Could voluntary carbon offset markets put more money in producers’ pockets to help them become more environmentally, and financially, sustainable?
In an era of increasing concern over climate change where companies are seeking to financially offset or compensate for their carbon emissions, producers potentially have an ace up their sleeves. They could use their farms to voluntarily generate carbon credits to sell to such businesses.
The money they earn could help them switch to ever more sustainable agricultural practices that lower their emissions while improving their ability to do things such as store carbon in soil.
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But how realistic is this idea in the hard-nosed, practical world of the bottom line that farmers must live in?
“I would characterize the carbon market as one that is continuing to evolve, and there are a number of different programs around the world,” said Don Smith, vice-president of petroleum and innovation at United Farmers of Alberta Cooperative Ltd.
“And I do believe that there is an opportunity, and it’s going to be a growing opportunity, for producers to be able to capture some additional value by implementing some changes in their practices.”
As an organization founded in 1909 that serves more than 120,000 members, UFA is known for its chain of farm and ranch supply stores and petroleum cardlocks. However, Smith said the next venture for one of western Canada’s oldest agricultural cooperatives could potentially be helping farmers enter carbon markets.
UFA is currently weighing the pros and cons of becoming an aggregator, acting as a kind of intermediary to help producers generate verified carbon credits to sell to businesses.
“We haven’t officially entered the marketplace, but we are looking very hard at it, and we do believe that there is some value that we can bring to the Alberta farmer.”
The federal government launched a national voluntary greenhouse gas offset credit system June 8. It will allow registered participants, including farmers, to undertake projects to generate one tradeable offset credit for each tonne of emissions they reduce or remove from the atmosphere.
It is meant to complement rather than compete with existing systems in Alberta, British Columbia and Quebec. Federal offset protocols – which are sets of instructions on how to quantify emissions from projects – will not apply in jurisdictions with active protocols for the same project activities.
Ottawa is developing protocols for agriculture that include livestock feed management and enhanced soil organic carbon. Protocols are also being considered for livestock manure management as well as anaerobic digestion.
However, there are a “huge number of problems with offset systems,” said Darrin Qualman, director of climate crisis policy and action for the National Farmers Union. For example, it can be difficult for farmers to meet requirements such as additionality, especially for practices that are already widespread, he said.
It means the credit must be given for “something that wouldn’t have happened anyway, so things like zero till in most cases fails the test of additionality because a lot of that is happening anyway.”
Another problem is how to define permanence in terms of practices that promote sequestering or storing carbon in soils, said Qualman. “The federal government in its regulations talks about 100 years.”
He said it not only raises concerns about how producers can commit in practice to keeping carbon in the ground for a century, but also the potentially unlimited liability they could face if they fail to meet their contractual obligations in some unforeseen way.
Qualman gave the hypothetical example of a farmer who currently earns $10 for every tonne of carbon sequestered in soil.
“Let’s say that carbon comes out of the ground in 50 years, and for one reason or another, they’re held contractually responsible,” he said.
“Fifty years from now when it’s harder to find emission reductions, those carbon credits might not be $10 a tonne, they might be $50 or $100 or $150 per tonne … that amount you get paid for a tonne of carbon today to sequester it might be only a fraction of what your liability is if that tonne of carbon is ever released 20, 50 or 100 years from now.”
The reliability of carbon credits also hinges on accurate measurement, which to some extent is almost impossible, said Qualman. Long-term studies have found that even if you measure carbon in one part of a field, it can be dramatically different only a few metres away, he said.
“And they would find things like even if the farmer was doing all the right things to sequester carbon, if it happened to be a series of dry years, the carbon levels in the soil were actually going down … You could have two fields side by side, and the farmer could be farming them the same way, say with zero till, and one field might be losing carbon and the other field might be gaining carbon.”
However, the biggest problem from a climate change perspective is that farmers could potentially be helping greenwash companies that are high emitters, said Qualman. “The voluntary systems tend to be an easy way for corporations to kind of on paper make their emissions go away cheaply without actually doing what they should be doing, and that is actually reducing the emissions.”
Producers will be among the hardest hit if emissions keep rising and the climate destabilizes, said Qualman. “Lots of farmers want to do the right thing,” he said.
“They want to graze better, or manage fertilizer better, or till less, etc., but they shouldn’t be forced to finance that by taking money from the biggest emitters. You know, that in some ways makes farmers complicit in the whole high emission system.”
It likely makes better sense to develop more programs such as the federal On Farm Climate Action Fund (OFCAF) to help producers transition to more sustainable technologies and practices, said Joy Agnew, associate vice-president of applied research at Olds College in Alberta.
Ottawa is providing up to $182.7 million to 12 organizations across Canada to deliver funding for OFCAF. For example, Alberta’s Results Driven Agriculture Research (RDAR) agency is providing $33 million to promote in-field nitrogen management, rotational grazing practices and cover cropping in the province.
Although such programs require some record keeping and data collection, it isn’t nearly as intensive as what is required for offset credit systems, said Agnew.
“I guess my personal opinion based on my understanding of carbon offset programs, and all the requirements associated with the documentation and filing and all of that, is I guess I’m not too sure how feasible it’ll be for farmers to count on carbon offsets specifically as a revenue stream to support adoption of new technologies or practices.”
Qualman said producers have been hearing about carbon credits per tonne “for 20-some years and they haven’t come, and that’s because the whole premise is flawed and difficult. And it’s unlikely to actually come ever for many of the practices we’re trying to support, so better to pay farmers to just more directly adopt the practice and support that in every way that we can.”
However, Smith expected carbon markets will be an “area that is going to grow, and grow in Canada specifically, and we are a bit maybe behind other countries in the world in terms of the development of our carbon markets.”
He didn’t want to comment about the direction the federal government is taking Canada’s voluntary greenhouse gas offset credit system. “But I do think that, again, that market is going to continue to develop, and I do believe that is going to be advantageous for producers to better understand what that is going to look like, and how they could potentially participate in it to, again, capture more value.”
