Carbon Markets – How Can Farmers Cash In On Their Regenerative Practices?

As tech and finance firms realize the vast potential the agriculture sector holds to mitigate and reverse climate change, increasingly more farmers and supply chain members are enrolling in programs looking to pay for drawing carbon into the soil. As part of our ongoing Regenerative Programs and Incentives Feasibility Study, the Organic Council of Ontario (OCO) is exploring the carbon market and measuring programs. Read on as we explain what carbon markets are, which carbon market programs are available for regenerative agricultural practices, how these programs rely on carbon measuring tools, and what members of Ontario’s agriculture sector can learn from these programs.

What are carbon markets?

A carbon market is a system of exchange that turns those who emit carbon into buyers, and those who draw carbon out of the atmosphere into sellers. In theory, sellers are those individuals or organizations who, while engaging in activities that mitigate, reduce or reverse emissions that contribute to global warming, and are not generally economically rewarded for the provision of this public good. Farmers are a good example because the economic gains they receive for their work is based primarily or entirely on the value of the food they produce, rather than their participation in climate change mitigation practices. 

Buyers are anyone that wants to reward climate change mitigation activities or make up for polluting behaviour. Examples include: a family looking to offset the carbon footprint of their recent international flight, or a corporation that is looking towards getting started on a more environmentally sustainable path. This system allows those who are completing projects or implementing practices that reduce atmospheric carbon to be rewarded for their actions while those who are engaging in emissions-producing activities can incentivize better behaviour.

Besides rewarding climate-friendly activities, carbon market programs hope to encourage polluting actors to reduce or eliminate their emission production in future years. While these programs are sometimes a part of government-mandated cap-and-trade policies, there is an increasing amount of voluntary carbon markets designed and administered by private companies charging a transaction fee to run their operations. 

Which of these voluntary carbon market programs reward farm-based activities? 

Voluntary carbon markets like Verra, Indigo Ag, Climate Action Reserve and Nori are proliferating. Here, we profile two programs at the forefront of paying for regenerative, farm-based activities. 

Verra is a Washington-based not-for-profit that “develops and manages standards that help countries, the private sector and civil society achieve their sustainable development and climate action goals.” Verra manages the Verified Carbon Standard (VCS) Program, which bills itself as the world’s most widely used voluntary greenhouse gas emissions program. The VCS Program projects include forest and wetland conservation and restoration and agricultural land management. “Almost 1,600 certified VCS projects have collectively reduced or removed more than 450 million tonnes of carbon” from the atmosphere to date. 

Indigo Ag is a Boston-based company that provides a variety of services at the intersection of agriculture and technology, including an online grain marketplace, advanced weather data and satellite imagery, and Indigo Carbon, the company’s carbon marketplace. Indigo Carbon focuses exclusively on paying farmers for drawing carbon into the soil and reducing emissions through regenerative practices. So far, over 2o million acres have been submitted to the marketplace, with farmers being paid up to $15USD per verified carbon credit, earning on average 2-3 credits per acre per year, making potential earnings for regenerative practices up to $45USD per acre per year. Thus far, participation in Indigo Carbon is limited to those farming 300 or more acres of cropland in Indigo’s service area within the United States. 

What tools are carbon markets using to measure carbon capture? 

As the Vice President and Senior Director of Systems Innovation of Indigo Carbon have written in a recent blog post, for carbon markets to be useful, we need a,

“high degree of confidence in the precise and verified measurement of carbon levels in the soil and net greenhouse gas emissions from the farm. Carbon [markets]…are only as real or valuable as the science and evidence underlying them. Rigorous standards for quantification, monitoring, and verification must be established for the creation of carbon markets.” 

This need for measurement tools has not gone unnoticed by the tech, science and agriculture communities. Growth in the number of programs that verify regenerative practices or that establish carbon markets has been accompanied by the development of tools to help farmers measure the ecological impact of those practices. This includes, but is not limited to the amount of carbon stored in their soil.

For example, the Open Technology Ecosystem for Agricultural Management (OpenTEAM) is a low-cost application that includes a variety of software tools created to help farmers and ranchers track their agricultural practices, calculate greenhouse gas emissions and sequestered carbon, and to monitor broader environmental conditions on their land. OpenTEAM is a collaborative effort between Wolfe’s Neck Center for Agriculture and the Environment, the Foundation for Food and Agriculture Research (FFAR), farmOS, the Land Potential Knowledge System (LandPKS), Stonyfield and many others. Its purported strength is the interoperability between all of its various connected tools. Farmers are only required to use and input their information into one of the applications, but can benefit from that information being shared across other tools meant for other aspects of farm management and outcomes measurement.

The Cool Farm Tool is a similar software platform that allows both crop and livestock farmers to input their farm data to receive an emissions breakdown based on their whole farm, individual emissions sources, a per acre calculation, and a per tonne calculation. Developed by the Cool Farm Alliance, one of the Tool’s most attractive features is that it was designed and administered to be free for all farmers, including those in Canada.

What can Ontario’s agricultural sector learn from these carbon market programs and measuring tools? 

While there are plenty of carbon offset programs to choose from for buyers in Ontario, it is not clear that there are any active voluntary carbon markets that reward regenerative agricultural projects on Ontario farmland. Thus far, these markets are partnering primarily with energy, conservation or forestry-related projects. The focus on ecological projects and the proliferation of agriculture-based carbon markets in the United States gives hope to Ontario farmers wishing to partner on a carbon market pilot. American carbon marketplaces like Nori have expressed interest in expanding agricultural pilots to Canada, but these plans are subject to change. Given the importance of measuring tools to the reliability of monitoring and verification of regenerative outcomes, it is crucial that comparable software applications to those in the United States be developed or extended to the Canadian and Ontarian context. The promise of accurately monitoring and quantifying emissions, and the effects of land management strategies on those emissions should come as a welcomed addition to what farmers are already doing to contribute to the sustainability of our food systems. 

Finally, no discussion of carbon markets can be complete without mention of the reality that many emissions-emitting corporations are purchasing carbon offsets without also curbing their polluting activities. Rewarding activities that mitigate climate change is an important piece of the sustainability puzzle, but it will not prove enough if we do not also engage in actions that significantly reduce pollution and carbon emissions.