The carbon credit market rolled out to agriculture has been compared to the Wild West. As 2022 approaches, the market is at a critical juncture. Those are two things nearly everyone who attended the recent Indiana Agriculture-Climate Alliance forum on renewable energy and climate mitigation agreed upon.
A panel moderated by Jeff Cummins, director of policy engagement for Indiana Farm Bureau, took a closer look at where carbon marketing might be headed from the industry side. Panel members included Heidi Burns, with the Indigo Ag carbon offering team; Christy Wright, global food chains lead in crop protection for Corteva Agriscience, and David Bausman, legislative and public policy director for the Indiana Department of Natural Resources.
Cummins: The Indiana General Assembly considered a proposed bill setting up carbon markets, but it didn’t become law. What do you expect from the Legislature?
Bausman: IDNR, Indiana State Department of Agriculture, and other ag and environmental groups have held a couple of working sessions since then and will hold more. IDNR is interested because the carbon market could be huge for forestry. There is good discussion, but there are still questions. For example, is it best to do this at the state level, or is USDA better equipped to handle it?
Burns: We saw the fact that the Legislature considered it as a signal. It’s a good indication that there is interest. There is still the question if it’s better handled at a state or national level. What we bring to the table as a company buying carbon credits from farmers is verification of what a carbon credit is, and what a farmer is producing.
Wright: We really see a role for USDA here, especially to set the rules.
Cummins: Who are the drivers in this carbon market?
Wright: We’ve seen changes in the food production chain. A few years ago, it was truly more like a chain. There were farmers producing food, companies processing it, retailers, and then ultimate consumers. Today it is more like a web. Some food companies are reaching out to farmers directly, and investors of big companies are more involved. Big players like Walmart are setting environmental goals. Investors are pushing some companies to pay attention to the environment. The bottom line, though, is that food companies need farmers to be successful. Companies like Kellogg’s, Smucker’s and others are making that clear.
Burns: Consumers are behind some of these changes. They are often the ones pushing for companies to purchase carbon offsets.
Cummins: What should farmers ask if someone approaches them about buying their carbon credits?
Burns: The biggest thing is, who is verifying the carbon credit? We use third-party verification, but there are many different programs out there. How are you going to get paid and when? Is there a partner on the other side of the table who is going to support you and guide you through the process?
Cummins: David, how does it work for forestry?
Bausman: Many landowners and farmers also have woods, so they could be affected by both markets. One problem with forestry is the principle of additionality. How do you do something new to sequester carbon? The other problem is aggregating enough timber land together to participate. One company who has proposed a market for forestry set the minimum at 750 acres. The average size of a woods in Indiana is 37.5 acres. There will be lots of things to work through for this to become practical.