Clarity On Carbon’s Potential: Compare Nine of the Leading Markets
In launching the TruCarbon carbon program, Brett Bruggeman, president of WinField United, says the team is ready to learn a lot and perhaps stub its toes. This spring, the team will enroll growers via the company’s 24 retail partners, which are in the Truterra network. And by summer, the first transactions with Microsoft as the buyer will occur.
“We are on a fast pace,” says Jason Weller, vice president, Truterra. “We have a customer and a huge opportunity to do the initial sale, and it will be one of the largest soil carbon credit sales in the U.S.”
Know The Players And Practices
The following details a roundup of the current carbon markets offering programs to farmers.
The key role trusted advisers can play is helping farmers navigate not only what programs in which to enroll but also each program’s requirements.
Carbon markets offer both economic and environmental value to farmers, according to a report
published by Ecosystem Services Market Consortium (ESMC). (Editor’s note: Farm Journal’s Trust In Food is an ESMC member.) It estimated $5.2 billion in demand for carbon credits from U.S. ag lands.
A separate study from the journal Science Advances found building soil carbon and using other natural climate solutions in farms and forests could offset up to 21% of U.S. greenhouse gas emissions.
“We actually think agriculture is the solution to greenhouse gas emissions,” says Mike Frank, executive vice president and CEO of retail at Nutrien.
The Potential Is Building.
In late January, Peoples Company and CIBO Technologies announced a partnership to offer carbon credits on more than 20,000 acres of land managed by Peoples, an Iowa-based land transaction and advisory firm.
What to Know: Carbon Contracts
“In the absence of a national policy, carbon markets are a bit of a Wild West,” says Laura Sands, principal at K•Coe Isom and sustainable ag expert. “Verification is key. The higher the certainty around the emission reductions, the higher the value of the credits—at least in theory. But verification can be costly.” She offers these tips to consider for farmers and advisers.
- Understand how the contracting entity is measuring carbon. Make sure the organization with which you are working does not have a conflict of interest in the measurement process. Confirm that sequestration projections are in line with what other industry sources estimate.
- Confirm how dollars flow. Some systems include holdbacks or percentages the organization with which you are contracting takes off the top.
- Assess contract terms, length and exit clauses. Understand to what you are committing and for what period of time. Some contracts ask landowners to abide by rules, policies or amendments—and there might not be a mechanism in place for farmers unwilling to abide by the rules, experts say.
- Know the risks of a reversal. Most carbon contracts have some sort of mechanism if you fail to sequester carbon.
How Some Leading Carbon Markets Compare
Minimum enrollment: 10 acres
Per-Acre Cash Payment: $10 per acre. Producers will be paid by the acre, not by the amount of carbon sequestered.
Bayer’s carbon initiative pays producers for adopting climate-smart practices such as no-till, strip-till and the planting of cover crops. Producers are required to plant corn or soybeans, have an active FieldView Plus account and agree to share the data needed for the program.
No minimum enrollment, but average is 1,000 acres
Per-Acre Cash Payment: $20 per acre. Soon, CIBO will enable growers and enrollees to set the price of their own credits.
The program is called the REAP program: Rapid Enrollment, Annual Payment. Growers agree to a one-year term, and they complete a one-page form attesting to their practices. CIBO follows up with an interview. Once practices are verified by CIBO through remote sensing and interviews, a farmer’s regenerative potential becomes a CIBO carbon credit that is available for sale on the CIBO marketplace. The grower retains ownership of his or her credits. CIBO markets the credits both directly and as part of an ag carbon credit pool. When credits are sold on the CIBO marketplace, CIBO pays the farmer while keeping 20% of the transaction fee.
Launching: Fall of 2022
No minimum acreage
Per-Acre Cash Payment: Not specified. Producers will be paid annually for the amount of soil carbon sequestered, GHG emissions reduced, pounds of phosphorus and nitrogen and tons of sediment prevented from release into the watershed and water saved annually from reduced irrigation (based on ESMC quantification, verification and third-party certification).
- The contract period is 10 years and includes cropland or rangeland.
- There is no contractual volume for producers; the producers’ outcomes are calculated annually over a 10-year crediting period, which can be renewed to a maximum of 20 years.
- Producers must register and enter required information for asset or credit generation, and they must certify information entered is accurate.
- Producers must show ownership of the assets to be generated to sell them into the market.
- Producers have no enrollment fee or requirement to purchase ag products.
- Implementing conservation could have associated costs. Producers might be responsible for practice implementation costs and expenses such as soil carbon testing.
Farmers Business Network
Launched: September 2020
Enrollment varies but generally at least 200 acres
Per-Acre Cash Payment: Payments are market-and buyer-dependent. Producers can receive anywhere from 30¢ per acre for research programs to more than 15¢ per bushel for identity-preserved premium programs.
Producers share information with Gradable on their crop production practices, including planting, fertilizer applications, tillage and harvest. The information is processed with artificial intelligence that leverages 240 million acre-events of farm data from FBN. Gradable validates and distills the practices into a single farm-level score, which allows farms to be rewarded for practices without having to share detailed practice information with buyers.
Launched: June 2019
Minimum enrollment: 150 acres (a minimum of one field)
Per-Acre Cash Payment: Payment is $15 per carbon credit with a guaranteed price floor of $10 for growers who enrolled in the program beginning in 2020.
- Producers dictate their own participation in Indigo Carbon and may choose to pilot on a handful or all of their fields in the first year. Growers can continue to enroll more eligible fields in subsequent years if they qualify.
- To be eligible for the program, a grower must contract at least one eligible crop field, hold exclusive operating rights to the land, have not cleared the land in the past 10 years and not receive payments for the land through another carbon credit program.
- Producers must commit to making at least one practice change on each enrolled field. There is no cap on the number of acres growers can enroll.
- Producers must submit three to five years of historical data depending on crop rotation as well as current-season details about planting and harvest dates, tillage and fertilizer applications. When applicable, farmers must provide information on cover crops, organic amendments, irrigation and grazing.
Launched: September 2019
Minimum enrollment: 1,000+ acres
Per-Acre Cash Payment: $15 to date, which is based on current prices for producers generating and selling Nori Carbon Removal Tonnes (NRTs). Producers set the floor selling price for NRTs, which sell when buyers are willing to pay that floor price plus Nori’s transaction fee.
- The individual (producer) who signs the contract is signing a 10-year contract to make the best effort to retain carbon and report on data annually.
- To qualify, third-party verification costs are paid by the participating farmer. Verification must occur once every three years.
- The producer must receive assignment of authority from any landowners of farms they plan on enrolling in the Nori marketplace.
- Anyone who receives cash from credits sold must pay taxes on that income; taxes are determined by the state in which the farmer lives.
Target: 500 to 10,000 acres per producer
Per-Acre Cash Payment: Not specified. Carbon pricing is under development but is expected to be at a level to support the adoption of targeted agronomic practices by growers.
The program, which is activating through Nutrien Ag Solutions, is voluntary and will involve a producer program participation agreement, which requires producers to fulfill sustainable farming practice obligations to receive grower payments. Producers participating in the program will agree to start providing data and implementing practice changes shortly after signing up. Details of the program, including terms and conditions, are still under development.
Soil & Water Outcomes Fund
No minimum acreage
Per-Acre Cash Payment: $25 to $40 per acre
Contracts require farmers to add new conservation practices to their operations that result in water quality improvement and carbon sequestration. Producers have one-year contract terms with the option to renew. This program is limited to Iowa, Illinois and Ohio.
Minimum enrollment: 2.5 acres
Per-Acre Cash Payment: Data from the Soil Health Institute indicate 1 acre of regeneratively managed soil could sequester 0.2 tons to 0.75 tons of carbon annually, so range would be roughly $4 to $15 per acre.
TruCarbon is activating through Truterra and its 24 retail partners within the larger WinField United network. The program helps farmers generate and sell carbon credits to private-sector buyers. This is a look-back program for carbon farmers have already sequestered—up to five years ago.