By Michael Hirtzer
Demand for carbon credits is surging, and agri-tech startup Indigo Ag Inc. is acquiring a company to keep up.
Boston-based Indigo Ag, which uses digital platforms to connect farmers with buyers and started selling credits about a year ago, is purchasing Soil Metrics, a company that measures how much carbon is getting stored in the ground.
The deal comes as companies from JPMorgan Chase & Co. to The North Face snatch up credits to offset their own emissions and reach climate targets. So far, Indigo Ag has enrolled thousands of farmers and more than 3.3 million acres in its program. It has also boosted prices for its carbon credits to $27 apiece from $20. One credit accounts for one ton of carbon dioxide.
Farmers can use techniques such as reducing tillage and planting cover crops to cut down on the amount of carbon circulating in the atmosphere and raise soil quality. They’re more likely to adopt such practices with the incentive of getting paid for the credits, according to Keith Paustian, a co-founder of Soil Metrics and a professor of soil ecology at Colorado State University.
Concerns have been raised over the use of carbon offsets, including the potential to pay farmers for actions they might take anyway. A number of companies are offering various credits, making it more difficult to consistently measure and verify how much carbon is being sequestered.
The deal “will increase the volume of carbon credits growers produce and reduce the amount of work required of growers to produce them,” said Chris Harbourt, global head of carbon at Indigo Ag.
Aggressive reductions of emissions is seen as a vital step to slow the impact of climate change that has contributed to extreme weather and threatened crops.
“We are going to have to reduce emissions as quickly as we can,” Paustian said. “It’s going to take decades if we’re successful at turning around the climate.”