Three Big Trends in the Carbon Marketplace
As U.S. farmers evaluate carbon market opportunities available today, most have more questions than answers.
“Farmers aren’t ready to jump in, because it’s the wild, wild west out there,” says Iowa farmer Mitchell Hora.
Despite the uncertainty that exists in the marketplace, there are at least three clear trends in the carbon marketplace, says Amy Skoczlas Cole, executive vice president of Farm Journal’s Trust In Food. Cole recently led a webinar discussion on carbon market trends with a panel of farmers, industry members and a USDA policy advisor. A link is available at the end of this story to the discussion in its entirety.
1. Consumer perspectives on farmers have changed. One trend, she says, is that consumers are now taking a more positive view of America's farmers, especially when it comes farmers’ role in environmental stewardship.
“Practically overnight, farmers have gone from being an eco-villain extraordinaire to planet-saving superhero, and it’s putting farmers under a whole new microscope,” Cole says.
Much of consumers’ exuberance is a result of what Cole describes as President Joe Biden’s “wall-to-wall” carbon planning.
“U.S. farms are positioned to become environmental solutions providers, with big potential to sequester carbon,” she says. “But navigating this complex ecosystem will require careful planning and understanding to lessen farmer risks.”
Robert Bonnie says he anticipates less risk and more reward ahead for farmers. As USDA Deputy Chief of Staff for Policy and Senior Advisor, Climate, Bonnie says farmers want to be part of the climate solution. In the process, they also want to be recognized for their stewardship practices that protect soil, water and air quality.
“There’s some trepidation about the policies going forward, but there is alignment that will put farmers and forestry in a positive light, but we do have to get it right,” he says.
Bonnie says farmers will need support from both public and private sectors to implement conservation-friendly agronomic practices.
“We have to provide incentives that reward farmers for these stewardship practices, because that’s what’s in the best interest of the climate,” Bonnie says.
2. Credible information is crucial. Reliable information is necessary for farmers, consumers and companies, and it’s the second big trend Cole sees in the carbon marketplace.
A Farm Journal Pulse poll conducted in March mirrors her perspective. The poll reports that 64% of farmers say they need more trustworthy information to help them decide whether to commit to a carbon market program.
To date, only 1% of farmers has actually signed a contract, according to the March Ag Economy Barometer from Purdue University. However, the Barometer found that between 30% and 40% of the 400 farmers surveyed are aware of opportunities to get paid for sequestering carbon.
“There's a lack of information and education about how to get involved, and there's a huge need for technical assistance from intermediary organizations to help get (farmers and ranchers) compliant and keep them compliant – to organize the monitoring that has to happen,” says Oregon rancher Kelley Delpit. “There's a huge need for that.”
Without help from intermediary organizations, Delpit says a lot of producers are hamstrung on knowing how to navigate the protocols various carbon programs require.
Cole adds that research conducted by Trust In Food found that at least half of the farmers surveyed still use paper and pencil for recordkeeping, while most carbon market programs are software based.
Iowa farmer Mitchell Hora says technology requirements create a gap that many farmers have difficulty bridging.
“It took one farmer I know 60 hours to enroll his 1,100-acre farm in one of the programs,” he says. “We need to get that down to 60 minutes. It has to be an easier process.”
Hora also says farmers need access to carbon market program dollars sooner than most programs allow, so they can buy machinery, seed or other technology needed to implement the required conservation practices.
3. The Biden administration is committed to addressing climate change, including carbon reduction. That’s the third big trend.
Agriculture Secretary Tom Vilsack recently raised the idea of creating a carbon credit bank to help farmers have the financial wherewithal to buy seed for cover crops or implement no-till and strip-till practices.
Cole asked Deputy Bonnie when the bank would be open for business. He replied that the agency is in the process of collecting information from agriculture and forestry and preparing a report for President Biden that’s due the end of April.
“In the coming months, you know, we’ll roll out – whether it's a bank or otherwise – some additional tools,” he says. “We want to develop a toolbox that is responsive, that helps agriculture and helps forestry. I think creative finance is going to be part of that.”
While some farmers and other ag stakeholders doubt whether a carbon bank will actually materialize, there is enthusiasm among members of the Biden administration about carbon market opportunities for farmers and ranchers.
“We want more Mitchell Horas out there starting businesses to do this work,” Bonnie says. “There’s interest on the Hill with the Growing Climate Solutions Act. Investments we make in monitoring and measurement are going to be important and some standardization in the marketplace is also going to be important.”
Kris Johnson, deputy director, The Nature Conservancy, says his organization is part of the Ecosystem Services Market Consortium, which he believes can standardize measurement. "It's a broad, multi-party consortium of different companies and nonprofits that are working together to try to build a sort of a transparent, science-based approach to counting carbon," he explains.
Bonnie says participating in carbon markets isn’t the only practice that farmers can adopt to help the climate or the environment at large.
“Different producers have different objectives. From a policy standpoint, it’s that toolbox – making sure we’ve got enough tools for those producers who either don't want to play in the carbon marketplace, or it's not right for their set of objectives or their interest,” Bonnie says. “I think the question is, what's the broader set of tools and opportunities that we can make sure are there for producers in both agriculture and forestry to take advantage of?”
The carbon panel discussion is available to listen to in its entirety here: https://www.farmjournal.com/farm-country-updates/
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