Our Mission: To advance ecosystem service markets that incentivize farmers and ranchers to improve soil health systems that benefit society.

Carbon Market Therapy. In last month’s column I started to address the proliferation of carbon and ecosystem services market opportunities to help provide perspective to our stakeholders on how to assess the opportunities, and to provide clarity on ESMC’s program and approach. To further elaborate, I will focus today on ESMC’s market approach, including at a high level, our focus on carbon offset markets and carbon “insets”, or supply chain accounting and reporting. ESMC’s innovative market design allows us to operate in both carbon offset and inset or supply chain mitigation programs.

Our theory of change is that a market mechanism is a scalable means to effect significant beneficial impacts from agriculture by focusing on providing the tools, support, and financial means to farmers and ranchers to enable their participation in these markets and programs in a way that works for them, and thus creates ‘supply’, while also meeting ‘demand’ side needs. Supply and demand are needed for viable markets. By paying, supporting, and recognizing farmers and ranchers for their contributions in a voluntary program that incentivizes their participation, and by creating the tools and opportunities for producers in a way that works for them and meets their needs, we can generate supply for these outcomes, thus meeting the demand by corporates, shareholders, stakeholders, and consumers for these societal benefits.
(Note: ESMC generates and stacks carbon and greenhouse gas (GHG) credits, as well as water quality and water quantity credits, and we’ve started work to generate biodiversity credits as well. In future columns I will address credits for services beyond carbon and GHG, but today’s column will focus on carbon and GHG.)

ESMC’s Ecosystem Program: Carbon and GHG Outcomes. ESMC and our members and funders are co-investing in a national infrastructure and technologically advanced tools and technologies to enable cost-effective outcomes in agricultural GHG reductions and increased carbon sequestration. Our market design allows us to operate and generate science-based and standards-based quantified, verified credits or claims and outcomes in multiple markets, including carbon offset markets. The main focus of ESMC’s program and efforts today is in generating outcomes to meet the needs of organizations seeking to reduce their agricultural supply chain footprints. Supply chain mitigation efforts (often referred to as carbon inset approaches) are not technically markets, but ESMC is applying a market mechanism to supply chain interventions within the agricultural sector to help scale outcomes cost-effectively, in a national scale, harmonized, and standardized approach.

ESMC’s programmatic and infrastructure investments are intended to reduce and prevent the need for redundant investments by others participating in these markets and programs. Our intent is to provide a seamless and cost-effective means to achieve quantified, verified carbon removals (increased carbon sequestration) and GHG reductions (reduced nitrous oxide, methane, and carbon dioxide) in supply chain reporting programs, as well as in carbon offset markets. Supply chain removals and reductions are the major focus of our activities at present, as well as the major focus of our participating members, particularly on the demand side.

Carbon Markets and Agriculture: Some historical perspective. Carbon offset markets started about 25 years ago and have moved from nascent stages to more mature stages today. Supply chain GHG mitigation efforts and commitments are far more recent and have different purposes than carbon offset markets. I will go into more depth next month in explaining the differences of each, respectively, but will start here at a high level to describe the evolution and purpose of these efforts and programs. Because carbon offset markets have been operating longer, there is greater familiarity with and more experience in them, and there are specialized carbon offset market actors and market participants whose roles have evolved and who contribute to market program functions and activities. These include national and international carbon market registries (such as Gold Standard, with whom ESMC is most closely working), project developers dedicated to bringing projects together to meet demand (such as ESMC member Native Energy, and other ESMC members such as Corteva and Nutrien who are now crafting similar roles in supply chain project development), and standard-setting and accounting bodies (I’ll provide more detail on those roles and organizations in the future).

The focus, demand, and potential role of agriculture within carbon offset markets has grown recently as the world’s scientists have indicated we no longer have the luxury to pick and choose GHG mitigation strategies or sectors to contribute to GHG mitigation. All sectors and all strategies are needed to curb climate change and the negative impacts we are seeing, including increased droughts, flooding and intense precipitation events, and increased storm intensities. These impacts are causing increased human suffering and negative impacts to nature and biodiversity. Agriculture offers a significant solution set, and one of those solution sets is ecosystem services markets. Markets are not a silver bullet but represent one potential solution set for the agricultural sector – albeit a promising and high-impact solution set.

ESMC as a Beneficial Change Agent for Agriculture. One of ESMC’s major focal points is to act as a change agent in carbon offset markets and supply chain programs to improve and tailor the participation and generation of agricultural credits or outcomes in these markets and programs. Carbon offset markets (and largely, by extension, supply chain intervention programs) were developed with a focus on sectors that generate point-source pollution that tend to be easier to quantify and monitor than impacts from biological systems like agriculture. Carbon offset market and program rules are thus tailored more to point-source pollution approaches. Agroecosystems are far more complex than point source pollution; they must literally be managed on a daily basis to account for different management and production systems, pests, weather, climate and on top of it all, increasing storm events. Regional and production system variability means there are no easy solutions or one-size fits-all approaches to manage or enhance agricultural production system outcomes.

Agricultural systems thus require flexibility and a systems-based approach are currently not well reflected in quantification and verification requirements in today’s carbon markets (and by extension, supply chain intervention programs). Also, agricultural market signals emphasize yield over other impacts and outcomes, and until market signals better value ecological outcomes, farmers and ranchers will focus necessarily on efficient means to maximize yield in order to survive as businesses in a highly competitive market with thin margins. Ecosystem services markets can create a new market signal if the value proposition is high enough to farmers and ranchers.

Systems-based Approaches. ESMC’s approach to carbon offset and supply chain intervention programs is to focus on agricultural systems – not practices – and beneficial stacked outcomes. This requires a mind-shift away from thinking about single practice-based and single impact approaches, and to thinking about how system changes can account for and stack multiple beneficial and desirable outcomes. Farmers and ranchers are, and can provide, not just food, feed, fuel, and fiber, but ecosystem services that are essential to human well-being and to nature and natural resource preservation.

The mind-shift will also require changes to how today’s programs – whether carbon markets or supply chain intervention programs – account for, quantify, and verify agricultural outcomes. That will take time to achieve, but ESMC and our members are working with accounting bodies and standard-setting organizations by demonstrating real-world examples of how this shift can benefit impacts and outcomes, at scale. While there is agreement across all these organizations, including ESMC and our members and the accounting and standard-setting bodies, that speed is of the essence, truthfully, not all these changes are happening at the necessary speed to achieve these outcomes now.

Change takes time, but I am confident that our collective voices and overlapping desires to achieve scale will move mountains once the mind-shift starts to happen. That is what is needed to help mitigate GHG emissions from all sectors, now, to prevent further anthropogenic interference and negative impacts to society. The agricultural sector and ESMC’s members and stakeholders have and are continuing to invest literally millions of dollars annually – both within our public-private consortium, but also individually and collectively outside of it – to scale beneficial GHG removals and reductions from agriculture. We look forward to advancing and recognizing agriculture’s role in this global race, and to using our collective voices and efforts to continue to achieve beneficial change.

Next month, I will more fully address the differences between carbon offset markets and supply chain intervention approaches, including differences in purpose and thus rules and rigor, and what that means in terms of differences in accounting, quantification, and verification. These are important distinctions for agricultural producers (suppliers) and corporates (buyers), policymakers, and consumers and other stakeholders to understand. I will also review the major actors, accounting and standard setting programs and bodies, and current international multi-stakeholder efforts to enhance and further align the growing demand on carbon offset markets and supply chain activities.

Feel free to reach out with any questions or suggestions, and let me know whether this carbon therapy is helpful, or how we at ESMC can assist in your journey.

Farmers Struggle to Break Into Booming Carbon-Credit Market
Reuters (April 28)
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. 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. ESMC’s work to build a market program and to reduce verification costs is highlighted. Click here to read the full article.

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Consortium Seeks Simplification in Sustainability
World Grain (April 23)
Sustainability continues to grow in importance to the farming and milling industries amid an evolving regulatory landscape and new policy energy under a new administration in Washington. Of vital importance to growers and millers is how they can get paid for sustainable practices and best utilize tools such as carbon markets. The North American Millers’ Association enlisted ESMC’s Debbie Reed for an afternoon session at their spring conference to discuss carbon markets. “We (ESMC) are new and different,” Reed said. “When we started, we really tried to look at the opportunity through the lens of ‘Can we conceive and design markets to work for agriculture specifically?’ because we haven’t seen these markets scale for agriculture in the past or even currently today.” Click here to read the full article.

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Voluntary Carbon Markets Have Matured — Here’s What’s Next for Corporate Action
Sustainable Brands (April 20)
Carbon markets connect the growing demand from companies and consumers committing to net zero. ESMC’s Debbie Reed stated that our job, “is to figure out what are the new outcomes that society wants from agriculture. That could be greenhouse gas mitigation, improved water quality, etc. What we are quantifying in our program is impact on soil carbon; net greenhouse gas emissions — including nitrous oxide, carbon dioxide and methane; water quality, water use/conservation, and biodiversity.” Click here to read the full article.

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Carbon Contract Reality: Why Conservation-Minded Farmers May Not Qualify for Private Carbon Programs
Farm Journal (April 12)
As the chase to capture carbon continues, it is a possible new source of income for farmers and ranchers and the payment piece of the puzzle is something to which a nonprofit group is working to bring more transparency. ESMC’s Debbie Reed noted, “Today, I think there’s evidence that 25% and even less is actually going to the farmer and rancher. There’s not a lot of transparency in these markets currently. So, you can’t always tell how many tons have been sold in any given registry, or for what protocol, for what practices, to whom and for what amount.” Click here to read the full article.

2020-2021 Forest Climate Working Group Learning Exchange Series
On May 5 from 3 – 4 pm ET, ESMC’s Debbie Reed and Stacy Cushenbery will highlight ESMC and carbon markets in a webinar: Ecosystem Services Markets Conceived and Designed for Agriculture: Scaling Impacts. This Learning Exchange is hosted by the Forest Carbon and Climate Program (FCCP) which is partnering with the Forest-Climate Working Group (FCWG) to offer a curated Learning Exchange Series on forest carbon and climate issues to group members and the public. Click here for more information.

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Innovate4Climate, panel hosted by Gold Standard
On May 26, from 2 – 2:50 pm ET, ESMC’s Debbie Reed will participate in a panel for Innovate4Climate on maximizing the impact of the voluntary carbon market in a changing policy and private sector landscape. Click here for more information.

NFWF, Food Companies Launch $5 Million Sustainable-Grazing Partnership
Philanthropy News Digest (April 22)
ESMC Founding Circle member The National Fish and Wildlife Foundation announced a partnership with Sysco and ESMC Founding Circle member Cargill, two of the world’s largest food companies, aimed at helping ranchers in Texas, Oklahoma, New Mexico, Kansas, and Colorado address the impacts of climate change. As part of the public-private Southern Plains Grassland Program, the companies will provide a total of $5 million over five years to accelerate the implementation of sustainable-grazing practices across a million acres in the Southern Great Plains, an area responsible for approximately 30 percent of the beef produced in the United States. Click here to read the full article.

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Is There Enough Land to Meet Biden’s Aggressive Climate Goals?
AgWeb (April 22)
President Biden is doubling down on his climate commitment, with a pledge to cut U.S. greenhouse gas emissions in half by 2030. But as some U.S. farmers see commodity prices hit a seven-year high, agricultural groups say moving land out of production may be a tough sell. According to National Geographic, to reach the 30 x 30 target, it will require conserving an additional area twice the size of Texas, more than 440 million acres, within the next 10 years. ESMC Legacy Partner member American Farmland Trust says one way to do that may be tapping into non-operator landowners; 40% of farmland and ranchland is rented or leased, and the majority is owned by what they call “non-operator landowners.” Click here to read the full article.

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Bayer, Corteva Take Divergent Approaches to Carbon Programs
AgriPulse (April 21)
As more farmers express interest in getting paid for sequestering carbon, two of the major players in the industry recently made announcements that illustrate the divides that exist in implementing carbon programs. Earlier this month, ESMC Founding Circle member Corteva AgriScience kicked off a program, without an allowance for so-called “early adopters” and a strict verification approach. Corteva will initially target row crop farmers in Illinois, Indiana, and Iowa for its Carbon Initiative with plans to expand into other areas in 2022. It plans to pay $5-$20 an acre, with the Ecosystems Services Market Consortium providing the quantification, monitoring, reporting and verification services. Click here to read the full article.

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After 75 Years, Noble Research Institute Changes Focus to Regenerative Agriculture
KOSU and National Public Radio (April 20)
ESMC funder and Founding Circle member The Noble Research Institute is changing its focus from plant science to regenerative agriculture. Noble Institute CEO Steve Rhines says the new shift gives the institute more of a focus and aligns with the vision of founder Lloyd Noble. Through a series of written speeches, Rhine says his goals were clear. “There are two things that resonate: Take care of the soil, and make it better, and work with farmers and ranchers to do that,” Rhines says. “And so when we begin to say what should be our focal point, we can always start back with the founder.” Click here to read the full article.

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Opinion: Six Keys to Success for Private Sector Climate and Sustainability Efforts in US Agriculture
AgriPulse (April 19)
ESMC Legacy Partner member Field to Market President Rod Snyder writes that the food and agriculture sector is facing a unique moment in time as an increasing number of companies across the value chain are setting ambitious climate and sustainability targets. Emerging leadership from the private sector has the potential to reshape our industry’s approach to conservation, spurring additional investment and accelerating environmental improvements at the farm and landscape levels. Click here to read the full article.

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Initiative to Reduce Greenhouse Gas Emissions in Agriculture Marks One Year Anniversary, Welcomes First Partner
Foundation for Food and Agriculture Research (April 13)
ESMC funder The Foundation for Food & Agriculture Research (FFAR) and U.S. Farmers & Ranchers in Action (USFRA) mark the one year anniversary of AgMission, an initiative to reduce greenhouse gases in agriculture, by welcoming ESMC Legacy Partner member PepsiCo as a Founding Partner. With a $5 million commitment to AgMission, PepsiCo is expanding its efforts toward creating a more sustainable planet. Click here to read the full article.

Why Is Fashion Talking About Regenerative Farming?
New York Times (April 20)
Brands like North Face, Allbirds and Patagonia, as well as the Kering luxury group, are all about agriculture these days. Here’s the dirt. Click here to read the full article.

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EPA Publishes 28th Annual U.S. Greenhouse Gas Inventory
EPA (April 14)
The U.S. Environmental Protection Agency (EPA) recently released its 28th annual Inventory of U.S. Greenhouse Gas Emissions and Sinks (GHG Inventory), which presents a national-level overview of annual greenhouse gas emissions from 1990 to 2019. Net U.S. greenhouse gas emissions were 5,769 million metric tons of carbon dioxide equivalent in 2019, a 1.7 percent decrease in emissions between 2018 and 2019. While many long-term and short-term factors influence annual greenhouse gas emissions in recent years, the downward GHG emissions trend can be largely attributed to falling emissions in the electric power sector. Click here to read the full article.

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Responsible Data Collection Could Inspire Consumer Trust – Here’s How
Forbes (April 6)
Much like we have biological ecosystems that connect with and reinforce others, our digital world continues to grow and become more integrated. However, unlike mother nature, we are the stewards of the data ecosystem, and we need to work together to ensure its growth is ethical, scalable, and secure. To maximize the benefits of data, it is imperative that participants in its collection, sharing, and use, operate in a framework that allows for the optimal and appropriate use of data, while striking a balance that respects the rights of the individual parties involved. Click here to read the full article.