Carbon Markets 101:
Recorded Webinar: Demystifying Carbon Credits, Carbon Markets, and Carbon Farming
CIBO’s Director of Carbon Product, Steve Lemeshow, led us through an exciting discussion covering topics including carbon markets, carbon credits, and carbon farming. In addition, the webinar broke down why carbon marketplaces are an essential part to our carbon-neutral future.
Watch our recorded webinar to hear through the many benefits of investing in carbon programs for organizations and growers. We received many questions from attendees and you can see some of the questions and their answers below.
Questions from the Audience
What is the difference between a compliance market and a voluntary market?
A compliance market is a regulated and required market where there is not much choice. There could be price guidance and standardization that is explicitly defined by the governing body. A voluntary market is not regulated or enforced and is still in its early days. They care about this space or its impact on climate, or they see the market’s future. They sometimes have a way of becoming regulatory markets in the future.
The notion of the big stick of regulation requiring actions to offset their carbon footprint is important. We just saw the Dutch court rule against Exxon Mobil, saying they need to step up their efforts. It was a forerunner for other companies in that industry.
Part of the reason that carbon markets are complex is that there is very little guidance and many players. Because of that, it creates a lot of confusion. Players are making their definitions and bringing carbon credits. Then there are registries creating protocols to help demystify credits. They make sure they have gone through enough oversight and review to make sure they’re real. In some cases, it’s overly rigorous.
As we move into a space where there’s more regulation and structured government definition, it would be better to find a way that helps growers find ways to participate in these markets.
How are Verified Carbon Standard (Verra) and Climate Action Reserve (CAR) regulated? How do we know their reporting is accurate and no conflict of interest exists?
Verra and CAR are not regulated and there is no governing body. They are acting as the regulators within an unregulated marketplace. The organizations established credibility in this space by hiring experts to develop the protocols and methodologies required to generate carbon credits. If this was a compliance market, there would be some regulation that would help define that. At the end of the day, it is all based on science that is repeatable and testable.
Do you have any comments on Gold Standard?
We have talked about Verra and CAR, and Gold Standard is the third in the “big 3.” Gold Standard has a very high standard in the way that they view these markets. They have taken a slightly different approach in that they are looking more heavily at scope 3 programs, that are more focused on supply chains and emissions reductions mitigation.
What is the average cost of a carbon credit now?
We have to understand that the adoption of practices is not cheap. Especially when you’re doing it the first time. There’s the cost of seeds, equipment, yield if it’s not optimized in the first few years. We’ve seen upwards of costs to $50 per acre. The typical cost of a carbon credit is $10 – $25 depending on the market. However, the prices are steadily rising. Agriculture has been relatively expensive compared to the norm of $15-20 and it’s on its way up.
At CIBO, we believe that if we’re going to be inspiring broad adoption of regenerative practices, we need to get closer to covering the full cost. It does not have to be completely from the carbon credits, there are opportunities to stack incentives from government programs or other environmental marketplaces. We need to aim through all of those to get to a point where we cover all of the practices otherwise it will be a niche. Remember, an acre of land typically only averages ½ a carbon credit per acre. We need the prices of carbon to go up considerably if we want to be able to pay for all of it. The cost/price of a carbon credit needs to be enough to actually create a financial incentive for growers to implement more sustainable practices. At the end of the day, farming is a business and they need to be able to make a profit in order to keep growing their operations.
What is driving the interest in carbon farming and carbon markets?
A lot of it stems back to the recognition globally of the large challenge of climate change. Close to 200 nations signed onto the Paris climate accord. There is an acknowledgment that many Americans are interested in climate change, and many organizations have pledged to go carbon neutral. However, most of the excitement is around ways people can help stop climate change.
People have started to think more strategically about what we can do about climate change. Many have pointed to carbon markets as a way to do it. It’s a valuable tool to make an impact on industries in a way that can be positive for everyone. There’s a recognition across the entire political environment that motivates individuals and companies that we need to change. It’s inspiring to see the people rally around the cause.
Regenerative agriculture is one of the things we talk about having co-benefits. Yes, we can sequester carbon but there are all these other benefits as well. For example, biodiversity or additional revenue streams.
What kind of cropping systems provide the most credit potential? I.e. row crops, fruit trees, vegetables, grazing, etc.
There is still a lot to be learned and CIBO currently relies on cropping systems that allow us to verify with satellite imagery like row crops. We need to be able to verify and scale these things to drive as much of that value back to growers. Typically, we see the biggest impact is when there is a combination of multiple practices happening together. Such as, no-till alongside cover crop alongside a reduction in nitrogen. That is when you have major results.
If you are interested in learning more about Carbon Markets, Carbon Farming and Carbon Credits, watch our recorded webinar where we cover everything in more detail!
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