Farmers may reap payments from no-till conservation practices.
A hidden crop exists in the rich fields being no-tilled across the Midwest. And unknown to many farmers, a concerted effort is underway to harness that crop.
The crop is carbon, and it holds very big potential. The most modest estimate of the carbon value to a farmer using no-till is $5 to $7.50/acre while the most optimistic estimates run $50/acre. Proponents of the new crop envision carbon being traded on the Chicago Board of Trade alongside corn and soybeans.
A lot must happen before the carbon crop becomes reality. But the wheels are turning and a program may reach the farm in a few years.
Decreasing greenhouse gases. The carbon program relates to the global issue of greenhouse gases. Many countries, including the U. S., have agreed to reduce greenhouse gases sometime in the next decade.
Carbon dioxide is the most prevalent greenhouse gas. It is produced naturally and by humans through the burning of fossil fuels, deforestation and conventional plowing. However, reduced-till practices can prevent the production of more carbon dioxide than it produces. The soil's ability to store or sequester carbon and start carbon dioxide from developing has captured people's attention.
"This represents an enormous opportunity for American agriculture," reports Richard Sandor, chairman of Environmental Financial Products, Chicago, IL. "I think the trading of carbon allowances provides the farmer the ability to grow one crop on top of the soil and another crop below the soil. And they will get paid to do something with positive social benefits."
Sandor, recently named senior adviser for Price Waterhouse Cooper on greenhouse gas trading, is helping design a carbon trading system to buy and sell carbon. Farmers who store carbon would sell their carbon sequestering abilities to industries or companies not in compliance with carbon dioxide standards.
The carbon trading system is being patterned after the sulfur dioxide market created four years ago, which Sandor helped develop. Basically, the sulfur market involves companies like public utilities that are unable to comply with sulfur dioxide emission standards. The non-complying utilities purchase emissions rights from other utilities with emissions levels below the standard.
Last year, $3 billion in sulfur allowances were traded on the market. "This is more than 50% of the value of the U.S. wheat crop," Sandor says. "Carbon would be the largest of all. Our estimate is for $4 to $6 billion additional net-farm income nationally from carbon."
Circle of life. Carbon is stored or sequestered in the soil through no-till and minimum-till farm methods. Converting cropland to grass or trees, restoring wetlands, and conservation buffer practices also promote carbon sequestration.
Trite as it sounds, carbon is part of the circle of life. Plants extract carbon dioxide from the air and change it to oxygen and carbon through photosynthesis. The carbon is incorporated into plant tissues and oxygen released into the air.
When plants die, decomposition releases carbon dioxide again, unless decay is delayed or the carbon stored in the soil. No-till planting and crop residues delay decomposition and leave more carbon for soil storage. In the meantime, carbon builds soil quality.
Farm conservation groups support carbon sequestering as a way to increase conservation practices. Adoption of conservation practices like no-till has stalled over the last few years at about 37% of U.S. crop acres. Carbon sequestering could provide an additional incentive to encourage more farmers to adopt no-till methods.
How much carbon. Before a carbon market can begin, scientists must determine how much carbon is sequestered in soils by different conservation methods. Several conservation groups are trying to do this in a program called the Iowa Carbon Storage Project. Currently, historical conservation data from all Iowa counties is being analyzed by a computer simulation model at Colorado State University. The university's Natural Resources Ecology Lab designed the special computer model called Century. The model was tested a year ago with conservation data from five Iowa counties.
Once the carbon analysis is complete, the results will be used to show agriculture's potential for carbon sequestration. Right now, agricultural soils are not included as a solution to carbon dioxide emissions in the global greenhouse gas discussions, according to Tim Kautza, National Resources Conservation Service. This winter, the U.S. and other countries involved in the greenhouse gas talks will meet again. The U.S. plans to provide the Iowa carbon information in hopes that ag soils will be included as a carbon sequestering option.
Some of the groups involved in the Iowa project are the National Resources Conservation Service, U.S. Department of Energy, EPA, Conservation Districts of Iowa, and the Iowa Department of Agriculture and Land Stewardship.
A carbon market. Meanwhile, Sandor and his company are working for clients to develop a protocol for carbon trading. "All the work we've done is aimed towards creating a commodity in just the same way that the Board of Trade defines USDA grain standards," he says. "I can easily foresee carbon sitting side-by-side with corn futures and the hedging of this commodity along with traditional commodities.
"A utility, instead of reducing its own emissions, may find it profitable to offset its emissions by buying rights from farmers," he adds. "The farm soils would be the oxygen factories or carbon sinks."
The details of trading carbon are still being worked out. These include who has rights to the carbon sequestration value, length of the contract, how the tillage practices are verified, and how the program is monitored.
Another question yet to be answered is who will represent farmers when selling the carbon allowances. Sandor says he expects farmers will work with groups like a cooperative to sell carbon rights. "The co-op would certify that the carbon was sequestered in the same way it buys beans or corn," he explains. "It will take years. But we're beginning to see lots of local groups interested." Some of those interested include state Farm Bureau groups.
Worldwide, several carbon markets are being set up, including the United Kingdom and Australia. Major global companies like Royal Dutch Shell and British Petroleum anticipate carbon trading and are remodeling to reduce carbon emissions, according to Sandor.
No doubt, the groundwork being conducted for U.S. agricultural soils could help farmers capture some monetary values while cleaning up the air.