In the popular imagination, solutions to climate change are often boiled down to reducing fossil fuel use and investing in alternative energy. Some would add underground carbon storage schemes or geoengineering techniques to the list, and perhaps tack on conserving forests and planting trees, as everyone knows this is nature’s way of pulling carbon out of the atmosphere.
But all plants absorb carbon as they photosynthesize, including corn, soybeans, wheat and the other commodity crops that now blanket huge swaths of the planet. And just like the trees in a forest, crops interact with microbes in the soil to produce organic matter, a stable form of underground carbon storage that outlasts the growth and decay of aboveground vegetation. Farmland is—potentially—a vast, inexpensive way to sequester carbon and store it long-term.
The problem is that modern agricultural practices emit far more carbon than they sequester. In addition to emissions from tractor fuel, cow burps and petroleum-based fertilizers and pesticides, common practices such as slash-and-burn, and even old-fashioned tillage, release carbon stored in plants and soils into the atmosphere. But minor tweaks to production methods—including planting cover crops, employing no-till cultivation, and converting to rotational grazing—begin to reverse the flow of carbon from the sky back to the farm.
Estimates of the carbon sequestration capacity of the planet’s farmland range from a quantity sufficient to cancel out current agricultural emissions, on the low end, up to an amount that would offset all global carbon emissions. The good news is that increasing soil carbon is the same as increasing organic matter content, which every gardener knows is the key to a healthy and productive landscape—pest resistance, water absorption and, ultimately, yields all flow from this “black gold.
Switching to climate-friendly growing practices can potentially cut farmers’ cost and boost their yields in the long term, but making the transition to—insert “carbon farming,” “regenerative agriculture,” or the buzzword of your choice here—is difficult for farmers operating on razor-thin profit margins.
This is the business proposition behind the Terraton Initiative at Indigo Ag, a tech company attempting to “disrupt” Big Ag with products like microbe-coated seeds and professional data crunchers who help farmers figure out how to grow more food with fewer chemicals. Indigo Ag, which has attracted $650 million in venture capital since its founding five years ago and is currently valued at $3.5 billion, earned the top spot on CNBC’s Disruptor 50 list in May. That was before they announced their plan to establish the world’s first carbon market dedicated to wholly to agriculture. The goal is to sequester a terraton (a trillion tons) of carbon on farms, paying farmers $15 per ton for the favor.
Sounds amazing, but selling agricultural carbon credits to companies looking to offset their emissions has been tried before, including in California’s cap-and-trade system, with little success. The reasons are myriad, though chief among them is that the price per ton hasn’t been high enough to attract the interest of farmers. Judging from the swarms of farmers who have signed up for the Terraton Initiative since it was launched in June, this time might be different.
Modern Farmer recently spoke with Indigo Ag CEO David Perry about how the Terraton Initiative works, and how he intends to overcome the obstacles that brought down other farm-based carbon trading platforms.
The following interview has been edited and condensed for clarity.
Modern Farmer: You’ve experienced a mad rush of farmers wanting to cash in on carbon. What are the numbers?
David Perry: Our goal was to have about 3 million acres under contract in the first 12 months. We launched on June 12th and within five weeks had interest from farmers farming a total of 3.6 million acres. That’s created an execution challenge on our part, in that we have to scale up much faster than expected. But that’s a good problem to have.
MF: What sort of farmers are signing up?
DP: It’s mostly row crop farms—corn, wheat, soybeans, rice—between 500 and 1000 acres in size, and they’re mostly in the US so far. But we’re also seeing quite a few smaller farm and ranchers, and we’re starting to hear from farmers overseas.
MF: How are you reaching these people?
DP: The amazing thing is that we haven’t really done any sales or marketing yet. People are hearing about it and coming to the website to sign up.
MF: How many acres do you project you need to reach a trillion tons of carbon sequestered?
DP: There are 3.6 billion acres of cultivated land on earth. If you took everyone of those from the current average of about 1 percent soil carbon to about 3 percent, that would equal a trillion tons. It is not necessary to get every acre because some acres will get above three percent, and the 3.6 billion doesn’t include grazing land, which is an even larger number of acres that also has potential to absorb carbon. So there’s a number of ways to get there.
MF: Farmers signed up to produce carbon credits is one thing, buyers of carbon credits is another. Are you attracting customers at a similar scale?
DP: That is a dilemma that is high on my mind. The challenge is how do you get to critical mass on both sides. We’re talking to companies that are already buying carbon credits from other markets, and we are also thinking about how to engage the consumer in a way that is transactional, so that they’re offsetting the carbon emissions of their purchases at the time the purchase is made.
MF: Would that be focused on food products? Perhaps a label that says this bag of bread was produced from wheat grown with X practices, and sequestered X amount of carbon in the process—that kind of thing?
DP: That is something that we’re considering, like a certification that verifies we’ve looked at the carbon footprint and they have offset more emissions than were produced in the creation of that product. I don’t think that would’ve worked 10 years ago because there simply wasn’t enough awareness and urgency around climate change. It probably wouldn’t have worked 18 months ago, but it seems likely that it will work today because people are more and more concerned and willing to pay for solutions.
MF: Some of the existing carbon markets around the world are run by government authorities. Yours is a private market approach. Do you see any role for governments to play?
DP: If we’re going to sequester a terraton of carbon and we believe the appropriate price for that is at least $15 a ton, then that’s a $15 trillion problem, and it’s likely that we’ll need to get governments involved to be able to meet that kind of a financial requirement. As governments start to look for real solutions to climate change, there are only a couple of things that rise to the scale of the problem. One of those is planting trees and maintaining forests. The other is sequestering carbon in agricultural soils.
MF: In terms of getting governments involved, are you referring to cap-and-trade systems?
DP: Yes, or carbon taxes. Or it could be we simply decide that we’re going to pay farmers to provide this service.
MF: In other words, a subsidy? That would probably be the more politically expedient approach.
DP: I’ve spoken with members of congress on both sides of the aisle and I think it is potentially a bipartisan topic. Those who are worried about climate change like the idea for environmental reasons and those who are concerned about farmers’ livelihoods like it for economic reasons. So it’s possible something can be done sooner rather than later.
MF: Previous efforts at agricultural carbon markets have fallen flat. How do you see yours as different?
DP: The biggest thing that has held up agricultural carbon markets in the past is figuring out how to verify that carbon is being sequestered at a cost that doesn’t eat up all the value of the carbon credit—the labor costs were just too large relative to the value of a credit. We’re addressing that by using remote sensing technology. We bought a satellite software company last year so we can remotely monitor fields to see things like whether there is a cover crop growing or if they’re using no-till practices. We’ve combined that with tools that allow the farmer to put in a lot of the data themselves and we can also tie into sensors on their planters and harvesters.
MF: Sounds like the idea is to use all that data to extrapolate the amount of carbon sequestered. But how do you know for sure that the numbers are right?
DP: We do an initial soil sample to get a baseline of how much carbon is in the soil. Then a combination of data collection and modeling is used to project how much carbon is being sequestered. And we do periodic soil samples to see how reality matches the model, adjusting it up or down as needed. So it still requires some human presence on the farm, and there’s some costs to us there, but when you put it all together we can provide verification for about $5 an acre, and we see a path to getting it down to less than a dollar an acre over the next couple of years.
MF: The beautiful thing about sequestering carbon in the soil is that it’s literally the same thing as building healthy topsoil, which is the basis of sustainable agriculture. If you’re successful in sequestering a terraton, how would that change what agriculture looks like on a global level?
DP: If regenerative agriculture were to become the predominant form of food production, we estimate synthetic fertilizer use would be cut by more than half and chemical pesticides would probably be reduced by 90 percent or more. We’re still trying to work it out the impact on water use, but we think it would be between 25 and 50 percent less. And there are all sorts of ancillary benefits. Runoff from fields would no longer be full of silt and synthetic fertilizers, so you’d get fewer algae blooms in lakes and fewer dead zones in oceans. You’d get healthier food because there would be fewer pesticide residues and the increased microbiological life in the soil would make more nutrients more available to crops.
MF: In other words, a carbon market, if successful, is actually a way to subsidize a mass transition to sustainable agriculture.
DP: And farmers will have another income stream, including in the developing world. Farmers in places like India will have a valuable new export, a source of cash they don’t have available to them today.