Carbon markets represent a promising tool in the fight against climate change, offering a means to achieve net-zero emissions.
The U.S Department of Agriculture (USDA) has released a pivotal report titled “A General Assessment of the Role of Agriculture and Forestry in the U.S. Carbon Markets,” offering a thorough examination of existing market activity, obstacles to participation, and avenues for enhancing access to carbon markets for farmers and forest landowners.
This report marks the inaugural achievement of USDA’s commitments under the Growing Climate Solutions Act (GCSA), a legislation enacted on December 29, 2022, as part of the Consolidated Appropriations Act of 2023.
Agriculture Secretary Tom Vilsack emphasized, “The Biden-Harris Administration is working aggressively to ensure farmers, ranchers, forest landowners, and tribal communities have opportunities to be part of the solution to climate change, all while cultivating new revenue streams and fostering investment in rural communities. This landmark report demonstrates both the potential and the challenges that carbon markets present for agriculture and forestry.”
Carbon markets represent a promising tool in the fight against climate change, offering a means to achieve net-zero emissions. Farmers, ranchers, and forest landowners can earn carbon credits by adopting practices that mitigate emissions or sequester carbon on their land. These carbon markets may introduce new revenue streams through the sale of carbon credits, and purchasing these credits may aid companies in achieving voluntary greenhouse gas reduction targets.
The report identifies several hurdles that have impeded agricultural participation in these markets. Notably, farmers encounter limited returns on investment due to substantial transaction costs associated with carbon markets, including expenses for greenhouse gas quantification, verification, and reporting.
However, this candid assessment of barriers provides valuable insights for federal agencies, scientists, farmers, and partners to devise solutions that facilitate greater and more beneficial participation by farmers.
USDA is committed to bolstering confidence and landowner involvement in carbon markets. Ensuring the credibility of climate benefits in these transactions, backed by rigorous scientific support, is paramount to the success of carbon markets.
Earlier this year, USDA announced a $300 million investment as part of President Biden’s Investing in America agenda to enhance measurement, monitoring, reporting, and verification of greenhouse gas emissions and carbon sequestration in climate-smart agriculture and forestry. This initiative is critical for advancing climate-smart conservation activities and fortifying opportunities in carbon markets.
The next step in implementing the GCSA involves USDA’s decision on establishing the Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Program. This program aims to enhance technical assistance for producers keen on participating in carbon markets, along with establishing a process to register market verifiers.
This report complements the broader efforts of the Biden-Harris Administration to empower farmers in mitigating climate change and fortifying the resilience of their operations. Additionally, it capitalizes on the growing demand for climate-smart agricultural products.
In tandem with this milestone, USDA has reported swift implementation of President Biden’s Inflation Reduction Act, which stands as the largest-ever investment in combating climate change. This act allocates nearly $20 billion over five years to some of USDA’s most popular conservation programs.
The demand for Fiscal Year 2023 funding has tripled, underscoring the significance of these historic climate investments. As a result, USDA announced funding for a new program in August 2023, aimed at assisting underserved and small acreage forest landowners in accessing emerging voluntary carbon markets.
Under the Biden-Harris Administration, USDA is ushering in a transformation of America’s food system, placing greater emphasis on resilient local and regional food production, equitable markets for all producers, and ensuring access to safe, healthy, and nutritious food across communities.
This includes building new markets and income streams for farmers and producers through climate-smart food and forestry practices, substantial investments in rural infrastructure and clean energy capabilities, and a steadfast commitment to equity by dismantling systemic barriers and cultivating a workforce reflective of America.