Storing carbon dioxide in soil and plants will deliver less than five per cent of the emissions cuts assumed under the Coalition's direct action climate change policy, according to government estimates.
Climate change department officials told a Senate estimates hearing on Monday night that soil carbon and revegetation projects are currently expected to deliver just 3.7 million tonnes a year of emissions cuts by 2020.
Labor says these new estimates blow a hole in the Coalition's direct action climate change policy, which suggested up to 85 million tonnes per year of carbon dioxide cuts could come from soil carbon projects alone by the end of the decade.
Australia will need to reduce its emissions by 160 million tonnes from 2000 levels to meet an unconditional, bipartisan target of a five per cent cut in greenhouse gases by 2020.
A central pillar of the direct action policy is a $2.55 billion emission reduction fund to pay for companies and landowners to reduce emissions through measures such as soil carbon, energy efficiency and waste coal mine gas projects.
A spokeswoman for opposition climate action spokesman Greg Hunt said the Coalition had not stipulated a set allocation of abatement to come from a particular source in its direct action policy, which was first released in 2010.
She said the Coalition was more confident than ever of reaching its targets and since the release of the policy the potential to cut emissions had increased while the costs had gone down. She added at the time the Coalition had made no allowance for revegetation, with it now becoming clear significant opportunities existed in the area.
''Our policy has never stipulated a set allocation of abatement to come from a particular source. We have always said that it would be determined by the market, based on verified abatement at the lowest cost,'' she said.
''We expect soil carbon to be part of that but have not set a figure. This was clear in the announcement in 2010 and those claiming otherwise are wrong and have failed to accurately read the policy.''
In a supporting press release for the policy in 2010, the Coalition said: ''The single largest opportunity for CO2 emissions reduction in Australia is through bio-sequestration and the replenishment of soil carbon in particular.''
The press release goes on the say: ''The Coalition will use the Emissions Reduction Fund to deliver about 85 million tonnes per annum of CO2 abatement through soil carbons by 2020 with an initial purchase of 10 million tonnes of abatement through soil carbons by 2012-13.''
The government allows landowners and farmers to create carbon credits by taking action to cut emissions via a range of land based projects through its Carbon Farming Initiative. Those credits can then be sold to large companies to cover their emissions under the carbon tax.
The department's Shayleen Thompson said early estimates of annual carbon dioxide cuts on cropping land from soil carbon projects was 0.7 million tonnes. She said another 2.93 to 3 million tonnes of carbon dioxide was estimated to be reduced through revegetation.
Parliamentary Secretary for Climate Change Yvette D'ath said: ''These estimates make it clear that there is no way the Coalition's plan can meet even Australia's unconditional emissions reduction target [of five per cent] by 2020.''
''They also leave the Coalition with a massive budget black hole in their policy,'' she said.