Are you a farmer who is interested in learning more about the benefits and steps to sell carbon credits? Let’s look at what these are and how it might help you earn additional income.
What Are Carbon Credits?
Carbon credits are a medium of exchange traded to offset CO2 emissions. A carbon credit represents 1 ton of carbon dioxide removed from the atmosphere. Companies that have greenhouse gas emission goals that may either be self-imposed or governmentally required. To meet those goals, they may need to purchase offset credits from another entity that is producing more than they need.
Farming contributes to greenhouse gas emissions, but based on what and how you are producing, you may be able to earn carbon credits that could be sold. To be able to benefit from selling carbon credits, may require changing and/or adapting your farming practices.
Farmers can make thousands of dollars a year selling carbon credits. Think of carbon credits as another prospective revenue stream that may also increase your yield of drought-resistant crops and/or manage risk in your farming processes. Potentially a win-win situation.
Why Do Companies Buy Carbon Credits?
These carbon credits represent reductions or removals of greenhouse gas emissions, which help compensate for not yet reduced or eliminated emissions within their operations. Companies purchase them on the voluntary carbon market or the compliance market.
Many of America’s largest companies have pledged to be net zero by a certain year. For most entities, it would be impossible to eliminate greenhouse gasses entirely and still do business. If they don’t achieve their stated or required goals, there can be issues with investors and/or regulators. Instead, they purchase carbon credits in these exchanges.
How Can Farmers Sell Carbon Credits?
Selling carbon credits is a multi-step process and requires, in most cases, a commitment to a particular type of farming. One example is regenerative farming which encourages ecosystems to store CO2.
Regenerative farming methods include:
- Reducing soil disturbance due to tillage.
- Reducing and eliminating the use of pesticides and fertilizers through mob grazing and manure/compost.
- Maximizing soil coverage through mulching.
- Crop rotation and growing cover crops.
- Combining livestock rearing with crops.
- Managing peatlands.
- Agroforestry.
- Maintaining and enhancing soil organic carbon on mineral soils.
- Livestock and manure management.
- Creating grasslands and growing cover crops, where carbon is captured and stored.
- Managing nutrients on cropland and grasslands.
- Improving water management.
Measurements are taken at different stages of the process, but it is typically done at the start by gathering baseline information. Gathering initial data on a farm can include the following:
- 3-5 years of farm data about crops grown, farm practices, yields, diesel usage, fertilizer and pesticide application, etc. Setting the baseline for the farm guides what carbon farming practices are appropriate for a particular farm and measures progress to account for carbon credits.
- Soil sampling.
- Reporting changes to farming practices means collecting data, for example, on the amount of fertilizer, cover crops, etc.
- An independent auditor verifies data accuracy and calculates how many carbon credits will be generated.
