PEORIA, Ill. — With unprecedented federal spending flowing to climate-smart agriculture through the 2022 Inflation Reduction Act, will the writers of the 2023 Farm Bill slash or eliminate conservation funding that can help farmers tap into the emerging carbon sequestration market? This was one of the questions addressed by Jonathan Coppess, University of Illinois agricultural economist and a farm bill advisor, during the Illinois Fertilizer and Chemical Association (IFCA) 2023 Conference and Trade Show in Peoria. 

“The biggest question is what the farm bill will be able to contribute to this (carbon) market opportunity,” Coppess said. “A whole lot still needs to be worked out. USDA assistance is critical to this expanding market.”

With the Biden administration throwing everything they can at the pressing issue of climate change (the last 8 years were among the hottest on record in the U.S.), reducing greenhouse gas emissions should be fully encouraged in the next farm bill, according to Coppess. He also noted that with companies actively searching for “new” carbon sequestration outcomes to purchase as emission offsets, farmer interest in emerging carbon markets is sky-high. 

“The idea is to design a market around these opportunities,” he said. “But how is it going to work? Your guess is really as good as mine at this point. Environmental, social and government standards are what’s driving this now, but there is not that long term market component that pushes it to grow and develop.” 

Farm bill guidance and encouragement of emerging carbon markets would provide a component of stability for farmers for at least the next five years. The new Chairman of the House Agriculture Committee, GT Thompson (R-PA.), said he is anxious to get to work on the next Farm Bill now that Republicans selected their new ag committee members. Thompson stated that he would like to establish bipartisan Farm Bill listening sessions in many regions between February and July and have the Farm Bill pieces in place by late summer; the current farm bill expires in September.

Though Thompson has not identified carbon market guidance as one of his top ‘23 Farm Bill priorities, returning Senate Agriculture Committee Chairperson Debbie Stabenow has made it clear that the Growing Climate Solutions Act (GCSA; S.1251) should be included in the final bill.

According to the National Law Review’s Carbon Quarterly, the GCSA would create a new program at the USDA to assist farmers, ranchers, and private landowners in developing and enrolling projects in voluntary carbon markets: the Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Certification Program.

The bill also authorizes an advisory committee to counsel the agriculture secretary on development of the programs. Further, it directs the USDA to publish information on how to become a certifier or verifier, as well as information about carbon market programs and registries that allow participation from farmers and ranchers.

The GCSA will help address climate change “by breaking down barriers for farmers and foresters interested in participating in carbon markets so they can be rewarded for climate-smart practices,” said Senate GCSA sponsor Mike Braun (R-IN).

As an example of needed government regulation in the carbon market space, Coppess pointed to issues that are developing between farmers who lease their farmland and their landlords. Guidance is needed, he said, to regulate contract terms and payment disbursement.  

“There are now 2,000 farmers enrolled in Indigo Ag’s carbon program and they have begun receiving payments. Interest in this startup market is really just getting underway and growing, as is the funding,” said Coppess, who has served as a past farm bill consultant as director of the University of Illinois’ Gardner Agriculture Policy Program. “There are a whole lot of things that need to be sorted out.”

USDA got its feet wet in the carbon industry in 2022 with the introduction of the Partnerships for Climate Smart Commodities program. Through the program, USDA finances partnerships to support the production and marketing of climate-smart commodities via a set of pilot projects lasting one to five years. Estimated as a $1 billion competitive grant project, a total of $2.8 billion was invested in a total of 70 first-round projects, including 15 in Illinois. 

“This kind of program and incentives is what can really drive the market,” said Coppess. “As for the farm bill, the big challenge will always be in the spending and the Congressional Budget Office baseline. The question is if we’re going to do something on this, where does the money come from? 

“The CBO is projecting over $130 billion per year in farm bill spending, with the bulk of that going to the Supplemental Nutrition Assistance Program. (But) we do have crop insurance, conservation and Title I farm program spending that may provide an opportunity for driving or helping jumpstart some of the climate-smart works and the carbon market.”

Coppess concluded his remarks at the 2023 IFCA Conference and Trade Show by reaffirming that the next farm bill should provide USDA with the leverage to get involved in carbon market guidance and regulation in a “significant and meaningful” manner. 

“We may soon see a lot of work out of the USDA to answer a lot of questions that have come out. We will begin to see USDA’s help in facilitating market development, information to farmers and technical assistance. This will be critical in developing the market for farmers and will help move the industry along,” said Coppess.