Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: East
Corn+Soybean Digest

Understanding Carbon Credits

There has been considerable discussion in the U.S. and throughout the world over global warming and how to address it for the future. Global warming is generally the result of excess build-up of the so-called greenhouse gases, which are usually linked to excessive emissions of carbon dioxide and other gases into the atmosphere. Carbon dioxide has been involved in the normal life process since the beginning of time; however, practices such as burning fossil fuels and changing global land-use patterns can increase carbon dioxide emissions and lead to increased heating of the earth’s atmosphere. Carbon dioxide is a concern due to the large amounts that regularly released into the atmosphere. Some of the other greenhouse gases have a much lower occurrence than carbon dioxide, but are much more powerful and stay in the atmosphere much longer. For example, methane has a 21 times greater warming effect on the atmosphere than carbon dioxide, while nitrous oxide has an almost 300 times greater effect on heating the atmosphere compared to carbon dioxide.

A carbon sink reduces carbon greenhouse gases by storing the carbon in another form rather than releasing it into the atmosphere as carbon dioxide. Forests and growing trees are good example of naturally occurring carbon sinks that help mitigate carbon emissions into the atmosphere. Organic matter in our agricultural soils currently accounts for less than 1% of the carbon sinks that exist to offset greenhouse gas emissions. However, there appear to be opportunities for agriculture producers to capture more greenhouse gases in the future through adoption of reduced tillage methods.

Besides reduced-tillage for crop production, some other opportunities for agriculture include:

  • Reducing nitrous oxide emissions through improved management of nitrogen (N) fertilizer.
  • Using technology to create ammonia (N fertilizer) from sources other than natural gas.
  • Developing strategies to capture and use methane gas emissions from livestock manure facilities.
  • Substituting renewable fuel sources for gasoline, diesel fuel and natural gas used on the farm.
  • Increasing the generation of electricity from wind, solar and other renewable energy sources.
  • Expanding the use of conservation practices such as managed shelterbelts, riparian zones, etc.

Producers who adopt reduced soil tillage and other practices have the opportunity to earn carbon credits for some practices. USDA, the state of Minnesota and some private organizations offer incentives to producers to implement conservation practices and to plant alternative vegetation on some farmland. The Chicago Climate Exchange has been established to buy and sell carbon credits,similar to the Chicago Board of Trade (CBOT) for grain futures or the Chicago Mercantile Exchange (CME) for livestock and meat futures. This is creating a new income source for farm operators and owners that adopt alternative management practices that help reduce greenhouse gas emissions. The concept of receiving payment for carbon credits and trading of credits is likely to increase in the future. Several farm organizations have provided assistance and information to agriculture producers on carbon credits,and have some excellent information available on their Web sites.

The agriculture industry also has plenty to be concerned with relative to possible legislation and regulation targeted at reducing the emissions of greenhouse gases. The largest contributors to the emissions of these gases are the traditional energy industry, transportation and manufacturing. Added fees and taxes to these industries will likely lead to considerable increases in costs for goods and services needed by crop and livestock producers in their normal farm operation.

Ethanol and Biofuels
When ethanol and other biofuels are discussed relative to greenhouse gas emissions, there are two very different lines of thought. One line of thought is that ethanol and other biofuels offer a significant improvement over traditional gasoline and diesel fuel, due to decreased direct greenhouse gas emissions when the fuel is used. The other line of thought wants to also include the greenhouse gas emissions resulting from the production of the feedstock (corn, soybeans, etc.) for the ethanol or biofuels being produced.

Several studies have shown that there is an improvement of about 20% in greenhouse gas emissions from using ethanol as a fuel source compared to traditional gasoline. The improvement in greenhouse gas emissions can rise to as high as 70% when the ethanol is produced from certain types of biomass. However, when changing land-use is factored into the equation, that percentage changes. The thought process is that if we use traditional cropland for fuel production, it will take more cropland around the world to meet global food needs in the future. This could result in non-ag land being converted to crop-production acres, and thus would reduce carbon sink acres, and ultimately increase the incidence of greenhouse gases. In addition, some of the current alternative feedstocks to corn for producing biofuels are crop residue sources, which when removed from the soil could reduce soil organic matter and ultimately increase greenhouse gases.

Things may not be as bleak as they appear for future biofuel development, relative to greenhouse gases, depending on how future legislation and regulations are crafted. Many of the future models and estimates are based on today’s technologies for agriculture and biofuel production. We have seen tremendous research advancements in seed genetics to enhance crop yields and other production traits in many crops. There are also many advancements occurring in the efficiency of producing ethanol and other biofuels. So, the overall net impact from future production of biofuels will likely be far less on emission of greenhouse gases than some current studies and analysis have shown.

Bottom Line
The bottom line is that the concern over global warmingand greenhouses gases – and the attention to carbon credits and other solutions– is here. These issues are likely to have a big impact on the agriculture industry in the coming years, so it is a good time to learn more about the issue and how it could affect your farm in the future. All of the major farm organizations and commodity groups, as well as several land-grant universities, are very active on these issues, and most have some excellent information available on these topics.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at[email protected].

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.