Navigating the carbon markets

Carbon markets are a concept that have been around for about 20 years. However, it wasn't until recently that they began expanding into agriculture, says Marisa Martin, managing director of Pollination Group. At the World Pork Expo, Martin gave an overview of the carbon markets and how producers can work to earn carbon credits.

Put simply, one carbon credit is equal to one metric ton of carbon dioxide – or carbon dioxide equivalent – that has been successfully offset or reduced. Companies and corporations can buy these credits to help offset their carbon emissions, or an industry can use its own carbon credits to prove how sustainable it is. 

Types of Markets

Currently, there are two types of carbon markets – compliance markets and voluntary markets.

If an industry is part of the compliance market, requirements are set by the government surrounding carbon emissions and reduction goals. Martin says these areas include the power sector, the oil and gas industries, and the manufacturing industry.

Voluntary markets, which is where the agricultural industry fits, are driven by corporations who are willing to buy carbon credits from those sectors voluntarily engaging in emission reduction, like forestry and agriculture. 

“It’s like the Wild West of carbon markets,” Martin says. “It's not credit by law. It's just driven by corporations largely taking on voluntary climate targets.”
 
Of the industries currently engaging in the carbon markets, about 45% are labeled as “nature-based solutions,” 5% of which are in the agricultural sector.

While growth is difficult to track, especially in the voluntary markets, revenue has exceeded $1 billion and is expected to increase tenfold by 2030, Martin says.

How do I start getting carbon credits?

For a sustainable, carbon-reducing practice to qualify as a carbon credit, it must meet the following five criteria.

1. Real. The carbon capture or reduction must be real, which means that they have to have actually occurred and be provable. 

“If a corporation needs to balance out, it’s buying a reduction so it can continue to emit,” Martin says. “If that claimed reduction is not real, then the emission happens and you're worse off from an environmental standpoint.”

2. Additional. The reduction should also be additional, meaning it occurs as something new on your farm rather than something required by law or common practice. Martin says one way to determine if the practice is additional is for farmers to ask, "Would I be doing this if it wasn't for the carbon credit?"

3. Permanent. Producers must also prove the solution will keep the emissions sequestered. Permanence is one of the more difficult criteria, as events out of producers’ control – such as fires and tornados – can reverse efforts by destroying the land. 

“That's one issue with ag credits and nature-based solutions in general that needs to be managed,” Martin says. “There are ways to manage it.”

4. Verifiable. Verifications occur from third parties and go hand-in-hand with reductions being real. If a practice can’t be verified, a producer cannot earn a credit. Establishing a baseline of carbon capture before implementing carbon credit efforts is a good way to verify carbon is being reduced.

5. Not result in leakage. Finally, the carbon reduction process must not result in the creation of more carbon. For example, Martin says, if a practice reduces a row cropper's yield and the farmer decides to plant more acres that are not reducing carbon emissions, that will not benefit the climate. 

What can producers do?

There are many projects producers can incorporate into their operations to qualify for carbon credits. Reducing fertilizer on fields, utilizing no-till practices, and cover cropping are all common suggestions, but livestock producers also have many options. 

Martin says the most common practice for livestock producers is incorporating biodigesters. The dairy industry has been the fastest in the agricultural sector to incorporate biodigesters – a system that ferments organic material like manure and turns it into fertilizer or biogas. It can also be a valuable tool for pork producers, potentially qualifying them for carbon credits.

Finding the right way to incorporate carbon credits into your farm isn’t one-size-fits-all, Martin says. Producers have to determine the programs and practices that work best for their operations. 

Tools like the Pork Checkoff’s Sustainability Report can help producers make that determination. Farmers can request a visit and receive a report of what they are doing well and how they can improve.