Using low-carbon, resilient agriculture to face climate challenges
Global warming’s impacts on agriculture are becoming clearer in all regions of the world. Rising temperatures, more droughts, changes in rainfall patterns, more pests and other factors are devastating grain production in Rio Grande do Sul, wine grape production in California, and wheat production in India, among countless other cases.
By September 2022, 141 Parties had included climate initiatives related to agriculture and food security in their Nationally Determined Contributions (NDCs), to promote mitigation, adaptation, and co-benefits. Challenges faced by each country and the strategies they adopt vary, as do the actions and policies they choose to implement their NDCs.
Encouraging the adoption of technologies and production methods that lower emissions, remove carbon, increase yields, and promote adaptation is the basis for these actions in agriculture. This means recovering degraded pastures, encouraging the integration of agriculture, livestock and forests, no-till farming, bio-inputs and biological nitrogen fixation, and other measures. The conservation and restoration of native vegetation associated with crops are another way to achieve both resilience and mitigation in agriculture.
The Sectoral Plan for Adaptation and Low Carbon Emissions in Agriculture and Livestock (the “ABC+ Plan”), approved by Brazil in 2021, promotes the adoption of low carbon technologies on 72.6 million hectares, for a reduction of up to 1 billion tons of CO2 equivalent. The approval of state ABC+ Plans will enable targets geared to regional challenges and the involvement of the private sector, banks, civil society, and other players in implementing actions for agricultural and food security.
According to the UN Food and Agriculture Organization (FAO), a climate-smart agriculture approach encompasses and incorporates different elements adapted to local contexts, including technologies, policies, institutions, and investments. Low carbon farming systems should consider three pillars: i) Sustainable gains in agricultural yields and incomes; ii) Stronger adaptation with resilience to climate change; iii) Reduction and/or elimination of GHG emissions.
During the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27), the Parties approved Decision 3/CP.27, creating the Sharm el-Sheikh "Joint work on implementation of climate action on agriculture and food security," to further negotiations on agriculture and climate change, drawing on the experience of the Koronivia Joint Work on Agriculture.
The decision recognizes the intrinsic relationship between climate change’s impacts on agriculture and achieving global food security. It also launched the Sharm El-Sheikh online portal, to pool Parties' actions and policies on climate action in agriculture and food security.
It is hoped that COP28 will define a scope of work for the group to connect the Parties' effective actions, policies, and projects to climate finance. Otherwise, the reach of agriculture and food security actions will fall short of their potential, and of the need to foster resilient agriculture.
Another key aspect in advancing implementation of the Paris Agreement and the role of agriculture is the discussion on carbon markets. Does issuing carbon credits for agriculture really fit into regulated markets under Article 6 of the Paris Agreement and the voluntary market?
In other words, is it reasonable to expect that agricultural production will meet all the conditions to yield a crop of carbon credits able to achieve climate neutrality towards the 1,5ºC target?
Article 6 rules approved at COP26 in 2021 laid the basis for a regulated carbon market to function, considering Article 6.2 (international transfer of mitigation outcomes/ITMOs) and Article 6.4 (emission reductions, known as "A6.4ERs"). Despite progress towards structuring these tools, remaining challenges to making them operational should lead to new decisions at COP28.
The World Bank’s report "State and Trends of Carbon Pricing 2023" found 73 carbon pricing models representing 23% of global GHG emissions¹. There are 36 Emissions Trading Systems (ETS) already in operation or being deployed, and 37 carbon taxes involving countries and jurisdictions.
A regulated market imposes mandatory reduction targets on sectors that emit the most, by establishing emissions ceilings, granting emission permits, and limiting the offsets anyone can purchase on the carbon market.
In the voluntary market, carbon credits are purchased by companies, states, cities, airlines, and other stakeholders who voluntarily decide to offset their emissions. In 2021, voluntary carbon markets grew exponentially, up to $2 billion, according to Ecosystem Marketplace². After two years of growth, though, fewer credits were issued in 2022 than the year before.
“In other words, is it reasonable to expect that agricultural production will meet all the conditions to yield a crop of carbon credits able to achieve climate neutrality towards the 1,5ºC target?”
The upcoming approval of a bill to regulate Brazil’s carbon market should follow the cap-and-trade approach, with compulsory targets for high-emission sectors. The new law will leave sectoral targets to be specified in supplementary regulations, as well as details on sectors, methodologies, and requirements to implement projects generating carbon credits acceptable on regulated markets.
We must recall that carbon credits in agriculture are about reducing emissions and sequestering carbon, and will demand strict requirements to ensure their environmental integrity. Avoiding double counting, emissions leakage, non-permanence risks, and additionalities are some of the factors to be considered to issue high-quality carbon credits.
For agriculture, besides environmental integrity requirements, there are major co-benefits that can add even more value to projects, such as improved socio-economic conditions, plus the embracing of innovations and of practices that allow farmers to adapt.
Deployment of agricultural projects will depend on sound, scientifically backed methodologies that allow for monitoring. Although applicable methodologies already exist, they must be adapted to Brazilian reality, to produce high-integrity carbon credits, ensuring greater credibility for Brazilian credits.
We must see climate action on agriculture and food security not only as a way to issue carbon credits as offsets. The International Platform for Insetting³ describes insetting projects as interventions along a company's value chain designed to reduce emissions and store carbon, while also creating positive impacts for communities, landscapes, and ecosystems.
Insetting, in the case of agriculture, is aimed at fostering actions and investments that directly reduce emissions from the operations or supply chain of a company with decarbonization targets. In short, it promotes the adoption of climate actions in agriculture based on technologies, innovations and practices that reduce emissions or remove carbon on a farm, such as regenerative agriculture (cover crops, integration of crops, livestock and forests, no-till farming, agroforestry, and others), reforestation and other practices. Deforestation is another important target for possible insetting schemes, due to the impact of direct emissions from deforestation.
It is impressive how insetting projects transform agriculture by bringing technology, services, financial and logistics firms together to stimulate efforts for emission reductions and carbon sequestration, with value impacts along the chain, but not as offset credits.
The upcoming approval of a carbon market in Brazil must take advantage of the opportunity to stimulate decarbonization in the economy as well as new projects to achieve innovation and generate carbon credits. Integrating the future domestic market with international markets will be vital, to optimize the scope of emission reductions and projects for sustainable development.
Agriculture will be able to incorporate methodologies and projects to issue credits on regulated domestic, international, and voluntary markets, but it must respect the need for environmental integrity, to ensure those credits’ quality. This demands a lengthy process to build methodologies based on rigorous carbon and beyond-carbon criteria, to allow markets to tell credits apart.
References:
¹ World Bank. State and Trends of Carbon Pricing 2023. Avaliable at: https://openknowledge.worldbank.org/entities/publication/58f2a409-9bb7-4ee6-899d-be47835c838f
² Ecosystem Marketplace. State of the Voluntary Carbon Markets 2022. Avaliable at: https://www.ecosystemmarketplace.com/publications/state-of-the-voluntary-carbon-markets-2022/
³ International Plataform for Insetting. Avaliable at: https://www.insettingplatform.com/
[1] Rodrigo C. A. Lima is a partner and director of Agroicone. A lawyer with a Law PhD in International Economic Relations from the Pontifical Catholic University of São Paulo (PUC-SP), he has 20 years' experience in international trade, the environment and sustainable development in the agricultural and renewable energy sectors. E-mail: rodrigo@agroicone.com.br
[1] Sabrina Kossatz Borba is a researcher at Agroicone. She is a lawyer, a postgraduate student in International Law at the Pontifical Catholic University of São Paulo (PUC-SP), working on the climate change agenda, carbon markets, biodiversity, and international trade. With her Law degree from UniCuritiba, she has been a collaborator in the Compliance and the Civil Liability Towards the Environment workinggroups. E-mail: sabrina@agroicone.com.br