Trade in carbon credits, is it getting off the ground?

Information gathered through precision farming techniques could kick-start the carbon sequestration market, Rabobank expects. With precision agriculture, changes in soil quality, for example the organic matter content in the soil, can be determined in time and space. 

But it is still difficult for farmers to get a reward for carbon sequestration, because it is often not clear exactly how much carbon is being fixed in the soil. According to Rabobank Nederland, there are a number of start-up companies in the United States, including Nori and Indigo Ag, that have a solution for this in-house and that are also able to bring supply and demand together. That is still lacking so far. 

European trading platform
The American start-ups want to create a market for carbon sequestration in the soil. Farmers take care of the recording and the IT technology company helps to quantify, monitor, report and verify it. The captured carbon is converted into carbon credits, which are sold to third parties.

By capturing more and more information on the farm, the foundation is being laid for valuing 'ecosystem services' and creating additional income streams. Indigo Ag introduced a European trading platform on March 16. This year, a trial run is underway in Germany. However, we are not there yet, says Rabobank.

Agreements about data
Because for a well-functioning reward system, a number of preconditions must be met, such as a universal standard. That is still missing. Various measuring instruments have emerged. This multiplicity of instruments creates uncertainty and raises the barrier to invest in the provision of ecosystem services such as carbon sequestration.

The bank believes that further standardization of operating systems and/or platforms between chain partners is necessary for the simple sharing of data about ecosystem services. In addition, it is important that farmers and chain parties make clear agreements about who owns the data, and it must of course be possible to measure accurately.

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