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Agri-giant Bayer partners with Nori for tokenised carbon credits

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Multinational agrichemical provider Bayer (XWBO:BAYN) has partnered with carbon removal marketplace Nori to generate tokenised carbon credits. These will be generated from the sustainable farming practices implemented through its ForGround Platform. 

  • Through Nori’s tokenised marketplace, Bayer will sell 720,000 tons worth of carbon offsets generated by farmers participating in its ForGround programme. 
  • Bayer aims to expand the adoption of carbon farming techniques, but questions remain as to the quality of its credits and the underlying motivations of big agriculture firms.
  • Public sector support could incentivise farmers to sequester soil carbon, without contributing to the questionable agendas of big agriculture.

Bayer’s ForGround Platform is an online portal that provides farmers with tools, resources and incentives for adopting sustainable agricultural practices. Through the partnership with Nori, Bayer will translate the carbon savings of participating farmers into tokenised carbon credits. 

Paul Gambill, chief executive and cofounder of Nori, said: “Bayer’s recent announcement of its ForGround by Bayer platform makes our collaboration an ideal way to grow our marketplace and enhance our impact.”   

“Key to Bayer’s vision is collaborating with innovative companies that are committed to advancing the carbon removal marketplace. Through working with groups like Nori, we’re able to enhance the offering within our ForGround platform to potentially enable even more growers to benefit from their environmentally sustainable farming practices”, added Leo Bastos, head of global commercial ecosystems at Bayer. 

How will the partnership work? 

Nori gathers independently verified carbon removal data and issues a tokenised carbon credit, which it calls Nori Carbon Removal Tonnes (NRTs), for each tonne of CO2 equivalent that is sequestered. The NRTs are then sold directly to offset purchasers, with each NRT guaranteeing that its respective tonne of carbon has been sequestered for at least ten years. 

Under the partnership agreement, Bayer will aggregate around 400,000 acres of land that have been sustainably farmed by its ForGround participants. This land is expected to generate approximately 720,000 NRTs, which will then be sold via Nori’s marketplace.  

Questions remain about carbon removal and credit quality

While there is no doubt that climate smart farming practices can help keep carbon sequestered in the ground, there are critics such as long time climate risk specialist Mark Trexler, who warns that “hundreds of billions of tons are removed from the atmosphere every year for all kinds of reasons, whether via the natural carbon cycle, public policies, or individual behaviours.”

In order to be considered high quality credits, they must remove additional CO2 on top of what would be sequestered under normal circumstances. The removed carbon must also be stored over the long-term, but there has been some debate over whether this permanence can be achieved through soil carbon sequestration.

At present, it is unclear how Bayer’s proposed programme will address these questions of additionality and permanence. With Nori’s credits only guaranteeing storage for ten years, it would perhaps be more appropriate to describe its solution as short term storage rather than carbon removal.

Another longstanding controversy within carbon market debates is the argument that carbon offsets are being purchased by the world’s largest emitters to justify their continuation of business as usual.

One of the ways in which the ongoing impacts of such business are being addressed is by prioritising offsetting mechanisms that can deliver co-benefits for surrounding ecosystems and local communities, such as improving soil health and agricultural yields while reducing resource intensity. Bayer’s climate-smart farming strategy claims to deliver such benefits.

Bayer’s climate-smart farming strategy 

Like many businesses that depend on agriculture as one of their primary revenue streams, Bayer perceives the transition to more sustainable practices as an insurance policy for the continuity of its business in the face of climate-related risks. 

As such, the company is prioritising the development of new farming methods, seeds and technologies as part of its sustainability strategy. Its ForGround platform was launched in August 2022 to accelerate its existing carbon programme and provide further incentives for smallholder farmers to adopt its climate-smart solutions. 

There are a range of sustainable agricultural practices, such as reduced-till farming, cover cropping or crop diversification, that have been shown to sequester carbon, support biodiversity, preserve resources, improve yields and increase profitability.  

Platforms such as Bayer’s ForGround initiative are used to incentivise the implementation of these practices by smallholder farmers by lowering the barriers to participation in voluntary carbon markets.

For example, larger corporations can provide guidance on the best practices to be applied in specific contexts and can support smallholders in gathering and monitoring the data required to issue credible carbon credits. 

Agri-giants are maintaining control over soil carbon sequestration potential 

Bayer’s strategy is far from unique. Fellow agricultural giants Nutrien (NYSE:NTR), Corteva (NYSE:CTVA) and Cargill have each introduced similar programmes that offer payments to farmers that climate-smart techniques through which they can generate carbon credits. 

These schemes have been criticised by the likes of international environmental non-profit Friends of the Earth, which claim that they allow major corporations to pursue their own agenda. 

To verify participation, such programmes collect detailed information on farmers’ production practices and yields that can serve their wider business. Cargill, for example, generates additional revenue by directly selling the data it collects from farmers.  

Bayer, meanwhile, takes full ownership of farmer-generated credits and makes its payments based on fixed rates per acre. To access its full support, ForGround farmers must enrol in the company’s in-house Climate FieldView platform, which measures their carbon sequestration data and provides ongoing guidance on climate-smart practices. 

Several of these practices rely on the use of Bayer’s own products. For example, it advises that no-till farming can be supported by using glyphosate, a controversial weedkiller owned by Bayer and tolerated by its patented seeds. This advice comes despite reports that suggest glyphosate is harmful to soil health and can disrupt carbon sequestration. 

This raises questions on whether the influence of major agricultural corporations on soil carbon markets leads to potential conflict of interest. Farmers involved in programmes such as ForGround seem to be advised to use agricultural inputs sold by the same companies that provide that advice.

Under the new partnership, Bayer will pay each ForGround enrolled farmer a flat rate of up to $12 per acre, for which it will receive the full rights to sell the associated carbon credits via Nori’s platform.

Nori, meanwhile, stresses its position as a carbon removal marketplace that stands outside of the agricultural sector. The firm notes that it works directly with farmers and does not push products or take ownership of data. 

Chief executive Paul Gambill said: “As the leading independent marketplace for connecting suppliers of legacy carbon removal with buyers who want to fund their projects, we pride ourselves on supporting farmers and not taking ownership of their data. We love working directly with farmers, but we also love working with partners who already have relationships with farmers.”

“As a small start up in the  urgent race to reach the UN IPCC target of 6 billion metric tonnes of carbon removal per year by 2050, we need to scale our supply as quickly and efficiently as possible. We are not an agriculture company, do not sell or recommend any agricultural products, and have no insight into how big agriculture companies might operate within their industry“, he added.

Bayer has also been approached for comment.

Should the public sector take control? 

Despite the criticism of Bayer and others’ motivations, it is undeniable that the aggregation of agricultural data has the potential to make farms more economically and ecologically sustainable. Data can be used to gain insights into best practices, opportunities and potential challenges. 

The incentivisation of voluntary carbon markets, which are projected to reach $190 billion in value by 2030, could also be crucial in encouraging the adoption of sustainable practices by smallholder farms.  

Beyond corporate carbon schemes, there is the opportunity for governments to step in and provide economic incentives for soil carbon farming. In the UK, for example, the Sustainable Farming Incentive offers payments for sustainable land management alongside guidance that is not conditional on the use of specific products.  

The US, meanwhile, has introduced its Agriculture Resilience Act and Climate Stewardship Act. If passed, these acts could be used to rapidly expand existing schemes such as the Conservation Stewardship Program or Environmental Quality Incentives Program, which rewards farmers for implementing regenerative practices.

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