Demystifying Carbon Credits, Carbon Markets, and Carbon Farming

hello and welcome to the sibo webinar demystifying carbon credits carbon markets and carbon farming today is june 30 2021 and i am your host billy cripe thank you very much for joining me and my very special guest steven let me shout to this sibo webinar series um before we get started i do want to do a little bit of housekeeping with you all as a reminder this is a discussion there are a couple uh slides in this presentation and the presentation is being recorded so that you can watch this at your leisure if you've joined with us live today we do have a live q a session so please use the question box on your bright talk screen panel to submit your questions they will be in writing and as we go through the the discussion in the in the chat today as those questions um are germaine to topics that we're currently talking about and as they come up we will inject them into the conversation and also address them at the end of the presentation for any that have been uh um left until that until that part if you are watching online that if you're watching this on demand thank you so much for taking some time out of your day to join us please do visit sibotechnologies.com and click on our resource center to see the follow-up blog post where we do address the questions that were answered in this presentation um in a more lengthy uh and maybe more detailed format our goal today with uh with you steven is to really set a um set up baseline let's start some common understanding let's do some demystification some definition work we're not going to go deep down into into science like we have with with some other of our presentations um we're not going to uh you know get all you know philosophical about this but we do want to just try to disambiguate to um to help understand what is um you know what what is carbon farming all about what are carbon credits what are the different types of carbon um offsets and insects and incentives that are out there what's the role of regenerative agriculture when it comes to understanding carbon markets and and carbon credits and ultimately carbon farming those are all uh part of our goals for this webinar and um before we get into the topics here i i would be remiss if i did not invite um all of you watching to also uh sign up and register for our upcoming webinar and expert panel discussions on july 15th we have uh transforming the future of agriculture with crop modeling we will get um into some more of the details of the uh of the big data and the ai and the modeling and simulation from our computer scientists we've got some of the leading crop modelers in the world joining us um there dr kofi uh dotsy and um crop modeling scientist na naload uh chatterjee both from sibo technologies and we'll be getting into the details of crop modeling that's on july 15th and also it will be on demand and then on july 28th we are going to um go deep down into understanding kind of the whole landscape of carbon and climate initiatives the programs the protocols the different initiatives that are out there this is not something where we're going to be talking as much about sibo technologies but rather let's get a lay of the land and understand um what's going to be you know what is in place and what is coming and how these programs are evolving both of these sessions um transforming the future of ag with crop modeling and understanding the carbon climate initiatives programs will be very very informative right there in the in the height of the growing season before harvest so take some time and join us for those as well but today right now uh steve thanks so much for taking the time out um with us you are the director of the carbon product here at sibo technologies why don't you give us a little bit of a story of your background and interest in sustainability and then we can dive into um our our topics today sure um so nice to meet everyone i'm steve lemichow as billy mentioned i direct our carbon product at sibo i've been at the company for about six months and i have a tech background so i spent um over eight years at google uh working you know on a variety of different projects most recently waze carpool um and you know most of the work that i've done on carbon has sort of been the side you know project capacity until sibo but you know this has been a long time passion of mine um you know dating all the way back to probably high school when i first saw inconvenient truth and i realized you know how big of a problem we had on our hands so um you know it's exciting for me to finally be able to dedicate 100 of myself to something that i see is you know really the most important issue that we as society society face today well and that's uh that's a great um that's a great segue let's talk about this so we are going to talk about um you know carbon markets carbon credits and carbon farming those kind of really the three main topics we want to make sure that we're covering here in that order carbon markets carbon credits and then carbon farming um so for those of you who are live and and joining with us um you know think about the questions that you may have for uh for stephen or for myself or that we can pass on to our data scientists and crop scientists after this meeting um but steve you know carbon markets carbon credits carbon farm you know there's a there's a huge amount of interest in this um you know just within the last 24 hours i did right before this session i did a quick uh search of any of the news articles just that just mention um carbon farming and it's it's literally hundreds of news articles in the last 24 hours that have just come out about this and that's not unusual there's nothing that was that was you know new and unique that happened within the last 24 hours to spur this news cycle it's just there's that much interest well when it when you think about it i mean that's that's great right at sibo we love that but what's kind of driving this interest in in carbon um you know in in carbon farming and carbon markets like why why do you think that we care now so much about this as a as a society yeah that's a good question i think a lot of this stems back to sort of you know the recognition um you know globally not just in the united states how big of a challenge climate change really is um you know close to 200 nations signed on to the paris climate accord uh several years ago now uh you know there's a a a recognition that the vast majority of americans now support uh you know environmental regulation and list you know those protections as a top you know policy priority uh you know most many of the fortune 500 companies have signed on to real measurable climate commitments and so i think you know the the interest in carbon markets is really sort of an artifact of the excitement and momentum around doing something about climate change um you know i saw a funny funny tweet the other day that was you know reframing climate change is just a series of regionalized apocalypses right and so um you know if we need to rebrand it you know as in the way that mobilizes our society to do it then that's fine um and i think that people now really since paris and the climate accord have really started to think uh more strategically about what do we do about it and a lot of people have pointed to these market you know sort of uh mechanisms to do it and the carbon market is a great opportunity for us to use a tool that's already in place that already exists to make a real impact and support an industry or a variety of different industries like agriculture in a way that can be positive for everyone that's a you know that's a that's a really good point and you know on the on the slide here that that we've got showing you know this isn't just something that's being compelled by by governments you know saying you know you know certain industries or certain companies must conform with with this regulation or with that particular goal but we're seeing an amazing increase in the volume of household name companies who are coming out and saying um yeah we're we're pledging to be net zero we're pledging to be carbon neutral we're pledging to be um you know climate positive by such and such a date there's there's a renewed focus voluntarily um by big organizations and individuals as well that you know what they they don't have to wait we don't have to wait for government to tell us what to do in order to make an impact a positive impact on um you know on on climate completely agree yeah i mean again and this is not it is becoming less of a political issue as well i think that there's a recognition across you know the entire political spectrum that we need to do something about this and doing so in a voluntary capacity in a way that mobilizes the private sector alongside you know individuals um and the government to to to come together and find a practical solution uh is very inspiring it it it really is and you know what's what's interesting um you know what's what's interesting there is that when it comes to you know the the politics of it of course here in the united states just a couple of days ago the u.s senate passed the growing climate solutions act it was overwhelming bipartisan support you know not just kind of narrow margins but you know something i think 93 or 96 of all of the um senators voting for it it still hasn't passed the house yet but um just overwhelming bipartisan support and when we come to regenerative agriculture um you know it's regenerative agriculture which of course is core to the sibo technologies mission but regenerative agriculture has a very big and profound impact on uh on carbon farming on carbon markets on carbon credits and and on soil regeneration and replenishment so this is one of the areas i think where we are helping we know we're aligning the the values and the needs of american farmers with the values and needs of um organizations who are you know have carbon and climate commitments with kind of the overall uh values and needs to make a positive impact when it comes to to climate change um you know i often say you know it's you know it's people are hard-pressed to find you know a farmer who they who they don't like i mean who doesn't like farmers and farming and helping um you know people produce better soils better food better food that our food eats um and a healthier population it's one of these things where it just makes sense across the board um without having to wield kind of a big regulatory stick in order to get compliance so that's right i mean i think regenerative agriculture is one of those things that you know we we talked about as having you know co-benefits or stacked co-benefits right so yes it is a climate solution yes we can sequester carbon in the soil and that carbon happens to make uh agricultural land more productive and healthier and more resilient but there's all these other benefits of it as well uh you know things like biodiversity or you know providing another revenue stream to to growers who are already operating on thin margins i mean if we can find a solution like regenerative agriculture that is inspiring on so many levels that it just makes practical sense for something that we should pursue it's not easy and we'll talk more about why that is right but it is important for us to figure out well let's dive into some of that that demystification let's let's talk a little bit about carbon markets and so for the next couple minutes let's work to demystify what carbon markets are all about um you know there's there's um uh well we have a we have a slide here why don't i bring those um when i bring those back up kind of as a as a guide for us to talk really there's compliance markets right and then there's voluntary uh carbon carbon markets um do you want to talk a little bit about the the difference between those two or how are they or you know what what they work on and we can um riff on there sure um i mean i think that the primary thing to understand is just that a compliance market is a is a regulated market it is required uh for you know those that are under that guidance to be to participate uh there's no choice about it um and you know that can mean a bunch of different things you know there could be price guidance there could be um you know sort of uh um you know standardization that is defined specifically by you know the governing body um but you know then the other side of that is a voluntary market right so this is kind of the the space that we're in right now within agriculture in the united states uh it's not regulated it's not enforced um and you know it's still early days uh so those that are purchasing these credits to you know offset their own you know greenhouse gas footprint um are doing so in a voluntary capacity um either because they they care very much about this space um they care about their impact on climate um or you know they see the writing on the wall that at some point in the future this could become a regular regulated compliance market so that's kind of where we are you know right now again and voluntary markets sometimes have a way of becoming regulatory markets in the future right right um you know and when we when we think about you know kind of the difference between you know regulatory markets and and institutional compliance markets i think that that notion of the um you know of the big stick of regulation kind of requiring that an industry or a company do some things in order to offset their carbon footprint um is uh is is is important right we just saw in the um the dutch court rule i believe um it was uh i think it was just within the last month um against exxon mobil saying that they have to step up some of their efforts um there and so that's an example of it of an international um regulation on uh you know on a foreign uh company um but it was also a you know kind of a bellwether for a lot of the other organizat other companies in that in that industry sector but when we come to voluntary or private voluntary um markets um you know we can we can talk about uh you know a lot of the startup works that's the it's the space that sibo technologies is in it's a lot of the space that a lot of the um or uh the other carbon farming um platforms and and technology markets are in um no one is coming out and saying you must buy carbon uh credits or carbon offsets from you know from regenerative ag at least not yet um and there's a perception i think that voluntary carbon markets are complex or difficult to understand um you know can you maybe talk a little bit about you know how how voluntary carbon markets as you know especially for voluntary um ag carbon markets are kind of leading the way to make things simple yeah i think you know and part one of the challenges here i just point out is that you know part of the reason um that they're complex is because there's very little guidance right now uh there's a lot of different players with you know mixed sometimes overlapping messages around you know the way that things should work um or you know the way that they've built out their methodologies uh and because of that i think it creates quite a bit of confusion right so you know within the context of a voluntary carbon market we have um you know at this point players out there that are sort of making their own definitions and coming to market with you know credits that they det they deem to be um you know credible uh and then there are platforms um or entities out there ngos that specifically focus on facilitating this so you know there are registries uh you know vera gold standard um you know climate action reserve or car they all do this they create standards or protocols that are designed to help sort of you know demystify and and ensure that you know the credits that are being transacted are are credible and they're valid and that they've undergone this a sufficient amount of uh rigor and oversight so that you know people aren't getting boondoggled and purchasing something that's not real i think that's incredibly important to exist uh and you know because of that you know because that we really need to to define how valid uh these credits are and prove it in some cases it's overly rigorous and i think that you know the position we're in within agriculture right now is that you know our desire to ensure that that these credits are valid is actually preventing in some say in some ways the market from fully taking off right now and so you know as we sort of move into a space where perhaps there's more regulation or there's more you know sort of government mandated uh structure or definition you know that will help i think in some ways to find what will be acceptable in a way that doesn't you know prevent um participation from from many of the growers that would like to participate in these markets right and i think that's i think that's an important point that that you make there right the first is to you know to really understand that the there's a a gradient or a variation in the you know there's a continuum of what a carbon credit is based on its verification and where it comes from and how long it's you know how much carbon and how long that carbon is represented to stay kind of in in place where you know where it's being um sequestered or how much is being avoided permanently that that sort of thing um and there's a number of these organizations and programs and protocols that are coming out saying you know we've got a way to do it or we've got a way to do it and there's not you know a kind of a two plus two equals four um uh consensus around you know this is good and that's bad i think everybody agrees we ought to be doing something and there's different ways of measuring that and and identifying it in fact that's what our webinar at the end of july we'll be covering is kind of looking at the landscape of all of those different um carbon programs and and protocols and when it comes into that voluntary carbon market place spurring participation and making it easy for people to engage both on the supply side and in our case farmers and growing operations and on the demand side whether that's individuals or businesses who want to buy carbon or re you know regenerative ag units or offsets or incense they want to buy they want to make a transaction that has to be easy um because at the end of the day as a society we're used to buying and selling things in a in a very easy and efficient manner right amazon has made that um you know very popular and easy for us we've been conditioned to make that uh you know to make those transactions easy and the sign up and the growing uh process has to be easy as as well and cost effective right um i would just add billy that you know we're in a place right now within the ag based carbon markets it's still very new right and there is a huge amount of uncertainty in terms of you know how long soil carbon is sequestered in the ground and what sort of things can release it and you know what sort of practices we need to uh require to ensure that you know we're warehousing enough carbon to actually have a real tangible impact on climate uh you know the the protocols related to you know agricultural carbon on vera and carr were released within the past year and at this point there are still very very few projects that have been accepted to allow for credit generation within them and so you know we're still in a point right now where we're defining what is an acceptable level of uncertainty uh as it relates to you know that the soil carbon uh and sort of the impacts there and so while we're defining that it makes it challenging i think to to to truly incentivize growers to take on these practices when it's a little bit of a moving target in terms of you know what they can earn and whether they're going to be able to recoup their investment that's a that's a really good that's a really good point and it speaks to one of the questions that has come through um so thank you very much uh for those of you who are watching live please do um type your questions into the question box and as they come up and are relevant to the topic that uh stephen is discussing we'll we'll address them here and i think this is time to talk a little bit in more detail about vera and carr the question that came through is how are vera and car regulated how do we know that their reporting is accurate and that there's no conflict of interest um you care to comment a little bit about uh about that steve yeah i mean it's as far as i know they're not regulated um so there's no governing body i mean they're acting in a sense as the regulators within an unregulated marketplace uh and so you know they need to establish credibility um within the space and largely they've done that by hiring experts and by working with you know those who really understand the space to develop you know the protocols and methodologies required to generate carbon credits so you know i think that that's it's important it's an interesting question i mean you know there's no if there were if this were a compliance market there would be some regulation that would you know help to find that um as of now i don't know of anything beyond you know their own credibility being on the line to ensure that you know they're doing things efficaciously well and and at the end of the day right this is it it's all based on science and so the the science is repeatable the science is testable the the scientific methodologies are they're they're not hidden it's not a black box um and you have uh you know a growing uh consensus a an already massive and growing consensus of global uh scientists who are implementing the you know the formula and the methodologies and the the testing criteria and the different protocols to actually say yep no this this actually does work um and it's a matter i think at this point of you know not it's not about you know is there is there a conflict of interest in place or is there fraud in place but more about is one going to be better than the other and i think that's a great place to be in because that means we're always going to have incremental improvement just like we do in in other market spaces right in technology markets right we're not still sticking at the you know at the first generation iphone we're on to 12 um because there's constant innovation and guess what it's not just apple with an iphone it's also samsung and google and all of the other um you know technology makers there so there's you know that incremental improvement which is which i think it's a good it's a good place to be and the science is able to be you know reproduced by you know by anybody who's interested and it's certainly the approach that we've taken here at sibo technologies with our own um you know highly qualified uh you know uh group of of scientists that run from climate scientists to crop modelers to soil scientists and all of the uh you know all of the above so um it's it's not a matter of opinion or philosophy or conjecture as much as uh you know testing rigor and always looking for the next best methodology um yeah i would agree i mean and this is going to be an iterative process right and i think expect to see changes within those protocols as they develop again this is the first sort of go at trying to to do this and so we need to determine you know what what needs to change moving forward in order to unlock these markets um but by large i think that you know what what's been put out there so far is is is really great stuff yeah um any any comments on gold standard and another another question from a viewer um right now and um and again i'll remind our our viewers whether you're doing now or watching this on demand that we do have another webinar planned right now for the end of july where we will go into depth on all the different programs and protocols um we mentioned vera we mentioned car any comments on gold standard uh gold standard is sort of the the other the third in the big three uh as i like to call them um you know gold standard has a very very high um standard you know in terms of the the way that they view these markets um and i think that you know as it relates to offsets with an aggregate they've taken a little bit more of a wait-and-see approach um because of some of that uncertainty that i was referring to earlier and so carr and vera have sort of released their protocols and you know vera calls it the vm42 uh and and uh cars is the you know soil and land enrichment protocol and you know i think that when you look at gold standard they've taken a slightly different approach in that they're looking more heavily at sort of scope 3 programs so things that are more focused on supply chain you know emissions reduction and mitigation and defining you know more protocols and regulations there which i think is also very important and something that sibo's looking very closely at well why don't we take some time to turn now to our next topic um we've done a little bit of an overview of carbon markets we've talked about um there are institutional compliance markets which are governed by regulation and have some uh some compulsory um capabilities or or feeders into them and then the private voluntary markets like sibo technologies and like a lot of the car um ad based carbon markets right now where you can um voluntarily enroll you can voluntarily purchase a carbon credit or an emissions reduction unit um and off and and they are real and they are really uh you know offsetting or accounting for a certain amount of carbon that has been sequestered uh but they don't have the um the the compulsory uh uh nature of the of the compliance markets um and so you can feel good that the science is solid um but you can't necessarily use it to uh you know answer a judgment from the hag um when we talked a little bit about those uh compliance markets and the voluntary markets let's turn our attention now to understanding you know what is a carbon credit um you know what what is what is that thing that that we loosely call a a carbon credit and um maybe stephen you could talk a little bit about how there are some you know some different names for carbon credits or um sure emissions units and things like that yeah so i would just start by saying that typically a carbon credit is equivalent to one ton of carbon or carbon dioxide equivalent co2 equivalent um you know and and you know the idea is that that ton uh is not being emitted into you know the the atmosphere um and so you know this is this is this represents sort of um you know the reduction or avoidance of uh carbon that would have otherwise been emitted um you know we'll come back to this slide but i think it's important to sort of you know define you know how you know there's a lot of conversation around offsets and insets um and how they're different from one another i think you know when we're thinking about offsets i think the the first thing to to point out is that you know typically in offset is defined by you know an emissions reduction credit that's generated kind of by a project developer and then it's sold uh separately almost as a permission structure to pollute to someone else okay so you know you can think of like a big tech company who has lots of emissions associated uh with their you know their their their servers and um you know they could be purchasing offsets from a completely different industry um to offset the pollution that they've emitted and that could be either you know um that they've chosen to admit or that are completely unavoidable as part of you know their operations and so the idea there is that you know an offset would allow for an organization that is polluting to essentially write off that pollution because of uh you know a a purchase of an offset elsewhere and i'd like to point out again that it does in some ways it is in some ways a permission structure uh to pollute because we are just agreeing that it is acceptable for that pollution to go into the atmosphere um doesn't mean that offsets aren't great and that they serve an important purpose um but you know billion you you and i were talking a little bit about sort of the bathtub analogy uh earlier and i think it's it's it's a useful one in terms of you know how we should be prioritizing our efforts um around reducing emissions um do you want to give that example yeah yeah that was i it was a part of an article that um that that we had been reading uh just a little bit earlier today and and the analogy goes something like this right if there's if your bathtub in your in your house is is overflowing um you know it makes sense to both turn off the the spigot as well as get a sponge um and and you know applying that metaphor to to carbon credits and carbon markets right a carbon offset is the sponge right you're literally doing you know taking something outside to soak up the the overflow and um you know the insetting activity um know reducing greenhouse gas emissions reducing um you know the the pollution that that you're emitting through changing of of processes that's equivalent to turning off the the spigot stopping the processes that cause the pollution we're reducing them um and you know contrary to you know this gets to be a kind of somewhat of a contentious debate sometimes when people say well you know you should turn off the overflow and other people say no we need the sponges and the the real answer i think is well it's both if you're in a situation in your bathroom and your bathtub is overflowing yes turn off the spigot and make sure that you've got the sponge you've got to do both things and if for whatever reason you can't turn off that faucet if the if the water is going to continue to overflow maybe there's a pipe burst there or you can only get it so much and it's going to keep on on leaking you do the best you can until you can overhaul the entire system and meanwhile you get the sponges and you clean and you keep on uh you know soaking up that that overflow right well there's a really important lesson here um and we're we're you know people who are and organizations who are maybe vested in one approach or the other uh maybe lose sight you know maybe lose the forest for the trees or the the ears of corn for the fields of of corn in in our wheel in our world um but it's important to have both both parts of the solution it's really about um being able to to offset and absorb the carbon equivalent that is being the carbon dioxide equivalent that's being released into the atmosphere and making those changes in our processes and in our supply chains and across our value sheds that are going to actually um reduce and prevent the uh and avoid the emissions of of greenhouse causing gases all of those are part of a very important um solution it's not either or it's really a band but there i mean there is in some ways an order of operations here i mean it's important as an organization that's making a climate commitment to first examine one's own operations and one's own supply chain and figure out are there ways that we can reduce our footprint um you know directly right can we can we work on um you know on procuring a more efficient fleet of cars to deliver our products is it you know can we procure you know renewable energy as part of our scope 2 emissions and then finally for scope 3 i mean are there ways that we can work with our suppliers you know the the growers that are growing the grain that go into the crackers that we put into the market to work with them to reduce their footprint right and so um i think that there's a growing recognition that in setting or you know sort of scope three emissions management is uh extremely important and maybe even the first thing that you should try and do and if there's no additional opportunity if you've exhausted your sort of financially feasible options um for reducing emissions within you know your scope one and two and three then go outside of that scope and offset the rest right it's important to look at like all options as you mentioned um but that's sort of how i think about the differences here of a carbon offset versus a carbon inset um and you know a lot of there is a lot of conversation about both right now and so this is there's and before we get into scope one two and three emissions because that's a really interesting topic for um for demystification here but before we get into that right when we talk about what is a carbon credit you had said before right a carbon credit is equivalent to one ton of carbon dioxide equivalent that is uh sequestered or avoided um and what that you know what that means for regenerative agriculture for carbon farming is that that one ton of carbon dioxide equivalent is reduced or avoided or sequestered is going to come from the actual processes and practices of farming one of those practices and processes is the actual growth of plants right as plants grow they consume and metabolize carbon dioxide and they can store it in their root structure and in the in the soil down down below that's that's one piece um some other pieces are doing things like uh conservation tillage right when uh growers are running their their tractors and their machinery over the fields um churning up that soil with a conventional till will release carbon dioxide all that anything that's stored in that soil up into the up into the atmosphere a conservation tillage does less of that and a no-till approach does um no churning of of that um of that of that soil and so all of those sorts of practices and there are many other practices help to uh reduce avoid and sequester carbon dioxide through the course of those of those farming practices and when we talk about regenerative agriculture when we use that term those practices that we that reduce avoid and um sequester carbon dioxide in the soil also have a really big benefit to the soil health the biome itself as well and those improvements those practices actually improve the soil they can enrich the soil that's there they can actually help to grow the amount of topsoil rich topsoil that is that is present um it reduces erosion it reduces uh you know um leaching and and flow of of inputs chemical inputs and fertilizers and things like that off into the into the watershed and ultimately what it what regenerative agriculture does for the for the grower is to create healthier soils create more climate resilient crops it actually has a measurable impact a positive impact on yield um for the for the crops that are that are being grown um and you know overall it it just it helps create a better agricultural product yeah it has all of these climate benefits as well which is why when we talk about you know sibo's mission is to scale regenerative agriculture it's really this this win-win situation for the grower you're improving the the soil you're improving the yield you're making healthier more nutrient dense um products and reducing uh input costs in in many cases and potentially creating a new revenue stream through carbon farming by being able to quantify and then ultimately produce and sell carbon credits as another i know as another commodity and yet i would just point out that these practices are still not widely adopted uh within the space you're right there are all these stacked benefits but on their own they haven't demonstrated enough value or enough sort of financial uh incentive to really propel you know propel you know wide scale adoption of cover cropping and reduce tillage and reduce nitrogen so you know there is something locking up this transition i think that we will eventually see it i hope that we will but you know that's why something like a carbon market is so important right no that's you know ultimately the the additionality that we need to show to demonstrate that a carbon credit is valid um is essentially that exactly right which is that we're we're providing value value that is ultimately inspiring the grower to make the change if those other stacked benefits all the things that you just mentioned billy reduce input costs et cetera aren't enough on their own well then we need something else and that's really what these carbon credits are for so even though they're getting value you know it hasn't been enough only something like five percent of growers at this point in the us are doing cover crops we need that number to be way higher uh and so i think because of that we're able to show that additionality does exist here and just what you're what you're seeing on the screen is just that um you know these are sort of four of the key uh kind of components um of a carbon credit you need to demonstrate that these exist in order for a credit to be valid um you know additionality is the the idea that it would not have happened otherwise right um you know and some of the important kind of pieces to look at as it relates to regenerative agriculture is did was this practice already adopted in the past so typically with you know you know the different carbon registries uh they require that it is a network practice uh this year um and that's the reason why is because we need to show that they haven't done it otherwise they didn't already do it um because they they saw the incentives uh already you know were already on the table for them um you know they also have to show like is this a common practice already is everyone already doing this you know there are certain sort of regenerative practices that most of the market has already adopted right i think that something like 70 of growers at this point are doing some type of reduced tillage typically um you know and so it's it's hard to demonstrate that we should be able to provide you know financial resources for something that you know most people are already doing um so really it's you know additionality is all about what is the reason that this practice is happening and can we show that the carbon credit had a material impact on its adoption um a couple others to to to mention is permanence um you know we need to be able to show that that this carbon credit is a permanent impact right it's not just a um you know a temporary thing we need to show that you know there is a long-term lasting impact from the storage and so that's where a lot of the uncertainty comes in as it relates to soil carbon and to these marketplaces is that you know um it's hard to prove that your you know a new practice regime will yield an absolutely permanent um drawdown of carbon that will be stored in soil forever it's not as if you're creating a rock and putting it on a scale and then putting it in you know on your desk or something like that and so that's why there's all sorts of different components built in to our you know the different registries that require um that we evaluate you know what sort of opportunity costs are there for a grower you know if the price of corn goes way up what's the likelihood that they're going to change their practices back what sort of environmental factors are there if there's a major drought does that have an impact on soil carbon we have to evaluate that um you know buffer pools investing schedules you know how much of the the credit do we just withhold in perpetuity to ensure that if there is a reversal and that carbon gets re-released back into the atmosphere that that you know we're accounting for that and then investing schedules right we want to create an incentive schedule or an incentive structure that you know has the grower that continues to do these practices year in and year out and will continue to reap the rewards a couple others to mention leakage you know did the reduction here cause an increase there is it truly net negative or did you know the adoption of these practices over here you know just yield some other practice on a different part of their land um to to you know account for you know maybe a yield hit or something like that is it a reduction or is it a reallocation um any any comments on that stuff billy um yeah i would just say that you know this is where the the agricultural markets really have an opportunity uh to shine and where sibo is taking a a really innovative and thought leadership approach here as we talk to the the market as we talk to growers as we talk to companies as we talk to legislators and regulators and bureaucrats and we're having all those conversations because things like you know additionality in the energy markets which a lot of the early carbon markets were designed for um and with those in mind additionality in those markets is really not able to be applied um you know equally to to agriculture agriculture is inherently an annual seasonal activity um you know in in in some cases um you know the the additionality is happening at some level every single year because every single year a brand new decision is made about what to plant how to plant the you know the the prevalence of um of renting fields uh uh in in some way shape or form means that there's a lot of ownership changes and so while the field is the same field or the parcel is the same parcel the practices on that parcel have to be evaluated you know every single uh every single year and so that's where the agriculture carbon markets and the regenerative ag-based markets really have an opportunity to to shine and to take a leadership stance that's what what sibo technologies is doing we're doing that in partnership with the um you know with the programs and the protocols like like you had mentioned before like vera and gold standard and car and with some of the other uh players in this in this space as well and i think it's a good uh point now to ask one of the questions that's coming from um from one of our viewers about you know what is the average cost or and value of a carbon credit right now um and you know this is this is i think this speaks directly steve to your point about hey there's a cost of doing regenerative ag or of doing practices that can help to offset and sequester and reduce and avoid carbon emissions what is what is that what is that price do you want to talk to that i've got a chart pulled up on my other computer over here that that we could um talk to if if you want to as well sure i mean if you want to bring that up uh you know please do and i can speak a little bit to it while you do that um it's it's a it's a really important question that was asked and i think you know um we have to understand that that you know the adoption of these practices are not cheap especially when you're doing it for the first time right so you're not not there there are costs of equipment there are costs of you know cover crop seeds there are the cost of potentially taking a hit to your yield if you you don't completely optimize it in the first couple years typically that normalizes after a couple years but you know the first few you've got to figure out exactly what the best uh you know kind of cover crop mix and you know uh you know sort of practice regime is in order to optimize um you know for your land and so you know we've seen upwards of costs of north of fifty dollars per acre um you know the typical average cost of a carbon credit uh in sort of our voluntary markets here in the us is less than ten dollars so we're talking probably about seven dollars and fifty cents somewhere in that range um you know those are higher in regulated markets uh you know we've seen upwards of somewhere around 25 and you know the prices i should mention are steadily rising and you know that's an average as well across all of the different types of carbon credits that's out there so you can have a carbon credit that's generated from putting a scrubber on a smoke stack and kind of you know pulling making sure that that carbon doesn't get released into the atmosphere um that those are very cheap right those cost probably two or three dollars per ton um and then there are you know really expensive credits like direct air capture which costs you know sometimes up to 150 to 200 a ton and then regenerative agriculture uh thus far within the voluntary space has been a relatively expensive uh you know compared to the norms uh within the industry um credit of about 15 to 20 dollars we've seen so far and again this is on its way up um but we at sibo really believe that if we're going to be you know inspiring full change or broad changes within the space of adoption of regenerative practices that we need to get closer to covering all of those costs and it doesn't have to be completely from the carbon credit there are opportunities to stack incentives either from you know government programs or from other sort of environmental marketplaces but we need to aim through all of those to get to a point where ultimately we cover all of the practice otherwise you know it will be niche it will be along the the margins where we see adoption um so you know i think that we you know ultimately we need to get to a point where we are paying um not just 50 a credit uh but remember that you know an acre of land only generates probably about typically a half a credit um sometimes more sometimes it's over over a full ton per acre but typically on average it's about a half so you know if you're paying um you know 20 for example for a ton and then uh you know you divide that by two that you know on a per acre basis that's only about 10 bucks so you know we need the prices of this carbon to go up considerably if we want to get close to paying for all of it yeah and as you can see this is just about quick google search here that uh that was done just looking at um a normalized carbon price index over over time and again this is not this is not for regenerative or farm-based carbon prices but it's kind of overall it goes up to about mid-year last year so you can see that interest in carbon is is going up and the the price index is you know hovering right there around twenty dollars today on the sibo technology platform you can buy a a sibo verified carbon credit for uh about twenty dollars a credit um but again it's it's very well recognized that when it comes to regenerative agriculture um when it comes to regenerative act there is a like you said steve there's a cost to actually implementing those practices there's a cost to doing cover crops there's a cost to doing no-till right it requires a new sort of uh you know drill planter um you know when it comes to time to actually plant the cash crop um there are you know there are you know potential cost savings on uh things like reduced nitrogen inputs when you're growing corn um but there you know there's there's all these other kind of costs to to navigate i know the usda has now issued a i believe it's a five dollar um you know kind of coupon for crop insurance for people who are doing cover cropping so there's kind of all these kind of stacked or overlapping you know incentives not necessarily cash payments to the grower or to the landowner um but this is where a lot of the the uncertainty lies and that's why we're having a session like this to help to demystify this as much as we can because it's it's always changing um right now but i think that your uh you know the the the um kind of general rule there right average cost or value of a carbon credit um you know you can you can find them uh cheap you can find them expensive and really what needs to happen in sibo's view and in the view of a lot of other people as well is that the cost of a carbon credit the price of a carbon credit needs to be enough to actually create at that financial incentive for growers to to implement those practices um at the end of the day growing you know farming is a business it is a family business it is a it is a big business and they have to be able to uh you know to to make ends meet and and hopefully make a you know make a profit and um you know and grow and expand uh literally their operations and if we're asking um not just to maximize yield and come out you know at current commodity prices but also to take into consideration soil regeneration and climate health um you know having those incentives in place through the vehicle of a carbon credit i think makes a lot of sense agreed i also think it's worth pointing out that you know from a demand perspective from the buyers of these credits credits are not created equal right there's a reason why some of this carbon is more expensive and you know as it relates to regenerative agriculture this is a you know we call it charismatic carbon right there is a beautiful story to tell about the impact this is having beyond the carbon that you're sucking out of the atmosphere right i mean you know the the the impact it has on soil health on fortifying our food system um on on you know creating new revenue shoes for growers on you know creating up pollinator habitats right they're all sorts of different really valuable things that happen as a result of regenerative agriculture that a buyer of that carbon would want to talk about um you know if you're going to be offsetting your footprint you should have a portfolio of different approaches and right particularly if you operate within the food and agriculture space purchasing carbon credits from you know through regenerative agriculture is absolutely crucial um to you know telling a story that's relevant to your business well let's go um ahead and talk briefly about scope one two and three uh emissions and then wrap up on what is carbon farming and uh regenerative ad sure so i mean if you look at um when we talk about scope one two and three emissions this is sort of the emission profile of a particular of an organization um and so you know we define these uh through these different scopes scope one is direct so these are things that are kind of owned and operated by the company that's you know company facilities uh company vehicles that are owned you know a fleet of a fleet of delivery vehicles whatever if they're owned by the company they qualify a scope one scope 2 is typically defined by per you know procured energy um so you know the the energy required to run your manufacturing lines or your data centers or uh whatever else you do you know you do have some control over it and that's why you'll see a lot of you know ppas or power purchase agreements where you know big tech companies are going out and securing energy from a particular you know wind farm or from a solar farm and so that's scope two those are two things that you know typically as in terms of order of operations a lot of companies start with trying to do as much as they can within scope one and scope two um and then oftentimes scope three comes next it's a little harder with scope three because you don't have as much direct control but scope three is everything else and scope 3 is both um uh you know they're both upstream and downstream so these are things that you know would be a result of you know for example if you are a cpg company that creates crackers um you know one of your upstream activities would be the the the production of the grain that goes into your crackers right so that both the the for on farm activities the transportation to get it to the processor the processing itself and then finally the delivery to you and then downstream activities within the scope 3 context involve the use of your product and service so you know once it gets into the hands of the consumer how are they using it do you have any control over that right or can you put your product into packaging that you know is more recyclable right and so these are all things that as a company you should theoretically have some control over um to varying degrees uh obviously and those that you don't have any control at that point that's when offsets come into play to you know further um you know influence your overall footprint well that was that was really helpful uh stephen when we talk about you know insets and offsets right those those insets can be you know through um you know scopes one two and three and you know the offsets are things that you can you know buy from it from you know anywhere it's that sponge helping to to clean up the uh the overflowing bathtub um but when we talk you know and when we talk about uh you know sibo and what what our company does um you know what we are in the business of um we are a we are a technology platform company focused on scaling regenerative agriculture and when we talk about scaling regenerative agriculture one of the things that makes the most uh that makes the most business sense are insets um offsets and incentives for regenerative agriculture and when you're talking about an organization sibo technologies sells tech sells a technology platform that helps companies with ag somewhere in their supply chain or in their value shed um manage monitor and incentivize and ultimately monetize their their um their agricultural network or their their agricultural systems that that are maybe part of their scope 3 emissions profile um that means in your example steve of the you know the the cpg of the company producing crackers um or you know a company creating a soy based uh you know alternative protein for example they can um see and create incentives for their growers who are all independent right these aren't controlled compellable growers but they can create an incentive structure and then monitor what's actually going on on those farms and on those fields in the way of farming practices like like tillage like cover cropping um like like reduced inputs and sibo allows that verification at scale of those regenerative agricultural practices which not only improve the soil and the and agricultural product but also have this net benefit of um of of a carbon credit that that can be produced and then ultimately sold um as part of that we sibo also has a carbon marketplace a voluntary carbon marketplace like we talked about at the very beginning when we combine our land insights with the um the farmers who enroll there's never any charge for a farmer who enrolls in our platform um to actually create a you know and monitor their practices and then ultimately produce that that sibo verified carbon credit or sibo uh regenerative unit which can then be bought and sold for about twenty dollars to today and those proceeds go back to the farmer less a management cost that uh price that comes back to sibo you know if and when they're they're sold um oh and you you brought this up that's that's true so i saw that there was a question about you know what is sibo actually in the business of and i would be remiss um if i didn't talk a little bit about that um but let's let's briefly go i know that we've been at this for uh for about an hour but let's talk about carbon farming um and uh and let's get into uh let's get into what is carbon um farming and where does uh sibo play there steve why don't you take that one sure uh so i think you know what's important to point out here is that we see carbon markets as a mean to an end right we see this as a way our focus as a company as you mentioned billy is to scale regenerative agriculture um and you know for decades we've been asking growers to deliver increasingly cheap reliable plentiful food and by and large they have delivered right so so food is cheap and um available and and and you know right now we're asking them to change and reprioritize uh sort of how they go about making a living and operating within that ecosystem and i don't think it's right really for us to you know sort of point the finger and blame them uh for any of the environmental impact here um they're running a business and and ultimately we need to support this transition as if if we as a society value uh you know the the impact of doing things differently and so i think that that's kind of the underlying uh you know sort of reality that we as sibo have recognized and that's you know really if we want to scale regenerative agriculture we need to use these different mechanisms to help sustain and support it and so you know we see carbon markets as one way to do that we see incentives you know as another way where it's you know either through a particular stakeholder that wants to offer you know discounted products or if they want to you know procure regenerative grain um you know or or uh you know sponsor other ecosystem services like water you know water um quality um and so you know that's sort of you know where we are in terms of you know really trying to uh put together the value proposition to help growers make this change and so you know this is kind of where what we've built so far as sibo uh and sort of how we've envisioned one of these many workflows that we'll continue to build out um which is you know a grower would enroll in sibo's carbon market right so they would give some information they would attest to doing certain practices both in the past and moving forward and they would commit to doing it for a certain period of time we at sibo believe that it's important to allow for growers to make an annual commitment as well as longer commitments if you're able and willing to do so you know most growers are renting land and it's really difficult to make a 10-year commitment to doing the same practices each and every year if you don't know you're going to be operating on that land next year or in a couple years down the line so you know once a grower has enrolled then sibo's technology will automatically monitor and verify practices so we use remote sensing technology and satellite imagery to look at you know individual fields and see if a cover crop emerges and to determine what sort of tillage um was taking place uh sibo's models the salus model then quantifies the carbon impact um of that you know uh updated practice regime um and validated practice regime and then a third party would validate um you know that everything that we've done is correct and that the model that we're using is correct and in some cases they will go out and actually do soil samples on the ground and then that is when the credit actually gets registered um you know at sibo we have our own sort of marketplace where we can register credits but we're also working with third-party registries um you know for for you know to expand the types of buyers that will be interested finally once those credits are available then uh and they sell then the grower will get paid so that's sort of you know the dynamic of how you know a grower who's adopting these new practices would see revenue as a result of them well that's that's um you know absolutely fantastic steve i will point out uh to the to the listening and the viewing audience that you know right now sibo is focused on row crops right and um and you're you're kind of your main row crops in the u.s so that's going to be corn soy cotton and wheat along with um uh cover crop uh you know detection and validation our technology allows us to scale uh the the verification quantification um and monitoring of fields across the united states because of of our um you know of our of our satellite and computer vision approach and then our modeling based approach which is baselined with um with with actual uh you know on on field uh data and soil sampling but the ability to scale this across all millions of parcels in the united states is absolutely vital in order for regenerative agriculture and ultimately carbon farming as a climate solution to to take off we don't believe that we should wait and do nothing until the perfect solution is found because the pace of technological innovation means that the perfect solution will always be what is current right here today and it will always be improving and so um you know that is that is our commitment to to technological innovation as well as making an impact right now and helping businesses monitor and um and and verify and improve their uh their supply chain and their value shed as well as individual growers and individual consumers to make a difference right in there you know in in their neighborhoods and in their in their backyard um so i know we are we are over time there's a bunch of questions rolling in right now we will answer these on our blog but steve i wanted to leave you with just a couple questions that came in here um do we have an idea of what kind of cropping systems provide the most credit potential like you know um row crops fruit trees vegetables and you know grazing and pasture land um you know right now i said sibo is focused on on the row crops and there's i think there's different impacts for different uh you know systems well that's a that's a really good question i think that um you know there's still a lot to be learned you know we've we've heard a lot of really interesting uh new research within the the pasture land space of different types of um you know uh uh grazing techniques you know intensive rotational grazing and things like that how it can rapidly um you know bring back topsoil um you know i think that the key for sibo is that we rely currently on cropping systems that we can use you know satellite imagery and remote sensing to validate to verify yeah um and so you know it's important for us to be able to use satellite imagery to determine whether the practices um that that we you know we're crediting for have actually happened right all of that ends up as an input into our model and for every anything that we can't you know use satellite imagery for what would require sort of attestation as well as um you know receipts right for example for nitrogen purchases or you know as applied maps coming directly off of a farm management system so we need to be able to verify it and that's it's key that these things are scalable so that we can drive as much of that value back to growers as possible as far as you know the different practices themselves within you know row crop system um typically we we see that the biggest impact comes when there is a stacking of practices right happening together so you know no no-till alongside cover crop alongside uh you know a reduction in in nitrogen that's when you have major results as well with crop crop rotation as as well right rotation is really important um uh i know that we've just recently found uh you know found found that as a very large statistical um driver of uh carbon sequestration that's right and and frankly it's also a matter of uh you know the delta from what you were doing before right right a conventional uh system with no rotation and you know a ton of uh fertilizer uh and no cover crops etc then that delta is is going to yield a big credit um so you know they see another question around baselines um you know within you know the the typical registries uh and the systems through vera and carr you know the way that that works is that you look at the previous three years at a minimum of what practices were and then compare that to the updated practice regime to determine what the credit uh eligibility looks like right and we also believe that you know growers who have been doing the you know the the right thing for you know for regenerative practices and for the environment who've been doing that for years and years and in some cases even generations that they not that they ought not be bracketed out from the entire marketplace but that they have a a place too that you know rewards not just the bad actors um but also the people who've been doing the right thing and that's why you see this continuum of of types of carbon credits and types of carbon markets that that can take place and that's why it's not an either or but really of both and right where you can have a seba regenerative unit where any grower who's taking a uh making a difference in doing the practice even if they've been doing it for generations can still participate at one level and then other growers um you know who are making a radical shift in their in their practices they might have uh opportunity to participate at a you know at another place and at another level and these are some of the things that are being developed in real time and that's really what makes the technology and the marketplace and the the regulatory environment um you know really an exciting place to be and i think kind of bringing this discussion full circle into a close um we started off by talking about this massive interest in carbon farming and carbon credits and in regenerative agriculture um and i think that really shows that we are at kind of the leading edge of this second wave of climate and carbon awareness where now we have the technology to be able to do something about this at scale we have an awareness of the the scope of the problem and the opportunities of the solution um and we have um you know the the ability to actually implement solutions in practical ways that will both help growers and landowners and the the commodities folks as well as the the business folks you know buying and selling the grain and turning it into you know the food that we eat or the food that our food eats or even the the products that that we use so it's a really exciting time to be here uh talking about carbon farming carbon credits and carbon markets i can say with certainty that um all of you who are watching whether you're watching the recording or what joining us live today um you know expect more things to come and expect change and keep an eye on sibo technologies to be uh leading the innovation and the thought leadership in this space so with that on behalf of uh my colleague steve and everyone at sibo technologies i want to thank you so much for your time today uh for taking some time out to watch and to participate with us we will follow up with your questions if we did not get to them um on our blog post and as always please do feel free to reach out to us at sibo technologies you can reach us at sibo technologies and we are more than happy to set up a conversation with one of our carbon experts with steve with myself or even uh some of our our crop scientists and modeling scientists and and soil scientists if um you've got some more of those detailed questions we'd be more than happy to have those conversations with you so pay attention to this space come back next time for our next uh handful of of webinars and we look forward to seeing you on the ground take care everybody thanks everyone

Channel: CIBO

Views: 21,109

Keywords: CiBO Technologies, CiBO, Simulation, Agriculture, AgTech, Farming Technology, Crop Models, Crop Modeling, agricultural ecosystems, food security, carbon credits, carbon markets, carbon farming, carbon offsets, carbon insets, farmer carbon programs, carbon neutral

Id: UwcZi7z2AS8

Length: 72min 19sec (4339 seconds)

Published: Fri Jul 02 2021