Carbon Credit Quality Characteristics
Welcome to the Agriculture Capital (AC) Mindset’s Climate Solutions Investing Primer, where we offer a point of view on the fundamental principles behind carbon markets. AC is focused on speeding the transition from conventional to regenerative farming with a focus on high quality carbon credits. To do that, we are addressing six key carbon credit quality indicators.
- Leakage
- Permanence
- Quantification
- Upsides
- Exclusivity
- Additionality
Permanence
Permanence is a critical factor to consider when evaluating the effectiveness of agricultural carbon sequestration methods. While soils can act as long-term carbon sinks, they can also become short-term carbon sources due to disturbances such as changes in crops, extreme weather events, or future changes in land management. This impermanence poses a significant challenge to agricultural carbon sequestration, as the carbon stored in soils can be easily released back into the atmosphere, reversing the climate benefits achieved through sequestration efforts.
The impermanence of agricultural carbon sequestration is further compounded by the fact that the carbon remains in the active biological cycle. This means that the carbon is constantly being exchanged between the soil and the atmosphere, making it vulnerable to release through processes such as decomposition, respiration, and leaching. Additionally, agricultural soils are often subject to tillage and other management practices that can disrupt the soil structure and release stored carbon.
Several strategies can be employed to mitigate the risks associated with the impermanence of agricultural carbon sequestration. These include:
- Implementing long-term governance structures that ensure the continued implementation of regenerative practices and the monitoring of soil carbon levels.
- Developing and adopting robust accounting methodologies that accurately quantify the net carbon impact of farming practices.
- Issuing carbon credits for measured reductions and removals compared to monitored baseline samples.
- Conducting further research on the factors that influence soil carbon storage and the development of management practices that enhance carbon sequestration and minimize the risk of carbon loss.
By addressing the challenges of impermanence and leakage, we can ensure that agricultural carbon sequestration contributes to long-term climate change mitigation efforts while also providing economic and environmental benefits to farmers and society as a whole.
Regenerative Management
It is crucial to monitor GHG levels in the soil closely to understand if the carbon being sequestered in soil is addressing permanence. At Agriculture Capital, we measure soil carbon sequestration yearly and our track record is illustrated in our annual series of Regenerative Impact Reports, which we began publishing in 2016. This data is key to learning how to continuously improve how regenerative agriculture is implemented, and as the technologies we utilize advance, our monitoring approach evolves.
AC began investing in regenerative agriculture strategies in 2014. Carbon sequestration is just one output from our regenerative systems design approach to asset management, which we call the AC Way. Implementation of the AC Way has led to farmland improvements in soil carbon, biodiversity, and water and has underpinned land productivity and value creation within Agriculture Capital’s existing investments.
For more information, please reach out to acmindset@agriculturecapital.com.