As Europe considers a carbon removal framework that includes so-called “carbon farming” from the agriculture sector to meet its net zero goal by 2050, the U.S. experience with agriculture carbon offset credits should raise questions about whether such an approach is desirable or feasible. Agriculture carbon markets have floundered in the U.S. for more than a decade, making no discernable impact on emission reductions as they open the door for polluters to greenwash. Many farmers, environmentalists and scientists are now questioning whether structural flaws with soil carbon credits can ever make them part of credible climate policy.
U.S. farmers’ skepticism of agriculture carbon credits is partially informed by the 2010 collapse of the Chicago Climate Exchange, which managed a private offset market. Over 8,700 farmers were involved in the exchange and committed to certain agricultural practices with the expectation that they would be compensated adequately, only to see prices drop well below $1 for the credits they generated.1 The market collapsed. In 2013, California established the country’s biggest compliance Carbon Market including carbon offsets. Though the market has grown, it still includes relatively few agriculture offset credits, with offset developers preferring to pursue simpler forestry-based offsets. Much of the renewed interest in private carbon markets in the U.S. comes from companies like Microsoft, McDonald’s and other major corporations who are looking for cheap strategies to offset their pollution and allegedly meet their net zero targets.2
For farmers, the carbon credit playing field is a complicated maze, difficult to assess and navigate. Characterized as a carbon credit “wild west,” a slew of private carbon markets and offset credit protocols have emerged in the U.S. — all with different rules, obligations, costs and prices. Carbon market developers like Indigo3 and Nori,4 which sell offset credits to corporate polluters, set their own requirements on the size of farm, soil testing data, third party verification, length of contract and practices. Agribusinesses like Bayer, Cargill and Land-O-Lakes have created their own carbon credit schemes with farmers they buy and sell to.
A 2021 Congressional Research Service (CRS) report on agriculture carbon credits within private markets identified five areas that threaten to undermine their credibility: realness (accurate measurement), additionality (action that would be additional to what was already planned), leakage, permanence and verification.4 All of these issues weaken voluntary carbon offsets, raising questions about whether emissions are actually cancelled out, let alone reduced, reports CRS.
An assessment by CarbonPlan of 14 soil carbon credit protocols in the U.S. found that not a single one had a meaningful screen for additionality. The requirement for additionality seeks to ensure that the credits would contribute to additional sequestration as a result of the project, as opposed to what would have been sequestered had the project not been carried out. CarbonPlan’s review concluded that “the lack of rigorous standards makes it hard to ensure good climate outcomes.”5
An emerging body of research is identifying the complexities and uncertainty in measuring soil carbon in the short term and over the long term. This is further weakening attempts to establish credible, high integrity agriculture-based carbon offsets, and causing experts to question whether significant additional soil carbon sequestration is possible.6 Recent research raises questions about whether carbon can be stored in the upper levels of soil for any significant length of time.7 An analysis of soil carbon testing found that typical testing practices overestimate the level of sequestration by sampling too close to the surface.8 A study in Nature found that rising temperatures predicted by climate change will release carbon from the soil much faster than previously predicted, thereby unraveling sequestration that has occurred.9
The latest IPCC report summary of science issued last year validated these concerns by making clear that there is not a one-to-one relationship between industrial sources of emissions and land-based carbon sequestration, and that climate change itself through temperature rise and extreme weather events will slow or disrupt our ability to sequester carbon over time.10
Farmers’ Perspective
From a farmer’s perspective in the U.S., there are fundamental concerns that have driven the extremely low participation rate in carbon offset credit schemes, many of them involving farm economics and risk. Here are a few:
1. Carbon credits do not cover farmers’ costs
To gain carbon credits, farmers need to employ new farming practices to sequester carbon, referred to as “additionality” in carbon credit terminology (see above). This includes upfront costs to implement practices such as reduced or no tillage, the planting of perennial crops and other agroecological practices. But farmers too often are dealing with year-to-year financial challenges as market prices rise and fall, so investing in new practices requires them to take on risk. An Arkansas rice farmer explained to the House Agriculture Committee that he only made $133 on 200 acres put into a carbon credit project, which is not nearly enough to justify the project.11 Bayer is paying $3 per acre for reduced tillage — strip-till or no-till; $6 per acre for cover crops; and $9 per acre for adopting both practices.12 Corteva is currently paying around $15 per carbon credit. The pricing for companies purchasing offsets directly from farmers, such as Cargill or Bayer/Monsanto, are less publicly available. Currently, it is impossible for farmers to tell exactly what the market price is — as opposed to other farm commodities — and whether that market will even cover their costs.
2. The implementation costs are considerable, favoring large-scale farms
Aside from implementing new practices to participate in carbon credits, farmers must also take on additional costs associated with producing, measuring and verifying the carbon credit, including third party verification. For example, Nori requires third party verification that could cost up to $3,000 per project. An assessment of agriculture carbon credit markets in the U.S. concluded that planning, measuring, reporting, verifying, market brokering and insuring risk are all significant barriers to participation in carbon credit schemes.13
Because of these costs to both the project developer and the farmer, the carbon offset projects that do exist have primarily benefited large-scale farms, raising concerns that corporate investment in carbon markets will contribute to further consolidation of agricultural land and disadvantage small to mid-sized farmers. Additional issues arise for farmers who are renting land, including who owns any credits that are generated, what are the legal obligations and risks to renters versus landowners, and how do long-term credit obligations affect the sale of farmland.
3. Past agroecological practices are not recognized
A carbon offset credit can only credibly reward new (or additional) carbon that has been sequestered. Farmers who have been practicing strong soil health building systems, such as organic or sustainable systems, for years or decades do not get credit for carbon stored in the past. Soil science indicates there are limits to how much carbon can be stored within soil, so long-time soil carbon builders may actually be at a disadvantage when it comes to developing carbon credits.
The issue of “additionality” has also plagued the forestry offset credit market, including the California compliance carbon market. A study by the University of California found that 82% of forestry offset credits were not additional, and hence did nothing to reduce emissions.14
4. Permanence and restrictions on farmland management
To credibly offset carbon emissions from polluters, soil carbon offsets must be permanent, due to carbon remaining in the atmosphere from 300-1,000 years. In farming, a change in land management practices like tillage can release the carbon stored, thereby undermining the integrity of the offset and ultimately their carbon credit contract. The risk of severe weather events, whether drought or floods, also may affect sequestration. Long-term carbon credit contracts can restrict farmers’ ability to respond to weather changes or market-related financial risks to the farm. The U.S. has already seen extreme weather events destroy carbon offsets. An estimated 158,000 acres of forestry-based carbon credits were literally burned during 2021 wildfires that hit many western states, according to research by CarbonPlan.15
5. Farmers lose control of their data
To qualify for carbon credits, farmers are required to share enormous amounts of data about what is happening on their farm, including annual information about planting, seeds, fertilizer, equipment and harvest. Many U.S. farmers are concerned about who controls that data and who is benefiting.16 Many of the major global agribusiness firms like Cargill,17 Bayer18 and Corteva19 have created their own on-farm data systems that would give the companies unprecedented access to what is happening on individual farms, as well as aggregate data on many farms — all of which would be privately-held and controlled. These are often the same companies on which farmers depend for purchasing farm inputs, hence creating a conflict-of-interest situation.
Larger concerns about carbon markets and environmental justice
Despite some interest from companies in farm-based carbon offsets, there is no push to develop a government-run carbon market at the national level in the U.S. Even a very limited bill to have the USDA set common standards for private offset credits hasn’t passed Congress, facing opposition from 220 environmental and farm organizations.20
The inability of flawed carbon markets in California and in the Northeast states to effectively reduce emissions, along with recent research on carbon markets’ lack of performance,21 has led to growing skepticism of this policy approach. In February, a California state panel reported that the state would badly miss its goal of reducing emissions by 40% below 1990 levels by 2030, largely because of the state’s cap and trade system.22 The panel found that polluters have banked millions of carbon credits, many of them forestry-based offsets, allowing them to evade pollution reduction requirements.
New climate disclosure rules proposed by the Securities and Exchange Commission (SEC) could further weaken the offset market, as companies will be required to disclose their emissions and any offsets they have purchased.23 This increased climate scrutiny through audited financial documents may be a deterrent for companies who want to demonstrate real emissions reductions.
Some of the sharpest criticisms of carbon markets in the U.S. have come from the environmental justice community. Many sources of greenhouse gas pollution also emit other toxic air pollutants that affect human health. Many of those pollution sources are located in communities of color.24 Critics, such as the Climate Justice Alliance, argue that offset credits let companies off the hook from reducing their own pollution and associated damage to public health.25 California’s carbon market has long been criticized by the environmental justice community for containing loopholes that would allow polluters to continue polluting.26 This affects low income and communities of color more as because pollution sources are disproportionately located near them. A study from the University of Southern California found that these communities were less likely to see polluters reduce greenhouse gas emissions and other pollutants in their communities than elsewhere in the state.27
Australia and Canada’s carbon farming initiatives also yielding poor results
Deep flaws in agriculture and forestry carbon offsets in other countries have also emerged recently. Australia’s carbon offset program has come under heavy criticism recently, with a plunge in carbon credit prices and claims of badly broken offset methodologies.28 In Australia, offset credits were granted for not clearing forests that were never going to be cleared in the first place; for growing trees that were already there; for growing forests in places that will never sustain permanent forests; and for operating electricity generators at large landfills that would have operated anyway.29 A whistleblower in charge of the program called it a “sham,” particularly criticizing a program in which landowners were rewarded for allegedly re-growing trees on deforested land; after analyzing the outcomes of 59 such projects, it turned out that the total forest area had actually shrunk.30 An earlier investigation by the Australian Conservation Foundation had found that one in five forestry offset credits did not represent real emissions reductions, as they rewarded landowners for not cutting down trees they could not plausibly cut down.31
Canada’s experience with agriculture offsets have also been troubled. The Alberta voluntary carbon market has been issuing carbon credits mostly for no-till practices, but the credits do not require additionality. They actually allow tillage on 10% of credited land each year, and payments are year to year rather than ensuring permanency in the storage of carbon — all elements that directly undermine the integrity of the offset credit.32 Another analysis of the Alberta market found that very few farmers participate because of low prices and shifting rules on what practices qualify for credits.33
What would work better for farmers and the climate?
The IPCC report issued in February warned of a significant rise in risks and costs to farmers and the food system due to climate-related disruptions and emphasized the urgent need for deep investments in climate adaptation.34 Paying farmers for soil carbon offsets treats agricultural land narrowly as a carbon sink for polluters. Agroecological-based farming systems can bring multiple benefits, including healthier soils, clean water, wildlife habitat, and farm resilience to drought and flooding.
Sustainable agriculture advocates in the U.S. are pushing for an expansion of government conservation programs that support agroecological farming systems. Currently, these programs are under-funded, with only 41% of farmers applying for the Conservation Stewardship Program and 31% of farmers applying for the Environmental Quality Incentives Program receiving payments.35 Expanding and improving these conservation programs and making them accessible to farmers of all types and sizes would bring immediate climate benefits.
The EU has allocated a budget of €387 billion in funding for the Common Agriculture Policy (CAP) from 2021-2027. The vast majority of CAP funds support large-scale farms, incentivizing polluting industrial practices. For instance, 80% of CAP direct payments go to 20% of CAP beneficiaries at the expense of small-scale producers.36 Though the new CAP includes payments for eco-schemes, it doesn’t go far enough. The CAP has the potential to be transformative for biodiversity and the climate if these demands from European environmental organizations are heeded: 1) create CAP safeguards against harmful payments (that lead to peatland drainage, monocultures and expansion of factory farms); 2) set binding national targets for environmental improvements as conditions for CAP money; and 3) expand eco-schemes to support farmers’ transition to agroecology.37 The CAP remains the most critical policy instrument to enable EU agriculture and rural communities to deliver on these goals.
Governments setting ambitious targets for reducing agriculture’s major sources of greenhouse gas emissions directly is also badly needed. In the U.S., farm and environmental groups have called on the Environmental Protection Agency to begin regulating methane emissions from the largest hog and dairy operations.38 The European Environmental Bureau is calling for EU-wide and national level targets to reduce agricultural greenhouse gases.39 Emissions from mass livestock production and the manufacture and use of synthetic fertilizers are major sources of agriculture-linked emissions in both the U.S. and the EU, and they currently go largely unregulated.
In 2023, Congress will write a new Farm Bill that should reflect the urgency of the climate crisis. The EU will also begin implementing the new CAP in 2023, with the opportunity to push for reform as early as 2024 as member states submit their annual CAP performance reviews and the Commission reviews the performance of CAP strategic plans in 2025. There are opportunities to invest more deeply in popular, effective conservation programs, incentivize agroecological practices and address the over-production of energy intensive commodity crops. It is critical that policymakers avoid distractions like carbon offset markets.
As Wisconsin dairy farmer and Chair of the National Family Farm Coalition, Jim Goodman says, “The last thing we should be doing is turning carbon into another commodity to be sold or traded in the global economy. Carbon markets will do nothing to reduce greenhouse gas emissions. All they will do is create another way for polluters to profit from their lack of environmental concern."40
Endnotes
1. Clayton, Chris. “Finding Environmental Markets.” DTN. November 22, 2019. https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2019/11/22/carbon-credits-water-quality-markets
2. Murray, Tom. “Apple, Ford, McDonald’s and Microsoft Among this Summer’s Climate Leaders.” Environmental Defense Fund. August 10, 2020. https://www.edf.org/blog/2020/08/10/apple-ford-mcdonalds-and-microsoft-among-summers-climate-leaders
3. Nori. Own, Track and Showcase Verified Carbon Removal. Accessed May 17, 2022. https://nori.com/
4. Congressional Research Service. Agriculture and Forestry Offsets in Carbon Markets: Background and Selected Issues. November 3, 2021. https://crsreports.congress.gov/product/pdf/R/R46956
5. Zelikova, Jane. Chay, Freya. Freeman, Jeremy. Cullenward, Danny. A Buyer’s Guide to Soil Carbon Offsets. CarbonPlan. July 15, 2021. https://carbonplan.org/research/soil-protocols-explainer
6. Berthelin, Jacques. Laba, Magdeline. Lemaire, Gilles. Powlson, David. Tessier, Daniel. Wander, Michelle. Baveye, Philippe. Soil Carbon Sequestration for Climate Mitigation: Mineralization of Organic Inputs as an Overlooked Limitation. European Journal of Soil Science. 2022. https://bsssjournals.onlinelibrary.wiley.com/doi/epdf/10.1111/ejss.13221 1
7. Popkin, Gabriel. A Major Climate Idea is Based on Some Shaky Science. The Atlantic. July 31, 2021. https://www.theatlantic.com/science/archive/2021/07/soil-revolution-climate-change/619611/
8. Slessarev, Eric. Zelikova, Jane. Hammon, Joe. Cullenward, Danny. Freeman, Jeremy. Depth Matters for Soil Carbon Accounting. June 17, 2021. CarbonPlan https://carbonplan.org/research/soil-depth-sampling
9. Nottingham, Andrew. Meir, Patrick. Velasquez, Esther. Turner, Benjamin. Soil Carbon Loss by Experimental Warming in Tropical Forest. Nature. 584. 2020. https://www.nature.com/articles/s41586-020-2566-4#:~:text=Two%20years%20of%20warming%20of,to%20soils%20at%20ambient%20temperature
10. Intergovernmental Panel on Climate Change. Climate Change 2021: The Physical Science Basis. Working Group 1. August 6, 2021. https://www.ipcc.ch/report/sixth-assessment-report-working-group-i/
11. Beeman, Perry. “Farmers Call for Voluntary, Financially Appealing Programs to Fight Climate Change.” Missouri Independent. March 12, 2021. https://missouriindependent.com/briefs/farmers-call-for-voluntary-financially-appealing-programs-to-fight-climate-change/
12. Doran, Tom. Selling Carbon Credits: Questions Farmers Should Ask. AgriNews. April 15, 2022. https://www.agrinews-pubs.com/news/science/2022/04/15/selling-carbon-credits-questions-farmers-should-ask/?utm_campaign=snd-autopilot&?utm_medium=social&utm_source=twitter_AgriNews
13. Murray, Brian. Why Have Carbon Markets Not Delivered Agriculture Emissions Reductions in the United States? Choices. 2015. https://www.choicesmagazine.org/choices-magazine/theme-articles/climate-change-and-agriculture-revisiting-the-evidence-and-potential-solutions/why-have-carbon-markets-not-delivered-agricultural-emission-reductions-in-the-united-states
14. Haya, Barbara. The California Air Resource Board’s US Forest Offset Protocol Underestimates Leakage. Berkeley Public Policy, Working Paper. May 2019. https://gspp.berkeley.edu/faculty-and-impact/working-papers/policy-brief-arbas-us-forest-projects-offset-protocol-underestimates-leaka
15. CarbonPlan. Forest Offsets. Accessed May 17, 2022. https://carbonplan.org/research/forest-offsets
16. Kelloway, Claire. Private Carbon Market Programs Funnel Farm Data to Big Ag. Food and Power. September 30, 2021. https://www.foodandpower.net/latest/regen-connect-carbon-markets-big-data-9-21
17. Cargill. Cargill Introduces New Revenue Stream for Farmers as Part of 10 Million Acre Regenerative Ag Commitment. September 16, 2021. https://www.cargill.com/2021/cargill-introduces-new-revenue-stream-for-farmers
18. Bayer. Earn Rewards for the Way You Farm. Accessed: May 17, 2022. https://www.cropscience.bayer.com/who-we-are/farmer-partner-resources/carbon-program/united-states
19. Corteva. Corteva Announces Expansion of Corteva Carbon Initiative for 2022 Crop Year. August 26, 2021. https://www.corteva.com/resources/media-center/corteva-announces-expansion-of-corteva-carbon-initiative-for-2022-crop-year.html
20. Friends of the Earth. 222 Organizations Reject the Growing Climate Solutions Act. October 15, 2020. https://foe.org/news/organizations-reject-growing-climate-solutions-act/
21. Green, Jessica. Does Carbon Pricing Reduce Emissions? A Review of Ex Post Analysis. Environmental Research Letters. March 24, 2021. https://iopscience.iop.org/article/10.1088/1748-9326/abdae9/meta
22. California Independent Emissions Market Advisory Committee. 2021 Annual Report. February 4, 2022. https://calepa.ca.gov/wp-content/uploads/sites/6/2022/02/2021-IEMAC-Annual-Report.pdf
23. Suppan, Steve. Q & A: The SEC’s Proposed Rule on the Disclosure of Climate-Related Financial Risk. April 18, 2022. Institute for Agriculture and Trade Policy. https://www.iatp.org/blog/202204/qa-secs-proposed-rule-disclosure-climate-related-financial-risk
24. Lejano, Raul. Kan, Wing Shan. Chau, Ching Chit. The Hidden Disequities of Carbon Trading: Carbon Emissions, Air Toxics and Environmental Justice. Frontier Environmental Science. November 10, 2020. https://www.frontiersin.org/articles/10.3389/fenvs.2020.593014/full
25. Climate Justice Alliance. Risks of Global Carbon Markets and Carbon Pricing. October 2017. https://climatejusticealliance.org/risks-global-carbon-markets-carbon-pricing/
26. Tigue, Kristoffer. “Why do Environmental Justice Advocates Oppose Carbon Markets? Look at California, They Say.” Inside Climate News. February 25, 2022. https://insideclimatenews.org/news/25022022/why-do-environmental-justice-advocates-oppose-carbon-markets-look-at-california-they-say/?utm_source=InsideClimate+News&utm_campaign=f145ea0a83-&utm_medium=email&utm_term=0_29c928ffb5-f145ea0a83-328319320
27. Pastor, Manuel. Ash, Michael. Cushing, Lara. Morello-Frosch, Rachel. Muna, Edward-Michael. Sadd, James. Up in the Air: Revisiting Equity Dimensions of California’s Cap and Trade System. USC Dornsife Equity Research Institute. February 2022. https://dornsife.usc.edu/assets/sites/1411/docs/CAP_and_TRADE_Updated_2020_v02152022_FINAL.pdf
28. Mazengarb, Michael. Australian Carbon Traders Defend Troubled Offset Market Against Whistleblower Claims. Climate Change News. March 28, 2022. https://www.climatechangenews.com/2022/03/28/australian-carbon-traders-defend-troubled-offset-market-against-whistleblower-claims/
29. Mazengarb, Michael. Greens Refer Carbon Scheme to Watchdog After Whistleblower Labels Offsets Fraud to the Environment. Renew Economy. March 24, 2022. https://reneweconomy.com.au/a-fraud-on-the-environment-whistleblower-slams-australias-carbon-offset-regime/
30. Morton, Adam. “Australia’s Carbon Credit Scheme Largely a Sham, Says Whistleblower Who Tried to Rein it In.” The Guardian. March 23, 2022. https://www.theguardian.com/environment/2022/mar/23/australias-carbon-credit-scheme-largely-a-sham-says-whistleblower-who-tried-to-rein-it-in
31. Morton, Adam. “One in Five Carbon Credits Under Australia’s Main Climate Policy Are Junk, Research Finds.” The Guardian. September 22, 2021. https://www.theguardian.com/environment/2021/sep/22/one-in-five-carbon-credits-under-australias-main-climate-policy-are-junk-cuts-research-finds
32. Sellars, Sarah. Swanson, Krista. Schnitkey, Gary. Paulson, Nick. Zulauf, Carl. Agriculture Carbon Markets: A Case Study of Alberta. FarmdocDaily. April 27, 2022. https://farmdocdaily.illinois.edu/2022/04/agricultural-carbon-markets-a-case-study-of-alberta.html
33. Lokuge, Nimanthika. Anders, Sven. Carbon-credit Systems in Agriculture: A Review of the Literature. University of Calgary Simpson Centre. April 2022. https://www.policyschool.ca/wp-content/uploads/2022/04/JSC14_CarbCredSystemsAgric.Lokuge.Anders.pdf
34. Intergovernmental Panel on Climate Change. Sixth Assessment Report: Impacts, Adaptation and Vulnerability. 2022. https://www.ipcc.ch/report/ar6/wg2/
35. Happ, Michael. Closed Out: How U.S. Farmers are Denied Access to Conservation Programs. Institute for Agriculture and Trade Policy. September 9, 2021. https://www.iatp.org/documents/closed-out-how-us-farmers-are-denied-access-conservation-programs
36. Sindicato Labrego Galego. Confédération Paysanne. Confederação Nacional da Agricultura. European Coordination Via Campesina. Sindicato de Obreros del Campo Andalucía. Coordinadora de Organizaciones de Agricultores y Ganaderos. Ehne Bizkaia. For a Fairer CAP That is Based on Solidarity. June 14, 2021. https://www.eurovia.org/wp-content/uploads/2021/06/2021-06-14-JOINT-DECLARATION-FOR-A-FAIRER-CAP-BASED-ON-SOLIDARITY-2.pdf
37. European Environmental Bureau. Beyond Net Zero Emissions in Agriculture. July 2021. https://eeb.org/wp-content/uploads/2021/07/Beyond-Net-zero-emissions-in-agriculture.pdf
38. Public Justice. Climate, Environmental Justice Groups Call for Biden EPA to Hold Industrial Dairy and Hog Operations Accountable and to Reject Big Ag Technology. April 6, 2021. https://food.publicjustice.net/methane-petition-press-release/
39. European Environmental Bureau. Beyond Net Zero Emissions in Agriculture. July 2021. https://eeb.org/wp-content/uploads/2021/07/Beyond-Net-zero-emissions-in-agriculture.pdf
40. Ritter, Tara. A False Solution: Why Carbon Markets Don’t Work for Agriculture. Institute for Agriculture and Trade Policy. February 5, 2020. https://www.iatp.org/blog/202002/false-solution-why-carbon-markets-dont-work-agriculture#:~:text=As%20Wisconsin%20dairy%20farmer%20Jim,to%20reduce%20greenhouse%20gas%20emissions.
Downloads
Download a PDF of the policy brief here.
