Why Carbon Stored in Soil Creates High Value Carbon Credits
A soil carbon credit represents 1 ton of carbon dioxide (CO2) that has been removed from the atmosphere. While credits can be created in many different sectors, Carbon Yield focuses on credits farms can create when they switch practices to regenerative agriculture practices. Through a project, farms can prove they removed carbon from the atmosphere through regenerative practices like planting cover crops or storing carbon in untilled soil. Once verified, carbon credits can be sold to individual or institutional emitters who purchase them to meet mandatory and voluntary environmental targets. Farmers, therefore, can make a profit from changing their practices and sequestering more carbon in their soil.
As the carbon market develops, there is a looming question: how much should one pay for a carbon credit? The current going rate within agriculture is $15-20 per ton. When a farmer adopts regenerative practices on their land, they can remove from 0.2 to 1.5 tons of carbon per acre per year. That means that they would only receive $3-$30 an acre at the current rate. If we want this market to grow and spur change, then farmers need to be incentivized with more money for their credits. At the current low prices, farmers could spend more on the costs of adopting a regenerative practice than they would receive from a carbon payment. For example, the seed, equipment, and labor for cover crops ranges from $15 to $75 an acre. If the general consensus is that farmers will lose money from regenerative practices, then they are unlikely to explore adopting these practices and the carbon market.
Carbon Yield believes that farmers deserve higher prices for the benefits their soil carbon creates. We aim for the goal price of $100 per ton of carbon. We want to make the carbon market more appealing and commercially viable for farmers by making sure they are getting properly compensated for their efforts. Carbon Yield’s team has more than a decade of experience in carbon markets. We can offer strong advice to farmers exploring their options when it comes to selling their credits.
There are many factors to how a carbon credit is valued. A big part of the pricing is demand. As demand increases, so does the price. If there was a greater demand from companies to purchase credits to offset their emissions, then the price would naturally be higher. As companies continue to try to meet climate goals, the voluntary carbon market is projected to grow up to 100-fold by 2050. This provides a lot of hope for farmers looking to sell their carbon credits.
Price is influenced by more factors than demand. If a project sequesters carbon but also supports job creation or retention, benefits the health of citizens, and has other environmental benefits, then those credits offer a higher value to the buyer driving a higher price with the bigger impact. Credits support farmers’ jobs by making farming more profitable. Regenerative practices increase the health of people and the planet by making cropland more biodiverse, removing excess CO2 from the atmosphere, and creating healthier soil through the addition of organic matter. Making people aware of the many benefits of adopting regenerative practices and creating a market for carbon credits is crucial to driving up demand and price.
Carbon credits represent hard work, effort, and resources that farmers have devoted to the health of their land. They also provide us with a chance to convince businesses and other major players to start investing in something very important… the health of the Earth. Carbon credits allow us to restore the health of soil since they encourage farmers to adopt more regenerative practices, but they must be valued high enough. According to Carbon Yield’s CEO Sam Schiller, high value credits “make carbon markets a more meaningful value stream that can help farmers transition to a sustaining operation and be prosperous into the future”.