Carbon offset markets caused quite the buzz in 2020 with a flurry of more than a dozen opportunities for farmers being introduced in a short time frame.
Today, the dust has settled a bit, and as such, the programs currently available are more focused and have multiple years of a track record behind them.
This space has seen exits. At the end of 2023, Rabo AgriFinance ended its Carbon Bank pilot programs, and it reassigned its focus in its sustainability team. In September, Nori closed its doors.
Two other programs refined their approaches to no longer include offsets.
Moving away from a broader approach, now Nutrien offers its Sustainable Nitrogen Outcomes program, which focuses on nitrogen management as a way to reduce overall nitrous oxide emissions. As Sally Flis with Nutrien explains, the program has grown from 150,000 acres in the U.S. and Canada to more than 2 million acres in 2023. With one-year contracts, farmers can adjust nitrogen management practices for enrollment.
“The total opportunity with additionality was overestimated,” Flis says. “Everybody thought it was going to be easier than it was. There are some tenacious companies who have not given up. Others have walked away.”
The Ecosystem Services Market Consortium (ESMC) now solely focuses on Scope 3 projects for food and beverage companies, which have been the most interested in reducing the environmental effect of their supply chain.
“Regenerative ag practices improve the producer’s ability to continue to operate and produce food,” says Thayer Tomlinson, communications director at ESMC. “In hindsight, it makes obvious sense the food and beverage companies would want to improve the resiliency in their supply chain and provide financial incentive to do so.”
Carbon Crescendo?
Have carbon offset opportunities reached their peak? Current providers say no.
“We’re still on the upswing,” says Clay Craighton with Agoro Carbon Alliance. “When I started at Agoro Carbon four years ago, we had 30,000 acres enrolled. Today, it’s close to 2.4 million across 32 states.”
In the past three years, Indigo Ag has produced $16 million in sustainability program payments to farmers—$10 million of which was from carbon offsets. In the first three years, Truterra paid over $21 million to farmers for the sequestration and reduction of over 1.1 million metric tons of carbon.
In that same time, the value of a carbon credit per ton has risen from $15-$20 to now $60-$80.
In December, a partnership was announced where Truterra will begin offering Indigo Ag carbon programs, and Indigo Ag science will back Truterra’s carbon measurement. Company leaders say this partnership aims to simplify, standardize and bring scalability.
“We’ve got to stop double investment,” says Ewan Lamont, head of Indigo’s Sustainability Solutions business. “Both companies have been investing in the same things, and it makes absolutely no sense. This work is expensive, it’s difficult, and it involves biology and sustainability science so it’s challenging.”
Jamie Leifker, president of Truterra, says previous years’ programs for carbon credits have sold out of the tons Truterra enrolled. Leifker is bullish on how adding Indigo Ag into their portfolio will expand opportunities for farmers.
“This market is fragmented and decentralized with inconsistent standards,” he says. “Farmers have a lot of questions. What this collaboration means for us is that we’re able to then guide them to the right program by working with Indigo to expand the portfolio of program options that farmers have and give them flexibility to move from one program to the next.”
New Questions Arise
Carbon offsets require a practice change or additionality for enrollment. With financial support available to facilitate those changes, farmers ask how they can stack these opportunities. In the most simple way to answer those questions, federal and state-funded programs can be stacked with private programs (most often). But enrollment can not duplicate across multiple outcomes. For example, crops can’t be enrolled in a Scope 1 program at the same time as a Scope 3 program.
This is coming into focus as questions are asked around the carbon space because of the 45Z tax credit provisions scheduled to go into effect on Jan. 1, 2025. The provisions make carbon intensity a measurement parameter for biofuels production. A crop acre can’t be enrolled for offsets at the same time a crop is sold for 45Z tax credits.
