In late June, Minister for the Environment Eamon Ryan announced he was going to pay farmers to store carbon.
Welcome words, but is much easier said than done, because carbon accounting and credits are a complex area with many moving parts.
Ireland’s carbon accounting methodology is governed by the Effort Sharing Regulation (2021-2030). This came under intense scrutiny last week.
Put simply, it’s not simple
Generating soil carbon credits from sequestered carbon is an entirely different subject. Put simply, it’s not simple.
We do not have the infrastructure in place to account for, generate and trade carbon credits at a national level here in Ireland.
This means that at national level, the Government will have to develop a mechanism to allow farm-sequestered carbon to be traded on a carbon market. This will likely be in the form of a carbon farming scheme.
This will require significant work, but has been done quite successfully elsewhere. The carbon trading initiative in France (‘4 per 1,000’) is a great example of how carbon farming can work. The ‘4 per 1,000’ process aims to increase the soil organic matter content and carbon sequestration through the implementation of agricultural practices adapted to local environmental, social and economic conditions and reward farmers for doing this.
There will also likely be an option for farmers to bypass this Government mechanism
This may be able to act as a template for Ireland’s model but ultimately, a bespoke model for Irish regulations and conditions will have to be designed. There will also likely be an option for farmers to bypass this Government mechanism and work directly with a company that is already trading on the Emission Trading Scheme (ETS) carbon market.
Project Clover is an example of a group of ETS companies aiming to develop this mechanism. Project Clover is an industry-led initiative aiming to facilitate the development of a farm-based anaerobic digestion industry to produce biomethane, bio-fertiliser and sequester soil carbon.
What is soil carbon?
Carbon sequestration is where carbon dioxide in the air is captured by plants and then stored in the soil.
For example, grass, tillage or cover crops take in carbon dioxide and the plant material helps to build soil organic carbon (SOC), which is directly related to soil organic matter.
Carbon can be released from the soil again as material is broken down and as tillage occurs or animals graze. It is the stable carbon that will result in carbon storage increasing. Therefore, carbon farming schemes essentially provide incentives to farmers to increase the soil organic carbon levels on their land.
The European Commission says that carbon sequestration on mineral soils is an important mitigation option given the ambitious scale of the overall mitigation that needs to be achieved within Europe.
However, it goes on to state that its potential should not be over-emphasised at the expense of other mitigation options.
This is important to state as developing our own carbon farming scheme will not cancel out other climate measures coming down the line, nor will it make any farmer rich.
A potential carbon farming scheme could take several forms, as outlined in a recent report published by the Commission.
For the purposes of this article, we will focus on models for a carbon farming scheme on mineral soils. Peatlands and bogs are treated differently to mineral soils as they are currently significant sources of carbon. Rewetting peatlands and bogs would have a relatively instant impact on emissions, whereas building soil organic carbon (SOC) in mineral soils and generating carbon credits takes time. Existing schemes in operation around the world can be grouped into four categories:
1 Learning-by-doing approach: where farmers are offered a menu of measures from which to choose, but where payments are calculated based on the expected result of the measure. At the same time, monitoring of SOC levels is done on a subsample of farms so that the overall project impact and measure impact can be estimated.
2 Hybrid scheme: where farmers are paid up-front with a guaranteed payment, the monitoring is done at regular intervals, and the farmers receive a top-up at the end of the commitment period which rewards the difference between the upfront payment and the total result.
3 Certified credits or pure result-based schemes: where farmers are paid solely for the measured or estimated result in changes in SOC levels on an ex-post basis.
4 Private company schemes: a specific industry-led scheme aimed at reducing the carbon footprint in the supply chain, for example Project Clover.
We don’t know yet which model the Government is likely to develop. However, it is important to note that in order to get the maximum value for your carbon credit, it needs to be verified by measured data.
The world standard Intergovernmental Panel on Climate Change (IPCC) process covers three tiers of carbon accounting.
Tier 1 (bronze) and tier 2 (silver) both generate “inferred” carbon savings.
However, under tier 3, the sequestered carbon is physically measured and verified.
Tier 3 measures carry a considerably higher premium on the market.
For example, if you measured 10t of sequestered carbon under a tier 1 or tier 2 process, when you go to trade those credits they will lose 80% of their value under the IPCC process, so you only get to trade 2t.
Whereas 10t of sequestered carbon under a tier 3 measure means there will be 10t available to trade.
Many carbon markets only accept tier 3 measures and other schemes, such as Australia’s carbon farming scheme, only use tier 3 processes. This means that farmers must physically measure soil carbon, which is costly but offers the greatest return.
1 How do I measure soil carbon?
In order to receive the maximum payment for carbon, Ireland’s carbon farming scheme would be based on tier 3 measures.
The first step in this scheme would be to determine the baseline SOC level.
Efforts to increase SOC prior to this first measurement will not be eligible to generate credits.
The test involves taking a soil sample to a depth of at least 30cm, taken in the same way as a normal soil sample would be taken.
It needs to be representative of the area it was taken from, avoiding unusual areas where farmyard manure was loaded, for example.
At present there is no minimum or maximum area to sample from but samples should represent similarly managed areas.
Of course, carbon can be stored much deeper than 30cm and the UN guidelines on this state samples be taken to a depth of at least 30cm, while the IPCC guidelines state that “the sampling depth should be below the depth that significant change can expect to occur”.
The IPCC adds that where soils are undergoing management changes, soil carbon changes are likely to occur in the top 30cm.
The most important thing is that “the depth used in one inventory should match the depth used for that location or land-use type in the next inventory”.
2 Where can I test my soil carbon?
Many laboratories across the country are now starting to test soil carbon stocks. This is the soil organic carbon minus the soil inorganic carbon. Sampling is quite expensive at approximately €35/sample. These samples would also need to be taken every year.
3 I have my baseline carbon measurement, now what?
The first thing is to maintain carbon levels in the soil. Maintenance is difficult and should be rewarded along with increases.
Teagasc research has shown that Irish soils have the potential to store vast amounts of carbon, particularly heavier soils, but it takes a lot of work to increase carbon and build-up is very slow over time.
Teagasc research on heavy soils has shown an average carbon storage content of 346t of carbon/ha (C/ha), but there was potential to increase this storage by an average of 792.1t C/ha. The data showed that the top horizon of soils measured was at 77.4% capacity for carbon storage, the middle horizon was at 21.5% capacity and the bottom horizon was at 10.1% of its capacity.
Carbon measurements from Solohead research farm outlined approximately 200t of C/ha to a depth of 90cm and this soil carbon level changed very little over 20 years of testing.
Drainage and reseeding results in carbon losses so carbon increases, gained from organic manures for example, may have been lost when these processes occurred.
Building carbon can take a long time and varies according to climate and soil type, as well as management systems, but it can be done through many different processes.
An example of some of the measures which could be included in a carbon farming scheme are:
In general, it will take around five years of implementing a combination of these measures to see an increase in SOC and have enough verifiable data to legitimately generate credits.
However, all soils are different, some may have a large sequestration potential while others may already be at saturation point.
One of the most widely used carbon markets in Europe is the EU Emissions Trading System (ETS).
This system gives the holder (typically an intensive energy user) of a carbon credit the right to emit 1t of carbon dioxide equivalents.
This 1t credit comes from someone who sequesters 1t of carbon equivalents.
Where proof of sequestration is available, carbon credits can be sold to companies or on the open market, like grain is traded for example.
At the end of last week, the December 2021 future price for one carbon credit on the EU ETS was €52.35/t. This was down on a price of €57.87/t on 5 July, when the price peaked.
This price hit a low of €15.71/t on 18 March 2020, when the COVID-19 pandemic hit.
Before this time, the highest price hit from June 2019 to January 2020 was €30.76/t and prices were generally around €25-26/t.
Many commentators expect the price to increase, especially as carbon taxes increase.
As an example, we will use Tullamore Farm’s soil carbon results to show how much can be made from soil organic carbon build-up.
Samples were taken to a depth of 30cm. There is over 3,000t of soil/ha (to 30cm) in Tullamore Farm.
At a soil organic carbon percentage of 4.8%, this means the soil organic carbon stock is 144t/ha.
If soil carbon increased by 0.1% in one year, this would be an increase of 3t/ha of carbon and at a price of €54.26/t that equates to €162.78/ha.
Soil sampling and testing costs must be taken from this price to calculate your profit.