Carbon credit start dates a sticking point

Prairie grain farmers could play an important role in helping Canada meet its greenhouse gas emission reduction targets, say experts familiar with carbon sequestration.

The potential for western Canadian farmers to sequester carbon in the soil is huge, they say. And so is the potential to generate revenues through carbon offset sales.

But first, a fair and transparent marketing system for offsets must be established in Canada, along with government-endorsed protocols that outline how farm-based carbon credits can be produced.

“It (a regulated offset market) is not going to be an easy thing to set up… however the potential is absolutely huge,” said John Bennett, chair of the Saskatchewan Soil Conservation Association’s carbon advisory committee.

Bennett, who has been observing carbon offset production and marketing since the 1990s, said interest in farm-based carbon offsets is growing.

With the federal government attaching a value to carbon taxes, discussions about establishing a national offset market have intensified.

The federal government has acknowledged that it is considering a national Greenhouse Gas Offset System that “has opportunities for agriculture to be recognized for carbon sequestration.”

The timelines for establishing that system are not clear but Ottawa has already distributed a discussion document seeking feedback on how such a system might work.

In a recent interview, Bennett acknowledged that work is underway to ensure that Saskatchewan farmers will be in a position to generate and sell offsets in a nationally regulated market.

Stakeholders involved in devising a system have been examining offset regimes in other jurisdictions and are hoping to see a Canadian system that’s regulated by government and offers full price transparency to buyers and sellers.

“What we are pursuing is a high value offset that has very, very sound science behind it,” Bennett said.

Ideally, the system would allow Canadian credits to be bought and sold internationally, not just in Canada, he added.

Work on establishing protocols for the production of agricultural carbon credits is already underway. And in Saskatchewan, the potential for generating credits could be significant.

A climate resilience report released by the province suggested that Saskatchewan’s farmers sequestered nearly 12 million tonnes of carbon dioxide equivalent (CO2e) in 2016.

At a value of $30 per tonne, those credits could be worth as much as $360 million currently, rising to nearly $2 billion in 2030.

Low-till crop production is a key part of that valuation, Bennett said.

But there are issues that need to be addressed.

Uncertainty over the “start-date” of carbon sequestering activities is one potential sticking point.

Some carbon accounting models don’t recognize sequestration activities that were implemented before a certain start date because it’s assumed that the environmental benefits of those activities will diminish over time.

If minimum-till cropping activities adopted before a certain date were deemed ineligible, for example, the revenue earning potentially of the province’s ag sector would be substantially diminished.

Others argue that a sustainable system aimed at reducing GHG emissions would reward farmers and landowners for preserving carbon sinks and continuing beneficial behaviours, regardless of the start date.

Either way, it will be critical for Saskatchewan farmers to learn all they can about carbon credit production and marketing, Bennett said.

“If you’re a farmer, you should definitely consider the future value of what you’re selling.

“There are companies that are trying to sign up farmers now to voluntary contracts and there are some… who are suggesting that a lot of practices will sequester carbon, when it’s probably not true.” Bennett said some aggregation contracts are very vague on the value of an offset credit, as well as other important terms.

“If I were an investor and I could buy voluntary (non-regulated) offsets at a buck a tonne, I’d buy all I could afford to buy on the off-chance that some of them would work for me (once a regulated market is established). Especially if the federal government is talking about carbon pricing of $30 a tonne, going to $170.”

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