The carbon credit dilemma in agriculture: Progress, pitfalls, and the future

Carbon credits have become one of the most debated tools in the global push for sustainable agriculture. The idea seems straightforward—pay farmers to sequester carbon through regenerative practices, then allow them to sell those credits to industries looking to offset emissions. But the reality is far more complex. As the system evolves, cracks are appearing in the form of verification issues, inequity, and questions around long-term sustainability. This article will take a closer look at the past, present, and future of agricultural carbon credits and explore why this seemingly promising solution is so controversial.

The early promise: Carbon credits take root

The global agricultural sector is responsible for approximately 19-20% of total greenhouse gas (GHG) emissions, primarily from methane, nitrous oxide, and land-use change . As pressure mounted on agriculture to curb its emissions, carbon credits emerged as a promising mechanism. Farmers could adopt practices like no-till farming, agroforestry, and cover cropping, which enhance soil's ability to store carbon, and be rewarded through carbon markets.

One of the first major initiatives to capitalize on this concept was Australia’s Carbon Farming Initiative (CFI), launched in 2011. By allowing farmers to earn credits for practices that reduced emissions, Australia aimed to create a scalable model for carbon reduction in agriculture. By 2019, the CFI had issued over 10 million carbon credits, bringing the agricultural community into the fold of climate action.

"We thought this would be the beginning of a new chapter in climate-smart agriculture." - Dr. Rattan Lal

In the U.S., platforms like Indigo Agriculture and Nori followed suit, promising farmers payments for soil carbon sequestration. A decade ago, this system seemed like a win-win: farmers were incentivized to adopt sustainable practices, while businesses could offset their emissions. “The idea of compensating farmers for good environmental stewardship was revolutionary at the time,” said Dr. Rattan Lal, a renowned soil scientist. "We thought this would be the beginning of a new chapter in climate-smart agriculture."

The cracks start to show

While the early promise of carbon credits attracted attention, significant cracks have appeared in the system. Critics point to the issue of additionality, which stipulates that carbon credits should only be awarded for practices that wouldn't have happened without the financial incentive. However, many farmers already using regenerative practices—long before carbon markets existed—find themselves left out of the system. “It’s incredibly frustrating to see those who have been doing no-till for decades overlooked in favor of newcomers,” said Tim Bardole, an Iowa farmer who adopted no-till in the early 1990s .

Bardole’s experience is not unique. A 2022 report by ProPublica found that many U.S. Midwest farmers had been practicing carbon sequestration techniques for years without recognition from carbon markets . These pioneers of sustainable agriculture feel penalized for their early adoption, as only incremental changes in carbon sequestration practices earn credits. This loophole creates an inequitable system where "late adopters" are often the only ones benefiting financially.

Additionally, the complexity of measuring soil carbon accurately has raised concerns. Soil carbon sequestration is highly variable and can be easily reversed by environmental factors such as drought, flood, or even a single tilling event. A 2022 Nature study found that many soil carbon credits overestimated their carbon reduction potential, with some delivering as little as 10% of their claimed impact.

Adding to the challenge is the inconsistency in verification. Different carbon markets have varied protocols, making it difficult to ensure that the credits sold are truly reflective of actual carbon storage. "If you can't verify it, you can't sell it," said Dr. Jonathan Sanderman, a carbon cycling expert, "and yet a lot of these credits are based on loose estimates, not robust, field-based measurements."

The future: Reform or replacement?

Despite these challenges, the demand for carbon credits in agriculture continues to grow, particularly as companies scramble to meet their climate commitments. However, the current system’s flaws have sparked debate over whether carbon credits can ever truly work in agriculture or if we need a different approach entirely.

Emerging technologies like remote sensing, AI, and blockchain are being integrated into carbon accounting systems to address some of these issues. Platforms like Regrow Ag use AI to provide more accurate, real-time monitoring of carbon sequestration in soils. Blockchain technology is also being employed to improve transparency in carbon markets, ensuring an immutable record of every transaction.

“Direct incentives would ensure farmers are rewarded without the volatility and complexity of carbon markets.” - Professor Timothy Searchinger

Yet, technology alone won’t fix the deeper structural problems with agricultural carbon credits. There are increasing calls to shift away from carbon credits as a primary incentive model for regenerative agriculture. Instead, some experts suggest direct government payments or subsidies. “Farmers shouldn’t need a market mechanism to be compensated for doing the right thing,” said Professor Timothy Searchinger from Princeton University, an expert in agricultural policy. “Direct incentives would ensure farmers are rewarded without the volatility and complexity of carbon markets.”

Critics also argue that carbon credits, particularly those used by corporations as offsets, serve as a distraction from the real issue—reducing emissions at the source. Carbon credits allow companies to "buy their way out" of reducing their own emissions, leading to accusations of greenwashing. “Offsetting should be the last step, not the first,” said Sanderman. “We need companies to focus on internal reductions, and only then should they be looking at offsetting what they can’t eliminate.”

What needs to change?

For carbon credits in agriculture to have a meaningful impact, several critical reforms are needed:

1. Tighter verification standards: Robust, standardized methods for measuring, verifying, and auditing carbon credits are essential. Current inconsistencies undermine the credibility of the entire system. As Dr. Lal notes, “We need uniform standards across carbon markets if we’re going to take this seriously.”

2. Reward early adopters: The system must evolve to reward early adopters of sustainable practices. If we continue only incentivizing new changes, we risk alienating the very farmers who pioneered regenerative agriculture. "We can't forget those who were ahead of the curve," said Bardole. "They deserve to benefit too."

3. Move beyond offsetting: While offsets have a role to play, they should not be seen as the primary tool for addressing emissions. A balanced approach that emphasizes emission reductions at the source, combined with responsible use of offsets, will be far more effective.

4. Diversified incentives: Governments should explore alternatives to carbon credits, such as direct subsidies, tax breaks, or payments for ecosystem services. A more diversified approach would create a more stable, equitable incentive structure, especially for small-scale farmers.

A path forward

The concept of carbon credits in agriculture once appeared to offer a simple solution to a complex problem. But as the system matures, its flaws are becoming increasingly visible. If carbon credits are to have a meaningful role in climate action, they need significant reform. As Lal aptly puts it, "The future of agriculture's role in carbon sequestration is bright, but only if we are willing to make the system fair, transparent, and science-based."

As we look to the future, one thing is certain: carbon credits alone are not a panacea for the climate crisis. However, with thoughtful reforms and a commitment to integrity, they could become one tool in a much larger toolbox for a sustainable agricultural future.

This article is also published on The Agritect Chronicles. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

References:

ProPublica report on Midwest farmers and carbon markets: ProPublica.

Rattan Lal interview and soil sequestration studies: Nature.

Carbon Farming Initiative data and analysis: Australian Government, Dept. of Agriculture.

Indigo Agriculture's carbon program: Indigo Ag.

Soil carbon overestimation study: Nature 2022.

Blockchain in carbon markets: World Economic Forum.

Jonathan Sanderman's research: Environmental Research Letters.

Timothy Searchinger’s critique of carbon markets: Princeton University.