Carbon farming

With the emergence of payments for public goods in Defra policy, and new private sector markets for carbon credits, the question many farmers and land managers are asking is whether their soil carbon sequestration and emission reduction is a marketable product and a new income stream? And if so, what are the risks and opportunities?

Agricultural soils contain large amounts of stored carbon and have the capacity to sequester and store significantly more. Some analysts estimate that the sequestration potential across the UK in soils is between 1-2 t C02e per hectare per year. And with the voluntary carbon offset market prices currently between £10 and £20 per tonne, it is quick to get to some large figures of £200-£750 million per year for soil carbon sequestration.

There are several advantages to so called ‘carbon farming’. It is a potential income source, a verified process of transitioning to net zero, and one where you can continue to produce crops and livestock on the same land. Additional benefits of increasing soil carbon include improved climate resilience, reduced flood risk due to improved water holding capacity, reduced erosion risk, improved soil health and higher yields.

We know that building soil carbon is a good thing; the question is whether you should turn this act of carbon sequestration into an income stream?

Ultimately, each business needs to consider for themselves whether it is right for them now and in the long term.

The key aspect to understand is what you are selling and how that affects your business. There are different ways to enter the carbon market which can impact your own farm’s carbon account differently.

If you are selling a carbon offset credit outside the supply chain then you cannot claim that against your own emissions now or in the future. Similarly, if you are selling a carbon offset credit within the supply chain, then you cannot claim that against your own emissions now or in the future, but there might be some benefits to supply chain relationships.

Alternatively, there are schemes where you are funded by the supply chain to verify emission reductions and removals, for their environmental responsibility rather than to offset. In these scenarios then you can use the credit for your own carbon balance.

Additionality and permanence are two principles of high integrity carbon credits. Meeting these principles can be a challenge for soil carbon sequestration.

Additionality means that you can only be paid for additional carbon i.e. increasing soil carbon stocks, not for maintaining the carbon store already present in the soil. Depending on land use and management some soils may already be at their maximum.

And it is not enough to sequester additional carbon: it also needs to be stored for the long-term. This is tricky as soil carbon can escape back into the atmosphere if management practices change.

Generating high integrity credits is important to provide confidence in the market place for buyers and sellers and avoid accusations of greenwashing and associated reputational risk. The UK Farm Soil Carbon Code project has conducted an analysis of various soil carbon standards globally to try and address this issue in UK farmed soils and ensure high integrity credits are generated.

It is important to consider how carbon farming sits alongside other schemes, such as the Sustainable Farming Incentive in England. At this stage, Defra has been clear that it is possible to go into private sector schemes provided there is no double counting of the carbon, but this may change.

Furthermore, for tenanted farms it is important to ensure that you have necessary management control and required permissions from the landlord for the duration of the agreement.

As with any contract it is important to understand the terms and conditions, what you are expected to do and what happens if something goes wrong.

There is no single answer to whether you should enter into a soil carbon agreement now, in the future or never. That is for the individual to decide based on your own circumstances. But whatever you decide, taking action to improve soil carbon and soil health can still deliver multiple benefits.