Budget 2024

Tax and spend fiscal plan will inhibit growth

As published by the World Economic Forum

Carbon is no longer a liability, it’s an asset. While that may sound counter intuitive, this shift in mindset is a realistic way to create positive change around emissions.

Agriculture can be a leader in this shift. Our journey as an industry has brought us to an interesting yet difficult crossroads. By 2050, we will need to feed another 2 billion people, but we can’t do so by using more land and allowing emissions to increase; this would risk solving one problem while adding to another. After all, food production—led by the agricultural cropping and livestock industries—is already responsible for at least one-quarter of the world’s annual greenhouse gas emissions. It’s a big concern and there is a lot of pressure, but this crossroads presents us with an opportunity.

The solution lies in rethinking a farmer’s relationship with carbon. While there are already many things a farmer can do to reduce the emissions of their operation, this effort comes at a cost. In a business where a few weeks of bad weather can make the difference between profitability and significant loss, additional expenditures required to boost sustainability often land in the ‘nice to have’ bucket. This is where agriculture is ripe for a shift in approach.

These extra costs exist in tools, technology and knowledge we already have as an industry, but many are yet to unlock as a comprehensive, useable package. While industry innovation has opened the door for farmers to capitalize on incremental advancements in sustainability, we need to help make it easy and profitable for farmers as part of a package that brings positive climate impact. To oversimplify a complex issue, the economics of sustainability just hasn’t stacked up for farmers, and as an industry we haven’t done enough to make it worth the effort; that ends now.

Economic viability

The role of carbon offsetting is key in addressing residual emissions that cannot be directly reduced and eliminated, and there is significant opportunity in our soils to help meet the demand for verifiable carbon credits that support nature-based solutions. In this decade of action, it is more important than ever to unlock large-scale carbon finance for natural climate solutions through carbon market mechanisms.

The economics check-out, and the potential value is only growing. According to the Taskforce on Scaling Voluntary Carbon Markets, the global market for carbon offsets could grow by as much as 100-fold over the next 30 years. In 2005, the US Environmental Protection Agency valued global aggregated carbon markets at US$10 billion – by 2008, that value jumped to US$126 billion.

In 2020, Mark Carney (former Governor of the Bank of England), called for an annual US$50–100 billion global carbon offset market, stating in a recent press release: “This [carbon market] presents an enormous green investment opportunity, which can help generate large flows of private capital from advanced to developing economies, and help fund projects from nature-based solutions to technological solutions like carbon capture and storage.”

Getting to net-zero

Beyond strong economic incentives, there are several other benefits to this approach. The creation of a carbon ecosystem will introduce the opportunity to partner with governments and NGOs to help achieve critical environmental goals, notably the ability to meet Paris Agreement targets and net-zero commitments.

Perhaps the most exciting part of this shift is that it can be done very quickly. Whereas an energy transition is likely still decades away, the formation of a carbon economy in agriculture can happen within the next two years. It sounds ambitious, but this short timeline is possible, and the speed at which it happens will depend on industry buy-in for this new approach. The stakes are immense and transforming how agriculture handles carbon needs scaling quickly if we are to realize its potential. This effort demands collaboration and a new sense of partnership across industries and the global agriculture value chain.

Change through collaboration

At Nutrien, we’re implementing this idea by piloting a new comprehensive carbon program (see infographic below). We are fortunate in that we can leverage our direct relationships with farmers to drive positive change, and many of our peers are working to do the same. As an advocate for this shift, I continue to call on fellow leaders in agriculture, businesses across industry, and governments, challenging everyone to come together to strengthen the systems and policies needed to establish agriculture as a leader in natural climate solutions. The world needs an aligned carbon marketplace to allow farmers to truly take advantage of this opportunity.

Infographic of Nutrien's carbon program
Nutrien’s carbon program offers end-to-end support for growers to drive sustainability and profitability.

The good news is this collaboration has already begun. Ironically, we were brought together by something that has mostly served to drive us apart. COVID-19 has created an urgent need to work directly with peers, governments and civil society to ensure continued food security for a hungry and isolated world. We have the opportunity to continue this unprecedented cooperation and shift our focus to enable a recovery that is sustainable, resilient and that capitalizes on innovative solutions.