An interest in reducing environmental impacts and achieving climate sustainability within the U.S. is growing significantly among both the public and private sectors. As a result, several different entities are considering carbon credit markets to encourage the reduction of greenhouse gases (“GHG”). Generally, these markets offer credits to market participants based on the amount of carbon dioxide they have sequestered in the soil. In turn, these credits are sold to companies in the carbon marketplace. Because of the creation of carbon markets and escalating interest in reducing GHGs, a carbon industry is beginning to emerge.

Meanwhile, agriculture has become a centerpiece of the climate discussion because the agricultural sector is capable of delivering natural climate solutions. Specifically, many agricultural producers across the nation are capable of reducing carbon emissions by undertaking certain “climate-smart” farming practices that sequester carbon. Agriculture’s ability to capture and sequester carbon has prompted the carbon industry to encourage agricultural producers to participate in carbon markets. Several carbon market operators offer market programs to agricultural producers who implement sustainable farming practices in order to boost market participation. Producers engaging in these markets are advancing the goal of climate sustainability, while also receiving a new source of revenue by selling credits on the carbon market.

While carbon market programs are currently operating, there is still some uncertainty surrounding the emerging carbon industry. Much of this uncertainty arises from the lack of information about carbon credit markets. Currently, the industry is operating almost entirely within the private sector because carbon markets are being operated by several different private companies. Because many of these market-operating companies rarely publicize details on business arrangements and how their carbon markets are operated, the industry continues to be complex and unclear.

Even though private market operators are dominating most of the carbon industry, the federal government is becoming involved in the climate policy debate. Specifically, Congress is seeking to develop the carbon industry by implementing practical solutions that reduce GHG emissions, while also generating economic opportunities for other sectors. Because agriculture and forestry sectors mitigate the release of carbon into the atmosphere through natural solutions, Congress has proposed legislation to assist both sectors.

Recently, Congress proposed a bipartisan bill known as the Growing Climate Solutions Act. Overall, this bill enables the United States Department of Agriculture (“USDA”) to regulate certain aspects of the carbon industry, bring more clarity to the carbon marketplace, and expand opportunities for more producers to participate in the carbon industry. In other words, it makes it easier for agricultural producers and foresters to participate in carbon credit markets.

Agriculture Developing the Carbon Industry

As the demand for climate sustainability increases, many different industries are seeking ways to participate in the carbon industry as a climate solution. Industries such as transportation, retail, manufacturing, and automotive are entering the climate policy debate to suggest measures they can implement to reduce GHG emissions. However, some of the climate-smart initiatives proposed by these industries will take time to implement, meaning it may be years before these industries can serve as climate solutions. Because it will likely take some time for other industries to implement carbon-reducing initiatives, both public and private sectors are looking to agriculture as a leader in the carbon industry.

The agricultural industry is the focus of the carbon industry primarily because many producers can offer existing solutions to mitigate climate change. In general, producers can reduce GHG emissions from entering the atmosphere—which mitigates the impacts of climate change—because they can store carbon dioxide in cropland and rangeland soil. Storing carbon into the soil is commonly known as carbon sequestration. Producers can sequester carbon when implementing certain carbon farming practices, such as conservation tillage, planting cover crops, or applying soil amendments to their fields. Accordingly, producers who implement at least some carbon-smart practices will reduce carbon emissions and provide a solution to mitigating climate change.

Another asset agriculture brings to the carbon industry as a current climate solution is that the agricultural industry does not have to collect data or develop new technology to mitigate climate change. This is because researchers have already found carbon-reducing practices, and the industry has created technology to help producers implement these practices. As a result, producers wanting to implement carbon farming practices can begin doing so. In fact, some producers across the nation have already reduced carbon emissions by implementing carbon farming practices within their farming operations.

Lastly, agriculture is a large focus in the carbon industry because there is already a market in place to offer a new source of income to producers, while also advancing climate sustainability. Currently, there are not many economic opportunities available to other industries in the carbon industry. Unlike other industries, agricultural producers have the ability to generate additional income by participating in the carbon credit markets. Because these carbon markets are offering an additional source of income for producers, producers are likely more inclined to participate in mitigating GHG emissions. Therefore, the more producers involved in carbon markets, more carbon is sequestered, and the risks of climate change are reduced.

“Considering Carbon” Series

The carbon industry is still evolving, but it is clear that agriculture is playing a key factor in developing that industry. Because carbon markets have become an increasingly important aspect of the agriculture sector, the National Agriculture Law Center will discuss various elements of the burgeoning industry in a new series titled “Considering Carbon: Legal Issues for an Emerging Industry.”

Over the next several months, the National Agricultural Law Center will provide resources addressing legal topics and issues that concern agriculture and the carbon industry. Each month, the Center will offer at least one new publication or webinar discussing certain areas of the carbon industry that may have an impact on agriculture. During this series, we will discuss topics such as contracts, insurance, monitoring and enforcement, administrative proposals, and taxation as it relates to agriculture’s role in developing the carbon industry.


To view the Growing Climate Solutions Act of 2021, click here.

To read other blog posts in this series, click here.