Carbon storage contracts require careful consideration by landowners
From Texas Standard:
Carbon emissions, a leading cause of climate change, can be naturally sequestered and stored in the soil. And some Texas landowners are now being paid for just that.
Companies interested in lowering their climate footprint will pay landowners to manage their property so that it stores more carbon. But these kinds of agreements are new, and there are lots of questions to consider before signing a contract.
Tiffany Dowell Lashmet is an associate professor and extension specialist in agricultural law with the Texas A&M AgriLife Extension service. She also writes the Texas Agriculture Law Blog. She spoke to the Texas Standard about carbon credit contracts.
Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: First, who's approaching landowners with these offers and who's purchasing the carbon their story?
Tiffany Dowell Lashmet: There are a couple of different ways that landowners are getting approached for these types of contracts. A lot of folks are being approached by brokers, which are sort of people serving as middlemen between big companies looking to purchase these carbon credits and the landowners who might be able to undertake some of the practices. There are some, though, where there are actual companies that are engaging in these sorts of transactions. Some ag-based companies and then some other companies where they’re not using that kind of broker aggregator as a middleman.
Just a little bit about the science here. Carbon and soil go pretty well together, but how is it that landowners, farmers, ranchers might try to capture this carbon and store it?
There are a number of ways that that can happen. Just by normal farming practices, there's carbon that does end up in the soil. But there are certain practices that can be undertaken that increase the amount of carbon in the soil. That's what these contracts are really looking for.
So, as far as farmland goes, that may look like either reduced ttill or no till farming, where they're not plowing a field, they're leaving some of that organic matter or biomass on the top of the soil. Cover crops is another popular concept. For range land, a lot of times what these contracts are looking for people who are interested in doing regenerative grazing where you kind of rotate around where you've got your animals on your property. And so those are some of the types of farm or ranch practices that can increase carbon in the soil.
So in a way, this is the commodification of things that ranchers and farmers have been doing for some time and asking them to do a little bit more of it and make a little bit more money?
That's true. And that raises an interesting issue in the contract standpoint. And that is if you're somebody who is kind of an early adopter of one of these practices – let's say you've been doing no-till farming already. Are you able now to sign up for one of these contracts and get the benefit of that? Or is the contract only available to people who would make that change now? That's real depended on the contract and the company. And that's a real concern that farmers and ranchers are having to watch out for.
Is there a way that we can understand just how much money may be at stake here? Is there a per -acre amount that would be a target for a contract?
I hate to give you the typical lawyer answer, but it really just depends on the contract, and they're structured in a number of different ways. Some of them offer you just a per acre payment for implementation of an activity. Some of them, though, are based on the actual amount of additional carbon that's sequestered in the soil. So they might go out and get a baseline measurement, and they might come back in five years and measure again. And your payment depends on the amount of carbon that was added to the soil so far is really dependent on the contract.
So fine print matters quite a lot. And I would imagine that may be in part why we're seeing some reluctance to sign on the dotted line here.
I think that's exactly right. The fine print matters a lot. And when you're looking at carbon contracts, they're just kind of a different animal. There are things in here that are different than if you're signing a contract to sell your wheat, or sell corn. And so I think people have been a little bit hesitant until they see how some of this shakes out, how some of these programs maybe are working for their neighbors or people in other places
What are a couple of questions perhaps someone should ask before entering into an agreement like this?
I think one of the most important questions is to really pin down exactly what practices are you required to undertake. Make sure you understand those practices and the additional costs that those may have for you. I think another really important thing is to look at any sort of penalties in the contract, if for some reason you're unable to engage in the practice, or just the amount of carbon you anticipate being able to add. Does it play out when they come to measure? I think those are two of maybe the most important things to look at,