How Do Data andPayments Flow ThroughAg Carbon Programs?
The article Ag Decision Maker File A1-76, How to
Grow and Sell Carbon in US Agriculture, www.
extension.iastate.edu/agdm/crops/pdf/a1-76.pdf,
compares 11 voluntary carbon programs across twodozen characteristics in a tabular form, providing
valuable details to help farmers identify the programs
they could benefit from. The present article abstracts
somewhat from the details and presents a simplified
description of how data, payments, and methods flowin voluntary carbon programs. The goal of this article
is to help farmers, policymakers, and ag stakeholders
understand who will have access to data on farm
practices, who is the most likely buyer of carbon
credits for each carbon program, who controls
the methodology that will be used to translate
farm practices into carbon credits, and who issues
payments to program participants (farmers, project
developers, carbon program, verifiers, registries, soillabs, and data platforms). The analysis is presented inflowcharts, with arrows pointing in the direction thatdata, payments, methods, and carbon credits move
within each carbon program.
The first of ten flowcharts describes a traditional
carbon offset generation system, with the following
nine showing voluntary carbon programs currently
operating in the United States.1 It is important tounderstand the workings of the existing markets forcarbon offsets before exploring the newer carbon
programs. Readers are advised to pay particularattention to the traditional carbon offset generation
section before focusing on the carbon program(s) of
their interest.
A major difference between the traditional carbon
offsets and the carbon credits generated in the newer,
voluntary carbon programs resides in the potential
gap on their perceived qualities. A carbon offset isconsidered a top-quality token for one metric ton of
The carbon programs by Nutrien and TruTerra described in AgDM
File A1-76 are in early stages of protocol development. This reportwill be updated when more information becomes available.
1

Ag Decision Maker

extension.iastate.edu/agdm

File A1-77
carbon dioxide-equivalent greenhouse gases (CO2e)sequestered through practices that adhere to trusted
protocols ensuring additionality and permanence,
which are verified by an independent third party,
certified, and registered with a unique serial number
into a secure ledger called the “registry.” Theregistry is typically linked to a network of registries
that serve as a clearinghouse of information on
carbon credits (issued, unsold, sold, and retired) to
avoid duplications and enhance transparency. Whenan owner of a carbon offset uses it to compensate
for emissions of CO2e somewhere else, the serial
number is retired from the registry (and thetransaction is transparent to the clearinghouse).
A carbon credit may or may not be perceived as
being of comparable quality to a carbon offset.
If carbon credits are perceived as being of lower
quality than carbon offsets, then they would tend
to attract lower market prices than offsets do. The
perceived quality of carbon credits is expected to behigher when verification and issuance are external
to the carbon project, and lower when those criticalprocesses are internal to the carbon project. By
illustrating whether verification and issuanceare external or internal processes to the carbon
program, the present analysis provides some basis toanticipate differences in the perceived qualities andresulting prices for agriculture carbon credits issued
by different programs.

Traditional Carbon Offset Generation
There are multiple registries in the world (such asGold Standard, Verra, American Carbon Registry,
and Climate Action Reserve) where US farmers
could register, under unique serial numbers,
carbon offsets generated via conservation practices
implemented anywhere in the US. Once a farmer
owns a serial number issued by a registry, they cansell the carbon offsets associated with that serial
number to any potential buyer, including industries

Updated April 19, 2022

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How Do Data and Payments Flow Through Ag Carbon Programs?

with regulated greenhouse gas (GHG) emissions
targets and corporations committed to achieving net
zero emissions. However, only top-quality carbon
offsets will be of interest to regulated industries,
requiring additionality, permanence, project design
and implementation according to registry protocols,
independent third-party verification, and in somecases additional approval by a regulatory body. The
California Cap-and-Trade program and the Regional
Greenhouse Gas Initiative (RGGI) in the northeastern
US are two compliance markets where some top
quality carbon offsets could be sold. It typically takes
several years from project design to carbon offset
issuance, and farmers usually enroll the collaborationof project developers to navigate the process. Dueto the scale of the projects and the time lag between
implementation of practices and issuance of offsets
by registries, most projects are financed throughemission reduction purchase agreements (ERPAs),

according to which an investor (usually a regulatedcompany) purchases the right to own the serial
number of the registered carbon offsets and makes
front-loaded payments to project developers andfarmers (see Figure 1). Given the risks involved
in financing these projects, the cost to investors ofcarbon offsets financed through ERPAs is much
lower than the price of (issued) carbon offsets in the
spot market. The investing corporation uses in its
GHG accounting system the serial number from theregistry to compensate its emissions and “retires” thecredit (making it no longer available for resell). The
corporation will also communicate the reductionof its GHGs footprint to customers, owners, andstakeholders through its environmental, social,and corporate governance (ESG) reports. Farm
production data is shared with project developers,
independent verifiers, and registries. Payments are
distributed over the life of the project.

Figure 1. Traditional Carbon Offset Generation

How Do Data and Payments Flow Through Ag Carbon Programs?

Page 3Ecosystem Services Market Consortium (ESMC)

ESMC finds investors to finance projects through ERPAs. Its methodology to translate agricultural practices
into carbon credits is based on the DeNitrification-DeComposition (DNDC) model and the Operational Tillage
Information System (OpTIS) model, which are publicly available. ESMC’s methodology is under review by theGold Standard registry and SustainCERT. Project developers can be internal or external to ESMC. Practices
implemented by farmers are independently verified by SustainCERT. Soil tests are mandatory at onset and every
five years. The Gold Standard registry issues serial numbers for carbon credits to ESMC, which in turn transfers
them to investors. Farm production data is shared with project developers, ESMC, SustainCERT, and the Gold
Standard registry. Payments to all actors in the process are distributed over the life of the project.

Figure 2. Carbon Credit Generation through Ecosystem Services Market Consortium (ESMC)

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How Do Data and Payments Flow Through Ag Carbon Programs?

Soil and Water Outcomes Fund (SWOF)

SWOF finds investors to finance projects through ERPAs and acts as its own registry. Its methodology totranslate agricultural practices into carbon credits is based on the publicly available COMET-Farm model.
Project developers can be internal or external to SWOF. Practices implemented by farmers are verified
internally by SWOF, and soil tests are mandatory. SWOF issues the serial number for carbon credits
generated in a project, transfers ownership of the serial number to the investor, and makes payments toall actors in the process. Farm production data is shared with project developers and collected through an
online platform owned by SWOF. Payments are distributed over the life of the project.

Figure 3. Carbon Credit Generation through Soil and Water Outcomes Fund (SWOF)

How Do Data and Payments Flow Through Ag Carbon Programs?

IndigoPage 5

Indigo develops carbon projects under standards developed by independent, nonprofit standards organizations,with credits issued and tracked on public registries. They currently work with the Soil Enrichment Protocol,
adopted by the Climate Action Reserve, and the Methodology for Improved Agricultural Land Management(VM0042), co-authored by Indigo and approved by Verra. Indigo works either directly with farmers or
through partner organizations (e.g., Corteva) to enroll in the carbon project and adopt new practice changes.
Management data collection occurs through a proprietary software platform, as well as through remote sensing,and farm management system (i.e., software used by farmers to manage data) integrations. Prior to eachissuance by the registry, Indigo hires an independent, accredited verification body who conducts limited site
visits and in-depth reviews of all documentation, reporting, and quantification. The program is certified Ag Data
Transparent and farm data are not shared beyond the registry and verification body. A portion of credits (5-20%)
are permanently held by the registry in a buffer pool to protect against future carbon releases. The balance ofcredits is issued to Indigo and then either transferred to or retired on behalf of the credit buyers. At least 75% of
the proceeds from credit sales are paid directly to farmers. If an unavoidable reversal of stored carbon occurs,
the registry uses an equivalent amount of credits from the buffer pool to compensate for the loss.

Figure 4. Carbon Credit Generation through Indigo

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How Do Data and Payments Flow Through Ag Carbon Programs?

Nori

Nori is its own registry and marketplace, and its methodology to translate agricultural practices into carbon
credits is based on the publicly available COMET-Farm model. Farmers can either enroll directly with Norior through a project developer. Practices implemented by farmers are verified by independent third-parties.
Farmers must pay out-of-pocket for the verification process at the beginning of the contract and at least
every three years. Nori uses Blockchain technology to issue and track serial numbers for carbon credits thatare sold to end-users. Nori adds 15% to the price of carbon credits as fees, from the buyer (not the supplier).
In the pilot phase of the Nori program, each supplier will be issued Nori tokens equal to the number of carbon
credits generated. Those tokens will be restricted over the life of the 10-year contract. If there are reversals
during that time, Nori will use those tokens as insurance to purchase more recent carbon credits. After thepilot phase, Nori will have both their own insurance pool of tokens and will restrict a percentage of tokens
from the supplier to use in case of reversals. If farmers avoid carbon reversals for 10 years following thesale of the tokens, Nori removes restrictions from the remainder of the farmer’s tokens. Nori claims that
it will never own farmer data or use it for anything other than running the carbon model. Any data sharing
agreements outside of Nori are made directly between the farmer and project developer or verifier. Payments
start flowing into the system when a sale of (issued) carbon credits occurs.

Figure 5. Carbon Credit Generation through Nori

How Do Data and Payments Flow Through Ag Carbon Programs?

Corteva

Page 7

Corteva Agriscience contracts directly with farmers to produce carbon credits. Corteva partners with MRV(measuring, reporting, and verification) companies such as ESMC and Indigo Ag to quantify and certify
carbon credits through registry-approved protocols including SustainCERT (ESMC) or Verra/CAR (Indigo).
Farmers input their practices into Granular Insights, Corteva’s free digital tool. These practices are submitted
to carbon registries for certification and are verified through remote sensing and random site visits. Soiltests are mandatory every five years. Verifiers issue carbon credits to ESMC and Indigo, who sell credits toinvestors. Corteva transfers 75% of carbon credit sale to farmers, and payments are distributed over the life of
the project.

Figure 6. Carbon Credit Generation through Corteva

Page 8How Do Data and Payments Flow Through Ag Carbon Programs?

Agoro

Agoro Carbon Alliance contracts and supports farmers directly to generate carbon credits throughregenerative practices including reduced/no-till, planting cover crops, pastureland management, andnitrogen management with further methodologies under review. Its methodology to translate agricultural
practices into carbon credits is based on protocols from the Verra and Gold Standard registries. Practices
implemented by farmers are registered online in the Agoro Platform and independently checked byaccredited verifiers. Soil tests are mandatory and paid for by Agoro Carbon. The associated registries will
issue serial numbers for carbon credits to Agoro, which in turn transfers them to buyers post-sale. Farmers
have two payment options; after verifications or annual forward payments based on estimates. Farm
production data is shared with project developers, Agoro, verifiers, and the respective registry.

Figure 7. Carbon Credit Generation through Agoro

How Do Data and Payments Flow Through Ag Carbon Programs?

CIBO

Page 9CIBO is its own registry and marketplace, and its methodology to translate agricultural practices into carbon
credits is based on the SALUS model (owned by Michigan State University). Project developers can beinternal or external to CIBO. Practices implemented by farmers are registered online in the CIBO Plus Land
Platform. Verification relies on remote sensing and is internal to CIBO. Soil tests are required only if the
farm is audited, and CIBO issues the payments to soil labs. CIBO issues a serial number for carbon credits
generated in a project and assigns 80% of the credits to the farmer and retains 20% of the credits as fees.
Farmers sell their carbon credits through CIBO’s online marketplace to end-users and brokers (who ultimately
resell them to end users), and receive full monetary compensation from which fees to external project
developers (if any) are paid. CIBO issues payments to soil labs. Farm production data is shared with project
developers and CIBO. Payments start flowing into the system when a sale of (issued) carbon credits occurs.

Figure 8. Carbon Credit Generation through CIBO

Page 10How Do Data and Payments Flow Through Ag Carbon Programs?

Gradable

Gradable is its own registry and marketplace, and it develops its own methodology to translate agricultural
practices into carbon credits based on a proprietary model, https://bit.ly/3cVpn2n. Project developers canbe internal or external to Gradable. Practices implemented by farmers are registered online in the Farmers
Business Network (FBN) Platform. Verification relies on remote sensing and is internal to Gradable. Soil tests
are required at project onset and possibly later. Gradable issues a serial number for carbon credits generated
in a project and assigns 60% of the credits to the farmer, retaining the remaining 40%: 25% of the credits are
retained to cover avoidable and unavoidable losses of carbon over a 100-year period and the remaining 15%
are retained as fees. Farmers sell their carbon credits through Gradable’s online marketplace to end-users
and brokers (who ultimately resell them to end users), and receive full monetary compensation from whichfees to external project developers (if any) are paid. Gradable issues payments to soil labs. Farm production
data is shared with project developers and Gradable. Payments start flowing into the system when a sale of(issued) carbon credits occurs.

Figure 9. Carbon Credit Generation through Gradable

How Do Data and Payments Flow Through Ag Carbon Programs?

Bayer Carbon

Page 11Bayer Carbon finds investors to finance projects through ERPAs and pays farmers $3 per acre per year to
implement no-till/strip-till, $6 per acre per year to plant cover crops, and $9 per acre per year to implement
both practices. Payments for implemented practices could increase (not decrease) depending on revenue
obtained at credit sale. Bayer Carbon allows enrollment of practices that began as early as 2012, and offers
up to five years of historic back pay after verification and validation. The methodology to quantify and issue
carbon credits is under development, in collaboration with multiple registries. Farmers contract directly with
Bayer Carbon and share their production data through the Climate FieldView Platform (owned by Bayer).
Farmers must have a Climate FieldView PLUS subscription, which is available for free via BayerPLUS. Soiltests are mandatory at onset and every five years for the majority of the acres, and test costs are covered byBayer Carbon. Depending on the final institutional arrangement for credit issuance and practice verification,
production data may or may not be shared with actors external to Bayer Carbon only for purposes stated in
the agreement, on a need-to-know basis. Payments are made on an annual basis after remote verificationand validation, within one year of practice completion. Bayer Carbon offers participating farmers access topremium low-carbon grain markets.

Figure 10. Carbon Credit Generation through Bayer Carbon

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How Do Data and Payments Flow Through Ag Carbon Programs?

For further details on ag carbon programs see AgDM File A1-76, How to Grow and Sell Carbon in US Agriculture,
www.extension.iastate.edu/agdm/crops/pdf/a1-76.pdf, or the Carbon Market Information resources on the Ag
Decision Maker website, https://go.iastate.edu/BTGKOP.

Prepared by Alejandro Plastina, extension economist, plastina@iastate.edu
www.extension.iastate.edu/agdm
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