult emerging market with the requisite ingredients for a confident and robust regulated carbon credit trading system, perhaps a review of Indigenous rights and resources within the sector are worth further scrutiny.

Benjamin Halliwell is an experienced capital markets adviser and principal of Jabiru Capital, holds a practicing certificate for Law in NSW and is a sub editor of Udayana Journal of Law and Culture.