Paper: Decarbonize Agriculture by Expanding Policies Aimed at Low-Carbon Biofuels

by Diana Yates (University of Illinois Urbana-Champaign) A team of agricultural economists, environmental scientists and policy experts envisions a path toward a carbon-neutral agricultural future by expanding the reach of policies designed to promote low-carbon biofuels for transportation and aviation. In a new paper in the journal Science, the researchers propose policies that would reward farmers for adopting “climate-smart” practices when growing biofuel crops and remove the hurdles that currently thwart such efforts.

Climate-smart practices include techniques that build soil carbon, like cover-cropping, not tilling fields after harvest and adding biochar or finely ground silicate rock to soils; and those that reduce the carbon footprint of crop production, like optimizing the timing of fertilizer application, electrifying farm vehicles and improving crop genetics.

Studies show that, if adopted globally, “climate-smart” farming practices could reduce carbon emissions by 4-8 billion tonnes per year, the researchers wrote. To put that in perspective, in 2024, global carbon dioxide emissions reached an all-time high of about 40 billion tonnes.

“Currently, our biofuel policies don’t reward farmers for adopting climate-smart practices,” Khanna said. “For example, they treat all corn grown for the corn-ethanol market the same, whether or not the farmers adopt those types of practices. By accounting for differences in practices implemented at the farm level and paying a premium for corn grown with climate-smart practices for corn ethanol, biofuel policies can incentivize adoption of these practices.”

Biofuel markets have already established mechanisms for accounting for the carbon-intensity of different feedstock types and have well-developed channels for transferring payments from energy markets to biofuel producers, the researchers report. This opens the door to using these channels to expand performance-based incentives to increase the adoption of climate-smart practices in agriculture.

“For example, the ‘40B’ Sustainable Aviation Fuel tax credit of 2023-2024 was designed to differentiate the credit based on the climate-smart practices adopted while producing the crop,” Khanna said. “The lower the carbon intensity, the higher the tax credit paid for sustainable aviation fuels and for the crop used to produce it.”

At present, however, the channels for crediting farmers for soil-carbon sequestration or other climate-friendly practices on the farm are segregated from the markets that provide credits for low-carbon biofuels, Khanna said. To be compensated for their sustainability efforts in growing the crops, farmers must either enroll in a conservation program or sell carbon credits to one of several companies specializing in agricultural carbon offsets. Space is limited in government conservation programs, however, and farmers must prove that they aren’t already engaging in climate-smart practices to obtain credits. This requires a lot of extra effort on the farmer’s part.

Khanna and her colleagues propose an approach for merging the biofuel feedstock market and climate-offset market into a single channel to reward farmers and others in the biofuel supply chain who use practices that lower the carbon-intensity of their operations. This approach could subsequently be broadened to reward farmers for adopting climate-smart practices for crops to supply food and feed markets as well.

Like existing policies, any new approach would require verification that farmers are actually implementing the practices they’ve pledged to follow.

“Emerging digital technologies and modeling advances can document farming practices and accurately calculate their carbon intensity. This can simplify and scale this process,” said Bruno Basso, a co-author of the study and an expert in modeling and digital agriculture at Michigan State University. Certification programs could allow independent verification that feedstocks were sustainably produced.

Calculating the changes in the amount of carbon sequestered in crop soils precisely each year is a more daunting task, the authors wrote. But “using multiple process-based ecosystem models can reduce the uncertainty in these estimates and avoid the need for labor-intensive soil sampling procedures,” Basso added.

Another concern is the chance that farmers will implement and then abandon various climate-smart practices, Khanna said.

“If they do it one year and not the next, they’ll sequester the carbon and then, perhaps, release it back to the atmosphere the following year,” she said. “But we can design incentives for longer-term soil-carbon sequestration by having farmers sign longer-term contracts. This would relate the size of the payments to how long the farmer agrees to keep that carbon in the ground.”

Khanna acknowledges that the carbon benefits from existing biofuels are controversial. Some critics argue that devoting farmland to the production of plant-based fuels takes up land that can be used for food crops and can contribute to the conversion of forests to cropland in other parts of the world, erasing its sustainability gains.

But current approaches could be under- or overestimating the carbon benefits of biofuels by disregarding the carbon effects of crop management practices implemented on the farm producing the crop for the biofuel market.

“By developing a market for agricultural products that accounts for all the direct and indirect carbon emission effects from the farm to the consumer, we can better address these concerns,” she said. “The main premise of our proposal is that we need to have a full and accurate assessment of carbon emissions from the beginning to the end of any product’s life cycle. And right now, the way that biofuel policies are designed, they treat crop producers supplying crop for a biofuel as all being the same.” READ MORE