Carbon credits. Everyone has heard of them. But how many know what they are?
“A carbon credit is a kind of permit that represents 1 ton of carbon dioxide removed from the atmosphere. They can be purchased by an individual or, more commonly, a company to make up for carbon dioxide emissions that come from industrial production, delivery vehicles or travel,” according to NBC News.
“Carbon offsets and the regenerative economy are really exploding. The world really needs it,” says Shidan Gouran, chairman of New York-based Blue Sphere Ventures, Inc., a brokerage that is involved in rationalizing the carbon market, making it easier to connect buyers and sellers.
Carbon credits go back to the Kyoto Protocol of 1998, in which most world nations agreed to set carbon caps—limits on the amount of carbon a nation or industry can release.
To make the process easier, a system of carbon credits was set up. Users who put more of the carbon in the air than they are supposed to can buy credits from sources that remove carbon.
Forestry has been a major source of carbon credits, Gouran says.
Agriculture hasn’t been able to participate on a large scale in the carbon market, Gouran adds, because until recently the technology for measuring the carbon footprint on a given piece of land wasn’t there—at least not on a cost-effective basis.
Now it is. New developments in aerial photography, sensors, and machine learning have driven down the cost of measuring carbon footprints.
Agriculture as a whole is carbon-neutral right now, Gouran says. It doesn’t put more carbon into the air than it takes out. But with certain regenerative practices, it could be carbon-positive. (That means it removes carbon from the air. “Carbon-negative” means that an entity adds carbon to the air. “Carbon-neutral” means that it doesn’t absorb any more than it emits.)
Gouran says that selling carbon credits “will be a new revenue stream for farmers, once they have been incentivized to change some of their practices.” For example, “how often you till the land aids tremendously in reducing carbon footprint.” He also points out that the “soil microbiome is an important factor.”
Once acreage becomes carbon-certified, the owner can sell credits for it to an entity that is carbon-negative.
What does that mean in hard dollar terms? Gouran says additional revenue from selling carbon credits could be as much as $2,000 per hectare.
The carbon market is becoming easy even for small farmers to enter, he notes.
The United States was one of very few nations worldwide to fail to sign the Kyoto Protocols in 1998, Gouran adds, although it is expected to ratify a version in 2023.
Critics of the carbon market point out that it doesn’t remove carbon or other greenhouse gases from the atmosphere; it merely offsets amounts that are already being released.
That claim is probably true, although it tempts one to put the carbon market into that big file labeled, “Better than nothing.”
