On Peter Yench’s sheep farm the bulldozers are ready. When they surge forward, trees will be ripped from the earth, clearing the land for grazing and crops.

Elsewhere another vast stretch of sparse, dry native forest stands on Mr Yench’s land. It is hardly the Daintree, but like all forests it is a sink for carbon dioxide. If it too is brought down then the CO2 stored in the trees will be released, exacerbating climate change.

Mr Yench holds a permit to clear on his western NSW properties, Bulgoo Station and The Meadows. Traditionally the more land a grazier could clear the more sheep they could run, bolstering their economic return.

Reminded of an old farming adage that “the only good tree is a dead tree”, Mr Yench smiles in recognition, but retorts: “yeah, but that’s not right”.

“You got to have both, your balanced country. That’s the way I look at it.”

Instead of clearing everything, Mr Yench has promised to keep almost 7000 hectares of forest on Bulgoo standing for 100 years. In exchange he receives carbon credits under the federal government’s Carbon Farming Initiative. It has proved a healthy alternative revenue stream.

Quietly, another 30-odd landowners in western NSW have promised to do the same or are exploring the option. Like Mr Yench, many are based around the mining and grazing town Cobar. It has quickly become an unlikely national centre for carbon farming.

Mr Yench says the new income is turning around marginal farms in the western district, allowing landowners to reinvest in their properties. Mr Yench used his first tranche of carbon cash to buy The Meadows and put on new workers.

But the Abbott government’s repeal of the carbon price, and the political uncertainty surrounding its much-criticised replacement, direct action, could bring it all undone.

Under the carbon price, polluting companies bought the credits generated by Mr Yench and others. With the scheme repealed, the only immediate potential buyer is now the federal government through the $2.55 billion it has committed to pay for emissions cuts under direct action.

That money is called the Emissions Reduction Fund. But the Coalition is struggling to win support for it in the Senate.

If a way through cannot be found then 140,000 hectares of native box eucalyptus, cypress pine, acacia and other semi-arid woodlands in the western district will again be under threat of clearing.

Behind the scenes a company called GreenCollar is responsible for almost all the western NSW forest projects. So far they say 12 million tonnes of carbon dioxide emissions have been saved and $25 million generated for farms.

GreenCollar has been working with farmers in Cobar for almost three years. They do the technical grunt work and in return take a cut of whatever carbon credits are generated.

Before credits can be claimed under the carbon farming program a set of rules must be written and then ticked off by the government so all projects of one type - in this case avoided clearing of native forest - work to the same standards.

Once a landowner is interested, and they hold an applicable land-clearing permit indicating a realistic threat of clearing, GreenCollar maps the type, size and density of the forest involved by surveying hundreds of plots.

From there they calculate how much carbon is stored in the trees, and therefore how many credits the farm should claim. Land that would not have been cleared or does not meet a standard definition of forest is excluded.

GreenCollar had kept its work relatively quiet, wary of the contested Australian climate debate. Agreeing to The Sunday Age’s request to visit the projects reflects increasing agitation at the policy vacuum threatening their work.

GreenCollar chief executive James Schultz says the carbon incentive is for the first time giving landowners an economic alternative to clearing. His fellow company co-founder, Lewis Tyndall, says that with the carbon price gone “the emissions reduction fund has the potential to keep these projects alive”.

Mr Schultz says the focus has been western NSW because land clearing permits are more common there due to advantageous rule changes made last decade.

Cobar grazier Robert Chambers advocated for those changes. He too holds a clearing permit for his property, but is leaving about 11,000 hectares of forest standing for credits.

“Any income stream coming into a community is a good thing,” he says.

Mr Chambers bristles at the suggestion the forests are locked up. His sheep can still graze through the area and he is managing the forests for fire risk and feral goats. “This is not lock it up, walk away. There are no green desserts here,” Mr Chambers says.

Mr Chambers and Mr Yench both suggest they will need to again consider clearing the forests if they lose the carbon income stream. The economic incentive would again return to running more animals.

All up, there are 154 accredited carbon farming projects across Australia taking different approaches to cutting emissions from the landscape. Environment Minister Greg Hunt said it would be irresponsible for others to hurt this work by blocking the Emissions Reduction Fund.

Opposition environment spokesman Mark Butler says the Carbon Farming Initiative - brought in by Labor - was designed to work with an Emissions Trading Scheme and direct action is no solution.

Greens acting leader Adam Bandt says: “Given that direct action as it stands won’t get through the Senate, the government now needs to come up with an alternative way of supporting carbon farming projects.”

Many of the crucial crossbench Senators have also been publicly lukewarm about direct action.

Out in western NSW, those farming carbon are just looking for a lifeline, concerned their work, income and the native forests may become the next piece of collateral damage in the bitter Australian political war over climate change.