Climate change has become an increasingly prominent topic in recent years due to its anticipated effect on farms and businesses. Greenhouse gas (GHG) emissions are seen as the primary driver of climate change and global warming. Carbon dioxide (CO2) emissions account for more than 79% of climate change (United Nations, 2022) and have resulted in the Earth’s surface temperature rising by 1.4°C since the late 19th century and is rapidly on its way to 1.5°C.
If CO2 emissions were to remain at current levels, the Earth’s surface temperature could rise by an additional 4°C by the end of the 21st century. All the effects of climate change, including changes in weather patterns, have heightened awareness of mitigation strategies. Consequently, carbon credits have gained significant attention.
What are carbon credits?
Countries around the world, including South Africa, have implemented carbon taxes to help combat climate change caused by rising levels of human-caused GHG emissions.
These taxes increase the cost for companies producing goods and services using carbon-intensive processes and aim to incentivise profit-optimising companies to invest in low carbon-intensive production processes. The aim is to limit the negative impacts of climate change.
While carbon taxes may increase business costs in the short term, they also create opportunities for companies to reduce or even remove emissions from the atmosphere in the long term. Companies can reduce their carbon tax liabilities in two ways: by reducing emissions, such as switching to renewable energy, or by purchasing carbon credits to offset emissions they cannot reduce in the short term.
A carbon credit is a certified and transferable instrument that represents one tonne of CO2 reduced or removed because of a carbon offset project. Importantly, it must represent an actual removal or reduction of CO2 emissions that would not have occurred without the offset project. This has led to the development of carbon markets, where holders of verified carbon credits from carbon offset projects can sell their credits to buyers.
This market not only creates incentives for any carbon-emitting entity to reduce their carbon emissions but also creates opportunities for entities, such as farms, that can capture CO2 directly from the atmosphere and sequester it into soils.
Figure 1: Environmental impact of climate-friendly farming practices.
(Source: UPL, Orizon Agriculture and participating producers)
Earning carbon credits
Agricultural production is under scrutiny for its resource use and GHG emissions. It is estimated that agriculture is responsible for 18% of total CO2 emissions (WRI, 2024). This impact necessitates a difficult conversation regarding balancing food production to ensure global food security while reducing the impact of climate change.
Carbon credits may be the answer to making the industry more environmentally friendly. The major aspect driving an agricultural producer’s practices is profits, and creating initiatives to reduce carbon emissions on farms can effectively engage the industry in climate action. Producers can earn additional income by adjusting their production practices to emit fewer GHG emissions and capture more carbon into soils.
We are quick to say that the change to more sustainable productivity but it is possible for producers to reduce their GHG emissions while maintaining productivity, and profits and improving soil health through practices such as reduced tillage, cover cropping, and rotational grazing practices.
Advice to producers
UPL Corporation (UPL) offers a practical way for producers to benefit from the carbon credit market with their CarbonSmart programme. UPL is an international company operating in 140 countries globally, including South Africa. They are primarily an agricultural solutions company and supply a wide range of crop protection, as well as sustainable solutions, such as biologicals and biostimulants.
UPL realises that agriculture can play an essential role in global sustainability efforts and in reducing agricultural emissions. To address this, they launched the UPL Gigaton Carbon goal on a global scale.
This goal consists of a series of international initiatives designed to remove the equivalent of one billion tonnes of CO2 from the atmosphere by 2040. Motivated by this objective, UPL launched the CarbonSmart programme, which has become an interesting topic within the South African agricultural sector.
The aim of this initiative is to encourage producers to implement more sustainable agricultural practices, improve soil health and soil organic carbon levels, and reduce GHG emissions. UPL plans to achieve this goal by rewarding producers with the majority share of the carbon revenue from the sale of certified carbon credits produced by their farms, either through soil carbon sequestration, reduction of on-farm GHG emissions, or a combination of both.
UPL pays up to 75% of the profits from the sale of high-quality carbon credits to producers who participate in this programme. Apart from the financial compensation, producers get reports on their land conditions and access to digital tools, such as CropVision by UPL, that improve their farm management decisions at no extra cost. Participation in CarbonSmart is free of charge, as the expenses for soil samples and the generation and certification of carbon credits are covered from the sale of the carbon credits itself.
How it works
The CarbonSmart journey begins with a discussion about eligibility and feasibility, as well as an analysis of current and future on-farm operations to help determine if the programme is a good fit for you and your farm.
Should you meet the eligibility criteria and decide you would like to join, the next steps will be:
- Complete a formal eligibility assessment with UPL’s implementation partner, Orizon Agriculture.
- Implement planned changes to your practices on your farm while keeping accurate records of these practices.
- Your practices and submitted data will be validated using a combination of satellite imagery and reviewing your farm’s accounting and management records. Locally calibrated soil carbon models, and physical soil samples, are then used to quantify the amount of carbon sequestered.
- The information collected is then audited by an independent validation and verification body, and once approved, the verified credits are then generated and issued by Verra, an organisation that sets the standards and requirements for carbon credit projects.
- After the issuance of the credits and the sale thereof, scheduled payouts will be made to the producer. The more regenerative practices you implement, the higher the possible payout rate will be.
Important considerations
Professors Linus Franke and Johan van Tol of the University of the Free State explain that the top two metres of soil serve as a reservoir where carbon is stored. It is important to understand that the carbon in the soil does not remain constant and that it changes with management and climate change. Research shows that the build-up of carbon levels will not continue to rise as conservation land and regenerative agriculture principles are applied.
Soil has a saturation point, beyond which it cannot effectively conserve carbon. Producers are advised to work with reliable businesses to sell their carbon credits.
Meeting the requirements to sell carbon credits may seem demanding, but proving that the credits are indeed stored is essential. One would not want to be non-compliant and the possibility of selling carbon credits to be lost. Accurate data and record-keeping is crucial to make participation in these types of projects work in the long term. – Siphiwe Tshabalala and Meyer van der Merwe, Department of Agricultural Economics, University of the Free State
For more information, email Prof Linus Franke at frankeac@ufs.ac.za or Matthew Kensett of UPL at matthew.kensett@upl-ltd.com.