Consumers are becoming more climate-conscious. And organisations – the largest contributors to climate change – are facing pressures on all fronts to make meaningful changes. Regulators, customers and consumers alike are exerting influence.
This means that, in addition to identifying ways to reduce Scope 1, 2 and 3 emissions, organisations are also using other tools to achieve their Net Zero targets. One of these tools is carbon offsetting. This explains the hyper-growth that this market is set to experience.
The role of agriculture
Agriculture is a relatively high contributor to greenhouse gas emissions (GHGs), and in the UK it accounts for 10% of the country’s emissions. So it may be surprising to some to learn that, according to the CLA, it actually only contributes around 1.7% of total carbon dioxide emissions.
In fact, nitrous oxide and methane emissions are far more significant. They account for 68% and 47% of the UK’s total N20 and CH4 emissions respectively, coming from fertiliser and livestock.
Yet carbon is a key part of the agricultural story. Why? Because farming and land use is one of the few ways in which carbon can be drawn down from the atmosphere.
This makes it a critical supplier of carbon offsets and means that farmers are a key player in this billion-dollar market.
Participating in the carbon offset market
There are three key steps for farmers who wish to get involved:
- Unlock carbon sequestered in soil. This is achieved through measuring soil quality and verifying this analysis.
- Increase the amount of carbon sequestered in soil. This work involves implementing ‘healthy soil initiatives’ in order to draw down more carbon from the atmosphere.
- Sell carbon to buyers looking for offsets. This unlocks a revenue stream, whereby income can be reinvested into other initiatives that are advancing a Net Zero agenda.
We’ll look at each of these in turn.
Measuring carbon sequestered in soil and determining its quality is complex. While taking soil samples is the more time-tested approach, it can be cumbersome for time-strapped farmers. Encouragingly, satellite imaging and sensing technologies are constantly evolving. This points to a future in which the process of carbon measurement is more automated – and standardised.
Improving soil health
There are four key principles to follow in order to improve soil health:
- Minimising disturbance
- Maximising soil cover
- Maximising biodiversity
- Maximising the presence of living roots
Decisions surrounding these principles need to be balanced in accordance with any other challenges related to the farm’s operations and business.
However, it’s not something farmers necessarily have to figure out in isolation. Organisations such as the CLA provide a wealth of information, particularly with the wider push towards Net Zero farming.
Agricultural policy also has a role to play. For example, the UK Government’s Sustainable Farming Incentive is set to pay farmers for improving soil health. The EU is expected to propose a Soil Health Law in 2023 to improve soil health significantly by 2050 and give soil a protected status on a par with air and water. And over a quarter of the USA has healthy soil legislation in place, with more states moving in a similar direction.
You can think about sequestered carbon as you would a crop yield. The producer should be able to take the product to market and get a fair price, in accordance with their definition of fair.
This is why being able to provide information to prospective buyers about a farm’s history, its practices and team is so helpful. This way, buyers can make a more informed decision, and differentiate between carbon supply sources.
But farmers also need to be assured of the authenticity of these sales. There have been serious problems within the carbon offsetting industry with carbon tonnes being sold to multiple buyers, thereby negating the impact of the practice. Not only does this approach facilitate greenwashing, but it also damages the seller’s trust in the market.
But blockchain technology is an ideal solution to this problem. Since every transaction (from ‘minting’ the carbon tonne and identifying the source, to tracking the subsequent owner or owners) is notarised on a digital ledger, it’s impossible to have multiple owners at the same time.
So what’s next?
It’s early days for the carbon offset market and historical challenges have, understandably, damaged trust. However, we want to help rebuild this trust.
But to do so, we need to make sure that we meet the most important factors. This means ensuring that:
- Good quality, verified carbon is available
- More carbon is being sequestered
- A high degree of auditability
- A trustworthy marketplace mechanism exists, which works for both buyers and suppliers
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