Through the market mechanism, a high carbon price raises the cost of products according to their carbon content. In order to effectively limit emissions of greenhouse gases (GHGs) the cost of using carbon as an energy source needs to be high enough to motivate the necessary changes needed in economic behavior ( Nordhaus, 1992). Reichle, in The Global Carbon Cycle and Climate Change, 2020 12.5 The economics of clean energy Governments and companies can reach their emissions targets through carbon sequestration, which is the process of capturing and storing atmospheric carbon dioxide (USGS, n.d.).David E. During the COVID-19 pandemic, the number of companies setting net-zero or climate-neutral targets has doubled (Forest Trends’ Ecosystem Marketplace 2020). Private companies also set emissions targets that may meet or exceed the Paris Agreement’s goal. will reach net-zero emissions no later than 2050, meaning GHG removal will cancel out human-caused GHG emissions.
With growing concerns about climate change and greenhouse gas emissions worldwide, some countries agreed to follow voluntary climate change agreements, such as the UN Framework Convention on Climate Change (1992), Kyoto Protocol (1997), and Paris Agreement (2015). The major greenhouse gases are carbon dioxide (CO 2), methane (CH 4), nitrous oxide (N 2O), and various synthetic chemicals (EPA, n.d.) The effect of anthropogenic emissions is greater than the effect of natural emissions, with human activities suggested to be the main cause of global warming over the last 50 years. Anthropogenic emissions are caused by human activities such as burning fossil fuels, and natural emissions are caused by such occurrences as volcanic eruptions, the Earth’s orbit, the carbon cycle, and the sun’s output. Greenhouse gases emissions are either anthropogenic or natural. Greenhouse gases (GHG) change the natural balance between energy received from the sun and emitted from the earth by trapping energy from the Earth in the atmosphere, altering the climate and weather.
This article provides a brief background about carbon markets, information about the breakeven price for carbon sequestration practices, and some questions for farmers to consider about selling carbon credits. Information about carbon markets can be challenging to navigate because each company typically has a different structure for payments, verification, and data ownership. The sale of carbon credits presents an opportunity for farmers to receive financial benefits from changing to more environmentally beneficial agricultural practices, although carbon prices may not currently be high enough to cover the cost of switching practices.
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