Additionality

Some of the carbon market programs recognize that farmers have been using practices over the years that qualify for credits now.  These might include “reducing tillage, changing nitrogen rate or practices, planting cover crops and/or changing crop rotation” (Sellars et al., 2021). 

Additionality means that carbon sequestration outcomes are being reached by growers as a result of incentives provided by brokers in the market. It’s important to know that there’s now more emphasis on the outcomes rather than the practices themselves.

If a grower has been using these practices, they should check with their broker to see if they can receive payment for a certain number of years prior to starting a carbon program. This may permit looking back for as many as five years. 

Aggregator vs. Data Manager

The two routes for a farmer to enter the carbon credits marketplace.

With the aggregator approach, the grower turns over ownership and control of their full project and all credits to the aggregator. A contract includes all terms and conditions. The aggregator owns the farmer’s carbon credits, and has control over whether and when to take them to market, accept a price and share any data.

With the data manager approach, the grower works with a data manager at a negotiated price (fee or percentage of revenue), in return for supporting the grower as they join the market (Donnelly 2021).

In both cases, contracts can last 10–20 years.

Carbon credits

A way of measuring carbon capture and storage. The way carbon credits are measured is by metric tons of CO2-eq. This means carbon dioxide equivalent. CO2-eq compares various greenhouse gas emissions based on their potential to cause global warming and translates that potential into units.

Carbon markets

Trading carbon credits, on a compliance (cap and trade system) or voluntary approach.

Carbon prices

Carbon credits can be paid out using any combination of cash, cryptocurrency or credits toward purchases. Prices may range $10–20 per metric ton of CO2-eq.

Note that these prices will not include any fees or sequestered losses as calculated by a broker, so in the end a grower will receive back less than the enlisted price.

Carbon sequestration

Any steps taken to capture and store carbon dioxide from the atmosphere. Geologic sequestration involves keeping carbon stored in rock formations underground, while biologic sequestration is all about storing carbon in soil, plants, water, trees, etc. (USGS, n.d.).

Carbon sinks

The places where carbon can be stored, such as rocks, plants, soil and water.

Greenhouse gas (GHG) emissions

GHGs include carbon dioxide (CO2), nitrous oxide (NO2), synthetic chemicals and methane (CH4), and emissions can be naturally occurring or created by humans. Either way, they change the climate and our weather. This happens when the energy put out by the sun and by our planet are not in balance. When this occurs, energy from the Earth gets held in our atmosphere. 

Natural causes include volcanic eruptions, the Earth’s orbit, the carbon cycle and the sun’s energy release. Burning fossil fuels, a common human behavior, is a leading cause of GHGs, making humans the chief factor behind global warming since 1970.