Environmental group, Friends of the Earth, which won a landmark court case against Royal Dutch Shell last year, is targeting 30 other firms with operations based in the Netherlands.
Last May, they won a landmark victory over Shell and forced then to decrease its environmental impact.
This time around they want significant reductions in greenhouse gas emissions in these large organizations.
Letters were addressed to the CEOs of some of the largest banks, retailers, oil, energy giants, builders, and industrial manufacturers.
The letter requested the firms present plans describing how they will reduce carbon emissions by 45% from 2019 levels by 2030.
Failing to do so may result in legal action and they have set a 3-month deadline for the corporations to present a climate plan, which is due on April 15.
“We have made it plain that, if necessary, we are willing to go to court. But, of course, we hope that these businesses will go on their own ” spokesperson for Friends of Earth stated
They will be used to establish an emissions baseline against which progress in reducing climate-heating gases can be monitored, according to the group.
Through carbon capture, SpaceX CEO Elon Musk announced a program to create rocket fuel. He is even offering a $100 million Carbon Removal X-Prize for new carbon capture technologies to help make it happen.
Elon Musk is the founder and CEO of SpaceX and Tesla.
Is there another reason behind SpaceX’s carbon capture program?
Many have criticized Musk for his space missions, saying these missions do little to benefit the Earth.
It is important to note that just one rocket launch emits over 300 tons of carbon into the atmosphere — staying there for years. Some flights are just six minutes long!
Musk believes that CO2 capture to use as fuel is the solution to:
1.) Improving the climate here on Earth; and
2.) Making a settlement on Mars possible (which is Musk’s ultimate goal).
Why is SpaceX offering a $100M prize for new carbon capture technology?
Believe it or not, making rocket fuel with carbon isn’t the tricky part. Capturing CO2 is, which is the reason behind the prize.
Direct air capture is so expensive that it can cost between $600 and $800 per ton.
To win, “teams must demonstrate a working solution at a scale of at least 1000 tons removed per year; model their costs at a scale of 1 million tons per year; and show a pathway to achieving a scale of gigatons per year in future.”
Does Carbon Capture work?
Not everyone is on board with carbon capture. Even Senator Bernie Sanders of Vermont, a strong supporter of green initiatives, is skeptical. Others are less focused on carbon capture technologies and more interested in the carbon credit industry, which is booming.
But Musk disagrees.
If capturing CO2 becomes more accessible and affordable, we can help life here on Earth while exploring space.
Musk is currently Time Magazine’s Person of the year.
Governments across the globe are working to reduce the amount of greenhouse gases (GHGs) released into the atmosphere by implementing stricter regulations and eco-friendly policies.
One of the ways this is taking place is through the creation of a “carbon offset” ecosystem.
Carbon offsets are valuable certificates that are issued when carbon dioxide is removed from the atmosphere—or prevented from being emitted in the first place. That can be accomplished through advanced extraction technology, through pumping it into rocks, or even just through planting trees.
The help of every farmer, rancher, and private landowner is necessary to produce enough carbon offsets to achieve the vision of global carbon neutrality—or at least come close. The good news is that anyone who owns or operates land can use the production and sale of carbon offsets to increase their profit margin while helping the environment.
Here are a few key takeaways from this article:
Producing and selling carbon offsets is finally becoming a lucrative business in the United States, and first movers will have a huge advantage.
Small farmers, ranchers, and landowners can earn additional revenue by optimizing their operations to produce carbon offsets.
Carbon offsets are transacted on the rapidly-growing but still complex voluntary carbon market.
How much a farmer, rancher, or landowner can earn per credit / per acre depends significantly on the location and the carbon offset project.
Numerous programs will now measure and pay for every ton of carbon removed from the atmosphere through carbon offsets.
Carbon offsets are essentially a tradeable certificate that proves that one ton of CO2 or the equivalent amount of one ton of another GHG has been removed from (or not emitted into) the atmosphere.
One carbon offset = one metric ton of carbon or other greenhouse gas (GHG).
If it’s difficult for you to gauge just how much a ton of carbon is, rest assured, you are not alone. After all, when most people think of a “ton,” they think of something physical, like a Volkswagen Beetle. But that is hard to do for a gas like CO2.
Think of a good ol’ fashioned fire extinguisher, like the one hanging on the wall in your office building or apartment. Put 500 of those together, and you’ve got one tonne of CO2.
Since it’s difficult to understand just how much a ton of carbon is, the term “carbon offset” gives emissions a manageable metric.
The concept of using carbon credits to measure emissions started in the early twentieth century. The decision to market them, however, didn’t begin until the 1997 UN Kyoto Protocol, the first international agreement to cut CO2 emissions.
Since then, carbon credits and their cousins, carbon offsets, have become a popular revenue generation tool for farmers, ranchers, and landowners.
Carbon Offsets Are a Brand New Financial Market
Carbon offsets have proven to be a robust and financially lucrative market across Europe, Australia, and Canada. The EU, for instance, is aiming to reduce emissions by over 55% by 2030, with zero emissions by 2050—and that can only be achieved with the help of massive carbon offset purchases.
The EU price on carbon allowances is more than €80/ton. And yet, high-quality carbon offsets can be purchased for less than $10/ton. For corporations that need to decrease the impact of their emissions, buying verified carbon offsets is a no-brainer. And that means huge income potential in the EU for people who quickly understand the market and how to use their land to produce carbon offsets.
The good news for U.S.-based landowners is that the entire spectrum of participants in the carbon offset market is also finally starting to mature in the United States. The federal government and state governments are passing stricter regulations that raise the cost of carbon emissions, and individual citizens are searching for ways to reduce their own carbon footprint.
Right now, the most significant carbon market in the U.S. is located in California, which has stricter environmental protection regulations than any other state. Most carbon offsets are also sourced from California through various land-use-related sequestration projects.
You may have heard it said that “California is the United States in ten years.” It could not be truer than in the case of carbon offsets. Right on schedule, states have begun following in California’s footsteps, implementing additional ecological compliance standards, carbon emissions limits, and taxes on carbon.
This new U.S. market comes with new financial incentives for landowners across the country to adopt more efficient agricultural operations and preserve their forested acreage. How much of an incentive? In 2016, $190 million in carbon offsets was transacted, representing 63 million tonnes of CO2. By 2019, offset transactions had almost doubled, accounting for 104 million metric tons of CO2—and worth $282 million.
Fast forward in 2023, the total volume of carbon offsets used (retired) by entities to compensate for their CO2 emissions hit almost 180 millions MtCO2e.
The “Forestry and Land Use” line is the one landowners should take note of. It’s an over half-billion-dollar opportunity that will have become even bigger by the time you read this. But what does the future look like for this market? According to experts surveyed by the Taskforce for Scaling Voluntary Carbon Markets (TSVCM):
“Based on stated demand for carbon credits, demand projections from experts… and the volume of negative emissions needed to reduce emissions in line with the 1.5-degree warming goal… the market size [for carbon offsets] in 2030 could be between $5 billion and $30 billion at the low end and more than $50 billion at the high end.”
That means something between 20x growth and 200x growth for the carbon offset market in under a decade. If you own any amount of acreage—even if not all of it qualifies—this is something you want to learn about before it’s too late.
A Tale of Two Carbon Marketplaces
Before you learn how to make money by using your land to produce carbon offsets, it’s important to understand why a market for carbon offsets even exists. And to get there, you have to start with carbon credits. Carbon credits are traded on the compliance carbon market. Here’s how it works…
Many countries and some states have passed “cap-and-trade” regulations, which limit the number of tons of CO2 a business can emit in a year. These tons are allotted as carbon credits.
Even companies that work as hard as possible to shrink their carbon footprint might find that the allocated emissions “cap” is not enough for their operations. They might be years away from substantial and compliant reductions in emissions, and they still have to keep operations going to make a profit in the interim. As such, they need to find a way to be able to emit more carbon than their cap without breaking the law.
When companies hit their emissions cap, they look to the compliance market to “trade”—they’re trading money in exchange for another company’s credits.
Here’s a quick example. The Hoover Company is only allowed to emit 300 tons of carbon per year, but they know their operations will result in 400 tons of CO2 emissions. To avoid a financial penalty, the Hoover Company can make up for the extra 100 tons by purchasing credits from another company that will only emit 200 tons of carbon this year.
The voluntary carbon market works much differently. As suggested by the name, participation in the VCM is optional. It’s a place where companies and individuals can, at their choosing, buy carbon offsets to offset their carbon emissions.
This market is mostly made up of entities that are environmentally conscious and work to offset their carbon emissions because they want to. It could be a company that wants to demonstrate to its clients that it is doing its part to protect the environment. Or it could be a person who wants to offset the carbon emission from their flight travel.
Take the Hoover Company example. Suppose they announced their operations would be net zero by a certain date, but they’re still emitting 200 tons of CO2 on that date. They can easily purchase 200 tons worth of carbon offsets to meet their net zero guarantee.
Regardless of who is purchasing or the reason they’re purchasing offsets, they are looking for a way to reduce their emissions footprint—and by producing carbon offsets, landowners can provide an excellent way to do that. As a farmer, rancher, or landowner, you can sell offsets on the voluntary carbon market, creating an additional (and sometimes substantial) source of income.
How Landowners Can Produce Carbon Offsets
Farmers, ranchers, and landowners can produce and sell carbon offsets by capturing and storing emissions. They do this using carbon farming and carbon sequestration processes, which involve implementing practices that remove CO2 from the atmosphere by converting the gas into organic matter within the soil and eventually into plants. Once absorbed, the CO2 helps restore the soil’s natural qualities—simultaneously enhancing crop production and reducing pollution.
Farmers, ranchers, and landowners can offset carbon emissions in countless ways. Though not a comprehensive list, here are a few practices that typically qualify as offset-producing projects.
Returning biomass to the soil as mulch after harvest instead of removing or burning. This practice reduces evaporation from the soil surface, which helps to preserve water. The biomass also helps feed soil microbes and earthworms, allowing nutrients to cycle and strengthen soil structure.
Using conservation tillage or no-tillage practices that improve the quality of water and the air by increasing nutrients, soil structure, porosity, and tilth.
Using nutrient management and precision farming to maintain plant and soil health instead of chemicals or pesticides.
Planting cover crops during the off-season to ready the land for cash crops by improving the soil quality.
Replacing surface irrigation systems with flood irrigation systems so that runoff water can be recycled to improve efficiency.
Promoting forest regrowth to remove, store, and re-purpose carbon within trees and plants.
Returning degraded soils to their natural state, converting acreage into grasslands, or planting trees or seeds to change open land into forest or woodlands.
Rotating crops to ensure soil nutrients remain plentiful.
Switching to alternate fuel types, such as lower-carbon biofuels like corn and biomass-derived ethanol and biodiesel.
Altering manure management and changing feeding schedules.
After reading this list, you might be wondering how the volume and value of carbon offsets produced via each of these methods are determined. To be clear, it’s not an easy task. Monitoring and evaluating emissions and reductions can be a challenge for even the most experienced agricultural professional.
Fortunately, when it’s time to list offsets on the VCM, a third-party verification expert can collect, analyze, and verify data from your property, possible even conducting a site visit, to determine how many offsets you are eligible for. New technology being developed can also remotely track the amount of carbon sequestered by your land, eliminating the need for any guesswork.
What Are Carbon Credits Worth?
In 2023, over $10 billion in carbon offsets were traded on the VCM. Total carbon offset volume was more than 2,400 MtCO2e. Simple math says the average price paid for a tonne of carbon removed from the atmosphere in this manner was $4.
There is a wide variance, however, in the price paid for carbon offsets, depending on project quality, issuance year, verifiability, additional benefits created by the carbon offset, and other factors. For live VCM pricing, please click here.
One major factor in pricing is the type of project. Different projects include forestry and conservation, waste-to-energy projects, and renewable energy projects. Some of these projects can be worth less than $1 per carbon ton offset, while others can be worth more than $50.
For example, imagine you planted a forest of shade trees. The chart below estimates that a typical urban shade tree will store approximately five tonnes of CO2 forty years, generating $12,500 in revenue at $10/tonne carbon. If the value of carbon rises to $50/tonne, that single tree could be worth more than $1,000 a year.
# of Trees Planted
Average Annual Carbon Credits Generated
Total Carbon Credits Generated Over 40 Years
Total Value of 40-Year Contract @ $5/tonne
Total Value of 40-Year Contract @ $50/tonne
250
31.25 VERs
1250 VERs
$6,250
$62,500
500
62.5 VERs
2,500 VERs
$12,500
$125,000
1,000
125 VERs
5,000 VERs
$25,000
$250,000
Alternatively, imagine you are producing carbon offsets using your wheat farm, and you are paid $15 per tonne of carbon removed. Depending on how you sequester the carbon, you might earn anywhere from .25 to 2 offsets per acre. If your 1,000-acre wheat farm removes 1 tonne per acre, that is 1,000 carbon credits—and $15,000 profit annually.
Sounds pretty good when it’s theoretical, right? Here’s what that actually looks like in real life. Indigo Agriculture, a Boston-based for-profit carbon sequestration startup, guarantees farmers who signed up in 2019 $15 per tonne of CO2 that they sequester. Farmer Trey Hill received a payment of $115,000 for 8,000 tonnes of carbon—a little over $14/tonne—last year and has continued to receive payments since.
How to Sell and Get Paid for Carbon Offsets
There are numerous online carbon exchange programs located both within the United States and internationally that enable sellers to get cash for the carbon offsets they’ve produced. The exchanges work the same way as various stock and commodity exchanges.
The three largest voluntary carbon registries in the United States have created standards for producing carbon offsets. In addition, use strict protocols that both scientists and stakeholders have implemented.
To enroll, you need to have land maps available that document your ownership of the land, as well as the legal description of the land. You also need have to document your management practices and obtain a signed contract between yourself and those purchasing/paying for the carbon credits. All fees should be listed.
Before signing a contract, it’s important to thoroughly research the company, understand what’s required of you, and ensure the amount you’re paid is appropriate. If the contract you sign is overly optimistic on the amount of carbon sequestered, you could later be charged the shortfall amount. On the other hand, if the contract you sign lowballs the amount, you could miss out on income.
The Future of Carbon Markets
Former President Barack Obama said:
When Americans are called on to innovate, that’s what we do… once we have a clear target to meet, we typically meet it. And we find the best ways to do it.
The world is aware that much is at stake, with the climate change crisis at the forefront of everything we do. As nations, companies, and individuals work together to address GHG emissions, far more ambitious neutrality goals will be set.
Both the regulatory and voluntary carbon markets are set to expand dramatically in the next decade. Recall that according to the TSVCM, the demand for carbon credits could increase by 15x or more by 2030 and by a factor of up to 100x by 2050.
The momentum behind those figures is that carbon marketplaces provide companies and individuals the power to experiment, innovate, and reach more people—strengthening environmental initiatives for generations to come.
When the United States and the world moves forward collectively to combat the climate crisis, change will happen, and a lot of money will be made. As a farmer, rancher, or landowner, now is the time to begin producing carbon offsets using your land.
To reduce carbon emissions, China looks to limit carbon allowances and raise the cost of pollution.
Under China’s current policy, carbon allowances are lenient. In fact, this past year, China gave allowances for 4.5 billion tons of carbon to 2,200 power firms.
These allowances accounted for 40% of China’s total carbon emissions.
Is it possible for China to limit carbon allowances?
Some analysts are skeptical and believe that lowering it to anything beyond -0.5% won’t easily be accepted by the power sector.
So, for China to meet current climate goals, regulators will have to find a way to balance climate objectives and power-industry interests. The carbon market may play a bit of a role here.
China’s national carbon trading market.
To reduce emissions, UBS Group AG thinks that carbon trading will help China decarbonize. They predict it could be worth 500-billion yuan, which is $79 billion.
At COP26, China agreed to work with the United States on an ambitious climate action plan. Both acknowledged that they needed to do more to reduce carbon emissions, but details were not provided.
In a joint statement, China and the United States said that they will “recall their firm commitment to work together” and close the “significant gap” that remains to reach environmental targets.
It is important to note that China is the largest carbon emitter globally, followed by the US and India. So, if China were to cut carbon allowances for the power industry, it would be a huge victory.
In 2015, India said that 40% of its installed energy would be from renewable energy by 2030.
In late 2021, they achieved that goal and now over 40% of India’s electricity capacity now comes from non-fossil fuels.
How did India meet its renewable energy goal so fast?
Believe it or not, India has seen the fastest growth in renewable energy across all large economies over the last 7 years.
This growth is likely due to private and foreign investments. In India, foreign investors can enter joint ventures with Indian partners to set up energy generation projects. These joint ventures can be financial, technical, or both.
To put these investments into perspective, from 2014-2019, renewable energy projects received $64.4 billion.
And, in 2019 alone, investments in renewable energy totaled $11.2 billion.
What are additional climate goals for India and other countries?
At COP26, India said its new goal is to reach net-zero emissions by 2070.
The Climate Service’s tech platform quantifies climate risk. It creates a physical climate risk analytics tool for businesses, investors, and governments.
The platform simulates physical risk, such as severe temperatures, drought, wildfire, coastal flooding, cyclones, and water stress.
It also provides clients with intelligence on transition risks, such as shifting legal, regulatory, and market situations.
The outputs include modeled transition risk and physical risk analysis expressed in financial terms. These are consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
“More than ever, investors and companies seek evidence-based insights, high-quality data, and advanced analytics to support the decisions driving their strategies linking sustainability and business performance.” says Dr. Richard Mattison, President, S&P Global Sustainable.
The transaction expands S&P Global’s portfolio of essential ESG data, scores, benchmarks, and insights.
Xpansiv’s CBL marketplace is the world’s largest exchange for carbon credits, RECs, water, and Digital Fuels. They have just launched their newest emissions benchmarks, Core Global Emissions Offset (C-GEO).
Within one day, transactions covered 127,207 metric tons of carbon.
Initial buyers of C-GEO.
Buyers were Carbon Growth Partners, Chevron USA Inc., EKI Energy Services Ltd., Fathon Energy LLC, Mercuria Energy America, LLC, Radicle Group Inc., and Virdiros Capital.
According to Manish Dabkara, CEO and CMD of EKI Energy Services, “The state-of-the-art platform is a great enabler for global companies like us as we continue our stride toward making the planet greener with our strategic and sustainable solutions.”
CBL’s existing benchmarks.
Existing CBL benchmarks include the Global Emissions Offset (GEO) and Nature-Based Global Emissions Offset (N-GEO).
Ben Stuart, Chief Commercial Officer at Xpansiv, said, “The GEO and N-GEO have been a tremendous success in enabling greater market transparency, price discovery, liquidity formation, and risk transference, proving the benefits of standardized benchmarks in voluntary carbon.”
Stuart went on to say that “The C-GEO contracts are the latest evolution of our product design to enable markets to more effectively scale to meet critical net-zero goals.”
How C-GEO works.
There are two parts to C-GEO: C-GEO-1 and C-GEO-2.
Credits with C-GEO-2 are on a rolling schedule. So older credits will no longer be available as CBL adds new ones. This will help CBL set up long-term contracts.
C-GEO-1 is separate. It will collect credits that roll off so participants can still trade older credits since there still are some benefits.
Why Carbon Credits?
The carbon credit industry is booming as companies search for simple ways to reduce their carbon footprint. Even world leaders see the value of carbon credits. At COP26, world leaders agreed to set a global standard to improve the carbon marketplace.
Because of this, many believe the carbon credit industry could be valued at $100 billion by 2030. This is up from a value of just $300 million in 2018.
There are approximately 100 million credits available with C-GEO-2 – quite a bit more than GEO and N-GEO.
Cover crops are growing in popularity to fight climate change. They now account for twenty-two million acres of land, a 43% increase from past years.
So, what exactly is a cover crop?
A cover crop is a crop planted without harvesting.
While that may sound silly, farmers can benefit from doing this. Cover crops can restore soil and reduce erosion. Plus, they remove carbon from the atmosphere. Because of this, when farmers plant cover crops, they qualify as a carbon offset project. This means the crops can generate carbon credits and create additional revenue.
Popular cover crops include barley, oats, legume, radishes, and rye. Some crops are converted into biofuel or fed to animals. However, leaving the crops to break down in the soil is best for the environment.
Companies, including Bayer, Land O’Lakes, and Cargill, Inc., launched carbon farming programs to offset their own carbon footprint. These programs pay farmers to capture carbon through cover crops.
For example, in 2021, Truterra (a Land O’Lakes subsidiary) paid $4 million to farmers for cover crops – capturing 200,000 metric tons of carbon.
Some critics say cover crops could cause an issue with the supply of seeds. They are also worried that the use of farm chemicals will increase. However, many environmentalists believe that the benefits of cover crops outweigh any risk.
Many in congress recognize the role cover crops can play in reducing carbon.
The Build Back Better legislation put forth by the Biden Administration allocated $28 billion for land conservation programs. $5 billion is to pay farmers and landowners to plant cover crops.
Right now, no one is sure if the bill will pass.
Estimates say by 2030, between 40 and 50 million acres of land could be cover crops.
Prince Edward Island farmer, and founder of North Atlantics Organics, Joe Dorgan, has found that seaweed makes cows less gassy.
Based on his research, feeding cattle seaweed can reduce greenhouse gas emissions up to 40%.
Methane gas accounts for 30% of global warming. One-third of that is from livestock pollution. So, the less gas that cows emit, the better it is for the environment (and anyone standing nearby).
Let’s put it this way: one adult cow has the potential to emit the same amount of gas as a small car. And, since the human population is increasing, the number of cows to feed them is growing too. The result? More greenhouse gas emissions.
Rob Kinley, the chief scientist of Futurefeed and a researcher who worked alongside Dorgan, said red seaweed can do even more. Based on Kinley’s research, when red seaweed was fed to livestock, it eliminated almost all their methane emissions.
According to Kinley, “We started testing seaweeds from coastal Australia, and it wasn’t long before the Asparagopsis species showed up, and it showed up in a big way. So big that we didn’t even believe what we were seeing. It took multiple runs of testing this before we believed what we were seeing, which was we couldn’t find methane anymore.”
The only challenge is harvesting it.
However, scientist Josh Goldman, the project leader at Greener Grazing, believes that harvesting seaweed may not be that hard to do.
It only takes 90 days to cultivate seaweed. This means that multiple batches can be produced each year. Plus, if farmers just place .2% of seaweed into the cow’s daily rations, they could:
A.) Save money on cow feed
B.) Be used to sell carbon credits
The long answer would be planting an entire forest, getting the government’s seal of approval, and then selling the obtained credits to companies.
Luckily, there are other options.
For the quick reminder, a carbon credit represents 1 ton of carbon dioxide – CO2 emissions – removed from the atmosphere.
This can be done through several methods, such as planting forests, waste management or wastewater treatment.
When it comes to getting carbon credits, a lot depends on location.
And on top of that, carbon credits were controversial for years.
In the US, cap-and-trade programs are emerging, such as the Regional Greenhouse Gas Initiative, or the Western Climate Initiative, which is a joint program with Quebec.
And while national programs did exist in some countries such as Canada or Australia, private markets grew alongside them.
So another option for getting carbon credits is to buy them individually.
In Europe – which is home to the largest carbon market – the EU ETS framework is used, and works on cap-and-trade as well.
Which brings us to our second question.
2. Can I Sell Carbon Credits?
If the country you reside in allows you to, you can sell your carbon credits to the government.
This is the case in the UK, Australia or Canada.
In the US, it is not possible yet.
But that doesn’t mean you can’t sell carbon credits. It means that the markets are organized by public and private companies.
And it does not mean less money, at all.
After all, selling carbon credits is part of the way Tesla got so far ahead, for one.
Since the carmaker receives them for free – in the form of credits for vehicles that emit fewer amounts of CO2 – they are able to sell them for a full profit.
Who do they sell to…?
The competition, basically. Large carmakers are the buyers, such as Stellantis, who bought more than $2 billion worth of European and U.S. credits from Tesla in the last two years.
And as regulation tightens around carbon emissions, you can be sure that you will see more and more companies basing their profit around carbon credits.
And while it may be easier to buy them for a company, an individual can do so too.
We just touched on the subject briefly, so here’s the last one.
3. Are Carbon Credits Worth Anything?
We answered part of this question by mentioning the growing demand as well as Tesla’s example, but that’s not all there is.
You probably already know that the carbon markets are growing at an incredible pace, but you may wonder where that leaves the credits themselves.
Because buying carbon credits can seem complex, and the prices vary based on market dynamics, it can be hard to estimate what they are worth exactly.
According to Ecosystem Marketplace, the average weighted price for one carbon credit – one metric ton of CO2 removed – is around $4.73 in 2021.
That’s only one estimate, of course, and others price it higher.
Considering the demand for carbon offsets is expected to rise as we get closer to net zero, the prices will grow accordingly.
