Unlocking the Benefits of Carbon Credits for Farmers
Carbon credits are a form of currency issued by national governments and accredited agencies representing one tonne of carbon dioxide (CO2) that has been reduced, avoided or sequestered from the atmosphere. Through carbon credits, farmers can be compensated for reducing their carbon footprint.
What qualifies for carbon credits?
To qualify for carbon credits, farmers must first assess their current operations to identify areas where they can reduce their carbon emissions. This may include:
- Implement carbon sequestration practices such as no-till farming and cover cropping
- Install renewable energy sources such as solar or wind power
- Reduce fertilizer and pesticide usage
- Restore soil fertility
- Adopt a farm management plan that includes conservation practices
- Participate in a carbon offset program for long-term emissions reduction
- Install methane digesters to capture methane gas produced by livestock
- Plant trees on the farm to absorb carbon dioxide from the atmosphere
Once the necessary changes have been made, farmers can register with a government agency or accredited organization to participate in a carbon offset program. Most carbon offset programs involve farmers submitting detailed information regarding their current practices and the changes they have made to reduce their emissions.
How is Value Determined?
Since engaging in sustainable farming and business practices is mainly voluntary and there are no government regulations to satisfy, the question of how carbon credits are quantified and valued is important.
Third-party consulting companies work with farmers to identify buyers and sell credits at the highest possible market prices and consult on credit verification, soil management, and crop production. A typical consulting relationship might involve a multi-year contract and the following benchmarks:
- The farmer uploads data about crop boundaries and historical yield data and current season management data to a proprietary platform.
- With consulting support, the farmer would add new practices to increase soil carbon and reduce emissions. The consultants may test some soil samples.
- The consultant calculates the carbon credits and validates the findings independently, then submits the results to a carbon registry that issues carbon credits.
- The consultant sells your carbon credits through the registry and submits payment to you.
This is just an example, but every carbon credit program is different, and farmers must ask the right questions before committing.
Locus Agricultural Solutions is helping farmers obtain carbon credits through improving soil quality with a micronutrient. This micronutrient is a graphite consistency type product added to the seed when planted. Once the micronutrients get to work in the soil, it is proven that they reduce carbon. The company provides a comprehensive suite of services, such as carbon footprint analysis, carbon offset trading and carbon credit monetization. Farmers can identify their carbon emissions, offset them and monetize their credits through these services. At the moment, Locus is charging around $6 per acre for the nutrients and guaranteeing those who enter the program will receive a minimum of $12 per acre in carbon credits. Locus also helps by providing the proof of carbon reduction and then marketing these credits for farmers.
This is not the only option available to pursue carbon credits, but it has emerged as a low-cost option to explore as a revenue source. If you would like to have a conversation about your farm’s potential for generating income from carbon credits, contact the Adams Brown agriculture team.