Emerging Carbon Opportunities

Carbon, and agriculture’s role in carbon markets, is a hot topic for discussion as opportunities emerge. However, information about carbon markets can be challenging to navigate as individual companies typically have unique payment, verification, and data ownership structures. Missouri Corn and Missouri Soybean have teamed up to provide useful information to help Missouri farmers make informed decisions before enrolling in a carbon program.

What is a carbon credit? A carbon credit represents the avoidance of one metric tonne of carbon dioxide equivalent (CO2e) into the Earth’s atmosphere. Credits are a non-tangible carbon-based asset that can be earned, deposited, sold, or traded. Carbon credits are generated by farmers when they enroll in certain carbon programs and adjust management practices that lead to increased soil carbon within their fields (i.e., carbon sequestration) or decreased carbon emissions from their farms. Both private and non-profit companies have developed agricultural carbon market programs that aim to reduce overall U.S. carbon emissions through the trade of carbon units sequestered at the farm level. The sale of carbon credits presents an opportunity for farmers to receive financial benefits from farming practice changes that produce environmental benefits.

FAQ

  • Q: Why carbon?
  • A: In the context of carbon markets, carbon generally refers to carbon dioxide gas (CO2), the most common greenhouse gas (GHG) emitted by human activities. CO2 is naturally stored or sequestered in plant biomass or soil. Tilling the soil or removing plants that store carbon in their tissues releases stored carbon.
  • Q: What is carbon sequestration?
  • A: Sequestration occurs when carbon dioxide is removed from the atmosphere and subsequently stored within the earth. Geologic sequestration involves storing carbon deep in rock formations underground, while biologic sequestration is all about storing carbon in soil, plants, water, and trees.
  • Q: What are greenhouse gas (GHG) emissions?
  • A: There are three primary GHGs, they include carbon dioxide (CO2), nitrous oxide (NO2), and methane (CH4). Atmospheric emissions of these three gases can be from both natural and human causes. Natural causes include volcanic eruptions, the Earth’s orbit, the carbon cycle, and the sun’s energy release. Burning fossil fuels, a common human action, is believed to be the leading cause of man-made GHGs emissions.
  • Q: What is carbon neutrality?
  • A: A company’s carbon footprint is the quantity of carbon emissions produced as a result of its operations. Carbon neutrality is achieved by reaching net-zero carbon dioxide emissions, or when the amount of carbon emitted by a company is equal to the amount of carbon the company captures or offsets.
  • Q: How can farmers tap into the potential of soil carbon?
  • A: Farmland has the capacity to sequester immense amounts of carbon directly from the atmosphere. Management practices like cover crops and no-till that enhance soil health are also converting and sequestering atmospheric carbon into soil carbon. With the right systems and practices in place, during each planting season, farmers can reduce their carbon emissions, they can enhance the uptake of carbon, and retain it there for years, even many decades after each harvest.
  • A growing number of companies are voluntarily setting corporate sustainability goals that include carbon reduction commitments. Many have set goals to become carbon neutral by 2030 or by other similar dates. To meet their carbon commitments more quickly and efficiently, some companies are looking to pay farmers to store additional carbon in the soil, thereby offsetting their own emissions.
  • As a result, farmers are being presented with new opportunities through the emergence of carbon market programs to help reduce greenhouse gasses, improve the environment, and create potential revenue in the process.
  • Q: I already implement these practices on my farm. Can I still join a carbon program or get rewarded for practices already adopted?
  • A: Early adopters that have already implemented conservation practices may or may not be eligible for carbon credits depending on the carbon program. Each program addresses this circumstance differently. Keep in mind, these programs are in the early stages of development and could change in the future.
  • Q: Why do I need to implement a new practice change on my farm, and why don’t my existing practices count in most carbon programs?
  • A: Currently, companies buying carbon credits are expecting those credits to be generated from new practices that offset current or future emissions, not past emissions. This is called “additionality,” whereby the practice change is resulting in new or additional reductions in carbon emissions. Carbon sequestration that occurred in the past does not necessarily help them reach their future carbon reduction goals.
  • Q: What if I rent land? Can I still enroll in a carbon program?
  • A: In most cases, farmers can participate in carbon programs on rented land. Most will require some form of documentation of approval from the actual landowner. Each program may have different requirements for enrolling rented land, and farmers should review this area closely.
  • Q: If I enroll in a carbon program, will I be able to enroll in a different carbon program in the future?
  • A: This depends. In general, once a farmer has implemented a practice change and used it to participate in a carbon program, they would not be able to enroll that same field into another carbon program until the contract expires. Once that contract is over, the farmer would then have the option to enroll in a different carbon program but would have to have a new practice change at that point. It is unclear if carbon programs will extent contracts and keep producing credits past the original contract. Carbon programs do not look at the farm as a whole, so a farmer could enroll different fields on the same farm into multiple carbon programs if they would like.
  • Q: What information will I need to provide if I want to enroll in a carbon program?
  • A: Farmers will need to provide detailed production information about the fields enrolled in a program, such as past and present data about practices such as crop rotation, planting, fertilizing, and irrigation. The number of years of data that will need to be provided depends on the program.

Questions To Ask Before Enrollment

Eligibility and enrollment

  • What crops and/or agricultural systems are eligible?
  • What is the minimum and maximum contract length?
  • Is there a minimum acreage required to enroll?
  • Will the program be practice-based or outcome-based?
  • What does the program do with certified or purchased credits? Ex. will credits be retained for internal or later use, sold, auctioned, traded, etc.?
  • Can existing practice adopters participate, or will a practice change be required?
  • Can fields that adopted practices prior to enrollment receive payment?
  • Can rented land be enrolled or just owned land?
  • What penalties will a farmer incur if participation ends before the contract expires?
  • Can I enroll acres that are enrolled in USDA or state cost-share or conservation programs?
  • What happens if there is a failed crop or failed practice implementation during the contract period?
  • Are other ecosystem credits included or just carbon?

Payment details

  • What is the annual payment amount and/or how are credits or outcomes priced?
  • Are payment amounts fixed for the term of the contract or calculated each year?
  • What is the annual payment timing/schedule?
  • Is there a transaction fee imposed by the program? If so, how much?

Data/software requirements

  • What operational data must farmers provide or share to enroll?
  • Is company-specific software required for data entry?
  • Will the program use, share, or sell farmer-provided data in ways external to the carbon program?

Quantification, monitoring, verification, and certification

  • How are credits or outcomes quantified?
  • Is soil sampling or other environmental monitoring required? If so, will they notify the landowner before a site visit?
  • Who conducts and pays for the environmental monitoring?
  • What is the process for practice verification and credit certification?
  • How is verification and certification paid for?
  • How does the program provide technical assistance to farmers?

For questions or to learn more about programs that may be available to you, contact Environmental Director Darrick Steen or Conservation Programs Manager Clayton Light

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