The dirt on soil carbon sequestration

Sometimes it’s the simplest solutions that can be the most challenging. Last week we wrote about technologies to engineer new pathways for capturing atmospheric carbon. This week we dig into one of the oldest (but most complex) carbon removal pathways in the book – soil.

While society has perfected the business of extracting carbon from the ground, only recently have scientists, entrepreneurs, and corporates seriously attempted to reverse the conveyor belt and increase the carbon stored in soils. But contenders have the shot off the starting blocks. Just last week, Microsoft announced the purchase of just under 200,000 mtCO2 from two soil projects (Truterra/Land O’Lakes and Regen Network) and Biden’s climate executive orders encouraged “climate-smart agricultural practices that produce verifiable carbon reductions and sequestrations.” The potential prize is big: scientists estimate nearly 500 gigatons of CO2 equivalents have been eroded from soils.

The existing voluntary offset market where corporates can buy credits as “currency” to counterbalance their emissions is increasingly offering soil carbon as a new flavor of offset product. While forestry-based carbon offsets are relatively plentiful, regenerative ag and forestry make up just 2% of the market. Australia boasts the most robust soil carbon market with an established government-backed marketplace and a regulated, empirical measurement methodology.

Nature-based climate solutions are accelerating as a critical strategy to reach net-zero (as Mark Tercek well articulates). On top of their sequestration benefits, healthy soils mutually benefit farm productivity. Despite the increasing enthusiasm and obvious benefits, a number of questions remain about the viability of soil carbon sequestration: What tools can farmers use? How accurately can we monitor and quantify? What is the right market or policy structure to reward farmers and enable scaling? A number of entrepreneurs (many of which were featured in IndigoAg’s Carbon Challenge last week) are hard at work developing solutions to these questions. We spoke to some of these founders, soil scientists, and investors to unearth this complex value chain.

Soil Carbon’s Value Chain

Farmers: Adopt practices and products to increase soil carbon content

It takes growers’ boots on the ground to adopt effective carbon-sequestering regenerative management practices like no-till, planting cover and mixed species forage crops, rotational livestock grazing, conversion of cropland to pasture, and reduced chemical use. Startups like Climate Robotics and Soil Carbon offer a further carbon retention boost with their respective biochar and microbial products. From a farmers’ P&L perspective, carbon-rich healthy soils mean good business not only from diversified carbon credit income, but importantly also from reduced soil erosion, lower chemical inputs, and improved biodiversity.

Project Developers: Quarterback and broker the end-to-end project plan

In response to early criticism, carbon credit methodologies have increased in rigor. While significant discussion remains, all carbon projects must now prove realness, completeness, consistency, transparency, additionality, etc. Project developers (e.g., NativeEnergy, AgriProve, Soil Capital) handle this complexity and are on the hook with auditors. Matthew Warnken, Managing Director of AgriProve, explains “we provide a one-stop shop to agricultural landholders in managing the administrative, monitoring, reporting, and compliance requirements of soil carbon projects, freeing the landholders to focus on the land management practice change for soil carbon.”

By closely adhering to a third party registry’s (e.g. Verra, CAR) methodology, project developers design projects and then act as the middle broker by supporting and partnering with farmers. First, project developers register a soil carbon project, then the area undergoes a baseline soil sample test, next the landholder or farmer undertakes regenerative practices with the goal of sequestering carbon. 1-5 years later, the area is sampled again to measure a creditable increase in soil organic carbon stocks. Only then are verified carbon credits awarded.

Measurement, Reporting, and Verification (MRV): Calculate and prove soil carbon levels

Undertaking sequestering practices is no longer enough to claim credible carbon credits. Rigorous measurement, reporting, and verification are crucial to scale demand for soil carbon credits. Currently, one needed a literal hammer and steel to extract physical soil cores which were then mailed to a lab and incinerated to determine organic carbon content. Emerging technology companies using in-situ spectrometry (Yard Stick, currently in stealth) and AI-enabled remote sensing (Cloud Agronomics) are bringing down the cost and time curves in order to scale MRV.

Cloud Agronomics combines remote sensing with artificial intelligence to remotely measure soil organic carbon levels in farmland. By combining attributes of the soil, AI, satellite imagery and ground truth soil sampling, the company is able to detect carbon levels up to 30cm underground. CEO Mark Tracy explains, “If you use traditional soil sampling, you can’t capture in-field variability well. We are providing the same quantifiable information, but we can aggregate thousands of points within a field to come to an accurate value for that entire field, not just single points.”

Marketplaces: Sell the carbon credit to buyers

Project developers can sell the carbon credits they produced to a variety of players:

• Voluntary market: Companies (Microsoft, Shopify and more) have raised their hands to bid early on purchasing high quality soil carbon credits. Nori has developed a carbon removal marketplace to directly liaise between farmers and corporate buyers; they’ve partnered with Locus to develop the CarbonNOW program which directly works with farmers to source high quality soil credits for Nori’s marketplace. Meanwhile, Regen Network, Soil Value Exchange, and Hudson Carbon also supply high quality credits to corporate buyers.
• (Voluntary) internal corporate market: Major agricultural corporations like Bayer and Cargill have eschewed the voluntary offset market as a means of counterbalancing their carbon footprint, and instead developed internal soil carbon marketplaces within their own supply chains, and without middle people or public participation.
• Compliance market: Companies within industry-specific markets such as CARB and CORSIA are required to reduce GHG emissions using official credits. To date, however, no compliance market has included soil carbon offsets as a viable credit type, though the European Commission has signaled an intention to do so by 2023.

Key Takeaways

1. 1. Scaling up soil carbon measurements poses significant scientific challenges. Agricultural soils are a living, breathing system. The biggest challenge confounding scientists is how to handle the heterogeneity of data associated with soils. The amount of clay, historical practices, weather, location, and endless other attributes all impact soils’ carbon content. As Avni Malhotra, a soil scientist at Stanford, points out, soil carbon can vary within a meter, making it difficult to extrapolate soil sample results from combustion to a larger scale. Startups which reduce cost and increase measurement density while maintaining accuracy, such as Cloud Agronomics and Yard Stick, can remove this bottleneck and create margin for other key stakeholders.
   2. Soil carbon sequestration provides multiple benefits. “It’s a really amazing win-win opportunity where carbon payments can help improve the quality and sustainability of our food systems in addition to climate benefits,” says Paul Gambill, CEO of Nori. 
   3. Sequestration technologies face a tough sell into farmers. Given just 40 chances to improve their yield, farmers are inherently skeptical buyers of new technologies. Look out for clever financing and insurance mechanisms that align farmers’ and startups’ and credit purchasers’ incentives to bring more soil sequestering technologies to market. 
   4. Permanence is very much up for debate. Even if MRV reaches certain accuracy, if a farmer then plows, does all of the carbon stay in the soil? In comparison to other carbon dioxide removal approaches (see: last week’s feature) permanence is soil’s relative weak spot. Read any criticism of soil, and questions around permanence are front and center (rightly so).
   5. There is no set criteria that defines quality for credits, leaving it up to buyers to trust sellers. As they stand, carbon markets incentivize buyers to purchase the cheapest carbon credit – which perversely are often the lowest quality projects. In order to differentiate in the voluntary market, project developers have relied on marketing and negotiation to sell their credit at a higher price. In some cases, both parties walk away happy campers: Hudson Carbon, a project developer, sold their soil carbon credits at $100/ton to a phone company.
   6. Investing in this space still requires reliance on voluntary credit purchases. Enough said. Though “voluntary” purchases are getting stickier by the day particularly as corporates announce their offset commitments publicly. 
   7. Radical disclosure from early adopters of nature-based solutions will drive the market forward. Early adopters can expedite NBS market formation through their purchases (which drive down costs) and by disclosing their process (costs, progress, side effects, etc.) so others can learn synchronously.
   8. It remains to be seen how heavy of a hand the US government will lend. Australia shows that the government can successfully play a market convening role, and the Biden administration had previously floated the idea of soil carbon banks for farmers. Similarly, Rory Jacobson from Carbon Direct points to the Growing Climate Solutions Act as one way the federal government might get involved by setting enforceable standards for soil carbon offsets.

Special thanks to Stella Liu for helping us unearth the dirt on soil carbon sequestration. 

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