Financial Incentives for Carbon Mitigation

Sustainable Food Lab published this summary of its 2018 Summit session on Financing Incentives for Mitigation in Mexico City, March 2018. “The conditions are ripe to accelerate soil carbon projects: soil science has come a long way, companies’ targets include Scope 3 emissions, producers know how to implement management practices that result in improved carbon mitigation and sequestration, but putting projects together remains slow. Jeff Bernicke from NativeEnergy and Tobias Bandal of Soil and More share two approaches that could help accelerate investment in soil carbon.”

Jeff shared examples of NativeEnergy’s, Help BuildTM approach from the wheat growing Palouse region of Idaho and grassland farming of Montana describing how it is possible to bundle incentives for practice change with verified impact. NativeEnergy assesses the carbon benefits of farmer/rancher practice change and the risks and builds from this, a single or multi-year expenditure to sell to corporate impact investors. The sale of impact credits helps cover costs for, and defray risks from, farmer/rancher practice changes. NativeEnergy verifies and delivers the impacts to companies and impact investors.

Tobias shared examples of True Cost Accounting, or moving the water and climate risks to core business accounting and financial assessment methodologies. This approach can create financial motivation for carbon-based incentives from the offsetting approach (where reductions are disconnected from emissions in a company’s supply chain), and insetting (where the reductions are occur within a company’s own supply chain). With offsets/insets there is still dependency on a company’s willingness to pay. But with True Cost Accounting, those payments become part of the financial integrity of the company.

Soil and More has engaged in this new model of risk rating with Ernst and Young, discounting the future value of a company based on climate and soil and water risks. The approach uses the Cool Farm Tool for some of these metrics showing that in different scenarios, raw materials availability becomes a risk for the company thus affecting its future value. This could be a powerful tool for making the business case for investment in farming practices that mitigate and sequester carbon as it shows net benefits as well as risk management opportunities.

Participants in the room added that there is also a large gap in understanding how soil projects bring benefits to all the players along the chain. The benefits include more consistent yield year–to-year and higher quality.  Investment will always be easier where there are stronger relationships with farmers and where a company has more influence to support the farmer to do more change.”

NativeEnergy’s HelpBuild program provides financing to farmers and ranchers and gets soil carbon projects up and running. To invest in change that mitigates carbon, improves biodiversity, protects waterways and enhances the resilience of farmers and ranchers, no matter the size of your business, contact us today.

Sustainable Food Labs’ original post appears here.