🤔What Will it Take to Get Soil Carbon Credits Right?
Innovation: Soil carbon seems to be the lurking figure of intrigue in any conversation about regenerative agriculture. Many advocates view it as a byproduct of good management practices but are wary of the effects of a soil carbon credit market gone wrong. Others see the prices of carbon credits, combined with the acceleration of adoption of regenerative agriculture pledges by corporations, and want to go all-in. High-quality overviews of the space come out quite frequently, be it in The Regeneration Weekly and other fantastic publications (including these great agtech newsletters). Overall, while soil carbon credits appear near the peak of the “hype cycle,” they are on their way to scalable scientific rigor, particularly with proper policy support, though barriers in equity and inclusion should be tackled head-on.
In broad strokes, soil carbon credits have three key parts that need to be done right: a good understanding of the soil science and dynamics of soil carbon, clear compliance with the requirements of carbon credits, and ways to get landowners to find this financially worthwhile at scale without sacrificing the former two. Here are my takeaways for each component part from over a year of working in the space:
We need to rethink soil carbon permanence and invest in deeper soil measurements.
A recent viral thinkpiece on soil carbon permanence accurately debunked the importance of soil “humus”(dark organic material created from decayed plants and other living material) as a carbon-storing leviathan, but it did not present the alternatives that have emerged. This is an important discussion to have, particularly because not all soil carbon is created equally - two major soil organic matter pools, particulate organic matter and mineral associated organic matter cycle differently and have vastly different permanence periods given subsoil dynamics. There is soil carbon that is “locked away” in the MAOM pools like a bank account, but there is also carbon that is cycled and respirated. As innovator Russ Conser puts it, a “grow and flow” model of soil carbon permanence, in which the total amount of carbon cycled becomes an indicator of an ecosystem’s “net wealth.” This is where corporations and startups can play a pivotal role in pushing forward our collective science and inspire more confidence in the space: taking deeper baseline measurements will help calibrate our understanding of how practices, technologies, and climates influence soil dynamics at different layers over periods of time. As soil scientist Paige Stanley notes in this great twitter thread, we know how to do the measurements scientifically. The added benefit of this is that well-funded measurement and modeling startups can use this data to improve their own tech, be it in discerning the soil carbon content of a field at a particular time or finding ways to account for heterogeneity and uncertainty. We have seen this happen in Australia, where a more mature soil carbon market with years of (very expensive) sampling data now accepts innovative methods of measurement and modeling. Two-thirds of the 2400 gigatons of carbon stored in soil lies below a 20 cm depth - it is paramount to understand how regenerative agriculture affects soil carbon levels (even beyond a meter depth!), be it on the crop side which has decent models or on the grasslands side in which the most intriguing models are not yet commercialized. Both measurement and modeling will be needed for soil carbon markets at scale, but measurement comes a priori to modeling.
Outcomes-based approaches should win the day, particularly when considering early adopters and the development of standardized approaches to “Additionality.”
Some programs, like Bayer’s carbon program, pay for practice changes, while others are purely outcomes-based (including the one I work with - Grassroots Carbon), such as the newly announced Rabo Carbon Bank. Conventional offsetting protocols require what is called additionality: folks can only get paid carbon credits for a practice change that would not have occurred without carbon credit finance. However, as a recent review of all soil carbon crediting protocols by CarbonPlan notes, these protocols either don’t address additionality, give a false appearance of rigorous additionality tests, or replicate criticized additionality standards. Many protocols can use quite different tests of additionality to achieve that criteria, lacking in internal consistency. While CarbonPlan puts a “buyer beware” note to all existing protocols, it is not clear how important this is to the buyer when compared to the continued drawdown of carbon into the soil. It is not out of the norm for carbon credit standards to carve out exceptions for early adopters to some degree (I’d recommend carbon credit geeks check out the inactive ACR grazing protocol), and early adopters of some practices can still adopt new ones for additional crediting. However, ultimately we should be rewarding carbon stored in the soil - which is again best done through empirical measurement.
Contract lengths and project sizes mar landowner adoption, though various innovative approaches exist within registries.
The baseline understanding of a carbon credit is that it will last 100 years. Given that this is difficult for landowners to agree to, there need to be better ways for farmers and ranchers to agree to it. Indigo recently announced that they will only require a five-year contract with farmers - I presume using a concept the Climate Action Reserve pioneered called “ton-year accounting” that discounts credits based on the contract length. The BCarbon registry uses a 10-year forward-rolling commitment without discounting credits, while Verra allows for a minimum 30-year contracting period. Even the shortest contracting periods present a stern commitment to growers and the unit economics of carbon projects favor larger farms and ranches at the start (though projects in the millions of acres like Indigo Carbon and Cargill’s new carbon program can afford to incorporate a variety of sizes). As of April 2021, less than 1% of producers had entered carbon credit contracts. Overall, if we do not find ways to include small producers in realistic contracting periods (though I presume contracting periods will be more palatable as carbon credit pricing goes up), then carbon credits will only exacerbate existing disparities in revenue for producers. Though I am a fan of what the Growing Climate Solutions Act (linked is my analysis) could do in this regard, I quite appreciated Yardstick CEO Chris Tolles’s skepticism on the matter.
Sometimes, I struggle to see whether soil carbon markets(particularly on the grazing side I’m mostly focused on) are a narrative violation that will change agricultural financing mechanisms or a narrative mirage that will dissipate a la Chicago Climate Exchange. Ultimately, innovations across the board are popping up. While measurement technologies get a lot of the flashy attention - mainly due to the allure of remote sensing, which is really important - various soil amendments, microbial products, and plant modifications are effectively finding ways to accelerate and guarantee soil carbon sequestration. Companies like Pluton BioScience, LocusAg, Soil Carbon Co, Biogea, and also the Salk Institute’s Harnessing Plants Initiative are doing work across the globe to that end, and I’m excited about the preliminary results. Techniques like the application of rock dust and compost also have promise. In any case, the practices that enhance soil carbon sequestration have so many other ecosystem benefits for erosion, productivity, biodiversity, and soil health that they will pay themselves off both in terms of private and public investment. What carbon finance provides a landowner is cash flow and alternative revenue streams. Carbon credit markets should be a means to the adoption of those practices, and some flexibility vis-a-vis a carbon-only focused product like a direct air capture technology credit is warranted.
Note: Though you won’t get any carbon credits for it, I highly recommend y’all build your own carbon sequestration garden. If you want to read more of my thoughts on soil carbon, subscribe to my bi-weekly newsletter on the topic.
Shop: Check out Singing Pasture’s tasty Roam Sticks for a great savory snack this weekend! I met farmer John Arbuckle last week at the Regenerative Food Systems Investment Forum and I was blown away by his holistic approach to regenerative hogs. Singing Pastures farm in Maine became a Savory Global Network Hub in 2019 and he appeared on the Investing In Regenerative Agriculture podcast last week. Keep your eyes peeled for a feature on the Arbuckle approach and regenerative pork, as that’s coming up soon!
Listen: This Down to Earth: The Planet to Plate Podcast episode on author William deBuys was quite illuminating on humanity’s role as stewards of nature. deBuys, a prolific author and conservationist, has keen insight on the importance of our building “arks” to do what we can within our means to preserve our parts of the Earth. Rather than the “doomer pessimist” view you might see in certain climate circles, deBuys makes a really compelling argument to give earth palliative care and accept that ecosystems do not remain static. Hat tip to Travis Krause for the recommendation, there’s definitely a lot to chew on here.
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I really appreciated this. I've read a lot that is a real downer on Ag, and this is cool to see you highlighting how farmers are caring for soil and improving their practices!
Thx for clear and thorough analysis. This is an important opportunity to get right.