Carbon credits are a well-known revenue stream for farmers yet come with many unknowns. To protect yourself and your data, ask yourself these carbon credits questions before committing to any carbon-based program.
It seems as if every day farmers are hearing about another new carbon program opportunity. While carbon credits are a possible new revenue stream for farmers, the market is very much like the Wild West with many unknowns and pitfalls. Before committing to any carbon-based program, make sure you are asking the right questions to protect yourself and your data.
But first, it’s important to understand the concept of carbon programs and the science behind them.
According to the Ohio Soybean Council, a carbon credit represents one metric tonne of carbon dioxide equivalent (CO2e) that can be traded, sold, retired, etc. Carbon credits can be generated when eligible farmers document sustainability practices that are included in several ‘best practices’ protocols.
So, what are some of those sustainable farming practices? Basically, any agronomic practice that increases the amount of carbon sequestered into the soil. According to AgriLife Today, practices such as no-till or reduced tillage and growing cover crops are common examples of how farmers sequester carbon.
Below are some program-specific questions you should ask representatives when comparing program opportunities.
- Who has control over selling the carbon credits, the producer or the aggregator?
- Do you have to lock in a price for the carbon?
- Can I enroll in this program while enrolled in other programs that compensate for conservation practices or carbon outcomes?
- What is the minimum field size/acreage that is eligible to participate?
- What is the contract length? Will I need to re-enroll?
- Can I remove a field from the program and add it back later?
- Can I try the program on just a portion of my farm?
- Am I able to drop out of the program entirely?
- Does it matter if I am not a landowner? What happens if the land ownership changes hands while enrolled in the program?
- What program support is available to me after I enroll?
- Can the carbon credits be stored? If so, for how long?
- Is there a limit to the number of credits per acre?
- What is the cost to me? Will I need to invest in new technologies or platforms?
- How is carbon measured? Will I have to pay for verification, or will the carbon program cover those costs?
- What happens if I am unable to implement the new practice due to weather events or other unforeseen circumstances?
- Are there any penalties for a break in practices?
- What happens if soil carbon does not increase after the new practices have been implemented?
- Does the company sell other services or products? Are any of these services/products required to be purchased in order to participate in the program?
- Are any other ecosystem services brokered by the company, such as water quality credits?
- What changes will occur if a market is established?
Understanding carbon programs is an undertaking in and of itself, but it’s especially important for farmers to take a thorough look at the contract before enrolling in a program. Be sure to comprehend what is expected of you in terms of record keeping, data ownership, eligible practices, and payment information.
Below are some more questions to ask carbon program administrators before signing any contracts:
- How much record keeping is required and how frequently does data need to be reported?
- Who owns my data and what can the aggregator or data manager do with the data?
- Will my data be shared or kept private?
- What specific practices do I need to implement on my fields to be eligible for enrollment?
- How long will I need to adopt or maintain these practices? How long must the carbon stay sequestered?
- I have already implemented these practices on my operations. Will these fields be eligible?
- What specific criteria are being verified to show the performance of practices?
- What is the total amount paid, the portion I get, and the portion the aggregator or data manager gets?
- How will I be informed of the price carbon credits are selling for?
- How will payments for carbon sequestration be made? Dollars or other currencies?
- What is the payment schedule?
- Does the company pay by practice implemented or by carbon credit?
- Some companies use ‘holdbacks’ or a percent taken off of the top to cover their role in the process. Are there any fees for this program?
To see programs available to you here in Illinois, check out the Illinois Sustainable Ag Partnership’s Ecomarkets Program Comparison.
Whether or not you’re ready to commit to a carbon program, the Illinois Soybean Association wants to help you reach your conservation goals, and carbon markets could be one tool to help you do that. That’s why we’re developing a one-stop resource to help you learn more about this evolving industry: CarbonSense. This new resource will help empower you to ask the right questions and have the best information before enrolling in a carbon program. Keep an eye out this spring for CarbonSense to go live on ILSoyAdvisor.com.