Having reflected on the challenges facing our own agricultural sector throughout my attendance at COP26, I’m convinced of two things.
First, payment for the mitigation and carbon storage of carbon by farmers has to be part of the solution.
Second, we shouldn’t shy away from market-based payments involving carbon trading.
It’s really encouraging to see the commitment to “carbon farming” in the Climate Action Plan. And we don’t have to reinvent the wheel. There are plenty of examples out there that we can learn from. But there’s a need for urgency to make carbon farming a reality.
Most will look to the public sector to reward farmers for mitigating and removing carbon. And it will have a big role, not only in providing financial support but especially in setting standards. The challenge will be to design a results-based scheme that is capable of efficiently yet rigorously evaluating the credits that are being claimed in return for payments. Unlike traditional environmental schemes, the administrative costs involved in results-based schemes could, however, be exceptionally burdensome.
A novel approach is the reverse auction aspect of the English Woodland Carbon Guarantee Scheme. Farmers have to indicate through an online portal what’s the minimum they would have to get for a tonne of verified carbon saved. The scheme was introduced last year and the average price has been about €26/tCO2e. This price is a fair bit below what carbon is trading for right now and considerably less than where it’s likely to be in a few years.
Another UK approach is the Peatland Code Certification Scheme. Farmers register their certificates online and these can be purchased by non-farm companies. The average carbon price so far, however, has only been about €12/tCO2e.
There are also several corporate initiatives. For instance some, such as Microsoft and Ben & Jerry’s icecream, are taxing their internal production of carbon and using the funds to support agricultural-based carbon removal.
But what’s really exciting is the presence of corporate market makers. For instance, Yara’s subsidiary Agoro Carbon Alliance has a global reach. Another international company, Indigo Ag, is using its big data capability to match discerning buyers and sellers of carbon. At COP26, a Finnish non-profit company, Compensate, based at the University of Helsinki, outlined a novel trading platform. In Australia, the Emissions Reduction Fund permits both government and private purchasers to purchase carbon.
Naturally there are many challenges in setting up successful trading systems. The crux issue is to ensure that what is offered in a trade is a genuine credit and that double counting is avoided. Another issue is whether trading is confined to the agricultural sector or whether inter-sectoral trade is permitted. But these problems have been addressed and resolved elsewhere. The UN’s special envoy on climate action and finance Mark Carney’s taskforce has provided a comprehensive checklist for successful schemes.
A trading scheme can’t work effectively, however, unless the final sectoral carbon budgets that are to be published in a few weeks are allocated to individual farms. More importantly, farmers will need to know whether their own farms are over or under their allocated budgets.
The infrastructure to provide robust baseline information and the technical support that farmers will need to optimise their net carbon balance will need to be in place. These will require significant investment.
The SignPost Farm Programme and the associated National Soil Carbon Observatory and the Devenish-Teagasc Agrinewal partnership can provide much of the required baseline information and technical support that will be required.
But substantially more will be required. We should be envious of the comprehensive individual farm soil and Lidar measurement initiative that was recently announced by Edwin Poots.
Professor Gerry Boyle is the former director of Teagasc and former member of the Climate Change Advisory Council.