Farmers far from capitalising on carbon credits

While soil is one of the largest carbon sequestration mediums, farmers have yet to capitalise on carbon trading platforms.

Carbon tax has brought opportunities for environmentally friendly operations to earn additional income through the generation of carbon credits. Under South African carbon tax regulations, companies can use carbon credits either from their own registered projects or from third parties to offset a portion of their carbon tax liability. This creates opportunities to develop carbon projects, resulting in benefits on both the buy-side and sell-side.

Complicated and expensive registration processes, however, hinder farmers in benefitting from on-farm green activities.

Speaking at a webinar on carbon credits, Jenine de Wet, South Africa country manager at WeAct, said that registering to sell carbon credits was a highly specialised field, and the process to develop such a project often required that experts be flown in from abroad.

With regard to conservation farmers capitalising on carbon sequestration done through no-till farming, De Wet said many parameters for measuring the total benefit still needed to be established.

“The biggest concern is how the project start date would be calculated. If no-till has been done for the past 20 years, it would be seen as ‘business as usual’, so there would be no benefit to take advantage of. If no-till has been done for the past five years, the carbon sequestration benefit can be calculated retrospectively. “But the biggest issue facing farmers is still the cost of setting up such a project and whether the payment for credits generated, or money saved from having to pay carbon tax, would be worthwhile.”

Such projects also required economies of scale. Zelda Burchell, manager at Cova Advisory, noted that one carbon credit was obtained for every 1t of carbon sequestered.

At a cost of around R120 per carbon credit, farmers would need to do their own projections to see if registering such a project would be worthwhile.

The global market for carbon credits was expected to keep growing as countries imposed harsher taxes on carbon emitters in a bid to meet environmental targets. The global market for credits was currently valued at US$45 million (R670 million).