What To Know About Carbon Insets Versus Offsets
To date, most carbon programs available to farmers have required a change in practice, which left many long-term users of no-till practices and cover crops on the sidelines.
However, 2023 is shaping up as a turning point. Tom Ryan, president of Truterra, says this will be a transformational year for two reasons:
- The groundswell of efforts with USDA Climate Smart grants.
- A shifting focus to carbon insets.
Plus, market demand is strong, says Ron Hovsepian, CEO of Indigo Ag.
“With our second crop of carbon credits, we’ve proven this is beginning to be a recurring revenue stream,” Hovsepian says. “It’s important to understand soaring growth comes from the demand to remove carbon in two different ways — offset or inset — and that we enable both as part of our overall journey.”
What is the difference between insets and offsets in terms of carbon markets? Insets reduce emissions on the farm based on how the grain was grown, while offsets compensate for emissions elsewhere.
Explained another way, offsets are a cost-share for a change in practice that leads to fewer greenhouse gas emissions, whereas insets derive their value through the supply chain.
While Ryan sees a future where offsets will continue to be offered, he describes offsets as transactional and insets as transformational.
TEMPLATE FOR THE FUTURE
Truterra, offers “look back” programs providing credit opportunities for change practices in the past three to five years. Indigo Ag offers a sustainable crop sourcing program for farmers who are using sustainable practices on their farms. Both companies believe new programs will open the doors for long-term practitioners.
A case study for how long-term practices and traceability manifest into such programs can be found in Mount Hope, Ala. Spruell Farms has grown cotton for The North Face as part of its sustainable cotton focus.
“They were looking for truly an authentic traceable part of their supply chain, and through the verifiable processes we have in place, we could leverage our relationship for a premium fiber,” says Elizabeth Spruell.
Spruell Farms worked with Indigo’s Indigo Market+ Source program.
“It’s intrinsic to a farmer to be curious, and you have to be OK with failing at something to try something else,” she adds. “We’re always looking for more creative solutions.”
Another example shared by Hovsepian is how AB InBev, the parent company of Budweiser, has worked with Indigo to source crops traced to save 5.5 billion gallons of water over conventional practices.
CREDIT SNAPSHOT
As of the end of February, Truterra has paid farmers $8 million for carbon offsets, and Carbon by Indigo has produced more than 130,000 carbon credits.
Margy Eckelkamp reports on the ag retail industry, input trends, machinery, technology and more.
