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With any level of familiarity with the environmental movement, you will probably have heard these phrases: “Environmental and Social Responsibility”, “Corporate Social Governance”, “Sustainability Initiatives”, “Carbon Neutrality”, and “Carbon Sequestration”. Two decades ago, interested parties uttered those phrases only in the classroom as merely theoretical or aspirational – that is, as general descriptors of potential programs, systems, and directives focused on making the world a cleaner and healthier place to live.
Fortunately over the years practical applications have emerged – that is, actual programs in which interested parties can participate to help clean up the environment. One such example can be found in the emergence of carbon credits and blossoming carbon markets.
Carbon credits essentially amount to a new commodity – one propagated through the capture and sequestration of atmospheric carbon.
The market in which people trade these commodities includes a decentralized network of credit verification companies who confirm the authenticity and quality of the credits and pair credit-creators with credit-purchasers. More specifically, to participate in the market, the credit-creator (the commodity producer) undertakes some action to capture and sequester one metric ton of carbon from the external environment (including, without limitation, the atmosphere). This can be done through the advent of technology and/or engineering based solutions – like mechanically operated direct air capture machines. It can also be done, however, by revising certain agricultural practices. Examples include no-till or low-till agricultural, regenerative agriculture, permaculture, agroforestry, silvoculture and timber harvest deferral programs.
Farmers throughout the southeast should consider strongly whether their farm and their operation is well suited for a transition of practice and the participation in these emerging carbon markets. Doing so can help generate significant revenue with little or no additional cost, in some cases.
Take, for example, the case of Wilmot Cattle Company. This Australian based company is a large acreage cattle and grazing operation. They partnered with a U.S.-based company called Regen Network to establish an accepted scientific methodology to change certain grazing practices on the ranch to ensure that additional carbon was captured and sequestered in the ground permanently. As a result of changing their ag practice and partnering with Regen, Wilmot was able to confirm and authenticate the fact that they were capturing additional carbon from the air and sequestering it permanently underground. That, in turn, permitted the creation of the “carbon credit” with Regen’s assistance. The collection of credits created were then able to be packaged sold to Microsoft, the U.S. based tech giant who has a goal of going carbon negative by the year 2030. The price for the credit was a whopping $500,000.00 – the proceeds of which, after costs, were added directly to Wilmot’s bottom line.
The benefit to the cattle operation did not stop at the additional dollars coming in the door. Both Regen and Wilmot anticipate that the revision of practice associated with generating the carbon credit will also help the operation reduce its overhead over time. This is because of the nature of the rotational grazing, compost, and manure reuse system which undergirded the methodology. Those new practices should enable the farm to use less fertilizers and other similar soil amendments over time. That, of course, will amount to a significant reduction in costs for the operation in the foreseeable future – not having to buy, for example, synthetic nitrogen and phosphorous supplements in the future. In essence, Microsoft has taken a significant step toward its Corporate Social Governance and Carbon Neutrality goals, and Wilmot has added to its revenue streams in addition to reducing its costs for the future. That’s a win-win.
Grazing operations, however, are not the only agricultural operations with a chance to generate significant value. Timber operations offer another great example. Companies like Natural Capital Exchange (NCX) have been offering large and small landowners (whether a formal timber operation or not) the opportunity to defer timber harvest in exchange for the generation of carbon credits – saleable through NCX’s marketplace.
NCX has developed an accepted methodology to establish how the deferral of timber harvest (even for a period as short as one year) can result in the equivalent of permanent sequestration of atmospheric carbon. As such NCX has been partnering with landowners (large and small) to encourage them to defer potential timber harvests. NCX, much like Regen Network, then pairs the landowner with willing carbon credit purchasers who desire to reduce their carbon footprint – like Coca-Cola, Shopify, Pepsi Co., Amazon and other major recognizable retailers for example. The retailers, again, takes strides towards their Environmental and Social Responsibility goals as well as their Sustainability Initiatives. On the other side, the landowners can generate funds from what sometimes are underutilized lands.
Carbon credits now have (and will continue to have) many uses in a world increasingly conscious about the reduction and sequestration of atmospheric carbon.
Clearly, for agricultural operations, it is worthwhile to connect with producers of acceptable methodologies to see if a slight revision in operations or management practices and/or harvest deferrals can add to the farming operations bottom line without too much additional cost. Helping to fight climate change, creating more efficient ways for corporations to offset their carbon footprint, and creating means through which revisions to existing practices and/or unused or previously underutilized lands can generate revenues for farmers and landowners, the emergence of the carbon markets – specifically carbon credits – is generating a win-win for all parties involved.
This article was co-written with Jansen Carver, a 2024 J.D. Candidate with the University of Tennessee College of Law. Currently serving as the Articles Editor with the Tennessee Law review, he served prior as a Summer Associate for two law firms based in Tennessee and as the Executive Editor of the Tennessee Journal of Leadership, Law, and Policy. He received his undergraduate degree in Political Science from the University of Tennessee, Knoxville. Jansen can be contacted via email at email@example.com.