by Kanika Chandaria, Climate Tech Lead, and Thomas Gent, Regenerative Farming Lead, Agreena
Carbon credits have become a key focus in businesses’ attempts to compensate for their residual emissions. But the carbon credit market has a complex dynamic – one that can unfortunately lead to doubts over its credibility.
Currently, most industry players are split into two broad groups. On one end, there are the companies investing in avoidance credits: these are typically cheap, low-quality and don’t physically remove carbon from the atmosphere. On the other end, there are those investing in engineered carbon removals, which range from high-cost technologies like direct air capture to more scalable methods like biochar or enhanced weathering. While effective, these approaches often face challenges around cost, scalability or deployment depending on the method.
What’s more, engineered carbon removals are currently being purchased by a narrow group of players – mainly big tech, consulting firms and hard-to-abate sectors. And even among them, only a handful are buying at scale, as the CDR leaderboard demonstrates under ‘purchasers’.
This concentration of demand – and high price point – has left a major gap in the market for more accessible, scalable and cost-effective removal solutions. And that’s where the opportunity lies: right beneath our feet. Soil-based carbon removals, through regenerative agriculture, offer a nature-based, immediately deployable alternative that can bridge the gap between quality and scale.
Soil is a massive (and overlooked) carbon sink
Soil is the largest terrestrial carbon sink. It stores over three times more carbon than the atmosphere. Yet despite this natural ability to soak up carbon, it is often not considered in carbon removal strategies or investment opportunities.
For companies looking at ways to deal with their residual emissions, soil carbon sequestration provides one of the few scalable, immediately impactful and cost-effective approaches.
In fact, the process could potentially remove between 2-5 gigatons of CO₂ annually by 2050. Consequently, for companies facing regulatory requirements, investor expectations or voluntary climate commitments soil carbon provides a high-integrity route to carbon removal – provided it’s underpinned by robust standards, rigorous scientific methodologies and credible Measurement, Reporting and Verification (MRV).
Relevant: Microsoft Commits To 2.6M Tons Of Soil Carbon Removal Credits
Beyond carbon, soil-based solutions also offer additional sustainability benefits like biodiversity restoration and long-term food security. Therefore, buying soil carbon credits means companies can compensate for their hard-to-abate emissions and also play their part in addressing wider environmental challenges.
But with so much potential, why does soil carbon remain on the fringes of the carbon credit market?
Well, from current market structures to measurement issues, there are a variety of challenges halting its progress. And one of the major but less apparent challenges comes from a tension in the interoperability between the voluntary carbon market (VCM) and supply chain initiatives.
The tension between the VCM and supply chain initiatives
Soil carbon sequestration is picking up steam and the regenerative agricultural processes that underpin it are growing. But all too often, it is the farmers, the people who are actually implementing these practices, who end up shorthanded when it comes to the financial side of things. This then impacts the whole process of adopting regenerative farming practices.
This can be attributed in part to a structural divide between the VCM and supply chain initiatives. The VCM is the network of businesses purchasing soil carbon credits to compensate for their residual emissions. Supply chain initiatives are generally funded by agrifood companies who wish to invest in regenerative practices for certain crops in their supply chain.
The disconnect emerges from a fragmented market and a lack of coherence between incentives, meaning a concentration of value flows to corporations instead of farmers. But we need both approaches to coexist on a level playing field, helping to encourage greater corporate action and supporting farmers in the process.
What’s driving the disconnect?
Supply chain companies are under increasing pressure to reduce their Scope 3 emissions. To achieve this, they need to empower farmers to adopt more sustainable practices on their farms. As a result, these companies may set rules or encourage specific farming practices, as they need to claim the resulting carbon benefits.
But supply chain programmes typically focus on just one or two priority crops – the ones aligned with the company’s sourcing interests. When farmers rotate to other crops – as they must to maintain soil health – they’re often left without continued support. This narrow focus creates a patchy funding model that places the burden and cost of sustainable farming squarely on the farmer’s shoulders. That’s why it’s critical that farmers are fairly compensated and secure the best price for their sustainable outcomes.
Giving soil carbon credits credibility
The VCM can help bridge this gap. Soil carbon credits can provide financial incentives for farmers to adopt sustainable practices across their whole farm. This is why we have to focus on strengthening the interoperability between the two initiatives. They are codependent on each other and both are vital for effective soil carbon sequestration. And it is why the mission to make soil carbon credits more appealing to corporates is so important.
By using robust verification technologies to prove their effectiveness and amplifying awareness around the unique benefits of soil carbon initiatives, we can build a mindset where companies wholly recognise how they can compensate for their residual emissions through soil carbon and tackle wider climate challenges.
The answer lies beneath our feet
Soil degradation alone contributes to roughly 5-10% of the total emissions produced by the agriculture sector. When you compare this to how soil carbon sequestration can deliver gigatons of carbon removal, it’s clear just how valuable soil health is in the mission to reach net zero and reduce global carbon emissions.
Farmers are not only the stewards of our lands – they’re also the backbone of our food systems. Yet they shoulder significant financial and operational risks when transitioning to more sustainable practices. Consequently, through investing in soil carbon credits, corporates can play an integral role in supporting them in their transition to regenerative agriculture and scaling soil-based solutions. These investments are not just essential for mitigating climate change, but also for ensuring long-term global food security.
But for soil carbon sequestration projects to work, we have to build interoperability between the VCM and supply chain initiatives – it’s a combination that can stimulate greater corporate action, enable farmers to be fairly compensated in adopting regenerative practices, and benefit the planet as a whole.
In a market where carbon credits are either low on quality or too expensive, for corporates, the answer could lie beneath their feet – in our soil.
