The role of soil in our everyday lives cannot be overstated, especially in the fight against climate change. Its ability to store carbon for up to a millennium is now being leveraged to create a new market: soil carbon credits. Despite optimism, however, significant scientific and social uncertainties remain to be addressed.
—
As pressure mounts on corporations to take meaningful climate action, carbon markets have emerged to encourage emission reductions and removals through both mandatory and voluntary participation. In compliance markets, such as Emissions Trading Systems (ETS), governments set limits on CO2 emissions from specific industries. Companies that emit less than their allocated allowance can sell their surplus to companies that exceed their limits. In voluntary carbon markets (VCM), emission removals and reductions are sold as carbon credits, with each credit representing one tonne of CO2.
Soil carbon credits (SCC) are tradeable certificates earned by farmers and landowners who implement practices that increase carbon sequestration in the soil, reducing emissions. There is currently growing optimism about carbon credits as a practical strategy for achieving net-zero emissions, particularly among governments, corporations and financial institutions. However, this market intervention remains highly debated, given ongoing uncertainties about the reliability of soil as a source of tradeable credits, both now and in the future.
You might also like: Explainer: What Are Carbon Credits and How Do They Work?
The Science of Soil Carbon Credit: Carbon Sequestration
Soil carbon sequestration refers to the process by which soil captures and stores carbon. The accumulation of carbon in soil can be attributed to microbial catabolic (breakdown) and anabolic (build up) processes. Soil organisms process organic inputs such as plant litter, root exudates, crop residues, and microbial necromass into soil organic carbon (SOC). A healthy soil ecosystem enhances the formation and stabilization of SOC, as it provides a habitable environment for the organisms that are actively involved in carbon sequestration.
In agricultural soil, sustainable agricultural management practices such as regenerative agriculture play a major role in protecting and stabilizing SOC. These practices build SOC by adding organic matter and reducing microbial respiration, the primary driver of SOC oxidation to CO2.
Beyond offsetting greenhouse gas emissions, these practices also benefit soil health. For example, cover cropping and no-tillage help protect the soil from erosion and build healthier soil through increased organic matter. The addition of organic matter provides energy for soil organisms, which are essential for rebuilding soil ecosystems and maintaining soil structure.
The growing interest in carbon farming can be attributed to its positive impacts on soil health and food security, particularly as agricultural systems become increasingly vulnerable to climate change. These benefits are now being used to strengthen the business case for soil carbon credits in carbon markets.
Where Science Meets Economics
The economics of soil carbon credits are based on accounting for the positive externalities of agriculture by financially rewarding farmers who adopt sustainable agricultural practices. A proportion of revenue from the sale of soil carbon credits in voluntary markets is typically paid to farmers who have provided these credits through carbon removal or emission reductions.
Soil carbon credits can be seen as a market intervention tool, designed to address imperfections in agricultural markets that often reward unsustainable agricultural practices due to short-term advantages, such as higher yields, or in some cases, lower operational costs. They also enable farmers to diversify their income by trading a new commodity: carbon.
If the negative externalities of unsustainable agricultural practices were accounted for, food from soil-degrading, high-emission systems would be significantly more expensive than food with less environmental footprint. In a perfect market, true-cost pricing would increase demand and supply of sustainable food, as consumers are price-sensitive, though their responsiveness varies. However, the opposite is true as a result of market imperfection. Advocates of soil carbon credits argue that revenue from the market can serve as a financial incentive for farmers to look after the environment, which is a public good, in the economic sense. When appropriately financially compensated, farmers do not have to bear the full cost of protecting a public good from which everyone benefits.
In voluntary carbon markets prices are primarily determined by the quality of the credits, which is often assessed by verification bodies. Attributes such as non-permanence, additionality and measurability are key in determining quality. Once credibility is established, supply and demand then shape market price. Credits that are deemed more credible are usually of higher price as they take into account the higher demand and the positive externalities of sustainable agricultural practices.
Why Soil Carbon Credits Remain Highly Controversial
The concerns surrounding soil carbon credits can be grouped into two categories: scientific and technical; and social and ethical.
Scientific and Technical Issues
Carbon offsetting, both in the compliance and voluntary markets, remains highly debated. When focusing specifically on soil carbon credits in the voluntary market, the debate intensifies around recurring scientific and technical issues, which continue to generate skepticism.
One major cause of uncertainty in soil carbon credits stems from the complexities of measurement and the lack of standardized methodology. For example, some measurements do not account for equivalent soil mass, which can result in inaccurate estimates of SOC stocks. Further complexities arise from the dynamic nature of carbon as it is difficult for current measurement technologies to capture the movement of carbon from the labile (easily decomposed state) to a recalcitrant state (a more stable state) and vice versa. These limitations mean that carbon markets may not fully reflect the true dynamics and permanence of SOC, potentially resulting in greenwashing claims.
The challenges of carbon verification further increase the uncertainty surrounding soil carbon credits. For example, there is no universal standard for verifying soil carbon credits and it is also not mandatory in voluntary markets.
Social and Ethical Issues
While the economic rationale for soil carbon credits is compelling, social and ethical concerns highlight the need to carefully review market participation requirements and, importantly, to ensure adequate support for participants – particularly farmers, who are often the most vulnerable.
Firstly, the requirement of “additionality”, which mandates that credits must be generated from carbon removed or reduced from newly adopted practices, can often exclude early adopters of sustainable agriculture. At the same time, soil carbon sequestration eventually plateaus near saturation, further marginalizing farmers who have always implemented “carbon-forward” practices.
Secondly, high costs associated with soil sampling and verification can prevent smallholder farmers with less capital from participating, widening the gap with large-scale farmers, for whom it is easier to diversify income through credits. Critics also question the proportion of carbon credit revenues that actually reach farmers. Ensuring that farmers are adequately compensated for their role as suppliers of carbon removals and reductions is vital for the credibility and success of soil carbon markets. This fair compensation can enable farmers to increase their income and reinvest in sustainable agricultural practices.
Finally, in developing economies, concerns about land dispossession to facilitate carbon farming to generate soil carbon credits demand urgent attention. Safeguarding against such risks is critical for ensuring that soil carbon markets operate in a sustainable, fair and equitable manner.
The Bottom Line
The consensus remains that farmers should be compensated for the management of a public good – in this case, environment protection and food security. Alternatives to soil carbon markets should recognize that financial compensation or rewards are essential, particularly in the short term, to help farmers offset significant upfront costs associated with sustainable agricultural practices.
Despite concerns of reliability of soil carbon credits, their co-benefits, such as improved soil health and potential contributions to climate mitigation, make them an attractive option. Ultimately, whether they deliver true climate benefits depends on overcoming critical science, technical, social and ethical challenges.
This story is funded by readers like you
Our non-profit newsroom provides climate coverage free of charge and advertising. Your one-off or monthly donations play a crucial role in supporting our operations, expanding our reach, and maintaining our editorial independence.
About EO | Mission Statement | Impact & Reach | Write for us
