Carbon offset criteria need to change to achieve government's goals and work for Canadian agriculture



We’ve been told many times over the last few years about the important role of agriculture and soil in reducing the amount of carbon in the atmosphere.

But as the Canadian government’s policies aimed at reducing carbon emissions take shape, it appears many Canadian farmers will not be eligible for any reward through the Liberal government’s carbon offset framework, unless Environment and Climate Change Minister Jonathan Wilkinson and his department are willing to adjust the proposed criteria.

While the Biden administration is looking at ways to possibly use government funds to pay U.S. farmers for sequestering carbon in their fields and pastures, the Canadian government has proposed its own carbon offset framework, pitching it as a way for Canadian farmers and others to get paid for practices that reduce the amount of carbon in the atmosphere.

While the carbon tax rising to $170/tonne is Ottawa’s proverbial stick, the carbon offset system is supposed to provide the carrot to change behaviour toward lower CO2 emissions and increased sequestration, as net emitters would pay for offset credits, potentially generated by farmers who are sequestering carbon in the ground.

“The development of the Federal Greenhouse Gas Offset System will mean farmers can be recognized and rewarded for reducing greenhouse-gas emissions on their farms by implementing practices that improve the carbon sequestered in their soil,” noted Agriculture and Agri-Food Minister Marie-Claude Bibeau earlier this month.

The problem is there are at least two major obstacles for agriculture with the carbon offset draft laid out by Environment and Climate Change Canada earlier this month.

First, the requirement that any practice that generates an offset credit must result in a permanent carbon reduction is a major hang-up in trying to have farmers “recognized and rewarded,” to borrow Minister Bibeau’s words.

The federal government has proposed a verification period of 100 years to make sure any sequestered carbon stays sequestered. If something were to happen to release that carbon in the next century, that offset credit would be revoked. This could introduce an incredible amount of opportunity cost that will need to be weighed when deciding whether to participate in the carbon offset framework.

There’s a long list of unpredictable and uncontrollable variables that go into land management decisions — including weather patterns, scientific and technological advancements, new weed resistance, and the economics of food supply/demand — but as proposed, the federal offset regulations would offer no flexibility to a landowner who wants to receive credit for sequestering carbon in the meantime (imagine locking in a practice from 1921 until now).

There may be cases where grasslands or marginal land can be committed for the next 100 years, but if crop farming is going to qualify in any significant way, there needs to be a way to recognize that carbon sequestration in nature occurs imperfectly. There can be, and have been, substantial gains over time, but guaranteed permanence is impossible in most situations.

Peas growing in zero-till corn residue in southern Manitoba.

A second, and maybe more significant impediment for Canadian agriculture is the requirement that any practice that generates an offset credit must go beyond business-as-usual. In climate policy circles, this is sometimes referred to as “additionality.”

In other words, practices that are already happening — even if they sequester carbon — would not count for any offset credits under Environment and Climate Change Canada’s proposed criteria. This would disqualify Canadian farmers who already sequester carbon every year with zero-till practices. At least half a dozen Saskatchewan farm groups, as well as the Soil Conservation Council of Canada and the Saskatchewan Soil Conservation Association, are calling on the government to drop this “beyond business-as-usual” requirement, calling it “non-scientific.”

Last week, we had the chance to ask Environment and Climate Change Minister Jonathan Wilkinson about the proposed carbon offset criteria, and what’s being done to make it possible and realistic for farmers to participate in the federal carbon offset framework. Here’s his full reply:

I would say a number of things. I mean, the first is that the regulatory framework that was put out was put out in draft. And we certainly are still receiving feedback with respect to some of the items there. And of course, the actual specific offset protocols that will be developed still have to be fully fleshed out. And the first four, we’ve enunciated the areas in which they’re going to be in, but there will likely be more in the way of offset protocols as we go forward.

Environment and Climate Change Minister David Wilkinson speaking during an online media conference call on March 18, 2021.

Certainly, the issue of permanence is an important one. Obviously, you know, the whole point of the offset protocols is essentially to provide ways in which for farmers to monetize practices around sequestration, and to do that by enabling businesses under the output-based pricing system to essentially buy offsets that may be cheaper than then reductions they would be able to get in their own operation. So they do need to be permanent in some way. That’s the whole point of the system. But obviously, we need to ensure that we’re talking to the farming community to make sure that it’s going to be a workable way of assessing and measuring those kinds of things.

And I would say the same thing with business as usual. I mean, certainly there are practices that farmers do, you know, in terms of no-till farming, and a range of things that do help with respect to carbon sequestration. But as is the case in all sectors of the economy, what we need to do is actually find additional tonnes in terms of reductions, we can’t meet our Paris obligations as a country and certainly can’t address the climate, the threat that is climate change, without finding the additional tonnes that allow us to make progress towards our target. So additionality is critical. But certainly I think there’s lots of opportunity in the context of additionality, for the farming community to to find ways to monetize that. And certainly there’s lots of work going on in Agriculture Canada, in the agricultural community, in many ag tech companies that are actually starting up and working, looking at ways in which to enhance the ability of the soils to to essentially sequester carbon.

As you can tell, he’s adamant that the permanence and beyond business-as-usual requirements are critical to the government’s proposed offset framework, which is open for public comment until May 5.

It’s understandable that the government wants to be able to guarantee that each carbon offset generated actually results in a new and lasting reduction of carbon. In theory, every offset should result in a permanent and complete one-tonne reduction of carbon, but reality is more complicated, as every pragmatic farmer knows. There will likely be plenty of discussion about the quality — and therefore the value — of carbon offsets allocated through different private and government-designed frameworks and markets in the future.

But the old saying “perfect is the enemy of good” (or Winston Churchill’s version, “perfection is the enemy of progress”) comes to mind with Minister Wilkinson and the Liberal government’s plan.

If they want to recognize farmers and incentivize practices that are proven by the government’s own scientists to sequester carbon, the criteria for receiving that reward must be realistic and achievable. Otherwise, it simply won’t be worth signing up from a farmer’s perspective, and the Canadian government will squander an opportunity to count the millions of tonnes of carbon that farmers sequester each year toward its Paris Agreement obligations.

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