A draft methodology for carbon farming at Henbury Station in central Australia has not been approved by the Federal Government.

The 5,000 square kilometre former cattle station, about 120 kilometres south of Alice Springs, was purchased by RM Williams Agricultural Holdings for $13 million in 2011.

The Federal Government contributed $9 million of the price as part of its National Reserve System.

The aim at the time was to de-stock the land and return it to its natural state to earn carbon credits.

Qantas has already agreed to purchase one million tonnes of credits from the venture.

A Department of Climate Change and Energy Efficiency spokeswoman says the project's proposed rangeland restoration methodology was considered but not approved.

She says the Domestic Offset Integrity Committee refused to on the grounds that further information is required before it can proceed.

RM Williams was aiming to have the methodology finalised by the end of 2012, in accordance with its two-year timeline for generating credits.

The project is having teething problems.

In October, project chief executive David Pearse left the company.

Shortly afterwards, RM Williams said it was going to completely restructure its carbon conservation project model.

At the same time, chief operating officer Rory Richards said the company had partnered in the venture with C-Quest Capital.

He said that, while Henbury Station had been completely de-stocked, a future model should incorporate livestock and beef production.

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