Canadian fields, orchards, and ranches might soon be growing a new crop: Carbon credits.
Last week, the federal government announced plans to create a carbon offset system that would let farmers who adopt regenerative farming practices be paid for the carbon they sequester. The approach reflects growing interest by farmers and policymakers in the agricultural sector’s potential to help Canada meet its greenhouse gas emissions (GHG) targets under the 2015 Paris Agreement.
“The (system) will mean farmers can be recognized and rewarded for reducing GHG emissions on their farms by implementing practices that improve the carbon sequestered in their soil,” said federal Agriculture Minister Marie-Claude Bibeau in a statement.
Agriculture is responsible for about eight per cent of Canada’s GHG emissions, and poor soil health and the excessive use of nitrogen fertilizers — a byproduct of industrial agriculture — are the main drivers of these emissions.
Residue left in fields from excess fertilizer is broken down by microbes into nitrous oxide, a GHG roughly 300 times more potent than CO2. Other practices like tillage also contribute to emissions from farm fields.
Changes to more regenerative farming practices, or practices that enhance soil carbon and soil health, can significantly reduce or eliminate these soil emissions. For instance, cover cropping or no-till cultivation can help soak up excess nitrogen before it escapes into the atmosphere, explained Sean Smukler, a professor of land and food systems at the University of British Columbia.
Last month, a coalition of farmers asked the federal government to invest $300 million in the 2021 budget to help the sector rapidly transition to these more sustainable practices. Roughly a third of the proposed funding would go towards helping farmers work with agronomists to use less nitrogen fertilizer. The group also asked for supports to help farmers transition to using more cover crops and rotational grazing.
The proposed federal plan takes a slightly different approach, however. By adopting several regenerative practices simultaneously, it assumes that farmers can — in theory — transform their fields into net carbon sinks.
This additional sequestration capacity is what they could sell on the planned federal carbon market, with a few exceptions: Practices they adopted anyway because they made business sense without the carbon credit incentive or because of government supports will not be eligible for the program, Environment and Climate Change Canada noted in technical documents announcing the plan.
The specific list of practices, or "protocols," that farmers must adopt to participate have not yet been created, but will be drawn up by expert teams convened by the government. These will then be used as guidelines by independent companies that will verify whether farmers are actually implementing practices required under the guidelines — and thus, in fact, are sequestering carbon, the ministry noted.
“Politically, it sounds good that we’re doing (agricultural) offsets. But the reality is quite different,” said @vercammenJ, a professor of land and food systems @ubcLFS.
Alberta implemented a similar system in 2007. In the U.S., several companies work with farmers in that country to trade carbon credits through private sector marketplaces, while the European Union is also home to a handful of similar programs. Yet, despite being increasingly common, issues remain.
“It’s tricky,” said Jim Vercammen, a professor of land and food systems at the University of British Columbia, largely because the price of carbon is lower than the wholesale price for commodity crops.
That makes it difficult for farmers to justify implementing carbon sequestration practices beyond reduced tillage, already a common practice, or transitioning to more fuel-efficient vehicles. And since many would be doing this regardless of the carbon market, getting paid to implement them wouldn’t do much in regard to carbon sequestration.
For instance, farmers in the Prairies can, on average, reap several hundred dollars per acre for commodity crops like wheat, according to a January report by the Manitoba government. But under Alberta's carbon credit system — currently the only government-run system in Canada — they would only receive around $1.73 an acre for implementing more sustainable farming practices. Unless those practices don’t substantially impact farmers’ yields, implementing them makes little economic sense.
Moreover, intensive land use changes like planting trees or converting fields to grasslands are most effective at sequestering GHGs. But again, they only make economic sense if the price of carbon is higher than the commodity crop farmers would otherwise be growing in that spot. As the federal government develops its program, it will need to take these economic tradeoffs into account, Vercammen explained.
Furthermore, he noted the government’s longevity requirement — that regenerative practices be maintained on a piece of land for 100 years after a carbon credit was issued for them — will be “just crazy” to oversee.
“Who is ever going to be monitoring that a farmer is going to be committed to this for 100 years?”
What will likely happen instead is that the carbon credit’s value will be reduced to account for its possible impermanence. This is common with forest-based carbon credit systems, but it could further depress the price paid to farmers for their practice changes under the system.
The 100-year requirement might also make farmers speculate on the value of their fields' carbon sequestration potential by waiting to implement more regenerative practices until the price of carbon rises. It’s an approach that makes sense from a business perspective, but will do little in the short term to increase the amount of carbon sequestered by Canada’s farms, Vercammen explained.
Successfully navigating these issues will be key to the program's success, he said.
“Politically, it sounds good that we’re doing (agricultural) offsets. But the reality is quite different.”
Marc Fawcett-Atkinson / Local Journalism Initiative / Canada's National Observer