Carbon Farming and Carbon Credits

What carbon farming covers

Carbon farming is any change in farm management that either takes carbon dioxide out of the air and stores it, or cuts the greenhouse gases a farm releases. On cropland, storage mostly happens in soil organic carbon, built up through practices such as no-till or reduced tillage, cover crops, longer rotations, compost and better grazing management. Trees add a second store, through agroforestry, shelterbelts and planting on marginal land.

Emission cuts count too. Using less nitrogen fertilizer, or applying it more precisely, reduces nitrous oxide, a strong greenhouse gas. Livestock farms can reduce methane through feed, manure handling and herd management. The FAO estimates that agrifood systems emitted 16.2 billion tonnes of CO2-equivalent in 2022, about 30% of global greenhouse-gas emissions, which is why buyers and governments are paying attention to farms.

How farm carbon credits work

One carbon credit represents one tonne of CO2-equivalent removed from the atmosphere or kept out of it. For a farm to earn credits, a project has to show four things:

• A baseline: what the farm’s emissions and soil carbon would have been if nothing had changed.
• Additionality: the practice wouldn’t have happened anyway without carbon finance.
• Permanence: the stored carbon stays put, usually backed by a commitment lasting many years.
• Measurement, reporting and verification (MRV), checked by an independent auditor.

Verified credits are issued by a registry under a published methodology. Voluntary-market soil projects commonly use Verra’s VM0042 methodology for improved agricultural land management; our explainer on what VM0042 requires goes through it. Australia runs a government scheme, the Australian Carbon Credit Unit Scheme, administered by the Clean Energy Regulator. Most farmers don’t deal with registries directly; a project developer aggregates many farms, handles the paperwork and shares the revenue.

Types of carbon farming programs

Carbon farming programs differ in who pays and what they pay for:

Read the contract closely before signing. Check the length, who owns the credits, what happens if you sell or lease the land, what data you have to share, and what you owe if soil carbon falls. If anything is unclear, have a farm lawyer or adviser read it before you sign. Our guide to carbon credits for farmers in the US, UK and Australia compares the options by country.

Carbon farming pros and cons

The practices behind carbon farming often pay for themselves through better soil, so the carbon income can be a bonus on top. Cover crops and reduced tillage tend to improve soil structure and water holding over a few seasons, and more precise nitrogen use cuts a real cost as well as emissions. Buyers in food and fiber supply chains are also starting to ask for lower-carbon supply, and a farm with records of its practices is in a stronger position in those talks.

The risks are mostly about money and contracts. Income per acre is often modest once the developer’s share and verification costs come out. Contracts can run for decades and may follow the land if you sell it. Soil carbon builds slowly and can be lost again in a drought or after a return to tillage, and some contracts make you repay credits if that happens. New practices also carry a learning cost: yields can dip for a season or two while you adjust.

Our article on the disadvantages of carbon farming looks at the downsides in more detail.

Measuring soil carbon

Soil carbon is the hardest part of any project to measure. It varies across a field and with depth, and it changes slowly, so a project has to separate a real change from sampling noise. Most use soil cores taken at fixed points, analyzed in a lab, combined with models that estimate change between sampling rounds.

Satellite data helps with the mapping and the in-between years. Our farm carbon footprint service maps soil organic carbon by zone across each field and tracks it over time, sets out baseline emissions, and keeps the records on a blockchain, which supports carbon credit projects that need verifiable data. It sits alongside the soil sampling a methodology requires and doesn’t replace it. In practice the maps are most useful for deciding where to take cores, so samples cover the real spread of soil carbon in a field, and for showing which zones are moving between sampling rounds.