Biological Carbon Canada: Multiple carbon markets bring opportunities

Date:01-19-2022

By Matt McIntosh

Putting a price on carbon doesn’t have to mean taxes and credit trading, but even if it does, a little pragmatism could help farmers save money.

According to Graham Gilchrist, chief executive officer of Alberta-based non-profit Biological Carbon Canada, producers should consider what the continued development of a carbon market could do for their business.

Gilchrist spoke during a December 2021 presentation and roundtable discussion hosted by Haggerty Creek Ltd. and detailed four categories of carbon markets available in Canada.

Why it matters: The commoditization of carbon by companies and organizations could help farmers and ranchers find ways to save and earn money.

Regulated carbon markets pertain to levies charged to emitters by the government, whether provincial or federal. They are based on protocols that designate how to establish, measure and verify emissions, as well as how to retain or grow a carbon sink.

Emitters can either pay the levy or buy offsets from those not being regulated to achieve compliance. The latter strategy involves payments made to the producer for enacting, refraining from, or continuing specific practices such as reduced tillage. No government money is involved.

Volunteer markets are those developed by companies and organizations trying to achieve emission reductions. Like regulated markets, these are based on protocols identifying how to find and achieve reductions.

The sheer variety of weights and measures used by different groups, however, makes it challenging to navigate opportunities and risks.

“We’re dealing with proxies, estimates, good research and modeling, but it’s a far cry from the oil and gas patch [to the farm] where there are meters on everything that moves”, says Gilchrist.

“It’s coming out of a vacuum because to date it’s been very tough to get traction on discussion around weights and measures.”

He says there are groups trying to remedy the problem by developing general parameters for carbon markets.

Better security in transactions is also required. Unlike grain contracts or livestock manifests, for example, carbon markets leave producers vulnerable.

“Weights and measures from a government side, they are needed so there is a guarantee of quality, security in the transaction, and all those things,” says Gilchrist.

Supply chain food printing, where companies and organizations work with producers to ensure stable supply of a commodity as well as production data, comprises a third market.

To include a carbon footprint number on a box of cereal, for example, General Mills requires specific information from the grower.

The company may pay for the data in some way, but generally speaking, Gilchrist says enforcing compliance as a requirement for purchasing the commodity is more common. Non compliance means exclusion from the market.

Category four is a broad group comprising personal service agreements between organizations and landowners. The former pays the latter for a specific management strategy.

Payments made for the maintenance of wetland and other naturalized areas by Alternative Land Use Services and Ducks Unlimited are examples of organizations that use carbon pricing.

Gilchrist says it’s critical that producers and those offering agreements understand contracts in the same way.

“They all have market and contract risk… You’re getting paid for it but be clear on what you’re getting paid to do or not to do,” he says.

Gilchrist says the carbon market should not be viewed solely as a levy and credit system. Different companies, government and groups will want different things, and cannot be lumped together. Opportunities to change farm management are similarly diverse, ranging from creating carbon sinks to reducing field travel by a pass or two.

“Let’s be pragmatic…The levy is not the only game in town. All these other markets exist too. Agriculture will probably turn and move rather quickly on carbon if we were exposed instead of being exempt from all the emission levies on your farm.

“Carbon represents a brand-new market. When it shows up in your area there will be people showing up saying ‘I think we can do this.’ You have to dust off your farm management and take a look at some of this stuff.

“Greenhouse gas reduction is another profit centre, whether you like it or not. If you can sell something, good. If not, take a look at the production size…there are cost savings.”