Farmers and landowners could be able to sell carbon offsets from native forest protection, tree planting and improved farming practices to companies as part of
Labor's carbon scheme.
But the plan, introduced to Parliament yesterday, puts the government on a collision course with the Greens, who believe it has the potential to undermine the effectiveness of carbon pricing.
The carbon farming initiative (CFI) enables farmers and landholders to sell carbon offsets generated from activities like native forest protection, landscape restoration, planting trees and better farming practices to companies.
These can include internationally recognised carbon offsets but also "voluntary" offsets which companies can buy to lower their carbon footprint.
At present prices of offsets in Australia range from as little as $3 to $40.
NFF president, Jock Laurie, said the government had made significant movement on a number of flaws in the draft legislation.
But the Greens indicated they had a number of concerns about linking the CFI to a carbon price scheme, including its potential to undermine efforts for more significant emissions reduction.
Greens deputy leader, Christine Milne, said she was not satisfied that the government understood the huge amount of offsets that carbon farming could create.
She was also concerned about its potential to repeat distortions in the land and water market caused by managed investment schemes.