Interest in carbon markets has grown in recent years, as industry and government have sought to address environmental and sustainability goals.
Carbon markets are voluntary, incentive-based markets. In agriculture, producers are typically the sellers and are paid for using management practices that sequester carbon, creating carbon credits.
These could include tillage practices, fertilizer practices and land retirement, among others. Aggregators representing collective groups of firms then purchase these credits to offset their own carbon emissions.
Carbon contracts between producers and aggregators are still very new and have little to no standardization, according to Dave Aiken, professor and agricultural law specialist in the Department of Agricultural Economics.
“It’s like the Wild West out there, and every company is going to have a different contract,” he said. “These can be quite complicated, so it’s going to be a little bit of a challenge to figure it out on your own.”