Farm Progress

Why it’s time to take another look at carbon programs

Climate-smart practices can provide your farm with new revenue and make it more resilient. It may be a better fit than you thought three years ago.

Mike Wilson, Senior Executive Editor

June 20, 2024

7 Min Read
CARBON COLLECTION: Carbon continues to be a hot topic as a possible revenue source for farmers. But how much is real and how much is lip service? Credit: Parradee Kietsirikul/Getty Images

Until a few years ago, Carbon was nothing more than an element you memorized as part of the periodic table in basic chemistry. Today it is the central focus of an existential crisis. Carbon, a greenhouse gas, threatens the future of our planet.

And for farmers? Carbon now means more – much more - than high school homework. It means a paycheck. It turns out carbon could be a way for you to make more income at a time when grain prices aren’t helping your bottom line as they have in the past.

Storing carbon in the soil can slow global warming, but turning that concept into reality through a carbon market, and paying farmers to make documented changes, has not proven easy. But it’s getting there, as you will see when you browse through our library of articles touching on a wide range of topics related to carbon farming.

Farm carbon origin story

The agricultural carbon credits movement was jumpstarted in 2017 when a group of U.S. rice farmers changed their production practices to slash methane emissions. Rather than soaking fields continuously, the farmers implemented ‘alternative-wet-drying’ practice, which used 30% less water and altered the soil chemistry to cut methane 60% to 90% without hurting rice yield. Those reductions were turned into carbon credits that were then sold to Microsoft on the voluntary carbon market.

A few years later another farmer showed how that process could be scaled up to provide a new revenue stream to the farm. In 2020 Maryland farmer Trey Hill, who farmed 10,000 acres of corn, wheat, and double-crop and full-season soybeans, enrolled 2,000 acres in Nori’s Carbon Removal Marketplace. The company paid him $150,000 for 10,000 carbon credits his farm produced over five years. The credits, which Nori sold on its online marketplace, were sold for $16.50 a ton. Nori got a commission of $1.50, so Hill got paid $15 a ton.

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These farmers are pioneers in the burgeoning field of carbon credits. In the few years since then countless others have weighed options, mulled over costs and management changes needed to adopt practices, and studied the fine print on carbon contracts. Some have made the climate-smart changes that were then verified and converted into credits sold for cash.

Sinners and saints

In the United States, agriculture is both sinner and saint. The industry produces nine percent of carbon emissions and is the biggest emitter of methane and nitrous oxide, the most harmful of the three greenhouse gases (carbon being the third). The White House has set a goal to slash GHG emissions in half by 2030. Using 2018 data as the benchmark, agriculture could cut 23% of those nationwide emissions by 2030, according to a 2022 Environmental Defense Fund report.

The big picture today

If you want to give carbon another look, there are three main options:

Voluntary (unregulated) carbon markets – exactly what it sounds like. Farmers make a specific change in how they do business, to create an emissions reduction. Common practices today are no-till, strip-till, cover crops, or more efficient use of nitrogen fertilizer. Once those climate-smart practices have been adopted and verified they are converted to carbon credits and sold by aggregators. Companies like Microsoft purchase carbon credits and farmers get paid.

These are ‘offsets,’ what people are most familiar with.

“In offsetting we have to be more careful because it’s allowing a company to emit by purchasing a credit instead of reducing their own emissions,” says Maggie Monast, EDF’s senior director for climate-smart agriculture. Ideally, the company will modify its business model over time to reduce its own emissions so that it no longer needs to buy carbon credits.

To make sure all these credits are ‘real,’ some independent governance bodies are working to create protocols and standards.  The Integrity Council for Voluntary Carbon Markets is in the process of setting up core carbon principles, which will establish a global benchmark for high integrity carbon credits, including for agriculture.  

Since the marketplace is unregulated, these benchmarks take on big significance.

“Lots of activities on farms can reduce emissions, but what we’re seeing is, some of the higher scientific integrity solutions are getting less investment in the carbon marketplace, and that’s concerning,” says Monast.

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Ag credits are just 5% of the total voluntary carbon market, but they are growing. Methane digesters, for example, are about half of that figure; a digester makes real reductions in methane emissions, an example of a high integrity carbon credit solution. That’s because it’s a straightforward emissions reduction with no risk of ‘backsliding.’

“When you reduce emissions it has a permanent effect, but when you sequester carbon through a farm practice or planting trees, the tree can be cut down, or the soil can be plowed,” says Monast.

Scope 3 – These so-called ‘insets’ are when a business works within its own supply chain to reduce its carbon footprint. So, an agribusiness or CPG (Consumer Packaged Goods) company incentivizes its supply chain network to modify practices that lower the company’s overall carbon footprint.  Bayer (ForGround), ADM (ADM Advantage) and Land O’Lakes (Truterra) are examples of companies with carbon programs.

“We strongly support insetting, as companies take responsibility for emissions in their own supply chain and compensate farmers for their work,” says Monast. This could mean paying farmers for environmental outcomes, paying to adopt a climate-smart practice, or helping to pay for technical assistance.

Government incentives – Last fall USDA announced it would provide $3 billion to help farmers transition to climate-smart practices through the Partnerships for Climate-Smart Commodities Program. The Inflation Reduction Act allocated another $20 billion to USDA conservation programs. In addition, beginning January 1, 2025, the Treasury Department will offer tax credits for the production and sale of low emission transportation fuels, including sustainable aviation fuel (SAF). The tax credit amount is $0.20 per gallon for non-aviation fuel and $0.35 per gallon for SAF. Farmers who can prove their grain has a lower than average carbon intensity score could, in theory, earn premiums for helping the biorefinery capture that tax credit.

“We’re at a very unique moment in the U.S. when you consider the amount of money going into climate smart agriculture,” says Monast. “Some of it is packaged as a carbon program, and some of it is to support an overall movement for farmers to adopt these practices.”

What happens next

Three years ago the carbon market industry experienced an initial rush of enthusiasm, especially around soil sequestration. That excitement was quickly dampened, as farmers saw low pay outs and risk in early contract offerings. Many were interested in soil health but were discouraged because they were already engaged in climate-smart farming and a carbon contract only delivers if there is a change that leads to new lower emissions.  

So, many sat on their hands, and waited. And today?

“We’re seeing a second wave of enthusiasm, with more opportunities than ever for farmers in supply chain programs, government funding, and voluntary carbon markets,” says Monast. “There still may be some confusion, but that could be because they now have so many options.  

“We’re at a place where many more farmers are prepared to act as soon as they see a good opportunity that works for them.”

If that’s where you are today, sit down and determine how you want to participate. Talk to farmers who tried it. Read the stories in this collection.

Money may be the biggest motivator, but also determine the cost of adoption and what those new practices can do to make your farm more resilient. Would adopting those practices make you a better manager and make your farm more sustainable, even without a contract?

“The best carbon program is what works for the farmer, not necessarily the one that pays the most money,” concludes Monast.

About the Author(s)

Mike Wilson

Senior Executive Editor, Farm Progress

Mike Wilson is the senior executive editor for Farm Progress. He grew up on a grain and livestock farm in Ogle County, Ill., and earned a bachelor's degree in agricultural journalism from the University of Illinois. He was twice named Writer of the Year by the American Agricultural Editors’ Association and is a past president of the organization. He is also past president of the International Federation of Agricultural Journalists, a global association of communicators specializing in agriculture. He has covered agriculture in 35 countries.

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