Carbon Confusion — A Messy Market

Aug 16, 2022

We mentioned this topic briefly in last week’s Magnetic, but figured the conversation deserved more credit.

Carbon dating: No, we’re not talking about aging dinosaur bones. We’re talking about new relationships forming around carbon. Businesses want to be carbon neutral. Their solution? Agriculture.

Credit conundrum: To sign up or not to sign up, that is the question for farmers. And in the case of carbon markets, the majority of farmers are saying “no, thank you.” Or at least, “not yet.”

It’s not me, it’s you… According to a report from Trust in FoodFarm Journal’s sustainable agriculture initiative, 9 out of 10 farmers are aware of carbon markets, but less than 3% participate. There’s a gap in confidence, trust, and understanding in the marketplace that needs to be met before large-scale adoption will take place.

What’s holding people back? “Producers might see such marketplaces as seeking to extract value from their operations at the lowest possible price, while requiring a lengthy and risky up-front investment of time, energy, and expert advisers.” Cara Urban, lead author of the Trust in Food report.

Variability and confusion are commonplace in the carbon market. Contract length and exit strategy, agronomic requirements, and credit for pre-existing practices can vary widely across organizations.

Where this goes: “It’s important to note that these credit markets are constantly evolving, and many are still under development or being refined in pilot stages. There is much more to explore, company-by-company and asset-by-asset, before making any decisions.” – Shelby Myers, Economist at American Farm Bureau Federation