Soils & Policy #3: Carbon Markets

Policies have been on the books in the United States for decades that help conserve soil and prevent erosion, often sequestering soil carbon in the process. In this series, we’re breaking down policy areas that have helped sequester soil carbon. These articles have been adapted from “Grounding United States policies and programs in soil carbon science: strengths, limitations, and opportunities” by Danielle Gelardi, Daniel Rath, and Chad Kruger in  Frontiers in Sustainable Food Systems. Check out the first article on soil health initiatives or the second on direct incentive payments.

Carbon markets rely on participants “offsetting” or “trading” greenhouse gas (GHG) emissions in one sector or location while increasing soil carbon elsewhere.

• For example, a carbon market might facilitate a company paying a grower to increase soil carbon via cover cropping, in exchange for maintaining or increasing GHG emissions at their factory. Other practices can include decreased or no-tillage or incorporating perennial plants and hedgerows.
• These scenarios include the market as brokers for the transaction. There are three “scopes” of emissions used to determine offsetting or insetting that you can read about here.
• Soil carbon offsets are controversial, with both supporters and detractors.

Strengths

Carbon markets have many potential strengths:

1. Cost effectiveness: Compared to direct incentive payments, carbon markets may be more cost effective. Unlike , carbon markets do not rely on federally funded programs built on taxpayer dollars.
2. Diversified revenue streams: Carbon markets provide growers the opportunity to diversify their revenue streams.
3. Continued conservation: Unlike direct incentive payments, the revenue from carbon markets is not confined to short-term grant cycles, typically lasting 1-3 years. If soil carbon offsets are continually valued in the marketplace, growers may reap the benefits of this sustained income for their conservation efforts.
4. Emissions offsets: For businesses, carbon markets provide opportunities to offset emissions that are otherwise tough to curb.
5. Innovation: Soil carbon offsets have already proved to be a driving force of innovation. They have encouraged enormous investment in soil carbon research and measurement technology. They have also created frameworks that could be applied to markets for other ecosystem services.

Limitations

Carbon markets have faced setbacks that limit their adoption. For many growers, they have proven to be very difficult to navigate. Additionally, carbon market detractors site “greenwashing,” or falsely portraying something as environmentally sound, as one major flaw. A large driver of this criticism are the inconsistencies in standards for carbon trading.

Break it down: Poor quality standards for carbon trading can lead to a net increase in GHG emissions. If offset purchasers increase or maintain their emissions in exchange for soil carbon sequestration, they’re relying on the accuracy of those credits. However, it’s often difficult to verify whether soil carbon actually has been sequestered. Plus, soil carbon sequestration may not have been achieved by the sellers, or could easily be reversed (i.e. by tilling a field that was previously under no-till).

• A recent review ranked 17 protocols used in soil carbon offset programs by their rigor, additionality, durability, and grower safeguards.
• Eight protocols, or nearly 50%, scored only 1 out of 5.

Why it matters: Poor quality standards can erode trust between the public, growers, scientists, government, and non-governmental organizations. We’ve seen this once before with carbon markets during the 2010 collapse of the Chicago Climate Exchange.

• The continued emission of GHGs and other co-pollutants can have serious consequences for the environment, and for the socially or economically disadvantaged communities most likely to live near sources of fossil fuel pollution.
• Plus, carbon is often priced so low that it’s not enough to:
  • Incentivize growers to participate
  • Act as a deterrent for GHG emitters
  • Allow participation from small operations or renters
• Carbon markets can also exclude early adopters—the folks who’ve been sequestering carbon through conservation practices for years.
• Finally, markets may create a siloed approach to soil protection that focuses only on CO₂ This misses opportunities to promote other co-benefits that are important for climate change adaptation, and not just mitigation.

Opportunities

Successfully sequestering and protecting soil carbon is incredibly dependent on location, soil type, climate, and management.

• Recommendations: Given current challenges, the authors of the article in Frontiers suggest that soil carbon is not yet robustly quantifiable enough for contractual emissions trading. However, they recognize that the science is evolving and progressing. Ultimately, carbon market success depends on transparency, trust, and verifiable standards.
• Cap and trade: Soil carbon offsets have been excluded from state-sponsored “cap and trade” carbon markets, such as those in California and Washington state. There, soil carbon is not traded in the market. Rather, revenue from the sale of GHG emission allowances is invested in projects that can increase soil carbon.
• Cap and invest: This strategy promotes soil carbon sequestration as part of a market-based system to curb climate change, but it does not depend on it for success.

In short, the authors recommend that “cap and invest” approaches are a better fit for promoting soil carbon sequestration through market programs at this time. This system keeps the pressure in place to reduce GHG emissions from other sectors, while still promoting the formation and protection of soil carbon stocks.

Photo by NRCS Oregon.