Carbon may be element 6 on the periodic table, but it’s number one for farmers – and all life on the planet. While it’s widely distributed in nature, carbon is not particularly plentiful, making up only about 0.025% of Earth’s crust – but it forms more compounds than all the other elements combined.
That’s why carbon is so important – and why the carbon credit market receives so much attention these days.
“A voluntary carbon market is a financial market with the buying and selling of a commodity, usually measured in metrics tons of carbon dioxide,” explained Ashley McDonald, executive director of the National Grazing Lands Coalition.
She helped to break down what carbon credits are and how they are used at the American Forage and Grassland Council earlier this year. McDonald noted that farming and forestry capture carbon naturally – but that grazing lands need to catch up to other ag practices when it comes to carbon sequestration.
There are two kinds of carbon markets, those with insets and those with offsets. “With insets, the credit stays within the supply chain; there’s generally less money involved; and verification can be easier, meaning less hassle,” McDonald said.
With offsets, the credit or claim is bought and owned by a different industry to offset their emissions, and there’s more money involved, but there are also higher verification standards and more hassle.
What constitutes a carbon credit worth paying for? A key point is additionality – the farm’s practice has to be something new, something they haven’t done before. There’s also causality – the payment causes you to begin a practice.
Other factors to consider include permanence. Farmers need to keep the practice going for it to be worthwhile. Credibility is critical too. There can be no “double counting.” You can’t claim a credit for yourself if you sell it to another entity.
A major hurdle the industry is still having trouble clearing is something McDonald described as a “perverse incentive.” That is the fact that early adopters tend to be excluded from the financial benefits of adopting climate-smart practices, so many may stop practicing them for a while to take advantage of the market.
Other challenges McDonald listed include a lack of modeled practices – a lot of farmers are still figuring the carbon market out, often through trial and error. There is still a lot of data lacking.
Another issue – one directly affecting grazing land – is that many of these practices are linked to the land and not to any livestock. “Everything so far is tied to the land, ignoring the genetic advances of livestock that reduce their carbon footprints,” McDonald said. The goal in the near future is to change that mindset.
So, is it worth it to enter the carbon market now? There’s no clear answer. “It’s still the wild, wild West and we still have a lot of producers sitting on the sidelines,” McDonald said. “And they’re not wrong – but we will see a big push as we approach 2030.”
(According to the United Nations, “to keep global warming to no more than 1.5º C – as called for in the Paris Agreement – emissions need to be reduced by 45% by 2030 and reach net zero by 2050.”)
McDonald suggested seriously asking yourself if entering the carbon market now is right for you and your operation. “How risk averse are you?” she asked, noting that there may be some benefit to working with other producers to form a co-op to sell credits together. “What will be the price of these credits in five years after the Climate-Smart Commodities programs aren’t around? Will they have solved the early adopter issue? Will we have done enough research?”
Those interested in learning more are invited to attend the National Grazing Land Conference, scheduled for Dec. 4 – 6 in Tucson, AZ. For more information, visit grazinglands.org/grazing-conference.
by Courtney Llewellyn
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