Intervention needed in agricultural carbon markets

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Pressed to take meaningful action to reduce harmful emissions, farmers are seen as part of the climate solution, but without an arbiter and consistent standards they can be taken advantage of, warns those who testified recently at a hearing on voluntary carbon markets in the agricultural and forestry sector.

When Michigan wheat farmer Dave Milligan recently appeared before the House Agriculture Committee, he was asked directly if he understood how carbon credits are valued and how it is determined what a farmer receives for carbon credit.

“No, I don’t at the moment,” said Milligan, who is also president of the National Association of Wheat Growers.

Milligan underscored the NAWG’s interest in the voluntary carbon market opportunities that work for various wheat production systems across the country, but these producers still have many questions.

“The carbon credit will be generated on the farm. The farmer must have a fair return as the value of the carbon credit increases, ”says Milligan. “The NAWG is cautiously optimistic about voluntary carbon efforts, and while we see the potential to have both an increasingly positive environmental impact and an additional source of income for these ecosystem services, there is still a lack of transparency in the details of the program and producers have questions about volunteering. carbon markets.

Milligan told members of Congress that just like there is a standard for grains, carbon credits could also benefit from standards on how to measure and ensure consistency, just like how wheat is graded.

Large scale adoption

Over a year ago, Bayer began enrolling farmers in a carbon program that pays them to adopt agronomic practices – primarily no-till and planting cover crops – to sequester carbon in the crop. soil of their fields. Unlike many carbon markets, Bayer pays farmers for the practices up front so they can easily make an economic decision and enter the carbon market.

Leo Bastos, senior vice president and head of global business ecosystems at Bayer, explains that Bayer determined the price to be paid to farmers based on public information for other products on the market ranging from $ 15 to $ 25 per carbon credit. In addition, if the price increases, Bayer has committed to share those increases with the farmer.

“We hear from farmers that this confusion reduces their ability to participate in carbon markets when they cannot be sure that they are making a capital investment that will ultimately produce a verified carbon credit,” Bastos says. “In order to move carbon markets forward, we need to tackle this uncertainty and the confusion that results from it. We need to recognize that while America’s agriculture is diverse, we need consistent standards to accurately measure, track, and assess long-term decarbonization. “

Referee required

Callie Eideberg, director of government relations for the Environmental Defense Fund, says there is still much to learn about the role of agriculture in reducing carbon, and that voluntary markets should remain the focus. Policies should prioritize practices that are now out of the box and have a high level of confidence in greenhouse gas reductions and avoided emissions, she said.

Yet as the carbon credit continues to be compared to the Wild, Wild West, farmers are faced with varying amounts of payments, verification requirements, and sometimes unattainable commitments. Eideberg says that approaches to accounting for the environmental benefits of farm-level actions taken by farmers are “all over the map”.

There is currently no arbiter to ensure consistency and verification of emission reductions. “The time is precisely right for Congress to step in and provide guidance and advice,” suggests Eideberg.

“If we don’t have an arbiter on the ground, if we don’t have someone who sets the standards and delivers consistent metrics, farmers are probably going to have their finger tips,” she warns. “They have to be able to have a consistent target to aim for. And then buyers want to make sure that the credits they buy are quality credits and won’t be eliminated or reduced later. “

She says the USDA can act as an arbiter or some other neutral third party.

The Senate Climate Solutions for Growth Act calls on the USDA to step in and provide this third-party certification in confusing carbon markets. Bastos called for the passage of the Growing Climate Solutions Act, which provides a basis to help farmers navigate a complicated system so they can trust their information to enter carbon trading. Bastos also urged the committee to work with the USDA to eliminate the confusion created by the lack of information on the concept of carbon banking.

“Farmers and businesses are waiting to make investments and decisions until we know what the carbon bank is,” he shares.

More funding for the conservation of the farm bill

Another role USDA can play is to make sure early adopters aren’t left out, part of how USDA might pay farmers for past actions. The Food and Agriculture Alliance for the Climate also supports a one-time payment to farmers who were the first to adopt environmentally friendly practices and ensures that they are continually enrolled in the programs. state or federal conservation, Eideberg adds.

Jeanne Merrill, policy director of the California Climate and Agriculture Network, explained in her testimony how, since 2003, carbon markets have proven to be an inadequate tool for reaching the diversity of farmers and ranchers. She described the rise and fall of the Chicago Climate Exchange, the California carbon market in 2012, and then California’s transition to subsidy-based programs to pay farmers for climate-smart agriculture programs.

She says carbon markets have failed to deliver on their promises due to high transaction costs for project development and verification. In addition, the complexity of developing clearing protocols for compliance markets which must be additional, verifiable and permanent, means that it can take years to develop credible offsets. This is the case of California with its rice / methane protocol which took seven years to develop. And now, not a single rice farmer has subscribed to these carbon credits because the cost does not make economic sense.

Low carbon prices are far from compensating farmers for the real costs of their new practices, resulting in the participation of only the most important producers, and often because there is additional public and private funds to offset the costs of initial startups.

“Time is running out,” she said of the impending deadline of 2030 to bend the curve of global greenhouse gas emissions to avoid the worst impacts of climate change. “We cannot waste time on complex and ultimately ineffective approaches like carbon markets. We have tried for almost 20 years to make agricultural carbon markets work and they have failed. “

Merrill has advocated for proven and proven farm bill conservation programs that can provide the research, technical assistance and financial assistance farmers and ranchers need to reduce their greenhouse gas emissions, improve their carbon sinks and strengthen their resilience in the face of extreme weather events.

Deb Reed, executive director of the Ecosystem Services Market Consortium, says these voluntary carbon markets are completely complementary to USDA conservation programs. USDA may continue to provide conservation payments in the form of seed funding to help farmers and ranchers adopt practices that could also qualify them to participate in markets that can provide an additional income stream.


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