A new report from the AGree coalition recommends alternatives for the Agriculture Department to consider in setting up a carbon bank that could be used to develop private credit markets and to assist producers who may be left out of them.
AGree’s Climate, Food and Ag Dialogue — a group that includes representatives of major food companies as well as some farm leaders and former government officials — suggests USDA test a range of options.
“The Bank should provide financial support to a broad array of agricultural and forestry managers to invest in climate-friendly and/or regenerative agriculture outcomes — operations that may not desire to or be able to participate in climate market mechanisms,” says the report, “USDA National Climate Bank — Concept Note.”
“The Bank should also support enabling conditions and complement existing policies such as technical assistance and voluntary market infrastructure to ensure that practices can be carried out on the ground at scale.”
Agriculture Secretary Tom Vilsack hasn’t disclosed any plans yet for establishing a carbon bank, using the spending authority provided by the Commodity Credit Corp. But Robert Bonnie, USDA’s chief climate adviser who is President Joe Biden’s pick to be USDA’s undersecretary for farm production and conservation, has been a leading proponent of the concept for some time.
The options the AGree report suggests include making payments to farmers who can’t qualify for carbon credits for various reasons, including for tenant farmers who can’t get their landowners’ approval to sell credits, or small-scale growers.
Payments also could be made to farmers who can’t qualify for carbon credits under programs that preclude “early adopters,” growers who have long been using practices such as conservation tillage and cover crops.
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Another option for the carbon bank is to make temporary payments to farmers contingent on third-party project development contracts. With USDA setting minimum criteria for the contracts, the payments would help farms with the upfront capital they need to cover the risk and costs of new practices.
Additionally, the carbon bank could be used to jump-start carbon markets by purchasing carbon credits that could then be retired, the report says.
USDA also could help support carbon credits by setting a price floor for credits by serving as a buyer of last resort or by offering loans and bond guarantees to provide developers to ensure that they have the capital to start work with landowners.
Members of AGree’s Climate, Food and Ag Dialogue include two former board members of the National Corn Growers Association — Keith Alverson and Fred Yoder, a past NCGA president — as well as representatives of groups and companies including Cargill, Danone, Nestle, Unilever, American Farmland Trust, the Environmental Defense Fund and the World Wildlife Fund.
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