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Nori’s Rebekah Carlson: “What’s the deal with the emerging carbon markets?”

About the Author

Rebekah Carlson is the Agriculture Supply Lead at Nori, a company creating an open marketplace in Carbon Removal.

The emergence of carbon programs for farmers demonstrates a shift in our agricultural narrative. For perhaps the first time, the value in farming is not just in the commodity grown from a field, but how that commodity is grown.

In the past few decades, every farming innovation has focused on increasing a commodity’s return on investment (ROI)— increasing yield and becoming more efficient with inputs. While each of these innovations have contributed to how we support feeding our growing population, they have required the farmer to rely on purchasing something to then increase their ROI. For example, the latest genetics, tailored herbicide or fertilizer blends, precision agriculture technology, or baling corn stalks.

Carbon programs, on the other hand, represent an entirely new income stream for farmers. The introduction of carbon markets shifts the focus from maximizing yield and minimizing inputs towards the economic value to how the land is managed. Stewarding the land well with conservation practices isn’t just environmentally beneficial, it’s economically beneficial. The creation of an entirely new asset for farmers has led to plenty of excitement in the industry. And, with that, plenty of confusion.

What are Carbon Markets?

Beyond just a new trend, what are carbon markets and will they last? Carbon markets are being driven by a rapidly deteriorating environment. Our 100-year droughts are now happening every 5 years resulting in record low yields. Flooding and extreme weather events are happening with more frequency keeping farmers out of the field when they would normally be planting or spraying. Consequently, there is a growing awareness in the public sector of how important it is to be better stewards of our carbon by taking it out of the air and putting it back in the soil.

In addition to emitting less, we also need to remove carbon to support modern living and properly care for the earth. How do we get our land and resources back to equilibrium so we are less dependent on purchasing so many inputs to supplement how nature is supposed to work? How do we incentivize nature to work as intended?

This is where carbon markets come into play. In short, carbon markets allow for companies and individuals to offset their carbon emissions by purchasing offsets from someone who is sequestering carbon. There are three flavors of carbon offsets:

  • Carbon Avoidance. I rode my bike and didn’t drive.
  • Carbon Reduction. I drive an electric car, not an SUV.
  • Carbon Removals. I paid a farmer to store more carbon in their soil.

Each flavor makes up how companies and individuals can make a difference in reducing their impact on the environment. When it comes to agriculture, carbon removals are the foundation of the trending carbon programs.

So will this trend last? The short answer is yes. Given the interest of both buyers of carbon and of companies helping farmers enroll their land, it seems like carbon markets are here to stay. From a buyer’s perspective, there are sustainability goals that extend to at least 2050. From a farmer’s point of view, we are seeing engagement from Big Ag companies (think Bayer, Corteva), policies shaping the marketplace, land grant universities investing in the research in soil carbon, and countless startups and emerging companies working on technologies to help measure and monitor changes in agricultural soil carbon. This level of engagement shows a stickiness to carbon markets that makes their longevity much more probable than, say, biofuels from corn stalks.

Given that carbon markets are here for the foreseeable future, how do farmers engage so they can capitalize on this new income stream?

What to Look for in Carbon Markets

By simply changing practices to more sustainable approaches, farmers can store more carbon in their soil. This approach of removing carbon from the atmosphere and storing the carbon in the soil uniquely positions them in the marketplace to sell their carbon removals.

If carbon markets are here to stay, why are they so confusing?

As these marketplaces are just beginning, there are many unknowns. The science is very young as to what happens to carbon in the soil. Remember, most grant money has gone towards research focused on increasing yield, battling bug pressures, etc and not how carbon moves through soil. The rules are just being defined, and the hype is off the charts.

That said, this is the time to get involved in carbon markets. While the concept of carbon as an asset is being formed, every voice helps shape the process. And to have the market tailored to the needs and rhythms of farmers, more and more farmers need to be part of it.

Just as there are many flavors of carbon offsets, there are many flavors of carbon programs for farmers. Which is a good thing—with so many diverse types of farms, farmers, operational management, etc. it is important to also have a diverse set of programs to appropriately meet farmers.

From an operational standpoint, all markets are based on farmers switching to practices that result in more carbon stored in the ground. From a very simplified scientific point of view, more plants on the ground leads to more photosynthesis, which leads to more carbon taken out of the air and brought to the roots of the plants. And the less disturbing of the soil keeps that carbon in place. So practices that put more plants on the ground (cover crops, diversifying rotations, perennials) and keep the soil in place (reduced tillage, no-tillage) all work towards increasing soil carbon.

The beauty of it is that these practices are not new, innovative, complex ways of farming—they are historic, tried, and true agronomic practices that help nature feed itself, rather than depending on expensive technologies. So where do you fit? What should a farmer look for? The first step towards turning operations into profit is to determine which program works best for you. Here are some areas to ask about:

  • Program type – have you already adopted these soil carbon increasing practices and want payment; or would you like to change practices and look for economic incentives to help with the transition?
  • Payment structure – What does the payment schedule look like? Do you sell your rights to carbon and get paid upfront, or look for an option where you control the price and timing of the carbon credit?
  • Contract length and obligation – How long are you required to update records? Are you signing up to maintain practices, or simply to keep the carbon sold in the ground?
  • Data requirements – Does the program need extensive records to issue credits? Will they visit your field for soil sampling? If so, who owns the data from records and soil tests?
  • Other obligations – If you sign up for a program, is it simply for carbon? Or are there any obligations to purchase new products in association with the particular carbon program?

Supplementary to the carbon programs themselves, there are many different companies that are focused on helping farmers benefit from the soil in their ground. Examples include different data management systems, helping farmers enroll in programs, technologies to monitor carbon and products that potentially increase carbon gains. While all of these players are aiming to help drive the adoption of regenerative practices, ensure that including them in your carbon plan will add value to the process, not just become a middleman.

Preparing for What’s Next

As the idea of carbon as a commodity is being shaped, there are some key ways you can prepare so that you are best suited to start an income stream from carbon. Some tips include:

Get your records in order – Most programs are based on records, so the more organized your farm records are, the quicker the process.

Talk to many carbon programs before beginning the process – Understand the ins and outs of each program before committing, as each program has a different set of requirements

Be patient – This is a new frontier. If the program you talk to claims to have it all figured out, be a bit leary of them. The space is new and there are many bumps along the way.

The network being built around this is exciting and points toward carbon programs being here to stay. This network includes changes in policy, federal money going towards research in this space, technologies emerging to better understand and track changes in soil health, and the list goes on.

If carbon becomes the next pillar of agriculture, it paves the way to creating more marketplaces for other environmental benefits, such as water quality, erosion control and pollinator habitats. Each of these marketplaces will broaden the reach of who benefits from the marketplaces— for example, someone who has been no-tilling for 30 years may not fully benefit from carbon, but they could from water markets.

The hope is that farmers will start making agronomic decisions on how to put more carbon in the ground, and not simply to maximize yield. With the emergence of this marketplace, it is imperative that we have many farmers’ voices involved so that this step is taken on the foundation of farmers. Stop waiting around to see what’s next— get involved in marketplaces so you can shape what’s next.

For further reading, check out the following resources.


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