Growing Carbon Credits: Strengthening the Agricultural Sector’s Participation in Voluntary Carbon Markets through Law and Policy

Abstract

In the face of a global climate crisis, the United States is not relying upon a command-and-control environmental regulatory system to prevent cataclysmic consequences. Instead, the United States is accepting voluntary greenhouse gas (GHG) emissions reduction pledges from the private sector that have little hope of being achieved without substantial emissions reductions, significant infrastructure improvements, and the purchase of carbon offset credits from voluntary carbon markets (VCMs). However, VCMs, a form of private environmental governance (PEG), are only a viable solution to the climate crisis if there are high-quality credits that function as valid representations of GHG emissions reductions. The agricultural sector is expected to play an important role in generating carbon credits through the adoption of carbon sequestering production methods, but farmers are not committing to sow the seeds of carbon credit generation. At this critical juncture, farmers’ concerns about carbon credit generation need to be understood and addressed in a way that maintains market flexibility while ensuring the integrity of the credits. In the last year, there have been multiple legislative proposals offering varying forms of public governance support for the private carbon marketplace. This government intervention is reflective of a new public-private hybrid form of environmental governance for VCMs. This Article seeks to contribute to the theoretical and empirical literature of PEG by evaluating the proposed forms of government support for VCMs and analyzing how a hybrid public-private environmental governance structure will facilitate the performance of VCMs. To explain how hybrid public-private environmental governance for VCMs will encourage the participation of the agricultural sector, this Article is structured around three propositions. The first is the agricultural sector’s central role in addressing climate change. The second is that VCMs are the preferred mechanism in the United States to facilitate emissions reductions pledges. The third proposition is that competing VCM standards and low carbon credit prices have created barriers to market entry for the agricultural sector. The recent passage of the Inflation Reduction Act and the revised Growing Climate Solutions Act have the potential to support the private carbon marketplace through funding for regenerative agricultural practices and by establishing a trusted source of credit generation information. To be effective, however, this public-private environmental governance will need to create a cohesive and transparent marketplace by unifying credit standards among markets, reducing transaction costs, and improving the economic incentives for the agricultural generation of carbon credits