6 Questions to Ask Before Signing Up for a Carbon Program

    December 15, 2021

    Carbon programs are popping up everywhere in agriculture. That makes deciding which program to participate in one of the hottest talking points for farmers right now. What questions should you ask to decide if a particular program is right for you? We asked a few Indigo agronomists, who work every day with farmers, to share some advice on what questions to ask yourself before signing up for a program.

    1. How long is your contract?

    Commitments are everything, especially with carbon programs. And the length of a program contract varies widely. Indigo’s carbon program, for example, has a renewable five-year contract. You will maximize earnings by staying in the program, but even if you choose to discontinue carbon farming with us, we will never ask for the money you’ve been paid back. In contrast, some carbon programs require a 20-year base commitment, or have “clawback” clauses, which mean a portion (or all) of the revenue you have earned will need to be returned. 

    Of course, no company wants you to leave a carbon program; carbon credit buyers are paying for permanent, not temporary, carbon sequestration. But farmers need flexibility. Nate Platt, a crop production specialist at Indigo that a shorter contract is better received by farmers. It allows the farmer to stay in control and better aligns with the longevity of a farming operation. “I was just talking to a grower whose family has been farming the same land for 110 years,” he says. “A 20-year commitment felt far too long for them.”

    2. Are you paying for practice adoption or carbon sequestration?

    Some companies offer you payment for the practice changes themselves, but not the actual carbon sequestered. That’s different from how Indigo does it. “We’re actually paying for the amount of carbon sequestered in the soil, and we measure it carefully,” says Platt. “Some companies simply estimate how much carbon was sequestered and don’t attempt to verify it, whereas Indigo uses advanced modeling to accurately measure carbon levels and has a third-party verify our findings,” he explained. This difference affects how carbon credit buyers view carbon programs. Companies that make claims about reducing their carbon footprint want to ensure that the offsets they are buying are legitimate and conclusive. They get that with Indigo’s program.

    Want to see if Carbon by Indigo is right for your operation? Calculate how much  you could be earning.

    3. Are carbon credits issued by a registry? Who’s buying them?

    How can you tell if you’re generating the most income for your carbon farming effort? You need to understand if you’re producing real carbon credits that corporations will buy, or if you’re just producing something the carbon program is paying for out of its own pocket. 

    This comes down to a simple question: are carbon credits being issued by a carbon registry? If the answer is yes, your carbon farming efforts will be rewarded by the market’s rising demand for carbon credits. If the answer is no, then you won’t capture the full income opportunity as carbon prices rise, and the carbon program operator’s incentives actually conflict with yours. Platt notes, “If you look at the carbon programs that are purchasing their own offsets, they’re wanting to purchase as cheaply as possible, because your income is their cost at the end of the day. They’re not on your side; they’re sitting across the table from you.” 

    Often carbon programs go this route if the credits they’re producing aren’t up to carbon buyers’ standards. It all comes down to the quality of the carbon credit, and this depends on the scientific rigor of the program. Indigo uses highly accurate methodologies that have been approved by the two preeminent carbon registries, and have cultivated a network of corporate buyers with purchase commitments for those credits. 

    Through the recent acquisition of soil analysis and carbon modeling leader Soil Metrics, Indigo has continued to show its continued commitment to generating high quality carbon credits for farmers to sell to buyers.

    4. What are your payment terms?

    There will be a split between the money you are making off the carbon credit and the money that goes to the organization running the carbon program. Andrew Esser, an agronomist working with Indigo, shares, “Make sure you find a program where it’s clear how both you and the organization you’re working with are getting paid – and exactly when.” 

    Indigo’s program, for example, offers a revenue share where farmers always receive at least 75% of the carbon credit sale price; the remaining 25% helps Indigo operate and continuously improve the quality of our agronomic support, soil carbon modeling technology, and software for data submission and land management education.

    5. Have you actually paid growers – and in cash?

    Esser and Platt both say this is one of the most common questions they hear from farmers. It makes sense; you need to know whether the carbon program you’re working with will be able to follow through. Be careful: if the company says “yes,” make sure to ask how many growers have already gotten paid, and how they got paid. “You’ll see out in the marketplace, there are what might be considered ‘show pony versions’ of payments,” warns Platt. He recommends growers be wary of PR-oriented activities “where growers hold big checks or the carbon provider puts on a big event to pay someone who is influential in a particular area.” He also encourages growers to ask carbon program operators if they make actual cash payments or if the payments are just credit towards future purchases with that company (or some type of other non-cash compensation).

    6. Does the program offer agronomic support?

    Esser says you’ll want to ensure the program you choose provides agronomic support, especially as you adopt new practices to sequester carbon. “There might be new equipment or new cover crops. There can be a fair amount of learning involved,” he says. Platt agrees and adds that right now, agronomy support is the most important aspect of choosing a carbon program. “We believe the program we’ve built,” Platt says, referring to Carbon by Indigo, “is the most grower-friendly one in the market. But no matter what you choose, we highly recommend you get guidance and support from either your carbon program or your preferred agronomist. Get started now so you can produce the most possible carbon credits when prices are even higher in the future.”

     

    Photo by Andrew Esser. Follow him on Twitter @AgronomistEsser.

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