CARBON BALANCE SPECIAL REPORT
What is the carbon market and how does it work?
Data from the UN show that 31% of global emissions of greenhouse gases (GHG's) - equivalent to 16.5 billion tons - come from agri-food systems, an increase of 17% compared to 1990, the same rate as the growth of the world population and the consequent demand for more food. Actions, projects and initiatives favorable to low-carbon agriculture contribute directly to soil quality and climate change mitigation, and can even make carbon an extra financial benefit for farmers.
In this series of questions & answers, the Land Innovation Fund, in partnership with the Solidaridad Foundation and the Association of Farmers and Irrigators of Bahia, seeks to deal with several issues regarding the importance of carbon balance for sustainable agricultural development. Coordinated by the Solidaridad Foundation, the three institutions are working in synergy to implement a calculator that describes the carbon balance in soy production in Western Bahia.
Let's take a look at the benefits and opportunities for low carbon agriculture in the 21st century.
1. What is a carbon credit?
A certificate that authenticates and recognizes the reduction of greenhouse gas emissions (GHG), responsible for global warming. One unit of carbon credit corresponds to one ton of CO2 that was not emitted through avoided deforestation, or that was removed through forest restoration and regenerative agriculture projects.
2. How does the carbon market work?
The carbon credit market was set up to stimulate sustainable practices that mitigate climate change through economic benefits for those who remove carbon from the atmosphere and avoid the emission of greenhouse gases.
Brazil has yet to institute a regulated carbon market. Bill 528/21, which would create the Brazilian Market for Emissions Reduction (MBRE) and regulate the buying and selling of carbon credits, is still pending in the House of Representatives.
In the voluntary market, however, companies or individuals can offset or neutralize carbon emissions by buying credits anywhere in the world.
3. What is the potential of the carbon market?
In 2020, the international market for carbon credits transacted US$ 53 billion and offset more than 20% of global emissions of GHGs (greenhouse gases), according to data from the World Bank.
For Brazil, this carbon market is very important: each hectare of standing forest in the Amazon stores 400 tons of CO2. As one of the world's largest agricultural producers, Brazil is a major player in a market that could become the 21st century's green commodity.
4. What role do agriculture and livestock play in the carbon market?
Agricultural production is one of the main sources of Greenhouse Gas (GHG) emissions. UN data shows that 31% of global GHG emissions (16.5 billion tons) come from agri-food systems – an increase of 17% compared to 1990, the same rate as the world population growth.
In Brazil, the sector was responsible, directly or indirectly, for releasing 72% of the country's GHGs in 2020, according to the Greenhouse Gas Emission and Removal Estimating System (SEEG).
Growing demand for food may increase agricultural production by 70% over the next 10 years, and Brazilian agribusiness is expected to account for 40% of this increase. This data from the Organization for Economic Cooperation and Development points to the need to expand the adoption of sustainable agriculture techniques.
5. How important is low-carbon agriculture?
Low-carbon agriculture contributes directly to mitigating climate change, and can also make carbon a new agricultural commodity, bringing in extra financial benefits for farmers.
In the soy chain, mechanized field operations like sowing and harvesting, as well as crop care through fertilization and soil acidity correction, are the main activities responsible for GHG emissions. Conservation practices like replacing nitrogen fertilizers with biological nitrogen fixation, no-till farming, and crop rotation help capture carbon and reduce GHG emissions.
6. What goals were set at COP26 for the carbon market?
The last United Nations Climate Conference (COP26) decided that greenhouse gas emissions must fall 45% by 2030, compared to 2010, and be cut to zero by 2050 in order to stabilize global warming at 1.5ºC.
COP26 also approved the establishment of a carbon market, along with a new United Nations agency to intermediate the buying and selling of credits. They will allow countries to trade credits with each other and contribute to a low-carbon economy that mitigates global warming.
7. What is Brazil already doing to help reduce carbon emissions in agriculture?
In terms of public policy, the ABC Plan (Plan for Adaptation and Low Carbon Emission in Agriculture and Livestock) is an action program to increase the adoption of sustainable agricultural and livestock technologies with a high potential for mitigating GHG emissions and fighting global warming.
In the first stage of the Plan, implemented between 2010 and 2020, 170 million tons of carbon dioxide were mitigated, in an area of 52 million hectares. In the second stage, the ABC+ Plan proposes to reduce carbon emissions by 1.1 billion tons by 2030, a sevenfold increase compared to the original goal. The new version also includes expanding sustainable production technologies to almost 73 million hectares in nine years, an increase of 103% over the previous target.
Actions, projects and initiatives for low-carbon agriculture contribute directly to sustainable development, produce carbon credits and yield extra financial benefits for farmers.
Sources: Agência Câmara de Notícias; Agrosmart; Government of Brazil, Embrapa