Carbon markets present opportunities, challenges

WEST LAFAYETTE, Ind. — Farmers may have a chance to sequester carbon and make a profit in the future.

“Farmers generate some carbon, just like everybody else in the economy,” said Carson Reeling, assistant professor of ag economics at Purdue University, during a webinar.

“Farmers might adopt a conservation practice: no-till, cover crops or scale back fertilizer applications. If they can verify and quantify how much carbon is being abated by those activities, they can sell that reduction as an offset to a firm that wants to pay them for it.”

In current regulatory markets, row crop agriculture has not been used as a source of offsets, Reeling said.

But it’s something that could happen down the road.

“When we think about row crop agriculture, the two that get the most traction are reduction in tillage and implementing cover crops,” said Nathanael Thompson, assistant professor of ag economics at Purdue. “Both of those practices are scientifically shown to sequester carbon.”

Other practices that may be eligible for carbon payments include replacing crops with pasture, replacing animal pasture with perennial pasture, land retirement and afforestation, importing organic matter to the field, or applying biochar.

Over half of U.S. cropland acres are currently in no-till or conservation tillage.

“If we put all U.S. crop acres into no till, using some assumptions, that would be 123 million metric tons of carbon (sequestered) per year, about 2% of all U.S. CO2 emissions,” Thompson said.

“While there is a positive impact that can be had, we need to be more realistic about the role of agriculture can be in the broader climate change discussion as it’s related to carbon sequestration.”

Even if no-till and cover crops were used on 100% of U.S. cropland, they would only sequester about 5% of total 2019 U.S. emissions, according to a white paper published by Thompson, Reeling and others at Purdue.

“Therefore, while discussions of agriculture as part of the climate solution are a positive development, it is important to be realistic about the potential of U.S. cropland to sequester carbon,” the paper states.

For farmers interested in carbon markets, there are several questions to reflect on:

• What are your current production practices?

• Do your current production practices support sequestration?

• Do you have an option to enroll these acres and receive a carbon payment?

• What if you would have to change production practices to qualify?

• What would cost of adopting new practices be?

• What contract terms are being offered?

• Looking ahead, what’s likelihood of government involvement and what will it look like?

View the complete white paper at tinyurl.com/26bsccdv.