Origin will pay Perth-based Carbon Conscious to plant millions of native Mallee eucalypts on less viable agricultural land in return for carbon permits tradeable under the Federal Government's proposed carbon pollution reduction scheme (CPRS).

Origin will receive a permit for every tonne of carbon stored, offsetting its liabilities under the CPRS. Although the CPRS is yet to be approved by the Senate, creating some uncertainty, Carbon Conscious chief executive Peter Balsarini said he was confident about the legislation because both sides of politics supported biosequestration.

Initial plantings will take place over the next three years at a cost of $26 million, comprising upfront planting costs and ongoing licence and management fees. Origin will have the option of subsequently planting more trees.

If Origin exercises its options in full, it is believed that the deal will be the largest forest sink program in Australia, valued at up to $169 million over 15 years.

The project will involve hundreds of farmers and thousands of hectares, initially mainly in Western Australia. Origin estimates that plantings of 30 million Mallee eucalypts would sequester six million tonnes of carbon dioxide.

Mr Balsarini emphasised that only less productive land would be used, about 10-20 per cent of the property, depending on land and soil type.

"It is all about integrating the trees into the landscape and providing environmental benefits, such as preventing salinity and erosion," he said. He said the deal would be profitable at a carbon starting price of $23 a tonne.

Carbon Conscious shares closed 1¢ higher at 35¢, while Origin shares closed 9¢ lower at $14.39.