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Carbon credits entice new players

New marketplace arises to manage trade of carbon credits.

The emerging carbon markets are attracting a number of new players, some of whom are familiar to farmers who are wondering if selling carbon credits could provide an additional revenue stream for their operations.

Among those are new names such as the Ecosystem Services Market Consortium and older entities such as Cargill, the Walton Family Foundation and Indigo Ag, which are better known in the Mid-South.

“I think this is a great example of how folks are coming together here to try to figure out how the carbon markets work,” said David M. “Max” Williamson, lead attorney at Williamson Law & Policy in Washington, D.C. Williamson spoke on the carbon markets during the virtual Mid-South Agricultural and Environmental Law Conference.

The Ecosystem Services Marketing Consortium, which is funded, in part, by USDA through the 2014 and 2018 farm bills, is trying to bring farmers and the companies that are buying carbon offsets together to create a new marketplace.

“I think they’re doing a great job of looking at all the various issues of how you can build a marketplace system, and it has a lot of echoes from that slide that we talked about a few minutes ago on the Chicago Climate Exchange. This is sort of a 2.0 version of the CCX, but with all that accumulated experience that we’ve had in the intervening years.”

Partnership

Another example is the Cargill Soil & Water Outcomes Fund, which is a partnership with the Iowa Soybean Association that is funded by Cargill and the Walton Family Foundation, comprised of the majority stockholders in Wal-Mart.

“They’re setting up a demonstration or pilot project, encouraging farmers to adopt these best or advanced practices,” he noted. “There’s a strong focus on water or watersheds, and they’re paying farmers $30 to $45 an acre. They want to demonstrate this does work for farmers, and if we pay them the right amount we really can get a large uptake of these advanced practices.”

Indigo Ag, which has a sizable presence in the Mid-South, is one of the private companies moving into the carbon arena. Indigo, which sells microbial products that enhance seed viability in row crops and other services to growers, has created a new division called Indigo Carbon.

“They're approaching farmers, recruiting them, and they report they have a very impressive number of acres signed up,” he said. “Again, the model has a list of practices that are thought to help the soil absorb carbon. If the farmer commits to adopting those, he receives a payment of $15 per ton.”

Most contracts require a commitment of 10 years to ensure the practices are being implemented and continued.

“I think part of Indigo’s ‘secret sauce’ is that it’s quite expensive to have to go to every acre that’s enrolled in a program and do a physical soil test to measure the carbon in the soil,” he said. “They’re looking, for example, at using satellites or drones and then also approach it statistically so you don’t have to send somebody out to every acre.

“What Indigo excels in is the technology side of things, and they’re approaching farmers and then will take those carbon credits and sell them to the Microsofts or Amazons who are looking for these types of purchases that go into their annual sustainability report.”

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