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What Makes a High-Quality Carbon Credit from Regenerative Agriculture?

Blog-4-TT2

Last week, we hosted our second Soil Carbon Removal Think Tank session – a series of webinars bringing together leading experts in the fields of soil carbon removal & the voluntary carbon market (VCM).

As companies, corporations & organisations gear up their climate leadership efforts, interest in regenerative agriculture carbon credits is growing exponentially.

To harness the vast potential of this financial mechanism & ensure tangible climate impact, we need to first and foremost establish a common understanding of what constitutes a high-quality carbon credit from regenerative agriculture.

We invited Marian Krüger of ETH Zürich, Stefan Jirka of Verra, & Kim van der Leeuw of Rabo Carbon Bank to dive deep into this crucial inquiry.


 

 



WHAT MAKES A HIGH-QUALITY CARBON CREDIT FROM NATURE-BASED SOLUTIONS?

For companies looking to showcase climate leadership, investing in nature-based solutions is a powerful tool to ignite tangible impact. But in a wild-west market with so much on offer, distinguishing the honourable credits from the insincere can be a tricky endeavour.

Drawing on his experience at ETH Zürich, Marian asserts there are a few parameters that are easily graspable when it comes to distinguishing a high-quality nature-based credit, while others continue to pose a trickier question.

According to Marian, a carbon credit needs to be first and foremost verifiable – carbon dioxide removal (CDR) needs to have actually happened, and the evidence of that needs to be demonstrated. This necessitates quantifying, measuring and monitoring soil carbon to robustly demonstrate drawdown from the atmosphere.

In addition, a high-quality credit must be net-negative. From a life-cycle perspective, it needs to account for all emissions involved in producing the credit, be it energy or other inputs. The end result reflects the true net-value of carbon removal.

Marian asserts these are important indicators in the making of a high-quality carbon credit that are considerably easy to ensure. Additionality and permanence, however, are more challenging to address.




HOW DO YOU ADDRESS ADDITIONALITY AND PERMANENCE?

Whether it’s in the context of NBS or the wider spectrum of CDR solutions, buyers need to be knowledgeable when it comes to additionality and permanence.

Diving deep into additionality, Marian asserts you need to credibly illustrate that barriers in place would have prevented a farmer from adopting practices that led to carbon sequestration - that it wouldn’t have been feasible without carbon financing.

“In a sense, regenerative agriculture is a victim of its own greatness. It carries so many other benefits that could lead someone to adopt the practices without utilising the carbon market.”

Given the effects of CO2 linger in the atmosphere for several hundreds of years, we need to ensure that the CO2 removed is also kept out of it for an extended period of time.

As Marian summarises, “in the nature of nature-based solutions, there is some risk of reversal.” These are issues for which solutions exist, but the matter of durability is prevalent in the debate.


How, then, do we address these issues?

As Stefan showcases, these are thorny issues that need to be considered while issuing any high-quality carbon credit - but there’s an emerging field centred on addressing these two perplexing problems.

For additionality, there are some procedures to establish whether carbon finance did indeed drive carbon drawdown. Some of these include common practice assessments, barrier analyses that establish social, economic or investment roadblocks as well as performance benchmarks.

In discussing permanence, Stefan asserts it’s crucial to consider non-permanence risks. This can be conducted vis-a-vis monitoring tools that establish a risk score, which allocates a percentage of the credit into a pooled buffer.

A credit buffer guarantees insurance against any future risk factors, thereby providing security for all stakeholders involved in the credit exchange.

 

 

QUANTIFYING, MEASURING AND MONITORING TECHNOLOGIES - WHERE ARE THEY AT, AND WHERE ARE THEY HEADED?

Kim argues there are current limitations in assessing soil carbon sequestration. Current methodologies heavily depend on biochemical process-based models that rely on practice data, so historical information at the field level.

But to stay on pace with a growing market, the technologies for measuring, monitoring and quantifying carbon are also developing rapidly.

“There’s so much effort going into this space & even more crucial change coming out.”

For Kim, the future of high-quality measurement lies in a holistic approach – ground truthing, remote sensing and machine learning complemented by modelling to assess change through time.

Through this, you can scratch the surface, get a step ahead of in-field heterogeneity & dig deeper into what’s happening in the soil.


THE ROLE OF ECOSYSTEM CO-BENEFITS

Regenerative agriculture’s carbon sequestration capacity is equally extensive as it is impressive – but its benefits go far beyond carbon.

From flood and drought prevention, food system transformation and ecosystem restoration, regenerative agriculture tackles a wide spectrum of challenges in the realm of environmental breakdown.

According to Stefan, this is where its strength lies – “the co-benefits of nature-based solutions are arguably their primary benefit when we take a wider perspective”.

A realisation that is spreading far and wide.

As Marian highlights, co-benefits are often a key driver for companies investing in nature-based solutions. They go above and beyond classic CDR credits, delivering meaningful climate impact & giving businesses the biggest bang for their buck.




THE PROSPECT OF A NEW MARKET

As organisations realise the significance of adopting holistic sustainability strategies, the prospect of a new market is on the horizon – one centred around ecosystem co-benefits rather than carbon.

The speakers unanimously highlighted that we need to shift our mindset from carbon as the be-all and end-all. As Kim demonstrates, carbon isn’t the end goal; it’s part of the solution.

“We use carbon because it has a liquid market attached to it. It’s quantifiable, relates to something we’ve set targets on, has a monetary value & it’s easy to use, but it’s not the metric to rule them all.”

The demand is there – offsetters are increasingly aware of their intrinsic value & looking to vote with their money, but the technology isn’t quite where it needs to be.

Right now, some ecosystem co-benefits are difficult to measure. They’re not at the stage that they can be made liquid except in the premium paid for NBS credits.

Once we can measure non-carbon proxies, Kim believes we’ll see a much-needed turnaround in the mechanisms of the market.




CLOSING NOTES

Our understanding of what constitutes a high-quality regenerative agriculture carbon credit is underpinned by various factors, some of which go above & beyond the CDR standard while others pose a trickier challenge.

But from measuring technologies to market mechanisms, the carbon market as we know it is developing at a rapid speed.

As the participants highlighted, there’s so much on the horizon & a lot that’s shovel ready. When these developments materialise, the accessibility of high-quality regenerative agriculture carbon credits will only continue to grow – and perhaps a new market alongside it.



WANT TO FIND OUT MORE?

Sign up to Soil Carbon Removal Think Tank #4

That’s set to dive deeper into how we can ensure additionality & permanence in NBS.