An Intro to Carbon Markets

Hello Readers!

This week I want to talk about Carbon Markets. Carbon farming has existed since the birth of agriculture — but now the rest of the world sectors are smartening up about it. What does it mean for farmers?

Grow your crops and take care of your land…. AND get paid for it!

How does this work?

Farmers farm their land and sequester carbon in their crops and soils. They partner with a carbon broker to find a demand for the carbon they sequestered in their growing season. Usually carbon brokers will ask that you give an estimate of carbon sequestered (a free way to do this is through the USDA/NRCS Greenhouse gas accounting system). After this estimate, the carbon broker will have a validator visit the farm and measure the carbon sequestration. For every ton of CO2 sequestered, 1 carbon credit is generated. Private companies can purchase these credits through the broker, and the proceeds from that purchase go back to the farmer to incentivize sustainable farming practices to sequester even more carbon the following growing season.

Why is this a big deal?

Big companies want to offset their carbon emissions because it’s socially responsible and helps their public perception. For B corporations, decreasing carbon footprints goes into overall scoring, and even for non-B corps, decreasing emissions helps improve general sustainability ratings. These companies could be trying to get ahead of the curve — nobody knows what the Biden or future administrations might mandate, but companies are trying to be proactive to get ahead of legislation, become models for other companies to mimic, and slow the rate of climate warming on earth.

What is an offset?

1 offset = 1 metric ton of CO2 reduction = 1 carbon credit.

However, in order to be considered an offset, this emissions reduction must be the result of an action taken by farmers that is considered above and beyond mandatory regulations, industry standards, or business as usual activity. For example, cover cropping and strip/no-till practices are actions that are by no means necessitated by government regulation, but that farmers adopt in order to improve their soils.

How much money is in it for me?

That depends. Farmers are paid per ton of CO2 sequestered, meaning that payments on larger land parcels are generally higher. That said, farmers get paid for the amount of carbon sequestered — so even if a farmer has a smaller parcel, if they’re able to sequester more tons/acre, their final payment will reflect that. There is no minimum parcel size to be considered a carbon farmer! As of now, a farmer might expect to receive around $10-20/ton CO2 sequestered.

Next week I’ll be discussing programs, practices that pay, and the future of the carbon marketplace! Stay tuned and feel free to share what you know on the subject at sarah@farmraise.us

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