Carbon credit revenue might not be enough to offset costs to implement BMPs in Alberta: report
June 14, 2022 By Top Crop Manager
A paper released June 14 from the Simpson Centre at the University of Calgary’s School of Public Policy has examined how Canada’s environmental policies have been effective so far in mitigating or reducing on-farm greenhouse gas (GHG) emissions.
Progress toward the emission reductions in Canada’s agriculture industry is voluntary for farmers and ranchers and relies mainly on the adoption of best management practices (BMPs) under agricultural carbon offset protocols. Credits are sold on the market to regulated emitters who have not met their emission reduction requirements.
The paper, authored by Sarah Van Wyngaarden, focuses on Alberta, where four agriculture-based protocols out of 19 total are based.
The paper states that an analysis of the estimated revenue gain for farmers from the sale of carbon credits, considering an average farm in Alberta, reveals that the revenue per acre may not be enough to offset the potential costs required to implement BMPs, and that the carbon offset market only offers a small incentive to producers who participate, potentially imposing a barrier to participation.
However, the results suggest that the true economic benefits are from the actual implementation of the BMPs themselves. For example, a recent study of the Nitrogen Emission Reduction Protocol (NERB) reveals that while carbon credit revenues provide incentives to farmers, the forecasted revenue from implementing 4R stewardship alone offers more revenue per acre.
The report also stated that there have been minimal participation rates, outside of the conservation cropping protocol, which it called “troubling.” For example, two livestock-related protocols have a maximum of five farmers participating in some projects. Additionally, a number of past protocols were revoked for various reasons. The conservation cropping protocol was retired Dec. 31, but the report stated that the high participation rates, including numerous farms adopting reduced or no-tillage practices, are encouraging.
A key step, the report says, is understanding why farmers are participating or not participating in the market despite low economic impact of carbon credit sales.
Read the full report here.