Sustainability and climate change are hot topics today. Along with the trend, the carbon credit marketplace is heating up but clear information on the key players and their relative benefits is sparse and convoluted. As many of you have likely learned – Google searches won’t get you very far here.
At FarmRaise, we’ve conducted research into carbon markets and tracked these players closely over the last several years. In this blog post, we share what we’ve observed and shed light on the five most-watched carbon credit companies. We’ll cover:
Are you a fund, agribusiness, or carbon credit company? If yes, we want to partner with you to get your funding opportunities in front of regenerative farmers!
First off, what even is carbon trading? In a few words, when a person - or more likely a business - wants to achieve net-zero greenhouse gas emissions (GHG emissions), they can buy carbon credits that equal the amount of carbon they’ve emitted into the environment. If the buyer of carbon credits buys too many credits, meaning they bought more carbon offsets than they’ve emitted into the environment, then they can sell them to someone else. That’s why it’s called a “carbon market” - it’s a place to buy and sell carbon credits.
Nowadays, U.S. farmers can get in on the trend of people, governments and industries trying to reduce their carbon footprints. By implementing regenerative agriculture practices, growers can practice carbon sequestration through carbon farming - trapping carbon dioxide in the soil.
One of the motivations behind the advent of carbon markets is to privatize climate action.
Sequestering carbon is the only way to address the excess carbon dioxide in our atmosphere that will continue to trapping heat in our atmosphere. There are many ways to capture and remove atmospheric carbon dioxide.
Carbon sequestration in agriculture is the removal of carbon dioxide from the Earth’s atmosphere and storing it in plants and soil. Carbon sequestration can also refer to trapping carbon dioxide in the ocean (have you heard of algae and seaweed farming?). Carbon sequestration improves both soil health and water quality. Here are five examples methods of sequestration:
You may be eligible for USDA funding to plant cover crops, sow certain companion crops and practice low or no-till farming on your land through EQIP. You can read more about EQIP and begin applying through the FarmRaise dashboard.
You’ll increase your chance for funding opportunities like EQIP by tracking your farm expenses and inventory. Check out FarmRaise Tracks to get started!
If you’re looking to sell carbon credits, it stands to reason that you may want to cultivate crops that capture the most carbon. From a botanical standpoint, those crops may include:
If you’re interested in capturing carbon for the sake of these planet, these plants may serve you very well. However, these crops many not meet the standards of the carbon market you work with. Some companies will allow you to enroll in carbon credit program while also paying you a premium for your crops if you use specific conservation practices. You’ll need learn to carbon capturing methods and standards of the company you enter into contract with. Let’s take a look at who some of the companies could be.
As the most recognized name in the farming community, Indigo Ag has an impressive list of well-known corporate buyers like The North Face, Blue Bottle Coffee, and JP Morgan Chase. While Indigo is touted as a leader in the emerging industry, it may not be the best option for all.
Nori is a blockchain-enabled startup company who is unique to the carbon-removal industry because they are powered by cryptocurrency. It’s a new approach that they hope will create efficient and transparent carbon removal transactions.
Companies can purchase NORI tokens (whose price depends on the market price of a carbon removal credit at time of purchase). Once it has a NORI token, the company can exchange it for an NRT (or Nori Removal Token).
Farmers create NRTs when they sequester one ton of carbon dioxide (CO2). That NRT translates into a NORI token which is priced at market value and can be sold whenever you feel is right. The exchange rate between a NORI token and an NRT will always be 1:1.
Companies like this model because they can buy tons of carbon in NORI tokens and bank them, then eventually exchange the NORI tokens for NRTs which count towards carbon removal. Farmers like this model because they get the power to sell their banked carbon when it’s most beneficial to them. (Hello, invisible hand of the market.)
TruTerra is a subsidiary of Land O’Lakes – the world’s largest farmer owned cooperative. Its carbon program launched in 2021 , and they currently offer three main sustainability programs to enroll in. They all have different eligibility standards, but one common requirement is that you must have already instituted conservation practices before enrolling.
Bayer’s Carbon Initiative is one of the newest ones on this list, but their program is one of the easiest to understand and most transparent we’ve seen so far.
Nutrien’s core businesses are creating seeds, fertilizers, herbicides and software to optimize farm performance. Since they announced their involvement in addressing carbon emissions November 2020, we were intrigued - and so were many others. Nutrien Ag started its two year pilot period in 2021 but has a decade long comittmentto scale the carbon program by 2023. So far, they exceeded their anticipated farmer participation. Below is what we’ve been able to gather so far.
The landscape of the carbon market is constantly changing with new carbon programs cropping up each year. But one thing remains - How you treat your soil and track your practices are the key to success in a carbon market. Keep track of which cover crops you’re planting and your inputs so you’re in good shape before and after carbon program enrollment.
We’ve done a deep dive into a few carbon credit companies, but there are many more that are focusing on GHG emission mitigation as well.
Carbon markets are meant to boost your income, diversify your operation and help the environment. Community Supported Agriculture (CSA) does that and more. When you weigh the pros and cons of carbon markets, consider a CSA as well.
While these programs vary slightly in stage of development and market mechanisms, they generally seek farmers who:
But there are other considerations aside from eligibility to think on.
There are a number of concerns by the public, climate experts and producers about carbon credits. But ultimately capturing carbon is good for any operation.
For one, not every carbon credit is linked to sequestration, so the idea of carbon credits can be misleading to consumers who think that buying carbon credits is reducing GHGs. In reality, some carbon markets aren’t selling high-quality offsets so they may not expect you to adhere to regenerative agricultural practices so much as to their specific carbon capture guidelines.
Because carbon markets are privatized and market-based, they can be subject to loopholes, lax regulations, and insufficient carbon pricing. All of that can spell lower prices for carbon farmers or insignificant emission cuts.
What’s more, companies with financial resources may be able to afford tons of carbon credits allowances as a means to offset their practices. In the end, the environmental and financial costs of corporate actions may be passed on to the public, potentially leading to higher energy prices, pollution and other environmental setbacks.
Regardless of it place in the market, carbon sequestration is still imperative to reducing the impacts of climate change, and we encourage every producer to do all that they can to trap carbon by adopting regenerative agriculture. It’s not just good for the planet, it’s good for the long term health of your operation.
If you think carbon markets are right for your farm, you may find that both private, state and federal funding options can help you try carbon sequestering tactics on your farm.
At FarmRaise, we are monitoring the development of these marketplaces closely so that our customers receive the most up-to-date information on their development. If you want updates about carbon sequestration, ag finance and Earth-friendly farming sign up for our free newsletter by joining FarmRaise.
This article is originally written by Sarah T. who has earned her Master’s Degree in Agronomy and Agriculture Technology from Stanford University. She supports American producers by dedicating herself to finding solutions that lead to more sustainable, healthier and tastier food systems.
*Truterra is a FarmRaise partner - partnering to help farmers in Iowa adopt regenerative farming practices.
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