Kanika Chandaria, Climate Tech Expert and Thomas Gent, Regenerative Farming Lead, Agreena

Carbon credits have become a focal point in the battle against the climate crisis. But while companies are investing heavily in tech-based offsetting solutions, the real opportunity lies beneath our feet – in our soil.

Agriculture is responsible for 26% of global greenhouse gas emissions, with soil degradation alone contributing roughly 5-10% of total emissions - a major factor being poor land management. Regenerative agriculture presents a solution, with the potential to sequester 120 billion tonnes of CO2 by 2050. 

Clearly, food companies have a vital role to play in driving sustainable supply chains and lowering the carbon footprint of the food system. Many are already integrating long-term sustainability contracts and financial incentives for the farmers in their supply chains, recognising that their own future depends on resilient agriculture.

However, there is tension in the interoperability between supply chain initiatives and the voluntary carbon market (VCM). This conflict highlights the need for both approaches to coexist, driving greater corporate action and supporting farmers.

To truly achieve net-zero goals, these initiatives must ensure that farmers – not just corporate ESG reports – reap the financial benefits of their climate-smart practices.

Filling the carbon credit gap with soil

The carbon credit market has an interesting dynamic. Most players are investing in hyper-cheap, low-quality avoidance credits, which don’t physically remove carbon from the atmosphere, or engineered credits with high permanence, which can be effective but expensive and harder to scale.

Moreover, the buyers that are engaging with tech-based offsetting (also known as engineered solutions) are mainly tech giants, consulting firms, the financial sector or 'hard-to-abate' sectors like aviation. As you can see from the ‘purchasers’ on this CDR leaderboard, there are only a few players purchasing such credits in massive volumes.

So, there is a large gap for more cost-effective and immediate carbon removal solutions. This demand for a middle ground is where soil carbon fits in. Soil is a crucial, but often overlooked, contributor to carbon removal – it stores three times more carbon than the atmosphere. And not only do soil-based solutions offer a high-integrity path to carbon sequestration, but they also foster wider co-benefits such as biodiversity restoration, climate resilience and long-term food security.

Soil carbon sequestration is one of the few near-term, scalable, and cost-effective solutions with the potential to remove massive volumes of CO2 – potentially between 2-5 gigatons of CO₂ annually by 2050. This makes it essential to avoiding the most catastrophic impacts of climate change.

For companies looking to buy scalable, immediately impactful and cost-effective credits to deal with residual emissions, investing in soil carbon sequestration projects offers a viable approach. They can offset hard-to-abate emissions while contributing to tackling broader climate crisis challenges.

Yet, despite its vast potential, multiple obstacles ranging from measurement challenges to current market structures have kept soil carbon on the periphery. A less obvious but significant barrier is the structural divide between supply chain initiatives and the VCM.

Building interoperability between supply chain initiatives and VCM

While soil carbon sequestration is gathering momentum and the broader renewable agriculture movement builds, farmers - the ones implementing these practices - too often capture only a small share of the financial upside.  This is due in part to a disconnect between supply chain initiatives and the VCM, where misaligned incentives and market fragmentation lead to a concentration of value flowing to corporations rather than farmers.  Agrifood companies typically invest in supply chain initiatives to fund regenerative practices for  specific crops within their supply chain. Meanwhile, the VCM is made up of corporates buying soil carbon credits to offset their residual emissions. There is currently a tension between both programmes, for understandable reasons.

Agrifood companies continue to invest in supply chain initiatives, but as farmers realise the growing value of regenerative practices (through both improved crop quality and access to external revenue streams like carbon markets) they gain greater leverage. Farmers may increasingly demand better prices or terms, which can create tension over value distribution. As a result, agrifood companies may design initiatives that retain greater control over how benefits are shared, balancing the need to incentivise farmers while protecting their own margins.

Then there are the costs placed on the farmers. If agrifood companies do decide to invest in initiatives that support a transition to sustainable practices for one crop, e.g. wheat, when farmers rotate to different crops, e.g. corn or soy, they suddenly lack this compensation. This is where the VCM can fill in the gap: these carbon credits provide financial incentives to support a farmer’s transition to regenerative practices across their entire operation.

However, to make these carbon credits attractive to corporates, we have to show the unique value of investing in soil carbon projects and prove their effectiveness through robust verification technologies. We have to create a mindset where players appreciate the innate benefits of regenerative agriculture.

Ultimately, we need to foster interoperability between both supply chain initiatives and the VCM. This combination is fundamental for the planet, for greater corporate action and for farmers – the ones who are stewarding our lands yet face the most challenges. It ensures farmers can withstand the financial burden of transitioning  while adopting sustainable practices that benefit society at large.

Empowering the stewards of our lands

In the face of climate challenges, there is also much promise for the future of agriculture. Farmers need to engage not just in sustainable practices but also in shaping the economic opportunities they create. This can emerge from soil carbon sequestration projects incentivised by a combination of supply chain initiatives and the VCM.

Farmers take on enormous risks, from both a financial and operational perspective, when adopting regenerative initiatives. Therefore, ensuring they are supported and rewarded for the environmental services they provide is crucial for scaling these solutions and for the benefit of the planet.

Ultimately, farmers must have greater control to ensure they are fairly recognised for their role in climate resilience and the near-term risks they take for our society and planet as a whole.

Meeting climate targets requires an industry-wide shift – one that empowers the stewards of our lands. Climate action and the future of food depend on it.