The Big Money In Carbon-Negative Ag

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On this week’s deep-dive, we talk about:

The Big Money In Carbon-Negative Ag

If you’ve ever thought about taking off the dress shoes to don some boots, now’s the time.

We’ve talked about regenerative farmers turning profits while healing land, but today we’re breaking down a new way to monetize a rewarding mission:

Selling the carbon you sequester while growing food.

Changing Tides

Historically, farmers and ranchers had few incentives to pay attention to what was going on beneath their feet.

Between subsidies and supply chain bottlenecks, the agriculture industry morphed into a behemoth dominated by pesticides, monoculture, and feedlots — techniques that are good for quickly producing food but bad for soil health, emissions, and long-term food security.

Now, the tides are changing. People are starting to ask, “Why would we use methods that destroy the soil we use to grow food?”

A general consensus, led by younger consumers, is building towards the golden rule of land management — leave it better than you found it.

And for the farmers and ranchers that walk the talk of that golden rule, rewards aren’t limited to the moral or ethical.

If regenerative agriculture is the proverbial sundae, carbon markets are the cherry on top.

How can you take advantage?

Catch Carbon, Print Dollars

Carbon trading, on a simple level, is the buying and selling of metric tons of carbon.

Why does anyone trade carbon?

Some governing bodies, such as the EU, are attempting to legally limit emissions. Any polluter must purchase permits from the government to offset how many greenhouse gases they produce every year.

It costs money, so they’re incentivized to emit less.

But sometimes, the polluter exceeds the legal limit set by the government. To stay on the right side of the law, they have to purchase carbon offset credits to decrease their net emissions.

What are carbon offset credits?

When someone reduces or sequesters 1000 kilograms (a metric ton) of carbon dioxide (or an equivalent volume of another greenhouse gas) and registers that number with a certification group, they earn a carbon offset credit.

The holder of that credit can then sell the offset to a buyer, typically the polluter we talked about earlier.

Over time, these government-led initiatives spread into private industries. Companies that want to say they’re “carbon-neutral” can purchase voluntary offset credits to bring their net emissions to zero.

As a result, the marketplace is packed with buyers and short on sellers. Currently, the global carbon market is valued at around $2 billion. In the next 8 years, it’s expected to grow 5x.

Regenerative Carbon Farming

Regenerative ag practices don’t need carbon credits to be profitable. The math already shows techniques like cover cropping, no-till, and mob grazing balloon a farmer’s bottom line.

But if you’re going to put in the work to grow better food, you should reap the benefits of this new marketplace.

Every step in a regenerative farmer’s journey is another opportunity to print more carbon credits.

Here’s a real-life example from a ranch in Texas:

• Loy Sneary owns a 10,000-acre ranch that used to let cattle graze wherever they wanted

• Six years ago, he transitioned to a regenerative grazing operation that moves cattle to new paddocks every day and periodically seeds native grasses

• Two years ago, he registered his ranch with a carbon credit certification program

• With carbon credits selling at $20-$30/metric ton, Sneary makes an additional $500,000 every year. In two years, he pulled in another 7 figures without changing his business.

Here’s another thing to keep in mind: it’s early.

Rules are evolving, but the number of carbon-credit buyers is only growing. If expectations prove accurate, Sneary’s ranch will pull in an additional $2.5 million annually by 2030.

Not every regenerative farmer produces livestock, and that’s okay. Trees, cover crops, and no-till practices all pull carbon from the air and trap it in the soil.

Here’s the exciting math:

Every 1% change in soil organic matter (SOM) on a single acre, measured 8 inches deep, adds 8 metric tons of carbon. On a tiny 100-acre hobby farm that manages a 1% increase in SOM, that equals a paycheck of ~$20,000.

Seems like a nice bonus for responsible land management.

Have questions? Leave a comment!

See you next week, fellow earthlings.

— Permacultured

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