Can the free market actually be the solution to the emissions crisis? Indiana political figures and business officials are beginning to think so. The brunt of the progress, according to Kip Tom, begins with the thousands of hardworking farmers throughout the state. “I think we’re going to be the industry that is the solution for climate change,” said Tom in a recent podcast appearance for AgriNovus Indiana. The way for farmers to achieve this is not by growing more or less crop, rather, it will be done by embracing the immense potential of a fully-functioning carbon credits market.
The idea of carbon credits and the ability to trade them is not a new one. The origin of the hypothesis can be attributed to the Kyoto Protocol in the 1990s, where countries came together around the idea of hard emissions caps for companies. With no legal way of bypassing these limits, the logical next step would be for low-emissions companies – who maintained carbon levels below the target and thus had room to spare – to convert that unused capacity into an easily quantifiable product for sale.
It introduces financial incentives for cleaner companies to stay clean, and for dirtier companies to work towards sustainability, all through Adam Smith’s “invisible hand” of free-market capitalism. Suddenly, the carbon credit was born.
The problem, in Indiana’s case, is that farmers currently aren’t participating in the carbon credits market. According to a survey conducted by the Indiana Corn Marketing Council, and in conjunction with the Indiana Soybean Alliance, as many as 95 percent of farmers currently operating in the state have yet to participate in the market. It is unclear whether the main culprit is the thinner margins leaving less cash on hand for the planting of cover crops (which trap carbon in the soil) or the perceived complexity of entering the credits market as stated by several respondents. Despite the low engagement, enthusiasm for the concept is still high: 67 percent of respondents stated that they planned on entering the market in the future.
The first step is for farmers to understand the importance of data collection on their farms. Without multiple years of data on their carbon footprint, farmers will not be able to verify any potential carbon credits. “Simplicity has to be paramount as they go forward for them to actually participate,” says AgriNovus CEO Mitch Frazier.
This dilemma serves as the basis for much of AgriNovus’ business operations. The company recently hosted a “Producer Led Innovation Challenge”, which tasked contestants with creating a software prototype that aggregates collected farm data in a way that is user-friendly enough for farmers of all ages. “Many farmers aren’t fortunate enough to have a combine monitor, much less the ability to transfer data to a computer,” says Indiana Soybean Alliance’s Larry Wilkinson. For Wilkinson, having an easily accessible program for integrating that data properly is “critical as a measurement of our sustainable contributions to the planet.”
The 2021 competition closed with Regrow Inc. declared as winner and recipient of $25,000 in funding. Regrow’s program uses crop and soil models along with satellite imagery to help farmers with the measurement and reporting of their data, which is linked to various farm management platforms. “The Producer-Led Innovation Challenge allowed us to better understand Indiana producers and the nuanced problems they face with carbon markets,” said Regrow executive Manal Elarab. “We are honored to be recognized as innovators in this space, and we look forward to continued progress in the industry.”