Capturing carbon credits from grassland

Five years ago Loy Sneary and his son, Adam, decided to change the grazing practices on their ranch – Sneary Cattle – located on the Gulf Coast in Matagorda County, Texas.

"We had practiced set grazing of cattle for three generations on our ranch, and we were beginning to understand that we were damaging the soil by continuously grazing the pastures," says Loy Sneary.

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They began switching to adaptive multi-paddock grazing that involves high-density stocking rates, brief grazing periods, and long rests on relatively small parcels of grassland. They believed the change would improve soil health and build soil carbon.

Cashing in on Carbon

That's why the father and son got involved in efforts then gaining steam in Texas to launch two entities destined to open doors for farmers and ranchers nationwide to the marketplace for carbon credits captured from grasslands. When both entities were up and running, Sneary Cattle was the first ranch to sign a contract that led in February to its first payment for carbon credits generated by cattle regeneratively grazing the ranch's grasslands.

"We were excited to receive that first payment," Sneary says. "The sale of carbon credits represents another opportunity for ranchers like us to earn revenue from the land."

The Houston, Texas, company issuing the payments to Sneary and other ranchers participating in its program is Grassroots Carbon, which sources carbon credits from farms or ranches practicing regenerative grazing and sells them to corporations looking to offset carbon emissions.

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The credits are first verified and issued by the independent, Texas-based nonprofit BCarbon, an entity originating from research initiated by the Center for Energy Studies at Rice University's Baker Institute for Public Policy in 2020. "Because BCarbon certifies only quantifiable conversions of carbon dioxide to soil organic carbon, all BCarbon credits are based on systematic measurement and follow-up verification," says Jim Blackburn, BCarbon CEO and board chair who is also a professor in the practice of environmental law in the civil and engineering department at Rice University in Houston.

The documentation of carbon dioxide stored in soil begins when soil testing measures initial levels of soil organic carbon at the beginning of a crediting period. Soil is tested again five years later to document actual increases in soil organic carbon. These measured increases, recorded by BCarbon, are verified by an independent entity. The measurements are then converted to the verified carbon credits that corporate buyers can ultimately purchase to offset emissions. "Each BCarbon credit represents 1 metric ton of carbon dioxide removed from the atmosphere and stored in soil," Blackburn says.

The process of carbon sequestration comprising each carbon credit is a process that is enhanced on regeneratively grazed grassland. Research has shown that managed grazing increases soil carbon above that of continuous grazing as well as above that of ungrazed grasslands.

"We are noticing a fast-growing interest in grasslands soil carbon credits," says Lauren Miller, vice president of Carbon Footprint Solutions for Grassroots Carbon. "Companies realize the many advantages of nature-based solutions over technology-based solutions. They understand, too, that soil carbon credits from grasslands are pretty robust. For example, they can withstand a grassland fire, without losing the carbon stock. Some of our clients had unfortunate experiences with forest credits and forest fires."

Building a corporate marketplace that incentivizes farmers' and ranchers' adoption of regenerative grazing practices could have far-reaching benefits by encouraging more wide-scale implementation of the practice.

"About 40% of the surface area of the United States – more than 650 million acres – is used for grazing," Miller says. "If landowners can improve how these lands are managed for soil health and ecological health, the impact will be enormous. Grazing lands managed in a regenerative way create thriving grassland ecology with many benefits. One of those is that the vegetation will capture more atmospheric carbon dioxide, CO2, which eventually ends up in the soil.

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"Depending on the local climate and soil types," she says, "soil carbon storage can range between 0.5 to more than 4 metric tons of CO2 per acre per year. The entirety of the U.S. may have the potential to sequester more than 1 billion metric tons of CO2 per year, or 20% of the total greenhouse gas emissions in the U.S."

Grassroots Carbon is supplying carbon credits to what Miller describes as "a growing number of credit buyers," including Shopify and Marathon Oil. "In February this year, we released our first payments to ranchers, totaling more than $200,000 for soil carbon credits," she says. "These payments represent the first time that American ranchers were paid for delivered soil carbon credits. We expect we can bring value to many more landowners this year."

Payments by Grassroots Carbon will be made annually and currently are for the purchase of "interim credits" certified and issued by BCarbon. After testing establishes a baseline level of stored soil carbon, landowners or project developers may apply for interim credits to be issued through BCarbon based on expected increases in soil organic carbon occurring over the five-year period before the second soil testing occurs and in response to continuing or new regenerative grazing practices.

After the second testing for soil carbon in year five, a reconciliation occurs, Blackburn says. At this point, landowners are issued more credits if soil tests show their practices generated more credits than modeling predicted. If landowners were allocated more credits than their soil captured, they may be required to repay the funds they received for interim credits during the five-year period. However, the 10-year term of their agreement with BCarbon — independently or through Grassroots Carbon — may provide the time needed for the soil system to store the carbon.

As of early March, BCarbon had applications for grassland carbon credits for some 400,000 metric tons of stored organic soil carbon, Blackburn says. He estimates the current value eventually paid to project developers for these credits to be at least $20 a ton, or per credit, an amount that could increase, he says, as the market for carbon credits continues to develop.

"This opportunity for earning income from grassland carbon credits presents huge potential for changes in land use," he says, "especially on marginal farmland where conventional cropping doesn't pay or where sources of irrigation are drying up. There's potential there for producers to move to grassland carbon farming over time."

Get Started Capturing Credits

Producers interested in capturing carbon credits from grasslands can contact BCarbon directly or indirectly through Grassroots Carbon or other project developers. While landowners may initiate carbon-capture contracts themselves, Blackburn says most landowners work with project developers, or carbon credit assemblers, such as Grassroots Carbon.

BCarbon will work with any size of operation, but individual assemblers may require a minimum number of acres per contract.

BCarbon's standards for certifying a carbon credit require that it must be earned from grassland or from farmland managed by no-till. No other management practices are required. Says Blackburn, "Landowners will quickly determine on their own that only regenerative grazing and other good stewardship practices will elevate the levels of measured soil organic carbon stored in the soil that warrant payments for carbon credits."

Contracts with BCarbon require there be minimal disturbance of the land for a 10-year period subsequent to each transaction. "Each time there is a new sale, the 10-year commitment is renewed," he says.

Soil tests measuring baseline levels of soil organic carbon are performed by independent service providers with specialized testing capabilities. Appraisals of vegetation contribute to the modeling used for the issuance of interim carbon credits before the second round of soil tests in five years.

Landowners or project developers initiating a contract with BCarbon pay for the soil tests. "When contracting through an assembler," Blackburn says, "the assembler generally covers the costs, which are then deducted from the sale proceeds before there is a split between the landowner and the assembler based on a formula set forth in the assembler-landowner contract."

Carbon-testing fees have been running upward from $5 an acre, he says, depending upon factors such as number of soil types and topography.