Booming carbon market brings excitement and uncertainty to Canada's working lands

Booming carbon market brings excitement and uncertainty to Canada's working lands

Photography & Words by Aidan O'Brien (M.A.)

As global carbon market prices continue to surge, working land managers face an opportunity to help Canada meet its carbon emissions targets, but not without risks to their own business.

Internationally the carbon market has increased five-fold since 2017 and forms an integral part of international climate change policy. Recently, Canada announced an updated commitment to reduce greenhouse gas (GHG) emissions by up to 45 per cent below 2005 levels by 2030, along with setting the price of carbon to rise steadily before maxing out at $170 per tonne in 2030.

This had led to an explosion of interest from private industry, NGOs and the Canadian government around carbon sequestration on private working lands, like farms. The new Federal GHG Offset System is designed to help farmers, among others, make money for cutting GHG emissions by generating and selling carbon credits in a domestic carbon trading market.

Soil organic carbon (SOC) is one key measurement for working lands stakeholders to focus on because the Enhanced Soil Organic Carbon (ESOC) protocol is the first of eight slated to be developed for the national carbon offset program.

Carbon cycles between soil and the atmosphere, so the adoption of sustainable agricultural land management activities like cover cropping, rotational grazing and set-aside lands can store carbon in the soil, reduce emissions and generate revenue for farmers in the form of carbon credits.

With increasing government support and the price of carbon set to skyrocket, working lands stakeholders like Certified Crop Advisors (CCAs), agricultural businesses, farm groups, researchers and NGOs are expected to help farmers adopt sustainable practices that improve SOC and produce carbon credits. 

The Output-Based Pricing System (OBPS) proposes that “in order to generate Offset Credits, projects must…achieve real, additional, quantified, verified, unique and permanent reductions of GHGs”.

However, working lands stakeholders are divided in their thinking about which offset projects are effective, trusted and fair for generating carbon credits.

A well-defined approach to the scope, measurement, verification, production and transaction of a carbon credit does not yet exist, which has created uncertainty among working lands stakeholders about the future of carbon markets in Ontario.

 There has not yet been a formal agreement on the extent that project data should be managed and monitored. All that is known so far about the ESOC are its plans to recognize practices that “reduce emissions and increase soil carbon sequestration on agricultural land”. Little detail has been provided on how the ESOC protocol will measure and track these emissions reductions.

Working lands stakeholders have different opinions about the extent that SOC data and information should be measured, managed and monitored. Some have the equipment to collect lots of SOC information, to find fields or portions of their fields with the most potential to perform as offset projects. Others think the ESOC protocol might work best at a farm or regional level, granting farmers more flexibility to trade-off SOC lost in one place on with SOC gained in another.

Measuring SOC is time consuming, expensive and imprecise because it varies so naturally through space and time. 

At best, only an estimate of SOC can be obtained. The variability of SOC and carbon cycling across the landscape complicates the decision about which sustainable practice to adopt (and at what scale) that results in the best outcome for the lowest cost.

This means that many farmers become uninterested or restricted from participating in carbon markets due to the high costs and extra labour often associated with adopting sustainable practices. Farm advisors and conservationists also lack access to decision-support systems (DSS) and other tools that can help them accurately and appropriately quantify and communicate changes in the carbon content of soils. 

DSS are a potentially useful technology for measuring SOC because they have been shown to work accurately, reliably and cost-effectively to measure and forecast SOC responses to changing climates, management and soil conditions. DSS may provide a practical solution to quantify SOC and support carbon market policies, but many carbon change models used in DSS are limited by the quality and availability of data, which can introduce uncertainty.

Although some SOC DSS exist in Ontario, many rely on outdated Soil Survey Complex to get SOC information and make decisions about potential offset projects. The Ontario Soil Survey complex was not designed for project specific management and contains little reliable information to forecast SOC changes.

This means many carbon change models can only estimate SOC for one specific ecosystem, making it difficult to obtain any meaningful measurements when a field or farm traverses many ecosystems and soil types. Some DSS like SWAT Maps capture layers and layers of data at very fine resolutions across a field, but that information can be too precise, because the size of modern day farm equipment limits the feasibility of projects that aren’t easy to implement as they are in too small of clusters, or in hard-to-work areas.

Stakeholders are also wary to set up carbon offset projects because they require sharing management data with the government, agri-businesses and other third parties. Currently there is a lack of trust from stakeholders that SOC and other information will be appropriately used and adequately protected by all involved parties.

This distrust stems from companies like John Deere using tactics like Extended Use License Agreements (EULAs) to argue that farmers who sign EULAs do not own their tractors, preventing them from repairing farm equipment or its software. When manufacturers release new software, they often stop supporting the old version, forcing farmers to continuously buy new software and equipment to keep up to speed.

Stakeholders are worried something similar may happen with SOC DSS.

Although conservation organizations are positioned to support carbon offset projects on working lands, conservation and agriculture have often been put at odds. Hindered by the dichotomous ideas of “land sparing” vs “land sharing”, conservation organizations too often focus on the way agricultural landscapes conflict with conservation. Conservation organizations and agricultural businesses should therefore work together to build more trust and knowledge across sectors to better empower and support farmers with their carbon offset projects. 

The Government of Canada's approach to conservation on working lands has always had a large focus on educating and incentivizing farmers about best-management practices (BMPs). With fewer farmers and an increasingly urban population in Ontario, farmers and local land stakeholders are not seen as the generators of new knowledge or technologies, and their contributions are often limited.  

This can quickly lead to agricultural protocols and policies that are out-of-touch and unfair.

One thing that it known about the carbon market protocol so far is that it will not credit farmers for removing any GHGs before 2017, and a project must be considered “additional” – or beyond what would happen in the absence of a price on carbon.

Many stakeholders have voiced concerns that this stipulation is unfair to those innovative farmers who have adopted sustainable farming practices long ago, and now may not be eligible for an offset project.  This may challenge the early adoption of innovative farm practices in the future by continuing to reward laggards with payments and incentives while leaving innovators out.

The current level of trust between farmers, independent third-party verifiers, brokerages and exchanges, and how easily these services can be accessed, may result in the sporadic adoption of SOC offset projects which favour niche operations with secure tenure, financial capital, and access to conservation networks, tech-literacy and reliable social and data infrastructures, like the internet.

Many are concerned about the governments focus on rolling out carbon market schemes while forgetting about the importance of rural broadband and other infrastructure for rural landowners to adopt sustainable practices and attract a new generation of farmers. Many areas in Ontario lack the necessary infrastructure, support and training required to install, monitor and maintain data intensive SOC offset projects.

On the other hand, technocrats have proposed using blockchain technology to facilitate the reliable, trusted and verifiable transaction of carbon credits, but these technologies face significant barriers to adoption in agricultural systems and ongoing debate from environmentalists about their energy usage.

No matter what, the ESOC protocol will only be effective if it uses data and procedures that are most relevant, trusted and fair for all stakeholders. 

This means consulting with scientific experts on carbon change models as well as incorporating the opinions, values and concerns of working lands stakeholders into the protocol. With questions looming about the effectiveness of carbon markets to lower GHG emissions, SOC DSS must be deployed in ways that are salient, credible and legitimate if they are to see widespread adoption.

The Offset Regulations are subject to public input and comments until May 5, 2021, with final enactment targeted for the fall of 2021. The development and finalization of the ESOC will occur separately from the Offset Regulations and will only apply to Canadian provinces and territories that do not address the same activity through an existing provincial or regional offset program (which is the case in Ontario). 

Overall, working lands stakeholders are concerned about the lack of a standardized and trusted approach to collecting, analyzing, sharing and making decisions around SOC sequestration. Carbon markets are rapidly evolving in Canada, but not without uncertainty and excitement around what the details of the ESOC protocol will entail and what that might mean for Canadas’ working lands.

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