By Karl Plume
When Microsoft Corp made a massive purchase of carbon credits in January, it turned to a relatively new source: farmers who plant crops meant to trap carbon in the soil.
The credits are financial instruments generated by projects that reduce or avoid the release of greenhouse gases, such as solar farms or tree-plantings. The projects' owners can sell the credits to companies who then use them to make claims of offsetting the climate impact of their operations.
Microsoft bought nearly 200,000 of the farm-based credits at an undisclosed price - among the largest-ever purchases of agricultural credits - as part of a larger deal to buy 1.3 million credits. But the tech giant rejected far more of the more than 5 million credits offered by agriculture projects because of systemic problems with measuring their climate benefit.
The Microsoft purchase underscores both the promise and the problems of the emerging industry in agriculture-based climate credits.
"For row-crop agriculture, the big opportunity it offers is scale. But it also has a measurement and monitoring problem," said Lucas Joppa, Microsoft's chief environmental officer.
The company received proposals from agriculture projects that made carbon-removal claims without scientific validation, Joppa said. Others led to deforestation or were found to capture some carbon but leak it back into the atmosphere quickly. Simply tilling a field, for example, can release carbon meant to be stored.
Solving such problems will be key to fully capitalizing on what could be a huge opportunity in selling credits to major firms such as Microsoft.
Joppa said the company might need to buy 6 million carbon credits annually by 2030. "And that is going to require a lot greater transparency" on the part of agricultural credit producers, he said.
Each credit should represent a metric ton of carbon dioxide removed from the atmosphere. Companies buy them to appeal to environmentally conscious consumers and to prepare for expected government climate regulations.
Agriculture is among the largest emitters of greenhouse gasses, including those from tractor emissions and from manure and fertilizer applications. But the sector is also a promising part of the solution. Global croplands and grasslands can capture and store the equivalent of up to 8.6 gigatons of carbon dioxide a year, according to a 2019 report from the Intergovernmental Panel on Climate Change. That's equal to about 1.3 times all U.S. emissions that year, according U.S. government data.
BUILDING A NEW MARKET
Farmers of commodity crops can capture carbon in their fields by planting an extra crop in the off season or reducing their plowing. Some programs also issue environmental credits for conserving water or reducing fertilizer runoff.
Typically, farm carbon programs establish a field's soil carbon with soil sampling and laboratory testing. Programs then estimate how much carbon is captured and stored by analyzing everything from weather and seed type to farming practices. They use data gathered by humans, satellites and sensors on farm machines.
Third-party verifiers validate the data and generate credits, which are issued to program managers or to farmers.
The high costs of measuring and verifying soil carbon credits have prevented more farmers from participating in such programs.
The Microsoft purchase showed buyers are willing to pay for high-quality credits, but farmers say they need help covering costs to ensure their efforts are worthwhile.
Click here to see more...