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Small farms, big job: Feeding the world against all odds in the Nilgiris, in the state of Tamil Nadu, Southern India. Photograph by P. V. Sundareshwar
Next week the world’s attention will be focused on Egypt, as representatives from over 195 countries, civil societies, the private sector, as well as activists and observers gather yet again at COP27. They share a common goal: to attempt to deliver progress for the people and the planet in the face of a changing climate. The need for immediate and meaningful action cannot be overstated, especially because prior actions by members to reduce emissions as part of their Nationally Determined Contributions (NDC) have fallen significantly short of what is needed to achieve the targets for 20301.
With more than 30 years of experience in environmental, social, and governance (ESG) issues including assessing climate change impacts and risk mitigation in domestic and international markets, I believe that in order to achieve meaningful action on the ground, the parties must tackle head-on two thorny but critical issues:
- Ensure that finance flows are consistent with a pathway towards low greenhouse gas emissions and climate-resilient development, and
- Provide clarity on Article 6 of the Paris Agreement and how they plan to achieve their NDC commitments via market mechanisms.
Current approaches have focused heavily on government-to-government solutions. While I firmly believe that parties must not reduce the ambition of their direct actions, to speed up the finance flows and facilitate immediate and meaningful action, parties must also embrace the private sector and market-based solutions more directly, as alluded to in the recent report by the Standing Committee on Finance2. One way to achieve this is to set up policy frameworks and infrastructure to leverage the growing Voluntary Carbon Market (VCM), especially for sectors that often have limited government funding to incentivize the adoption of climate-resilient behavior or practices.
For example, despite climate change exacerbating global food insecurity and threatening the livelihood of farmers - not to mention that the agriculture sector itself contributes over a third of GHG emissions globally - the pace of adoption of climate-smart agricultural strategies has been slow. Agriculture has a big potential to mitigate emissions and store carbon, yet farmers who face the brunt of climate change are often locked out of the emerging opportunities to participate in a growing climate change mitigation market. It is especially true for farmers in the Least Developed Countries (LDCs) and developing economies where the incentives and access to resources and tools for the adoption of climate-smart strategies remain low, while operational barriers for scaling up these strategies remain high. With a third of the world’s food coming from small household farms that are under five hectares3, the world can ill afford to slow-walk their inclusion in market-based solutions to promote climate-resilient sustainable development.
A major barrier to scaling even well-accepted climate-resilient strategies that governments have faced is the absence of a framework to incentivize farmers and ensure that the strategies are deployed in a consistent and verifiable manner across the globe. True to the nature of market-driven innovations, the VCM has spurred advancements that now make it possible to scale up such strategies that can drive real benefits to the stakeholders. One such innovation is Carbon by Indigo, a novel approach to incentivizing carbon farming that generated the world's first registry-issued agriculture carbon credits at scale, launched by Indigo Ag - a science-based company that is improving the sustainability and profitability of the agriculture industry.
Government action and market-based solutions are not mutually exclusive. The governments must leverage the VCM to mobilize private sector finance; working with registries and other bodies to adopt unambiguous policies that consider VCM equities to facilitate projects that are additional, credible, and viable. This will ensure that everyone follows the same rulebook and, importantly, will shore up public confidence in market mechanisms for climate-resilient sustainable development.
On the other hand, VCM players such as project developers, registries, and companies purchasing the credits must operate transparently, and work with host governments to help meet their NDC commitments. As the VCM commits to the generation, sale, and use of real, verifiable, and permanent offsets, so must it ensure that the benefits to the local stakeholders are real, verifiable, and permanent.
Carbon by Indigo is doing just that, having delivered real benefits at ($30/tonne of CO2e) to hundreds of farmers in the US, for adopting climate-smart farming practices that reduce farm emissions and store soil carbon over thousands of acres. Farmers are guaranteed at least 75% of the revenues from sales of the credits they generate, thus ensuring they remain the primary beneficiaries of the market activity.
Bringing additional revenue to farmers in LDCs and developing economies will undoubtedly contribute to their resilience, while enhancing their productivity due to the multiple benefits of soil carbon. Countries can stimulate this process by adopting VCM-aligned policies and keeping sectors such as agriculture outside the ambit of more complicated/onerous regulatory and compliance market.
The Paris Agreement commits to public-private partnerships (PPP) in addressing climate emergencies and promoting sustainable development. It is time that parties transform this PPP into a triple-bottom-line that also stands for “Planet, People, and Profits” leading to durable solutions.
Interested in being part of the solution to scale innovations that promote sustainability and profitability? Please join myself and my colleagues at COP 27 to talk about "Scaling Global Agricultural Soil Carbon Markets" at the International Emissions Trading Association's business hub gathering in the Blue Zone on November 9th at 4:30 – 6:00 pm (Cairo time). This event will be livestreamed via Zoom, see details below:
When: Nov 9, 2022, 10:30 am ET
Topic: COP27 Livestream - Indigo Ag
Please click the link below to join the webinar:
1 United Nations Environment Programme (2022). Emissions Gap Report 2022: The Closing Window — Climate crisis calls for rapid transformation of societies. Nairobi. Emissions Gap Report 2022
2 Four New Reports Set Scene for Discussions on Climate Finance at COP27 | UNFCCC. Accessed November 02, 2022
3 Sarah K. Lowder, Marco V. Sánchez, Raffaele Bertini, Which farms feed the world and has farmland become more concentrated? World Development, Volume 142, 2021, 105455, ISSN 0305-750X