First-Ever Rice Farming Carbon Credits Sold to Microsoft

June 14, 2017 01:56 PM

By Ben Potter,
Social Media and Innovation Editor

For the past four years, the California Air Resources Board, the Environmental Defense Fund and others have been working behind the scenes to develop protocols that allow farmers to offset carbon emissions and get compensated for their efforts. Today, those groups celebrate a critical milestone as the first-ever voluntary carbon credits generated from U.S. rice farmers were sold to Microsoft.

How does it work, exactly? Robert Parkhurst, EDF’s agricultural greenhouse gas markets director, says the carbon market is split into two components, compliance and voluntary. The two main compliance markets are driven by California and Quebec. In the California market alone, the state’s businesses will look to offset as much as 200 million tons of carbon by 2020.

And that’s where farmers come in. In the rice pilot project, for example, farmers collect data to quantify how several production practices – such as dry seeding, alternate wetting and drying, and early drainage – reduce generation of around 30 pounds of methane per acre.

With several participating farmers on board, the next step was getting the voluntary credits approved by two primary registry bodies, the Climate Action Reserve and the American Carbon Registry, which write standards, verify results and maintain carbon databases.

With Microsoft as a buyer, the loop is finally completed. Voluntary carbon credits trade around $7 per ton, which makes the rice farmer credits worth about $2 per acre. But farmers like Arkansas rice producer Chris Isbell say it’s not even about the money.

“The credits themselves are not our central concern,” he says. “Three other concepts are involved. No. 1, it’s the idea of potential – one thing leads to another. There are multiple opportunities involved, like saving water. No. 2, the program fosters an ongoing relationship with researchers. That’s critical. And No. 3, it’s the right thing to do.”

Arkansas rice producer Mike Sullivan adds that consumer demand is another benefit to further investigating various sustainability practices.

“The general public is screaming for sustainably sourced products,” he says. “We’re building the base right now.”

Parkhurst points out another important wrinkle. Even though the buyers come from specific places such as California or Quebec, this program proves the sellers can theoretically come from anywhere.

“Offsets can come from any 50 states,” he says. “So if you farm in the Midwest, you can create a credit through conservation practices and sell it to a business in California.”

Other opportunities could present themselves in other parts of the agriculture industry, Parkhurst says. Additional projects are focused on dairies capturing methane, fertilizer-use efficiency in row crops and grassland conservation, he says.

Parkhurst says EDF is trying to shepherd more of these transactions. Participating farmers will need to be able to provide baseline information about their operations and collect data to document changes they make. Because of that, EDF is taking a long look at farmers already actively engaged in precision ag practices, Parkhurst says.

“They’re in the best position to generate credits and revenue,” he says.

These farmers sparked agricultural carbon markets across the U.s.

By Robert Parkhurst | Published June 14, 2017

EDF: Environmental Defense Fund

Photo Credit: Adam Jahiel

I want to tell you a story about a handful of growers whose commitment to sustainability and desire to innovate inspired an ag carbon credit movement.

Today, the first ever carbon credits generated from rice farmers were sold to Microsoft, all because of a handful of pioneers who tested out a radical idea – that by implementing conservation methods on their crops, farmers could reduce methane emissions and thereby generate a carbon credit that could be later be sold on the carbon market. Not to mention the fact that these farmers also reduced water use by as much as 30 percent.

Testing out the feasibility of the voluntary rice protocol revealed several hurdles for growers to participate – but it also provided a proof of concept that changes in farm management can indeed reduce emissions, create carbon credits and reduce water use by as much as 30 percent. Because of these farmers, we were able to learn what works and what doesn’t and spur the development of a grasslands protocol – and now, their leadership has led to an opportunity to generate credits at scale through a new nitrogen fertilizer management protocol.

Here are insights from the farmers that made it happen.

Chris Isbell, part of a father-son team that grows rice on 3,000 acres in central Arkansas:

While the carbon credits program is important, the credits themselves are not our central concern. Three other concepts are involved. Number one, it’s the idea of potential – one thing leads to another. There are multiple opportunities involved, like saving water. Number two, the program fosters an ongoing relationship with researchers. That’s critical. And number three, it’s the right thing to do. If we can do the right thing but choose not to do it, well, that's not a good thing, is it?

Economic incentives are growing. But you can't always wait for the windfall; you have to do something because it shows potential. Now is the time to do this. Farmers are generally comfortable engaging a practice that has potential. They will look at it and take a risk; they don't want to wait until it's all figured out.

Mark Isbell, Chris’s son and farming partner:

There’s an element of choice in the carbon credit program, that’s important. It gives the rice farmer an option for income. Any program involving farmer participation has to have that flexibility. It never needs to be compulsory. Carbon credits are another step toward defining what it means to engage in sustainable agriculture.

Jim Whitaker, who works in partnership with his brother, Sam, to farm rice in Arkansas:

The Rice Carbon Offset project has been very rewarding for Whitaker Farms. Conservation has always been a major component in our family operations. This project has helped save millions of gallons of water, lower fertilizer rates, increase waterfowl habitat and lower GHG emissions. We consider this a win-win for the environment.

Jim and Sam are part of a group who call themselves Nature’s Stewards. They’re setting the bar for what it means to be a sustainable production rice farmer. They’re after the conservation trifecta: water and soil conservation; expanding wildlife habitat; and, more recently, participating in the carbon credits market.

Sam Whitaker:

We need more PhD's in the field doing the research and finding out more about conservation methods; researchers tend to teach to the middle. That’s okay. I understand that. They’ve got their job to do. But we don’t aim for the middle.

Mike Sullivan, who farms with his son, Ryan, in northeast Arkansas:

The general public is screaming for sustainably sourced products. We're building the base right now.

We need a type of green seal on every bag of rice. That seal needs to to be accompanied by a barcode that, when accessed, tells the consumer that this rice came from a young farmer – which in my case would be my son Ryan – and was grown in Burdette, Arkansas using less water, less energy and at the same time creating more waterfowl habitat. Will the carbon credit deal help us get that green seal? I don’t know, but I’m willing to give it a try.

Dan Hooks, rice farmer in Slovak, Arkansas:

I first heard about carbon credits when I was sitting on a panel. I kept asking myself: Why wouldn’t I want to do this? We’re already have precision-leveled fields and using AWD (alternative-wet-drying). Carbon credits program represents money on the table for us. I signed up.

With support from the Conservation Innovation Grants program at USDA’s Natural Resources Conservation Service, Climate Smart Group, Environmental Defense Fund (EDF), and KCoe Isom are leading a nitrogen management pilot project that will determine the feasibility of developing carbon credits by improving fertilizer efficiency on croplands. Corn growers who are implementing or are starting to implement practices that optimize the application of nitrogen to their fields may qualify and could generate revenue from the resulting carbon credits.

We are working to enhance the tools and technologies used to create offsets from rice cultivation to enhance their potential for the marketplace. There is a future for generating rice credits from agriculture – and for ag carbon markets on the whole – because these farmers proved that there is an interest and willingness to participate in pilot efforts that reduce emissions from agriculture.

A diverse group of like-minded partners also guided these farmers through the process, including Terra Global Capital, American Carbon Registry, USDA Natural Resources Conservation Service, California Rice Commission, and the White River Irrigation District. This public private partnership was funded by NRCS under the Conservation Innovation Grants(CIG) program and Entergy Corporation.