Agriculture and Forestry Offsets in Carbon Markets: Background and Selected Issues

November 3, 2021 R46956

Agriculture and Forestry Offsets in Carbon
November 3, 2021
Markets: Background and Selected Issues
Genevieve K. Croft
The number of private carbon market programs (also known as carbon market initiatives) that
Analyst in Agricultural
pay farmers, ranchers, and forest landowners (participants) to generate carbon offsets for use in
Policy
carbon markets has grown in recent years. Such programs promise to financially compensate

participants for implementing climate-smart practices that reduce greenhouse gas (GHG)
Katie Hoover
emissions associated with agriculture (e.g., carbon dioxide [CO2], methane, nitrous oxide) or
Specialist in Natural
sequester carbon in soil and plants (e.g., crops, trees). Through hearings and proposed legislation,
Resources Policy
Congress has considered what role, if any, the federal government might play with respect to

agriculture and forestry offsets and carbon markets.
Jonathan L. Ramseur
Carbon market generally refers to an economic framework that supports buying and selling of
Specialist in Environmental
environmental commodities that signify GHG emission reductions or sequestration. Governments
Policy
and private entities typically create carbon markets to support climate change objectives that

include mitigating GHG emissions. Carbon markets can include both carbon-based GHG
Megan Stubbs
emissions (e.g., CO2, methane) and non-carbon-based emissions (e.g., nitrous oxide). Carbon
Specialist in Agricultural
markets generally fall into two broad categories: compliance markets and voluntary markets.
Conservation and Natural
Compliance markets —for example, the Regional Greenhouse Gas Initiative (RGGI, a regional
Resources Policy
cap-and-trade program involving 11 states) and California’s cap-and-trade program—typically

support a program requiring certain entities to cap or reduce their GHG emissions. Voluntary
markets give businesses, organizations, and individuals that are not regulated in terms of GHG

emissions the opportunity to purchase carbon offsets to support a range of objectives.
Agriculture and forestry activities are sources and sinks of GHG emissions. Agriculture is a net emitter of GHGs, and
forestry results in net sequestration. According to the U.S. Environmental Protection Agency (EPA), agriculture contributed
10% of all U.S. GHG emissions in 2019. EPA also estimates that carbon sequestration through agriculture and forestry
reduced gross U.S. GHG emissions by 12% in 2019. Some research estimates that agriculture and forestry have the potential
to increase their current levels of carbon sequestration. Collectively, these estimates suggest that the agriculture and forestry
sectors could play key roles in meeting U.S. GHG emission reduction goals.
Carbon offsets (also known as carbon credits) represent an amount of avoided or reduced emissions, or sequestered carbon.
Agricultural producers can generate carbon offsets by beginning new practices, such as cover cropping or installing methane
digesters to manage livestock waste. Forest landowners can generate offsets through new afforestation or reforestation
projects, among others. The quality of carbon offsets may be considered in terms of broad metrics , including realness,
additionality, leakage, permanence, and verification. Offsets viewed as high quality are generated by implementing GHG
mitigation protocols (or methodologies) accounting for each of these metrics. Protocols are specific to individual GHG
mitigation practices (e.g., cover cropping, no-till farming, reforestation), and they standardize the measuring, reporting, and
verification (MRV) requirements for generating carbon offsets. Protocols generally require that third-party verifiers
independently confirm the requirements of the protocol were met. Once verified, a carbon offset may be registered with a
carbon registry and sold to a purchaser (e.g., private company, individual) on compliance or voluntary markets.
Currently, the U.S. Department of Agriculture (USDA) is not directly involved in carbon markets. USDA personnel do
implement policies, conduct research, and collect data that may be useful to existing or potential carbon markets. Such
policies and activities involve USDA’s Office of Environmental Markets; Forest Service; Agricultural Research Service;
Economic Research Service; Natural Resources Conservation Service; and other agencies and offices.
Certain legislation introduced in the 117th Congress would address agriculture and forestry offsets and carbon markets. The
Growing Climate Solutions Act of 2021 (S. 1251/H.R. 2820) would create a USDA certification program for third-party
verifiers and technical assistance providers and would require USDA to establish and maintain a list of USDA-backed
protocols. The Rural Forest Markets Act of 2021 (S. 1107/H.R. 3790) would direct the Secretary of Agriculture to establish a
program within USDA to provide financing to facilitate the sale of forest carbon offsets in carbon markets. These bills would
not set a price for carbon, create a federal carbon bank, or create or regulate a carbon market.
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Agriculture, Forestry, and Carbon Markets: Background and Selected Issues

Carbon markets and carbon offsets in the agriculture and forestry sectors raise numerous questions for ongoing policy
consideration, including questions about
 who benefits financially from such programs;
 the appropriate role, if any, for federal engagement;
 whether or how to reward early adopters (e.g., participants who implemented climate-smart practices
before financial rewards became available);
 equity and access for potential participants of different financial means and operating circumstances; and
 other approaches to achieving GHG mitigation goals that may not involve agriculture and forestry in
voluntary carbon markets .

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Appendixes
Appendix A. Selected Existing Compliance Carbon Markets ............................................... 34
Appendix B. Historical U.S. GHG Emissions and Selected GHG Emissions Targets................ 37

Contacts
Author Information ....................................................................................................... 39

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Agriculture and Forestry Offsets in Carbon Markets: Background and Selected Issues

Introduction
Congress has debated what policies, if any, the federal government should adopt to address
climate change by reducing greenhouse gas (GHG) concentrations in the atmosphere.1
Greenhouse gas mitigation includes both reducing GHG emissions and increasing carbon
sequestration. Practices that reduce GHG emissions and increase carbon sequestration (storage) in
the agriculture2 and forestry sectors have the potential to play a key role in mitigating U.S. GHG
emissions. These sectors are both sources and sinks of GHG emissions. According to estimates
published by the U.S. Environmental Protection Agency (EPA), agriculture contributed 10% of
U.S. GHG emissions in 2019.3 The same year, EPA estimates indicate that net sequestration in the
land use, land-use change, and forestry (LULUCF) sector—that includes agricultural and forested
lands—reduced gross U.S. GHG emissions by 12%.4
Various policy tools exist to support GHG mitigation in the agriculture and forestry sectors. This
report discusses carbon offsets in the agriculture and forestry sectors and their use in carbon
markets. A carbon offset is a measurable reduction, avoidance, or sequestration of GHG
emissions used to counter (i.e., offset) GHG emissions generated at another location. Carbon
offset projects often involve activities in the forestry and agriculture sectors. Carbon offsets can
be a valuable commodity in carbon markets. A carbon market is an economic framework that
supports the buying and sel ing of environmental commodities that signify GHG emission
reductions or sequestration.
Generating and using carbon offsets from agriculture and forestry can be complex, requiring
technical expertise and familiarity with how carbon markets operate. In recent years, a number of
carbon market programs have arisen to assist farmers, ranchers, and forest landowners
(participants) to participate in carbon markets. Carbon market programs can provide participants
with technical guidance, and they may be able to reduce costs by providing services to multiple
participants and by aggregating their carbon offsets for sale to purchasers.
As described in this report, carbon offsets and carbon markets can be a part of both voluntary and
mandatory policy approaches to GHG mitigation. Although the development and use of carbon
offsets in carbon markets do not require federal intervention, this report discusses congressional
deliberations and potential questions regarding roles the federal government could play in shaping
and facilitating the use of carbon offsets from agriculture and forestry in carbon markets. It also
discusses stakeholder perspectives and highlights issues for potential congressional consideration.
Discussion of other policy tools to achieve GHG mitigation—such as regulation of GHG
emissions in agriculture and forestry—is beyond the scope of this report.

1 Greenhouse gases (GHGs) in the atmosphere trap radiant energy, warming the earth’s surface and oceans. T he
primary GHGs emitted by humans include carbon dioxide (CO2), methane, nitrous oxide, sulfur hexafluoride,
chlorofluorocarbons, hydrofluorocarbons, and perfluorocarbons. CO2 emissions account for 80% of total GHG
emissions in the United States. See U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas
Em issions and Sinks: 1990-2019, April 2021. Worldwide, CO2 emissions account for approximately 74% of total GHG
emissions, according to the Climate Watch database (https://www.climatewatchdata.org).
2 T hroughout this report, agriculture refers to on-farm production of food, feed, or fiber and does not include
processing, transportation, or storage of agricultural goods.
3 EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 -2019, April 2021.
4 Ibid.
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Agriculture and Forestry Offsets in Carbon Markets: Background and Selected Issues

Carbon Markets: Overview and Key Elements
A carbon market general y refers to an economic framework that supports the buying and sel ing
of environmental commodities that signify GHG emission reductions or sequestration.
Governments and private entities typical y create carbon markets to support climate change
mitigation objectives. These objectives often include the reduction, avoidance, or sequestration of
GHG emissions, such as carbon dioxide (CO2), methane, and nitrous oxide, among others.
Carbon markets can include both carbon-based GHG emissions, such as CO2 and methane, and
non-carbon-based emissions, such as nitrous oxide or certain fluorinated gases. Carbon markets
can also support other objectives, such as conservation of forests, soils, or biodiversity.
A carbon market can take several different forms depending on its specific structure and context.
The operations of a carbon market may involve a number of entities, groups, or organizations.
The following bullets briefly introduce some of the key terms involved in carbon market
discussions and subsequent sections of this report.
 Carbon offsets represent a measurable reduction, avoidance, or sequestration of
GHG emissions. Farmers, ranchers, and forest landowners can create carbon
offsets by implementing eligible projects or activities. Carbon offsets have
monetary value and may be tradeable instruments in both compliance and
voluntary carbon markets.
 Compliance carbon markets support a regulatory program that requires GHG
emission reductions from particular emission sources. A traditional example of
such a mandatory program is a GHG emission cap-and-trade system, which
creates a cap on GHG emissions for covered entities while providing flexibility
in how these entities comply. In some cases, covered entities may be able to use
carbon offsets as a compliance option.
 Voluntary carbon markets encompass the voluntary buying and sel ing of
carbon offsets outside of a regulatory framework. There is no single voluntary
carbon market or authoritative marketplace. Carbon offset transactions can occur
directly between participants and buyers, or they can be mediated by other parties
or programs.
 Participants in carbon markets include farmers, ranchers, and forest landowners
who implement certain agriculture and forestry practices that have been shown to
reduce GHG emissions or sequester carbon. These practices may generate carbon
offsets, a tradeable commodity in carbon markets.
 Purchasers of carbon offsets include entities that use the offsets to comply with
mandatory emission-reduction requirements or corporations and individuals
pursuing voluntary GHG emissions reduction goals.
 Carbon market programs enroll participants and offer financial opportunities
for implementing specified practices that are associated with GHG mitigation in
agriculture and forestry.
 Carbon registries track the ownership of carbon offset projects and issue offset
credits for verified and certified units of emission reductions or removal. Carbon
registries may serve as carbon standards, establishing general rules and
requirements for certifying carbon offsets; accreditors of third-party verifiers of
carbon offset projects; and developers and approvers of carbon offset protocols.
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 Technical assistance providers advise participants on implementing agriculture
and forestry practices associated with generating carbon offsets.
 Third-party verifiers are individuals who are not participants and who are not
employees of carbon market programs, who verify that participants correctly
implemented carbon offset protocols.
Carbon Offsets
A carbon offset is a measurable reduction, avoidance, or sequestration of GHG emissions used to
compensate for emissions elsewhere.5 Offset projects often involve land-based activities,
particularly projects in the forestry and agriculture sectors. Forest landowners can generate offsets
through afforestation (i.e., establishing tree cover on previously unforested lands) and
reforestation projects, among others. Agricultural producers can generate carbon offsets by
beginning new practices, such as cover cropping or instal ing methane digesters to manage
livestock waste. As offset projects can involve different GHGs, they are typical y quantified in
terms of metric tons of CO2-equivalent (MTCO2e).6
Carbon offsets are key instruments in both compliance and voluntary carbon markets. Many
compliance market frameworks, such as cap-and-trade programs, al ow covered entities to use a
limited number of carbon offsets to help achieve compliance. In voluntary markets, companies
and other entities may purchase unlimited offsets to pursue voluntary GHG emissions reduction
goals.
The option to use carbon offsets could al ow some entities to continue with their current emission
levels, or perhaps even to increase them, depending on the circumstances. This may raise
concerns at facilities such as fossil-fuel-fired electric power plants or petroleum refineries that
produce both GHG emissions and traditional air pollutants. Such pollutants may present risks to
human health on a local or regional scale, while GHG emissions present risks on a global scale.7
The ability of industrial facilities to use carbon offsets in lieu of directly reducing their onsite
GHG emissions has sometimes raised concerns8 that some stakeholders categorize as an
“environmental justice” issue.9 This issue is beyond the scope of this report.

5 A carbon offset is a tradeable instrument that may be certified to represent an amount of carbon dioxide equivalent
reduced, avoided, or sequestered, which can be sold to another party to compensate for its GHG emissions. Some
entities—including many carbon market programs in agriculture and forestry —instead use the term, carbon credit.
T hese terms are generally interchangeable, and in this report, we preferentially use the term carbon offset.
6 CO2 equivalents are used because GHGs vary by global warming potential (GWP). GWP is an index developed by the
Intergovernmental Panel on Climate Change (IPCC) that allows comparisons of the heat -trapping ability of different
gases over a period of time, typically 100 years. Consistent with international GHG reporting requirements, EPA’s
most recent GHG inventory (with data from 2019) uses the GWP values presented in the IPCC’s 2007 Fourth
Assessment Report. For example, based on these GWP values, a ton of methane is 25 times more potent than a ton of
CO2 when averaged over a 100-year time frame.
7 T he Clean Air Act regulates air pollutants, such as sulfur dioxide and nitrogen oxide. Whether and how carbon offsets
might affect air quality and compliance with federal and state air pollution laws are beyond the scope of this report.
8 For example, environmental justice concerns regarding offsets have generated considerable interest in the context of
California’s cap-and-trade program, which allows offsets as a compliance alternative. For more information, see
CARB, “Cap-and-T rade FAQ,” https://ww2.arb.ca.gov/resources/documents/faq-cap-and-trade-program. See, for
example, Danae Hernandez-Cortes and Kyle C. Meng, Do Environm ental Markets Cause Environm ental Injustice?
Evidence from California’s Carbon Market, National Bureau of Economic Research, 2020; and Lara J. Cushing et al.,
A Preliminary Environmental Equity Assessment of California’s Cap -and-Trade Program , University of Southern
California Dornsife Equity Research Institute, 2016.
9 T here is no definition of environmental justice in federal law. Some have interpreted the terms “environmental justice
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Offset Quality and Credibility
A primary concern regarding the use of offsets in compliance and voluntary markets is their
quality and credibility. The availability of offsets that do not actual y reduce GHG load in the
atmosphere could undermine the overal policy goal of achieving specific GHG emission
reductions. Problems with offset quality and credibility can raise questions about the effectiveness
of compliance and voluntary markets. Research and policy measures have sought to correct such
problems as the markets have evolved.10
The quality and credibility of carbon offsets may be considered in terms of broad metrics
including realness, additionality, leakage, permanence, and verification (see the text box for
definitions). Offsets viewed as high quality are generated by implementing GHG mitigation
protocols that account for each of these metrics.11 Protocols are specific to individual GHG
mitigation practices (e.g., cover cropping, afforestation), and they standardize the measuring,
reporting, and verification (also referred to as MRV) requirements for generating carbon offsets.
Selected Metrics for Carbon Offset Quality and Credibility
Realness refers to whether the offset represents an actual and quantifiable amount of carbon
sequestration or reduction in GHG emissions.
Additionality means that the GHG mitigation would not have occurred without the purchase of
the carbon offset. As such, participants do not general y earn offset credits for the continuation
of existing practices and activities, but rather for the initiation of new practices and activities.
Leakage refers to an increase in GHG emissions outside of the project area in response to
decreases in production within the project area. High-quality carbon offsets are generated with
processes that take steps to prevent leakage.
Permanence refers to the duration of stored carbon. Many carbon standards require 100-year
permanence. Carbon registries can address the risk of impermanence by holding some offset
credits in reserve. Al or some of these reserve offset credits can be cancel ed if a certain
amount of the stored carbon is released before the agreed duration is reached.
Verification is making sure that the offsets were quantified correctly – a process usual y
conducted by a third party (i.e., not the project developer, participant, or purchaser).
Carbon Markets
The two general categories of carbon markets—compliance carbon markets and voluntary carbon
markets—are described below.

(or injustice)” and “environmental equity (or inequity)” broadly to describe the perceived disproportionate impacts of
pollution across populations that possess different demographic characteristics (e.g., age, gender, race, national origin,
occupation, income, or language). See CRS In Focus IF10529, Role of the U.S. Environm ental Protection Agency in
Environm ental Justice, by David M. Bearden and Angela C. Jones.
10 For more information and analyses of these issues, see Government Accountability Office (GAO), Climate Change
Issues: Options for Addressing Challenges to Carbon Offset Quality, GAO-11-345, February 2011; and GAO, Carbon
Offsets: The U.S. Voluntary Market is Growing, but Quality Assurance Poses Challenges for Market Participants ,
GAO-08-1048, August 2008.
11 For specific information regarding the generation of carbon offsets in agriculture and forestry, see “ Agricultural
Offsets and Carbon Markets” and “ Forest Offsets and Carbon Markets.”
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Compliance Carbon Markets
Compliance carbon markets typical y support a regulatory program that requires GHG emission
reductions.12 An example of a compliance market framework is a GHG emission cap-and-trade
system, which creates a cap on GHG emissions for covered entities (e.g., fossil-fuel-fired power
plants) while providing the sources with flexibility—whether to use on-site reduction or
emissions trading, among other possibilities—when complying with the emissions cap. There are
currently two compliance markets in the United States: California’s cap-and-trade program and
the Regional Greenhouse Gas Initiative (RGGI) that operates in 11 states.13 Appendix A provides
details about these markets and the European Union’s Emissions Trading System (ETS).
In a cap-and-trade system, entities subject to the cap are often referred to as covered entities.
Covered entities may include facilities that directly release GHG emissions, such as fossil fuel-
fired electric power plants or specific industrial operations, which general y include facilities in
carbon-intensive industries like steel, cement, and chemical manufacturing.
To date, proposed legislation that would cap GHG emissions would not include agricultural
facilities, such as farms and livestock operations, in the list of covered entities.14 Including
facilities in the agriculture sector as covered entities could pose some implementation chal enges
because some agriculture-related emissions are released from a relatively large number of discrete
sources, including crop and animal operations.15
Whether or not these agricultural operations are directly subject to an emissions cap, they could
be impacted by a federal cap-and-trade system. General y, a cap on GHG emissions or the fossil
fuels that generate them is expected to increase the prices of fossil fuels, as wel as the prices of
goods and services produced using these materials, such as electricity.16 This outcome is inherent
to a GHG emission cap because the cap is intended to (a) increase the relative price of more-
carbon-intensive energy sources compared with less-carbon-intensive alternatives, (b) encourage
innovation in less-carbon-intensive technologies, and (c) promote other activity (e.g., energy
efficiency) that may decrease emissions. These expected outcomes wil have some economy-wide
impacts, affecting the agricultural sector and a wide range of other sectors. The ultimate impacts
would depend on the design and specific circumstances of the federal program.
In a cap-and-trade program, an emissions cap is partitioned into emission al owances (or permits).
Typical y, in a GHG cap-and-trade system, an emission allowance represents the authority to emit
one MTCO2e—the same measure used for carbon offsets. At the end of each established
compliance period (a calendar year or multiple years), covered entities submit emission
al owances to an implementing agency to cover the number of tons emitted during the period.

12 Compliance carbon markets may also be described as regulatory or mandatory carbon markets.
13 For more information on California’s cap-and-trade program, see California Air Resources Board (CARB), “FAQ
Cap-and-T rade Program,” https://ww2.arb.ca.gov/resources/documents/faq-cap-and-trade-program. T he RGGI states
are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey (rejoined in 2020), New
York, Rhode Island, Vermont, and Virginia (joined in 2021). For more information on RGGI, see CRS Report R41836,
The Regional Greenhouse Gas Initiative: Background, Im pacts, and Selected Issues.
14 See CRS Report R45472, Market-Based Greenhouse Gas Emission Reduction Legislation: 108th Through 117th
Congresses. Some recent proposals would provide a rebate to farms for the increased costs of fuels (e.g., gasoline)
resulting from the carbon price on fossil fuels (e.g., H.R. 2307).
15 According to the U.S. Department of Agriculture’s (USDA’s) 2017 Census of Agriculture, there are more than two
million farms in the United States and over 93.6 million cattle, among other livestock. USDA National Agricultural
Statistics Service, “T able 1. Historical Highlights,” 2017 Census of Agriculture, 2019.
16 For more discussion, see CRS Report R45625, Attaching a Price to Greenhouse Gas Emissions with a Carbon Tax
or Em issions Fee: Considerations and Potential Im pacts.
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General y, if an entity did not provide enough al owances to cover its emissions, it would be
subject to penalties.17 Depending on the cap-and-trade design, an entity may acquire sufficient
al owances by buying them from the implementing agency, from another covered entity that may
have excess, or in a commodities market, while some systems al ocate al owances for free, at
least for an initial period.
Under an emissions cap, some covered entities may have a financial incentive to make reductions
beyond what is required, because they can (1) sel unused emission al owances to entities that
face higher costs to reduce their facility emissions, (2) reduce the number of emission al owances
they need to purchase, or (3) bank emission al owances—if al owed—to use in a future
compliance period.
When entities are al owed to buy and sel emission al owances, a cap-and-trade system creates an
emissions trading market, like a commodities market. This is why cap-and-trade is often cal ed a
“market-based mechanism.” Depending on design details, emission al owance trading may
involve not only sources directly subject to an emissions cap but also a range of brokers and
intermediaries.
Carbon Offsets in Compliance Carbon Markets
A primary benefit of carbon offsets in a compliance market could be improved cost-effectiveness
of the overal GHG reduction program. Carbon offsets would provide additional emission
reduction or sequestration opportunities—beyond those available at covered entities. Instead of
making direct, onsite reductions, such as instal ing new equipment or improving operational
efficiency, covered entities could purchase offset credits, which represent emission reductions or
sequestration from other sources, such as agriculture and forestry operations. In some cases, the
offset credits would present a lower-cost alternative to onsite emission reductions, thus lowering
the cost of compliance for covered entities.
The ability to generate and sel offset credits in a compliance market could provide a financial
incentive for non-covered sources to reduce, avoid, or sequester emissions. As previously noted,
non-covered sources in compliance frameworks often include agricultural operations and forestry
activities. Sequestration from land use activities, particularly in the forestry sector, offers the
potential for further reductions in net GHG emissions. A compliance market that al ows these
activities as carbon offsets could support objectives of overal reductions in U.S. GHG emissions
by providing a financial incentive to reduce or sequester emissions in these sectors. As discussed
in Appendix A, the California and RGGI cap-and-trade systems both al ow for carbon offsets
from selected agricultural and forestry activities.
The use of carbon offsets raises similar concerns in both compliance and voluntary carbon
markets. These include concerns related to the quality and credibility of offsets (see “Offset
Quality and Credibility”).
Voluntary Carbon Markets
In the United States and around the world, a number of businesses, interest groups, organizations,
and individuals are purchasing carbon offsets. These exchanges represent a voluntary market (or
noncompliance market) for offsets, because these parties are not required to directly reduce their
emissions or purchase offsets. The motivating factors for these purchases may vary. For example,
some businesses and individuals may value their contribution to abating climate change, or be

17 For additional details, see CRS Report R45625, Attaching a Price to Greenhouse Gas Emissions with a Carbon Tax
or Em issions Fee: Considerations and Potential Im pacts.
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seeking to enhance their public image, for example by claiming that al or part of their GHG-
emitting activities (e.g., travel or specific events) are “carbon neutral.” Others may hope to take
credit for the offsets in a future program that includes a compliance market, a possibility that
would depend on the details of the future program.18 Others may see a value in gaining
experience in a carbon market to give them advantage in a future compliance market.
Figure 1 il ustrates the estimated volume and value of voluntary carbon market transactions
between 2005 and 2019, based on survey data collected by Ecosystem Marketplace. According to
these global data, in 2019, renewable energy projects, and forestry and land-use projects,
accounted for 42% and 37%, respectively, of the volume of transactions.19 As the figure indicates,
estimated global offset transactions in 2018 were approximately 100 MMTCO2e.20 This volume
of offsets is far smal er than total U.S. and global GHG emissions. As a point of reference, U.S.
total emissions were 6,677 MMTCO2e out of total global GHG emissions of over 47,000
MMTCO2e in 2018.21
Figure 1. Estimated Worldwide Volume and Value of Carbon Offset Transactions in
Voluntary Carbon Markets

Source: Prepared by CRS; data from Forest Trends’ Ecosystem Marketplace, Voluntary Carbon and the Post-
Pandemic Recovery, State of Voluntary Carbon Markets Report, September 2020, https://wecprotects.org/wp-content/
uploads/2020/11/EM-Voluntary-Carbon-and-Post-Pandemic-Recovery-2020.pdf.
Notes: Carbon offsets in the figure include seven broad categories: renewable energy; forestry and land use;
waste disposal; household devices; chemical processing/industrial manufacturing; energy efficiency/fuel switching;
and transportation. According to the Ecosystem Marketplace report, “most voluntary offsets are transacted

18 For example, policymakers may decide not to include emission reductions achieved from certain projects or from
activities conducted before the compliance program began. When designing a mandatory emission reduction program,
this issue is often a subject of considerable debate.
19 Forest T rends’ Ecosystem Marketplace, Voluntary Carbon and the Post-Pandemic Recovery, State of Voluntary
Carbon Markets Report, September 2020.
20 One MMT CO2e equals one million MT CO2e.
21 Although 2019 is the most recent year of GHG emissions data in the United States, global emissions data are current
through 2018. T herefore, U.S. data are from EPA, Inventory of U.S. Greenhouse Gas Em issions and Sinks: 1990 -2018,
2020. Global data are based on the most recent data (2018) for all countries from Clim ate Watch (managed by the
World Resources Institute), https://www.climatewatchdata.org.
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bilateral y and over-the-counter, with no centralized repository for price and volume data. Ecosystem
Marketplace gathers this fragmented data by reaching out to al known market participants individual y with a
global y recognized “Ecosystem Marketplace Carbon Survey.” The dol ar values are not adjusted for inflation.
A variety of different entities buy and sel carbon offsets in the various voluntary markets. The
quality of the offsets in the voluntary markets varies because there is no recognized central
authority and no universal y accepted standards or guidelines for generating offsets (see the text
box “Selected Metrics for Carbon Offset Quality and Credibility”). Some sel ers offer offsets that
comply with relatively rigorous, independent standards. Others sel ers offer offsets that meet the
sel er’s self-established guidelines.
Carbon Registries and Programs
Carbon registries support carbon markets by tracking the ownership of offset projects, such as
agricultural and forestry projects, and issuing offset credits for units of emission reductions or
removal that have been verified and certified.22 To avoid double-counting concerns, registries
assign offset credits with serial numbers. If an entity, such as a covered emission source, submits
the offset credit for compliance purposes or a company or individual claims a reduction in a
voluntary market, the registry retires the serial number. In both compliance and voluntary carbon
markets, carbon registries play a key role. Some carbon market frameworks require that carbon
offsets originate from specifical y approved registries.
A selection of carbon registries is listed below.
 Verra Registry (a program under Verra)23
 American Carbon Registry24
 Climate Action Reserve25
 The Gold Standard26
Some carbon markets al ow only offsets from certain carbon registries for use in their markets.
For example, the Verra Registry, the American Carbon Registry, and Climate Action Reserve are
approved registries in California’s cap-and-trade program, whereas The Gold Standard is not an
approved registry for California’s program but is used by other programs. According to the 2020
Ecosystem Marketplace report, offsets issued under Verra (formerly the Verified Carbon
Standard) accounted for the largest percentage (over 40%) of offsets transacted in voluntary
markets in 2019.27
In addition to serving as carbon registries, each of these entities performs additional roles in
carbon markets. For example, Verra operates the Verified Carbon Standard, which establishes
general rules and requirements for certification under the Verra framework. Verra also accredits
and oversees third-party verifiers of carbon offset projects and develops and approves carbon
offset protocols that are widely recognized by compliance and voluntary carbon markets. Climate

22 For more discussion, see Derik Broekhoff et al., Securing Climate Benefit: A Guide to Using Carbon Offsets,
Stockholm Environment Institute and Greenhouse Gas Management Institute, 2019.
23 For more information, see the Verra website at https://verra.org.
24 For more information, see the American Carbon Registry website at https://americancarbonregistry.org.
25 For more information, see the Climate Action Reserve website at https://www.climateactionreserve.org.
26 For more information, see the Gold Standard website at https://www.goldstandard.org.
27 Forest T rends’ Ecosystem Marketplace, The Only Constant is Change: State of the Voluntary Carbon Markets 2020,
Second Installm ent, December 2020.
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Action Reserve also operates a standard, accredits and oversees third-party verifiers, and develops
and approves protocols.
Potential Role of Agriculture and Forestry in U.S.
Climate Mitigation
Agriculture and forestry activities are both sources and sinks of GHG emissions. As sources,
some activities generate GHG emissions that are released into the atmosphere and contribute to
global climate change. As sinks, they remove CO2 from the atmosphere through photosynthesis
and store carbon in vegetation and soils (processes known as removal and sequestration).28
Neither the emission sources nor the emission sinks from agriculture and forestry are subject to
federal regulations that require emission reductions, emission removal, or emission sequestration
efforts. Historical y, legislative proposals that would establish mandatory GHG emission
reduction programs or emission fees have not included requirements for the agriculture or
forestry sectors.29 As discussed above, compliance carbon markets (in certain U.S. states) and
voluntary carbon markets have supported carbon offsets in the agriculture and forestry sectors
some degree.30
Table 1 identifies the GHG emission sources and sinks in the agriculture and forestry sectors.
Regarding emissions related to agricultural production, EPA estimates that the agriculture sector
contributed 10% of U.S. GHG emissions in 2019 (670 MMTCO2e), an increase of 12% since
1990.31 As indicated in Table 1, about half of these emissions are from crop production (e.g., soil
management), and half are from livestock production (e.g., enteric fermentation, manure
management).32
Regarding emissions related to forestry, EPA estimates GHG emissions and GHG sequestration
from the land-use, land-use change and forestry sector (LULUCF). LULUCF includes various
agricultural land uses (e.g., land conversion to cropland), forestry land uses (e.g., forestland
remaining forestland), and other land uses (e.g., residential land use). As indicated in Table 1,
according to EPA, the net result of LULUCF activities in the United States is a relatively large
amount of GHG sequestration: 789 MMTCO2e. This total net sequestration reduced the gross
U.S. GHG emissions by 12% in 2019.33 Most of this sequestration is attributable to carbon stocks
and carbon uptake by trees in the forestry sector (e.g., forestland remaining forestland, and land
converted to forestland).34

28 For more information, see CRS In Focus IF11693, Agricultural Soils and Climate Change Mitigation.
29 See CRS Report R45472, Market-Based Greenhouse Gas Emission Reduction Legislation: 108th Through 117th
Congresses.
30 For example, see the number of types of carbon offsets issued in California’s cap -and-trade program, ARB Offset
Credit Issuance Table, available at CARB, “ ARB Offset Credit Issuance,” https://ww2.arb.ca.gov/our-work/programs/
compliance-offset -program/arb-offset -credit-issuance.
31 EPA, “Sources of Greenhouse Gas Emissions,” https://www.epa.gov/ghgemissions/sources-greenhouse-gas-
emissions. T he 10% contribution relates to gross U.S. emissions.
32 Enteric fermentation refers to digestive processes in ruminant animals like cattle, which result in GHG emissions.
For more information, see CRS In Focus IF11404, Greenhouse Gas Em issions and Sinks in U.S. Agriculture.
33 EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2019, April 2021.
34 For more information, see CRS Report R46312, Forest Carbon Primer.
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Agriculture and Forestry Offsets in Carbon Markets: Background and Selected Issues

Table 1. EPA Estimated 2019 GHG Emissions and Sequestration in U.S. Agriculture
and Land Use, Land Use Change, and Forestry (LULUCF)
Mil ion Metric Tons of CO2 Equivalent (MMTCO2e)
Source
Emissions
Sequestration
Agriculture Activities

Agriculture soil management (N2O)
345
-
Enteric fermentation (CH4)
179
-
Manure management (CH4 and N2O)
82
-
Fossil fuel combustion (CO2)
40
-
Other agricultural sources
25
-
Total for agriculture sector
670
-
LULUCF

Forestland remaining forestland
-
676
Land converted to forestland
-
99
Cropland remaining cropland
-
15
Land converted to cropland
54
-
Grassland remaining grassland
15
-
Land converted to grassland
-
23
Wetlands remaining wetlands
-
4
Land converted to wetland
.2
-
Settlements remaining settlements
-
122
Land converted to settlements
79
-
Total LULUCF
149
938
Total U.S. GHG Emissions from All Sources
6,558
-
Net LULUCF
-
789
Total Net U.S. GHG Emissions from All Sources
5,769
-
Source: Prepared by CRS. Data from EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2019, April
2021.
Notes: Other agricultural sources include rice cultivation (16 MMTCO2e), urea fertilization (5 MMTCO2e),
liming (3 MMTCO2e), mobile combustion (1 MMTCO2e), and field burning of agricultural residues (1
MMTCO2e). Indirect emissions from electricity use at agricultural operations (35 MMTCO2e in 2019) are not
included in this table (EPA Inventory, Table 2-12). LULUCF estimates are from Table 6-1.
In terms of national GHG accounting, net emissions from LULUCF contribute to lower total net
GHG emissions. Net GHG emissions is a key measurement, because that is general y the metric
of emissions targets used by parties to the 2015 Paris Agreement. For example, pursuant to that
agreement, the United States released a new National y Determined Contribution (NDC)—or
GHG target—in 202135 aiming to reduce U.S. net GHG emissions by 50-52% below 2005 levels

35 A binding commitment in the Paris Agreement is that all Parties must communicate their Nationally Determined
Contributions (NDC) every five years, containing a GHG reduction pledge and actions, though this content of an NDC
is not binding. For more information, see CRS In Focus IF11746, United States Rejoins the Paris Agreem ent on
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by 2030.36 The United States can achieve its emission targets either by reducing direct emissions
(e.g., emissions from fossil fuel combustion) or by increasing GHG removal efforts (e.g.,
sequestration through LULUCF activities identified in Table 1). Results from a number of
climate models of different climate change scenarios indicate that LULUCF activities could play
a key role in achieving specific emission reduction targets (e.g., net zero by 2050).37 Appendix B
provides data on historical U.S. GHG emissions and selected GHG emissions targets.
A question policymakers may consider is how much additional carbon removal (i.e., above
current business-as-usual or baseline levels) is possible in the agriculture and forestry sectors to
help mitigate climate change? The GHG mitigation potential of the agriculture and forestry
sectors is subject to a range of factors. These factors include land availability and competition
among potential land uses; environmental constraints, such as water availability; federal and state
policies, particularly the scope and degree of financial incentives for GHG mitigation; and others.
A comprehensive discussion of these factors is beyond the scope of this report.38
Multiple studies have estimated the additional GHG mitigation potential of agriculture and
forestry activities. A National Academies of Sciences, Engineering, and Medicine analysis in
2019 used the results of relevant studies to estimate what it described as “practical y achievable”
carbon removal.39 The authors of this report estimated that—in the United States—carbon
removal from forestlands could potential y provide 600 MMTCO2e sequestered per year and
agricultural practices could provide 250 MMTCO2e per year. They found that these potential
amounts could roughly double in size under certain circumstances.40
These estimates suggest that the agriculture and forestry sectors could play key roles in meeting
U.S. GHG emission reduction goals (see Appendix B). The precise roles that the agriculture and
forestry sectors may play in U.S. climate policies is uncertain. For further discussion of policy
options, see “Questions for Potential Policy Consideration.”
Agricultural Offsets and Carbon Markets
Farmers and ranchers can leverage (1) carbon sequestration and (2) reduced or avoided GHG
emissions to generate tradeable carbon offsets for use in carbon markets.41 As with other offset

Clim ate Change: Options for Congress.
36 T he White House, The United States of America Nationally Determined Contribution Reducing Greenhouse Gases in
the United States: A 2030 Em issions Target, April 22, 2021.
37 Net-zero emissions refers to a situation where any continued human -caused GHG from an entity (e.g., country,
subnational government, company) is balanced by human, or anthropogenic, carbon removal from the atmosphere that
stores the CO2 in geological, t errestrial, or ocean reservoirs, or in products. For a further discussion of these results and
related issues, see CRS Report R46807, Greenhouse Gas Em issions Scenarios: Background, Issues, and Policy
Relevance.
38 For a further discussion of these factors see National Academies of Sciences, Engineering, and Medicine (NASEM),
Negative Em issions Technologies and Reliable Sequestration: A Research Agenda , 2019 (hereinafter NASEM 2019).
39 NASEM 2019. According to the study, these estimates would include existing practices that could be implemented at
rates that do not require land-use conversion and would not jeopardize food security and biodiversity of intact native
ecosystems.
40 NASEM 2019, p. 135.
41 Forestry offsets are discussed later in this report (see “Forest Offsets and Carbon Markets”). Other industries may
also generate marketable offsets, but are beyond the scope of this report. Additionally, this section focuses on
agricultural offsets for use in existing carbon markets, and does not address potential future compliance or regulatory
measures that could be imposed on the agricultural industry.
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categories, standardized and transparent processes for developing agricultural carbon offsets
increase confidence in their quality and utility for potential use in carbon markets.
There are many potential paths to generating agricultural carbon offsets. Farmers and ranchers do
this independently or by joining in agricultural carbon market programs (also referred to as
carbon market initiatives) designed to facilitate participation in carbon markets (see “Private
Agricultural Carbon Market Programs” and Table 2). The text box below describes an example
process for generating agricultural carbon offsets. The inclusion of one or another entity in the
example process does not indicate endorsement by CRS.
Generating Agricultural Carbon Offsets: An Example Process
A project developer (e.g., Corteva) incorporates one or more protocols (e.g., the Soil Enrichment Protocol)
developed by a carbon registry (e.g., Climate Action Reserve) in designing a carbon market program (in this example,
Corteva’s Carbon Initiative) to generate carbon offsets. Protocols are specific to individual GHG mitigation
practices (e.g., cover cropping, no-til farming), and they standardize the measuring, reporting, and verification (also
referred to as MRV) requirements for generating carbon offsets. The project developer enrol s participants (e.g.,
farmers, ranchers), who implement the protocols. Protocols general y require that third-party verifiers (e.g., SGS)
independently confirm that the requirements of the protocol were met, before offset credits are issued. The
project developer may register the carbon offsets with a carbon registry, and may sel the carbon offsets to
purchasers (e.g., private companies, individuals) on compliance or voluntary carbon markets.
Profits associated with each carbon offset may be reduced by: initial costs associated with enrol ing in a carbon
market program and implementing new practices; ongoing costs of measuring, reporting, and verifyin g carbon
offset protocols; and transaction costs associated with and registering and sel ing carbon offsets.
For more information, see
Corteva, “Corteva’s Carbon Initiative,” https://granular.ag/carbon.
Climate Action Reserve, https://www.climateactionreserve.org; and Climate Action Reserve, “Soil Enrichment
Protocol,” https://www.climateactionreserve.org/how/protocols/soil- enrichment.
SGS, https://www.sgs.com.
Carbon protocols address two general categories of agricultural management activities:42
 Soil Carbon Sequestration projects involve implementing agricultural practices
that research has shown can increase carbon in soils. These practices may include
using no-til or reduced-til soil management, cover crops, and diversified crop
rotations.
 Reduced or Avoided GHG Emissions projects involve implementing
agricultural practices that decrease or avoid GHG emissions in agriculture (e.g.,
CO2, nitrous oxide, methane). These practices may include improving nitrogen
use efficiency for crops (e.g., fertilizer use protocols); managing animal waste
with anaerobic digesters, composting, or improved storage; and improving water
and residue management in rice cultivation.
Carbon registries—in their roles as carbon standards—have developed a variety of relevant
protocols for agricultural management activities. For example, the American Carbon Registry has

42 T hese activities can involve implementing climate-smart agricultural practices. According to USDA, “Climate-
smart practices include activities that store carbon and improve resilience and soil health, such as reduced and no -till,
cover crops, and prescribed grazing; reduce GHG emissions, including methane and nitrous oxide, using practices such
as ruminant feed management, manure management, and fertilizer management; improve on -farm energy efficiency,
such as improved irrigation efficiency, reduced fuel use, and energy conservation; and improve forest management to
increase forest resilience and health.” USDA, Climate-Smart Agriculture and Forestry Strategy: 90-Day Progress
Report, May 2021 (hereinafter USDA 90-Day Progress Report 2021).
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an approved protocol for “compost additions to grazed grasslands;”43 Climate Action Reserve has
protocols for “soil enrichment,” “rice cultivation,” and “U.S. livestock;”44 and the Verified
Carbon Standard has six approved protocols for agriculture, including protocols for soil carbon,
sustainable agricultural management, and reduced nitrogen fertilizer use.45
Carbon markets vary in the types of agricultural offsets they accept. Voluntary carbon markets
may accept both general categories of agricultural carbon offsets, and various specific protocols
within these categories. Existing U.S. compliance markets currently do not al ow for offsets from
soil carbon sequestration, but they do accept offsets from reduced or avoided agricultural GHG
emissions (see also Appendix A). The California and RGGI cap-and-trade programs each have
five offset categories, and soil carbon sequestration is not among them. Both programs include
offset categories that reduce agricultural methane emissions: both al ow for manure management
with anaerobic digesters, and California’s offset categories also include reduced methane in rice
cultivation.
Agricultural Carbon Offset Quality
As with other carbon offsets, key concerns regarding the quality of agricultural carbon offsets
include realness, additionality, prevention of leakage, permanence, and verification. These general
criteria are described in the text box “Selected Metrics for Carbon Offset Quality and
Credibility,” above. The following points identify potential issues specific to agriculture, with
respect to these criteria.
 Realness. It is technical y chal enging to quantify the amount of carbon that is
stored in agricultural soils through practices such as reduced and no-til farming.
Soils are disperse and soil carbon dynamics are complex. It is more
straightforward to quantify emissions through direct monitoring of a single
emissions source, as is possible with a methane digester for livestock manure.
 Additionality. Offering offset credits for the initiation of new practices raises the
question of how to engage with early adopters, or those farmers and ranchers
who adopted climate-smart agricultural practices before offset credits were
offered.
 Leakage. Preventing leakage may be a chal enge. Leakage could occur, for
example, if new practices reduced crop yield in one field, which was
compensated for by planting additional crops or implementing more-GHG-
intensive practices in another field.
 Permanence. Many carbon standards require 100-year permanence, which can
be a chal enge for agricultural soils in which a change in practice can lead to the
release of stored carbon.
 Verification. The need for verification raises the questions of whether there are
sufficient numbers of third-party verifiers qualified to assess agricultural offset
projects, and how to reduce transaction costs associated with verification.

43 American Carbon Registry, “Carbon Accounting: Standards and Methodologies,” https://americancarbonregistry.org/
carbon-accounting/standards-methodologies.
44 Climate Action Reserve, “Protocols,” https://www.climateactionreserve.org/how/protocols.
45 Verified Carbon Standard, “Methodologies,” https://verra.org/methodologies.
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Concerns about the quality of agricultural carbon offsets have affected their use in carbon
markets. For example, some researchers suggest that concerns about the quality of agricultural
offsets have contributed to limitations on their acceptance within compliance carbon markets.46
Protocols intended to bolster the quality of agricultural carbon offsets may increase costs to
farmers and reduce the profitability of generating carbon offsets.47 Many of these are transaction
costs related to monitoring, reporting, and verification requirements of offset protocols.48
Private Agricultural Carbon Market Programs
In recent years, private companies have launched a variety of agricultural carbon market
programs (see examples in Table 2), most of which engage with voluntary carbon markets. While
some of these programs directly pay farmers and ranchers (participants) to begin implementing
new, specified management practices, most assist participants in producing, verifying, and sel ing
carbon offsets in a carbon marketplace. These programs have different requirements regarding the
geographic location of the land enrol ed, minimum acreage, al owable practices, contract
duration, recordkeeping, data sharing, the value and timing of payments, and other variables.
Some private companies launch agricultural carbon market programs as their sole business
interest, while others use such ventures to support their corporate social responsibility or
sustainability pledges.
While participants can engage in carbon markets outside of carbon market programs, doing so
without joining a carbon market program can be costly for smal -scale participants, largely due to
measuring, reporting, and verification (also referred to as MRV) requirements associated with
many carbon offset protocols (also referred to as methodologies).

46 See, for example, Brian C. Murray, “Why Have Carbon Markets Not Delivered Agricultural Emission Reductions in
the United States,” Choices, vol. 30, no. 2 (2015).
47 For a discussion of potential issues and concerns related t o agricultural carbon offset quality, see Dan Blaustein-
Rejto, “Dishing the Dirt on Ag Carbon Credits,” AFN, July 13, 2021.
48 For example, an analysis by the Environmental Defense Fund (EDF) estimated that in some scenarios, monitoring,
reporting, and verification transaction costs for implementing the rice protocol approved by California’s cap -and-trade
program could amount to twice the potential revenue from selling the resulting offset credits. Jeremy Proville, “ Barriers
to T apping the Potential of Carbon Markets for Agriculture,” EDF blog, January 21, 2021.
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Table 2. Selected Agricultural Carbon Market Programs Operating in the United States
Initiative
Eligibility/Requirements
Practices
Certification
Compensation
Website
Bayer Carbon
17 eligible states. Min. 10
New no-til , strip til , or
Bayer verifies practices
Per acre/per practice, up to
https://www.cropscience.
Initiative
acres. Corn or soybeans.
cover cropping (some
based on data farmers
$9/acre/year. Payments
bayer.com/who-we-are/
10-year enrol ment, then
credit for existing
upload to Bayer’s digital
eligible for up to 5 years of
farmer-partner-
10-year practice retention.
practices).
platform, Climate
past practices on/after
resources/carbon-
FieldView, and satel ite
January 1, 2012.
program/united-states
data.
CIBO Impact
United States. Row crops.
New cover crops,
CIBO verifies practices
Per carbon credit, set at
https://www.cibotechnolo
No min. acres. One-year
conservation til age, no-
with satel ite-based and AI-
$20/credit, sold on the
gies.com
commitment.
til , strip til , crop
enhanced remote sensing,
CIBO marketplace. CIBO
rotation, reduced
supplemented by
keeps 20% of sale price.
nitrogen.
interviews. CIBO quantifies
GHG flux with computer
modeling.
Corteva Carbon
In 2022: 11 U.S. states and
New no-til , strip til , or
Climate Action Reserve
Per carbon offset credit.
https://granular.ag/carbon
Initiative
17 crop types. 5-year
cover cropping;
verifies and issues carbon
Indigo Ag sel s the credits.
contract. 3-5 years of
increasing nitrogen
offset credits. Corteva and
Payment to farmer is based
historical practice data.
efficiency; increasing
Indigo pay certification
on sale price: minimums of
crop diversity.
costs.
$15/credit, and 75% of sale
price, to farmer. Payments
vest over 5 years.
Ecosystem Services
Current pilots until
Practices specific to
ESMC certifies ecosystem
Per specific ecosystem
https://ecosystemservices
Market Consortium
anticipated 2022 launch:
production systems and credits based on its
services provided (incl.
market.org
(ESMC)
specific U.S. regions. No
geography.
methodology.
additional carbon
min. acres. 10-year
sequestered), based on
contract.
ESMC analysis.
Farmers Business
United States. Min. 250
New (or within prior
Gradable generates credits
Per carbon offset credit
https://www.gradable.co
Network (Gradable
acres. Five-year contract.
two years) no-til ,
based on data farmers
(initial min. $20/credit).
m/carbon
Carbon)
reduced til , cover
upload.
Farmers can wait up to 5
cropping, diversified
years to sel at
crop rotation, reduced
contemporary market
nitrogen.
price.
CRS-15

Initiative
Eligibility/Requirements
Practices
Certification
Compensation
Website
Indigo Carbon
28 eligible states. Field
New reduced-til or no-
Indigo determines carbon
Per carbon offset credit,
https://www.indigoag.com
crops. Min. 150 acres. 5-
til , cover cropping
sequestration based on
(min. $15/credit). Indigo
/carbon/for-farmers
year contract.
(new, diversifying, or
data farmers upload to
sel s the credits and
extending duration),
Indigo’s digital platform,
compensates the farmers.
reduced fertilizer use,
and some soil sampling.
Payments subject to multi-
rotation diversification.
Independent carbon credit
year vesting requirements
issuers (Verra, Climate
to ensure soil carbon and
Action Reserve) verify
emissions levels are
carbon credits.
maintained over time.
Growers receive 75% or
more of the credit sale
price.
Farmers Edge (Smart
Canada and certain U.S.
New cover crops,
FarmersEdge determines
Per carbon offset credit
http://farmersedge.ca/
Carbon)
states. No min. acres.
intercropping, no-til ,
carbon sequestration based
(estimated $10/acre).
carbon
reduced-til , nutrient
on data automatical y
Farmers Edge aggregates
management, direct
uploaded from fields to
carbon offsets across
seeding, crop rotation,
FarmCommand, its digital
producers, sel s credits, and
crop diversification.
platform. Third-party
compensates farmers,
verifier verifies the credits,
retaining an administrative
which are then recorded
fee.
with a carbon registry.
Nori
United States. Croplands
Practices not specified.
Farmer selects third-party
Nori issues "Nori Carbon
https://nori.com/for-
not enrol ed in the USDA
“Regenerative
verifier and pays
Removal Tonnes" (NRT)
growers
Conservation Reserve
practices" adopted
verification costs.
certificates for farmers to
Program since 2000, with
within the last 10 years,
Verification once every
sel in the Nori
historical practice data. No
using Nori’s U.S.
three years.
marketplace. 1 NRT = 1
min. acres. 10-year
Croplands
ton CO2e stored for 10
contract.
Methodology.
years. Farmers receive total
sale price, less a 15%
transaction fee for Nori.
Nutrien Carbon
Pilot (as of 2021): United
Under development.
Under development.
Per carbon offset credit.
https://www.nutrien.com/
Program
States (15 states) and
Nitrogen management,
Anticipated use of existing
Framework under
sustainability/strategy/
Canada (3 provinces).
soil heath (low and no-
protocols. Nutrien’s
development.
feeding-planet-
Expansion expected in
til , cover crops).
Agrible sustainability
sustainably/carbon-
2022. Crops.
platform for data
program
col ection.
CRS-16

Initiative
Eligibility/Requirements
Practices
Certification
Compensation
Website
Rabobank (Rabo
Pilot (as of 2021): United
Reduced/no til age,
Under development. In
Per carbon offset credit.
https://www.rabobank.nl/
Carbon Bank: Carbon States and the Netherlands.
reduced inputs, planting discussions with
Anticipated $25-$50/credit,
en/about-us/carbon-bank/
Farming)
Row crops, land with
of cover crops, crop
certification bodies to
less a transaction fee for
carbon-farming
historical practice data.
rotations, optimized
verify methodologies and
Rabobank.
grazing patterns,
validate carbon stock levels
species composition,
measured in the soils.
agroforestry.
Source: Table created by CRS from multiple sources (see “Website” column for original sources).
Notes: CRS identified more than 10 private agricultural carbon markets announced or in operation, and selected those in this table t o exemplify various approaches.
The different designs and requirements may result in different degrees of quality, including realness, permanence, leakage, and other characteristics discussed in the text.
a. One offset credit represents sequestration of one metric ton of carbon dioxide equivalent (MTCO2e).

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Carbon market program requirements, including those regarding eligibility, al owable practices,
and certification, can affect the participation of farmers and ranchers, the quality of carbon offsets
generated, and the extent to which a program is achieving its stated goals. For example, while
those programs with shorter contracts and fewer requirements regarding the continuation of GHG
mitigating practices may reduce barriers to entry for farmers and ranchers, they also may cal into
question the permanence of the carbon offsets generated. Those programs that permit
compensation for past GHG-mitigating practices may encourage the participation of more
farmers and ranchers, but they may not generate offsets that meet the additionality criteria for
high-quality offsets. Offsets that do not meet additionality or permanence criteria potential y may
be sold in voluntary carbon markets, cal ing into question whether they are achieving the intended
goals of offsetting GHG emissions from other industries and activities.
Stakeholder Views
While carbon markets can offer farmers and ranchers new sources of income, they can also raise
some concerns. Stakeholders in agricultural and environmental communities display a variety of
viewpoints regarding agriculture’s inclusion or exclusion in carbon markets. Views have shifted
over time, and can vary based on individual policy proposals. Stakeholder views discussed in this
section are not necessarily representative of al views.
Most agricultural interest groups have expressed support for the industry’s inclusion in carbon
markets, provided that markets
 are voluntary for farmers and ranchers (i.e., any agricultural emissions abatement
or sequestration efforts are voluntary);
 provide a financial incentive to participate that outweighs costs to the farmer or
rancher;
 provide workable practices that can be incorporated into a farming or ranching
operation; and
 include assurances for failures (e.g., reversal) beyond the control of the producer.
Among supporters, the Food and Agriculture Climate Al iance (FACA) is a coalition of
organizations representing diverse interests of the food, agriculture, forestry, and environmental
sectors. It launched in 2020 to promote shared climate policy priorities.49 Among its many
recommendations, the group supported the development of a U.S. Department of Agriculture
(USDA) carbon bank and legislation that would establish a third-party certification program for
agriculture’s participation in carbon markets.50
General opposition to the inclusion of agriculture in carbon markets has come from some
environmental and farming groups. In general, these groups have expressed concerns about (1)
the effectiveness of carbon markets to result in real net emissions reductions and (2) the potential
disproportionate benefit to large operations, with smal - and medium-scale farmers and ranchers

49 For more information, see the Food and Agriculture Climate Alliance (FACA) website at
https://agclimatealliance.com. Founding members include American Farm Bureau Federation, Environmental Defense
Fund, FMI, National Alliance of Forest Owners, National Association of State Departments of Agriculture, National
Council of Farmer Cooperatives, National Farmers Union, and T he Nature Conservancy.
50 For additional information on the USDA carbon bank proposal, see FACA, Food and Agriculture Climate Alliance
Carbon Bank Recom m endations, May 2021. Legislative support was for the 116 th Congress’ Growing Climate
Solutions Act introduced in the House (H.R. 7393) and Senate (S. 3894). For additional discussion on this bill, see
“Legislative Developments”.
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struggling to gain market entry.51 Among opponents, the Institute for Agriculture and Trade Policy
(IATP) and the National Family Farm Coalition (NFFC) argue that (a) agricultural offsets for use
in carbon markets have not led to real and sustainable GHG mitigation, (b) they risk the health
and economic security of communities, and (c) they draw attention away from policies that IATP
views as better suited to addressing climate change.52 Other concerns raised about agriculture’s
participation in carbon markets center on issues related to inadequate measurement tools,
impermanence of soil carbon, low prices for participation, and undermining potential y more
effective and holistic agricultural practices as ways of improving the environment.53 Opposition
to the carbon bank proposal is primarily directed at whether USDA has authority to carry out such
an activity.54
Overal , both supporters and opponents of including agriculture in carbon markets have stated
support for continuing and expanding existing USDA conservation programs and research efforts
related to climate change mitigation and adaptation (see “Selected USDA Policies and
Activities”). The exact scope and scale of expansion that they would support, however, varies.
Forest Offsets and Carbon Markets
Similar to agriculture, forest landowners can leverage forest carbon sequestration and GHG
mitigation to generate tradeable carbon offsets (or other carbon market instruments; see the text
box “Forest Carbon Leases for Harvest Deferrals,” below). Forests sequester and store large
amounts of carbon and have the potential to mitigate future GHG emissions, though how much is
an area of ongoing debate.55 The capacity of forestry projects to provide offsets for use in a
carbon market is potential y substantial, however, and several forestry-related activities are
approved to earn offset credits in existing compliance and voluntary markets.56
As for agriculture, there are many potential paths to generating forest carbon offsets. Forest
landowners can do this independently or by working with a project developer or joining a forest
carbon market program (see “Private Forest Carbon Market Programs”). The steps involved in
generating forest carbon offsets general y are similar to those involved in agricultural carbon
offsets. The following text box describes an example process.

51 For example, see Georgina Gustin, “Politicians Are Considering Paying Farmers to Store Carbon But Some
Environmental and Agricultural Groups Say It’s Greenwashing,” Inside Climate News, April 16, 2021.
52 IAT P and NFFC, Why Carbon Markets Won’t Work for Agriculture, Fact Sheet, February 4, 2020 (hereinafter IAT P
and NFCC 2020).
53 IAT P and NFFC 2020.
54 Liz Crampton and Helena Bottemiller Evich, “Boozman: Vilsack Do esn’t Have Authority to Create Carbon Bank,”
Politico, February 2, 2021.
55 For more information on the amount of carbon in forests and the carbon sequestration implications of different forest
types, see CRS Report R46312, Forest Carbon Prim er. For an example of the ongoing debate regarding the GHG
mitigation potential of forests, see Jean-Francois Bastin et al., “ T he Global T ree Restoration Potential,” Science, vol.
365, no. 6448 (2019), pp. 76-79; Joseph W. Veldman et al., “ Comment on “ The Global T ree Restoration Potential,”
Science, vol. 366, no. 6463 (2019); and Jean -Francois Bastin et al., “ Response to Comments on ‘T he Global T ree
Restoration Potential,’” Science, vol. 366, no. 6463 (2019).
56 Other market types and non-market mechanisms may also provide some sort of offset credit related to forestry
activities, for example, Reducing Emissions from Deforestation and Forest Degradation (REDD+) projects in
developing countries. Discussion of these mechanisms is outside the scope of this report. For more information, see
CRS Report R46952, Reduction in Em issions from Deforestation and Forest Degradation (REDD+) and Patrick
Maguire et al., A Green Growth Spurt: State of Forest Carbon Finance 2021, Ecosystem Marketplace, June 2021.
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Generating Forest Carbon Offsets: An Example Process
A forest landowner earns offset credits after demonstrating compliance with an established forest carbon project
standard (or specific protocols) as developed and approved by a carbon registry. The carbon offsets may be sold to
purchasers (e.g., private companies) on compliance or voluntary carbon markets. Compliance with the forest
carbon project standard is demonstrated through rigorous measuring, reporting, and third -party verification
processes. The offset amount credited is typical y the difference between the carbon sequestered through the new
forest management activities implemented in the forest carbon project standard as compared to a baseline, usual y
representing the carbon sequestered under a business-as-usual approach. The measuring, reporting, and
verification process (also referred to as MRV), along with the quantification of the baseline carbon stocks and
potential for additional carbon sequestration, requires investments in forest inventorying and knowledge of forest
carbon dynamics and accounting. These requirements often lead to a forest landowner working with a consultant
or project developer and general y lead to high transaction costs both upfront and through the term of the carbon
offset (which could range from 1 to 100 years).
Many carbon markets accept forest carbon offsets, and have developed carbon project standards
and protocols for three general categories of forest management activities, listed below.
 Afforestation and Reforestation (A/R) projects involve establishing tree cover
to previously non-forested land (afforestation) or restoring tree cover to
previously forested land that recently lost tree cover (reforestation).
 Avoided Conversion (AC) projects involve preventing the conversion of
forestland to non-forested land (e.g., preventing deforestation).
 Improved Forest Management (IFM) projects involve land management
activities that increase or maintain a baseline level of carbon stocking. In other
words, projects that increase average forest carbon per acre across the project
site, across varying time scales.
The standards associated with several carbon registries (e.g., American Carbon Registry, Climate
Action Reserve, and Verra) each have protocols related to these three categories of forest
management activities. Voluntary markets recognize each of these standards, and California’s
compliance market approves each as an Offset Project Registry.57 RGGI also accepts offsets for
the three categories of forest management activities, although it has some restrictions related to
afforestation projects.58 The specific requirements and carbon counting protocols for the forest
management activities differ among the different protocols and markets and, as a result, they may
offer varying levels of credits for similar activities. Additional domestic (or international) carbon
markets not listed or discussed in this report may also have a forest carbon project standard.
Forest Carbon Leases for Harvest Deferrals
While the most common forest carbon product is a carbon offset (traded on many voluntary or regulatory
markets), there are also other carbon products available for forestry activities, such as cost-share payments or
annual leases. For example, in 2021, Natural Capital Exchange (NCX, formerly SilviaTerra) launched a new carbon
product and marketplace that al ows a forestland owner to sel , or more accurately to lease, the additional carbon
accumulated through delaying a timber harvest for one year. This is a targeted, short-term Improved Forest
Management project that pays a landowner to increase the forest carbon per acre by deferring harvest activity for
one year. The short-term length is intended to maximize the present climate benefit per dol ar of present cost for
the landowner and increase flexibility for the forestland owner. The payment is made at the end of the year, and
the price is determined at an open auction. The first auction was held in March 2021 and resulted in the sale of

57 For more information, see CARB, “Offset Project Registries,” https://ww2.arb.ca.gov/our-work/programs/
compliance-offset -program/offset -project-registries.
58 Within RGGI’s offset protocols, forest projects fall within the “ Sequestration of Carbon Due to US Forest Projects”
category. Afforestation projects are only available in CT and NY. For more information, see https://www.rggi.org/
allowance-tracking/offsets/offset -categories/forestry-afforestation.
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130,000 tons of carbon offsets by over 100 different landowners delaying harvests over 1.17 mil ion acres. See
http://www.ncx.com for more information.
Issues and Concerns Related to Forest Carbon Offsets and Markets
The issues and concerns related to forest carbon markets are similar to those related to
agricultural carbon offsets and carbon markets general y: realness, additionality, prevention of
leakage, permanence, and verification (see text box “Selected Metrics for Carbon Offset Quality
and Credibility,” above). There are also concerns related to offering carbon offsets for plantation
forestry,59 and general concerns regarding the extent to which providing forest carbon offsets
might substitute for more reliable GHG reductions.
 Realness. Realness is not as great a concern in forest carbon offsets as it is with
agricultural carbon offsets. Numerous studies have addressed how to quantify
carbon stored in trees, forest litter, and forest soils. However, researchers and
stakeholders continue to debate if and how to address carbon stored in wood
products and specific carbon accounting practices.60
 Additionality. Additionality is a specific concern across al forest offset project
types. This is in part because many of the activities that generate offset credits are
also common forest management activities, which creates chal enges when
determining whether an activity was truly additional or would have occurred
anyway.
 Leakage. Preventing leakage can be chal enging if forest carbon-sequestration
projects in one geographic area lead to deforestation outside of the project area.
 Permanence. Unforeseen events (e.g., wildfires, insect or disease infestations, or
other natural disasters) have the potential to increase carbon emissions rather
than sequestration. Carbon standards often mitigate this risk by holding some
carbon offsets in reserve or a buffer account as a shared insurance pool.
 Verification. The need for verification raises the questions of whether there are
sufficient numbers of third-party verifiers qualified to assess forestry offset
projects, and how to reduce transaction costs associated with verification.
Other concerns specific to forestry carbon offsets include those related to the profitability,
scalability, and feasibility of forest carbon projects. For example, current market conditions often
do not make forest carbon projects profitable or feasible for smal er forest landowners. General y,
the per-acre costs associated with developing forestry carbon credits (primarily related to the
measuring, reporting, verifying, and monitoring requirements, including the costs associated with
developing baseline and projected carbon measurements)61 can be high relative to the potential
price the credit may receive in the market. In order to generate a financial return, most
participants in forest carbon markets have large land holdings and enroll large projects, and these

59 Plantation forestry generally refers to a type of intensive forest management where the site is intentionally planted in
uniform rows of one selected, commercially valuable species.
60 Some research findings suggest t hat the financial viability of some forest carbon offset projects is largely driven by
carbon accounting methodologies. Christopher S. Galik, David M. Cooley, and Justin S. Baker, “Analysis of the
production and transaction costs of forest carbon offset pr ojects in the USA,” Journal of Environm ental Management,
vol. 112 (2012), pp. 128-136.
61 T he costs may include those associated with implementing and monitoring the project, producing the data necessary
to measure the carbon benefit, and the transaction co sts associated with verifying and registering the credit.
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usual y are corporate landowners. Large, corporate owners account for 20% of U.S. forestlands.
Nearly 40% of U.S. forestlands are owned by an estimated 10.6 mil ion families, individuals,
trusts, and estates, many of these own fewer than 100 acres. The remainder of U.S. forestlands are
publicly owned.62 Expanding access to forest carbon markets to these landowners has the
potential to increase the scale of the aggregate carbon offset benefit.
Another issue is related to accounting for the carbon stored in harvested wood products. The
carbon in these products is stored while the product is in use, but eventual y returns to the
atmosphere upon disposal and decomposition. In principle, substituting a sequestering product,
like wood, for a more GHG-intensive product, like steel, could reduce overal GHG emissions. In
practice, it is not clear whether this would result in a net GHG reduction, given the complexities
related to accounting for the carbon emissions associated with the harvesting, transportation, and
production of the wood products. Carbon in wood products is not accounted for in any of the
existing markets, largely due to these complexities. Accordingly, carbon offsets are not available
for any potential carbon savings related to substituting wood products as an alternative to more
carbon-intensive materials.
Private Forest Carbon Market Programs
Several new and forthcoming forest carbon market programs aim to expand access for smal er
landowners to forest carbon markets.63 Many of these programs rely on al owing multiple
landowners to pool their lands together to obtain economies of scale. Many of these programs
also use technological advancements and remote sensing data (usual y provided by the USDA
Forest Service’s Forest Inventory and Analysis program) to lower the transaction costs associated
with measuring and quantifying carbon. The following are examples.
 The NCX forest carbon lease market is open to landowners of any size, and also
provides access to a proprietary mapping resource, Basemap, to facilitate
enrollment.64 The first market auction was held in March 2021.
 The American Carbon Registry released in 2021 an IFM protocol for enrolling
lands ranging from 40 to 50,000 acres.65 Core Carbon (from Finite Carbon) is
developing a free digital platform with access to several mapping resources to
facilitate the enrollment process, and was expected to launch the platform in
summer 2021.66
 The Family Forest Carbon Program,67 developed by The Nature Conservancy,
American Forests Foundation, and TerraCarbon, anticipates enrolling projects
ranging from 20 to 1,000 acres and was expected to launch in summer 2021. The
protocol is being reviewed and validated by Verra.68

62 Sonja N. Oswalt et al., Forest Resources of the United States, 2017, USDA Forest Service, GT R-WO-97, March
2019.
63 Forest carbon market programs are also known as forest carbon market initiatives.
64 For more information, see the NCX website at http://www.ncx.com.
65 American Carbon Registry, “ IFM on Small No-Industrial Private Forestlands v1.0,” September 2021. Available at
https://americancarbonregistry.org/carbon-accounting/standards-methodologies/small-non-industrial-private-
forestlands.
66 For more information, see the Core Carbon website at http://www.corecarbon.com.
67 For more information, see American Forest Foundation, “Family Forests Carbon Program,”
https://www.forestfoundation.org/what -we-do/increase-carbon-storage/family-forest-carbon-program.
68 As of the date of this report, the Verified Carbon Standard Methodology for Improved Forest Management is under
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Some of these initiatives were funded through grants from USDA, and many also received funds
provided through corporate philanthropy.69
Stakeholder Views
While carbon markets can offer forest landowners new sources of income, they have also raised
some concerns. Some of these concerns and views have shifted over time, and may vary based on
individual policy proposals. Stakeholder views discussed in this section are not necessarily
representative of al views.70
In many cases, stakeholders in both the forestry and environmental communities general y agree
on the potential role of forests in climate mitigation and adaptation. There is broad agreement on
the need for financial assistance to support forest carbon management general y and to facilitate
participation by smal forest landowners in climate programs and markets specifical y. This
includes support for programs to pay landowners to protect existing forestlands or for improving
the management of existing forests, such as those payments provided through carbon markets. In
some cases, however, there are differing viewpoints regarding the operation of specific forest
carbon offsets, typical y related to the role of timber harvesting and wood products. Industry
organizations general y support policies and programs that would encourage new and innovative
uses of wood products as substitutes for more carbon-intensive materials rather than policies and
programs that include restrictions or prohibitions on timber harvesting (as is the case in some
forest carbon standards).
Forestry Carbon Market Programs on Public Lands
Nearly 40% of the forested areas in the United States are publicly owned, mostly by the federal
government but also by state and local governments.71 Some—but not al —of the forest carbon
project standards al ow for nonfederal, publicly owned forestland to generate carbon offsets. The
extent that forest carbon project standards al ow for projects on federal lands to generate carbon
offsets is mixed, however, general y due to concerns related to permanence and additionality.
More specifical y, permanence concerns include the extent that any future administrative—or
legislative—activities could result in changes to the project’s capacity to generate the carbon
offset. Additionality concerns relate in part to how to calculate the baseline, business-as-usual
carbon measurements for federal land management activities and if and how to incorporate
consideration of agency resource availability into those calculations.72 Other concerns relate to
specific legal questions, such as if issuing a credit would confer any sort of property right to the
holder.73

assessment ; see https://verra.org/methodology/methodology-for-improved-forest-management .
69 For example, the Family Forest Carbon Program was funded in part through a Conservation Innovation Grant from
the USDA Natural Resources Conservation Service (NRCS), but also received funding from Amazon, 3M, and other
corporate donors. NCX received funding through the Microsoft Climate Innovation Fund and other investors. BP i s an
investor in Finite Carbon’s parent company, Finite Resources. T hese examples are provided as illustrative of the mixed
funding sources and is not a comprehensive list of all public funders or corporate donors to these programs.
70 T his section was informed by policy statements from the Forest -Climate Working Group, National Association of
State Foresters, Society of American Foresters, and the American Forest Foundation.
71 Sonja N. Oswalt et al., Forest Resources of the United States, 2017, USDA Forest Service, GT R-WO-97, March
2019.
72 Gordon Smith, Forest Offset Projects on Federal Lands, Climate Action Reserve, March 8, 2012.
73 Discussion of the legal aspect of these issues is outside the scope of this report.
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The Climate Action Reserve, for example, wil only register credits for forestry projects on
federal lands if the project is accompanied by a legislative or regulatory approval to ensure
permanence and additionality.74 In 2019, the American Carbon Registry denied approval of a
protocol for generating carbon offsets from the National Forest System (NFS, managed by the
U.S. Forest Service in USDA) lands in the southwestern United States. The methodology was not
approved in part due to complications in calculating the baseline carbon assessment and
uncertainties related to future federal land management decisions, among other factors.75
However, other carbon registries have accepted project-specific carbon offsets generated on
National Wildlife Refuge System lands managed by the U.S. Fish and Wildlife Service.76
The National Forest Foundation (NFF), a congressional y chartered foundation supporting
management of the NFS, has initiated several attempts to establish carbon offsets on NFS lands.77
Starting in 2008, the NFF established demonstration reforestation carbon offset projects on two
different national forests in California.78 Though the initial plan was to register the offsets with
the American Carbon Registry, they have not been registered as of the date of this report.79
Further, the American Carbon Registry reports at least one of the projects has been cancel ed.80
These projects were funded through corporate donations to NFF’s Carbon Capital Fund. The NFF
offered corporate and individual donors the opportunity to donate to the Carbon Capital Fund to
support generating carbon offsets from other reforestation projects;81 these carbon offsets were
not accredited, registered, sold, or traded, but were reportedly third-party verified and subject to
“financial” and “biological” additionality tests.82 The NFF continues to accept donations for NFS

74 Gordon Smith, Forest Offset Projects on Federal Lands, Climate Action Reserve, March 8, 2012.
75 For more information, see American Carbon Registry, “Inactive: Southwestern Forest Restoration: Decreased
Wildfire Severity and Forest Conversion,” available from https://americancarbonregistry.org/carbon-accounting/
standards-methodologies/inactive-methodologies.
76 See, for example, the Restoring a Forest Legacy at Upper Ouachita Nat ional Wildlife Refuge project as approved in
2011 by the Climate, Community, and Biodiversity Standard on the Verra Registry and Reed Porter et al., Restore
America’s Estuaries and the Marine Affairs Institute, Legal Issues Affecting Blue Carbon Projects on Publicly-Owned
Coastal Wetlands, February 2020. For more information on the different types of federal land, see CRS In Focus
IF10585, The Federal Land Managem ent Agencies.
77 T he National Forest Foundation (NFF) was established by the National Forest Foundation Act, P.L. 101-593, Title
IV (16 U.S.C. 583j). For more information on the National Forest System, see CRS Report R43872, National Forest
System Managem ent: Overview, Appropriations, and Issues for Congress.
78 For more information on the NFF’s projects, see U.S. Forest Service, San Juan National Forest, “Reforesta tion
Project to Begin in Bear Creek Burned Area North of Vallecito,” press release, October 7, 2011; and American Carbon
Registry, “American Carbon Registry Named the Most Widely Used Forest Carbon Standard in North America,” press
release, November 5, 2012. T he American Carbon Registry maintains an information page for each project: the San
Juan National Forest Demonstration Project is available at https://acr2.apx.com/mymodule/reg/prjView.asp?id1=108;
and the Angeles National Forest Carbon Demonstration Project is available at https://acr2.apx.com/mymodule/reg/
prjView.asp?id1=168.
79 U.S. Congress, Senate Committee on Energy and Natural Resources, Hearing on Forest Management, Forest
Products, and Carbon, 117th Cong., 1st sess., May 20, 2021 (testimony of Mary Mitsos, NFF President and CEO). For
information regarding the status of each project, see their respective project information page on the American Carbon
Registry, as listed in the previous footnote.
80 T he American Carbon Registry project page for the San Juan National Forest Demonstration Project indicates the
project is cancelled. More information on the project is available at NFF, Carbon Dem onstration Project San Juan
National Forest Missionary Ridge, October 2016. T he project was verified in 2016.
81 U.S. Forest Service, Ecosystem Services, NFF Carbon Capital Fund website at https://www.fs.fed.us/
ecosystemservices/Carbon_Capital_Fund.
82 For more information, see U.S. Forest Service, Ecosystem Services, NFF Carbon Capital Fund FAQs website at
https://www.fs.fed.us/ecosystemservices/Carbon_Capital_Fund/faqs.shtml. See also U.S. Forest Service, Modification
No. 1 to the Master Mem orandum of Understanding between the National Forest Foundation and U.S. Forest Service ,
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reforestation activities—and did so prior to the establishment of the Carbon Capital Fund—and is
reportedly pursing a new protocol through Verra for generating carbon offsets from forest
restoration projects on NFS land.83
Selected USDA Policies and Activities
USDA has broad general authority to assist agriculture and forestry operations through research,
technical support, financial assistance, and education. The department’s involvement in markets
for environmental goods and services involving the agriculture and forestry sectors began mostly
through various pilot programs starting in the 1990s with nutrient credit trading, wetland
mitigation banking, and carbon offset projects.84 These programs provided a market for farmers to
sel nutrient, wetland, or carbon farm-based offsets to emitters/dischargers that were looking to
buy offsets to mitigate their own emissions/discharges. In 2006, USDA released a departmental
regulation defining its policy on market-based environmental services, citing interest in a variety
of environmental factors (e.g., greenhouse gases, water, air, wetlands, and wildlife habitat) and
mechanisms (e.g., credit trading, insurance, mitigation banking, and eco-labeling).85 This
departmental regulation did not create or increase USDA’s authority and only applied internal y
to USDA agencies.
The Food, Conservation, and Energy Act of 2008 (2008 farm bil ; P.L. 110-246), contained a new
Environmental Services Markets provision (§2709) to facilitate the participation of farmers and
landowners in environmental services markets. The Environmental Services Markets provision
provided USDA new authority by directing the department to develop technical guidelines for
measuring farm- and forestry-based environmental services. The provision provided priority to
developing guidelines for participation in carbon markets. This was an indirect reference to
various agriculture and forestry provisions in bil s under consideration as part of the broader
climate change debate at the time. Following enactment of the 2008 farm bil , USDA established
the Office of Ecosystem Services and Markets, which was renamed the Office of Environmental
Markets. Presently, both the Office of Environmental Markets and the Climate Change Program
Office are under the same leadership within the Office of the Chief Economist.86
As part of implementing requirements of the Environmental Services Markets provision, USDA
contracted with university and private researchers to develop technical guidelines and science-
based methods for estimating the GHG and carbon sequestration impacts of agricultural and
forestry practices at the individual farm, ranch, or forest scale. Two interim technical reports were
released in 201187 and 2012,88 and a final report was published in 2014.89 The 2014 report

No. 1993-SU-11130000-035, July 2007.
83 U.S. Congress, Senate Committee on Energy and Natural Resources, Hearing on Forest Management, Forest
Products, and Carbon, 117th Cong., 1st sess., May 20, 2021 (testimony of Mary Mitsos, NFF President and CEO).
84 USDA, Economic Research Service, “T he Use of Markets to Increase Private Investment in Environmental
Stewardship,” ERR-64, September 2008.
85 USDA, “USDA Roles in Market -Based Environmental Stewardship,” Departmental Regulation 5600 -003, December
20, 2006.
86 For more information, see CRS Report R46454, Climate Change Adaptation: U.S. Department of Agriculture.
87 Karolien Denef, Shawn Archibeque, and Keith Paustian, Greenhouse Gas Emissions from U.S. Agriculture and
Forestry: A Review of Em ission Sources, Controlling Factors, and Mitigation Potential, prepared by ICF International
and Colorado State University for USDA, Interim Project T echnical Report, December 2011.
88 Ibid.
89 Marlen Eve, et al., Quantifying Greenhouse Gas Fluxes in Agriculture and Forestry: Methods for Entity-Scale
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includes a set of consensus-based methods to account for GHG emissions associated with
agriculture, forestry and land-use change activities at the entity scale.90 The report provides the
foundation for USDA entity-level tools, such as COMET-Farm and COMET-Planner, to estimate
GHG benefits from conservation and land management activities.
COMET-Farm and COMET-Planner are online tools developed by USDA’s Natural Resources
Conservation Service (NRCS) and Colorado State University.91 COMET-Farm provides a site-
specific estimate of GHG emissions from on-farm operations based on existing management
practices identified by the user. COMET-Planner provides generalized estimates of GHG impacts
of select NRCS conservation practices if applied to an operation.92 A modified version of
COMET-Planner is currently used by the California Department of Food and Agriculture’s
Healthy Soils Program (HSP).93 Under California’s HSP, COMET-planner has been expanded to
estimate GHG reductions, and it approximates program payments associated with NRCS
conservation practices specific to HSP. HSP includes, among other components, financial
incentives for farmers and ranchers to implement conservation practices that improve soil health,
sequester carbon, and reduce GHG emissions.94 The program is funded, in part, through the
state’s cap-and-trade program. Another adaptation of COMET-planner—the Carbon Reduction
Potential Evaluation Tool—overlays data from the 2017 Census of Agriculture to al ow
comparisons among practices, estimated costs, and potential impact across states and regions.95
Another example is a tool created by USDA’s Agricultural Research Service (ARS)—the Dairy
Gas Emissions Model (DairyGEM). DairyGEM is a software tool for estimating ammonia,
hydrogen sulfide, GHG, and volatile organic compound emissions of dairy production systems as
influenced by climate and farm management.96 The software predicts the GHG emissions from a
simulated dairy production system.
USDA also conducts ongoing research to assess carbon sequestration and GHG emissions
mitigation potential for agriculture and forestry through management and production practices.
One example of such research is the Greenhouse gas Reduction through Agricultural Carbon
Enhancement network (GRACEnet). GRACEnet is an ARS initiative with the primary objective
“to identify and further develop agricultural practices that wil enhance carbon sequestration in
soils, promote sustainability and provide a scientific basis for carbon credits and trading
programs.”97 Other research examples are GHG market grants funded through NRCS’

Inventory, USDA, Office of the Chief Economist, T ech nical Bulletin No. 1939, July 2014.
90 Entity scale generally refers to all lands for which the landowner has management responsibility.
91 COMET -Farm may be accessed at https://comet-farm.com/Home, and COMET -Planner may be accessed at
http://comet-planner.com.
92 NRCS develops and maintains a list of nearly 170 conservation practices standards. A practice standard includes
information on why and where a pract ice is applied, as well as the minimum requirements that must be performed in
order for it to achieve its intended purpose. T hese standards serve as technical guides that are modified to local
conditions. NRCS also ranks select conservation practice standards according to their GHG reduction and carbon
sequestration potential. T he NRCS GHG and Carbon Sequestration Ranking Tool may be found at
https://www.nrcs.usda.gov/wps/portal/nrcs/detailfull/national/air/quality/?cid=stelprdb1044982.
93 T o access the HSP version of COMET -Planner, see http://comet-planner-cdfahsp.com.
94 For additional information, see California Department of Food and Agriculture, “Healthy Soils Program,” at
https://www.cdfa.ca.gov/oefi/healthysoils.
95 For additional information, see American Farmland T rust, “T he CaRPE T ool,” at https://farmland.org/project/the-
carpe-tool.
96 For additional information, see https://www.ars.usda.gov/northeast-area/up-pa/pswmru/docs/dairy-gas-emissions-
model.
97 USDA, ARS, “National Program 212: Soil and Air,” GRACEnet Introduction, https://www.ars.usda.gov/natural-
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Conservation Innovation Grants (CIG) program,98 as wel as projects under the Soil Health
Demonstration Trial (SHD) component of CIG.99 The SHD collects data on soil health effects of
implementing conservation practices and systems, including carbon sequestration. The
information collected includes the environmental and financial effects of implementing select
practices. Similar to the objectives of GRACEnet, SHD data could add further evidence of the
effects that agricultural practices have on carbon sequestration in soils, thus providing additional
scientific evidence for designing and valuing carbon offsets and trading programs.
USDA Forestry Carbon Measurement Resources
The USDA Forest Service (FS) has several resources available related specifical y to carbon sequestration and
GHG mitigation on forests. For example, the FS’s Forest Inventory and Analysis (FIA) program is responsible for
col ecting, analyzing, and reporting information on the nation’s forest resources. The FIA program includes several
resources related to measuring and quantifying the carbon on forested lands, such as providing access to remotely
sensed information for carbon estimation. The FS also has developed various other tools related to carbon
inventory, management, and reporting. For example, the Forest Vegetation Simulator is an approved tool to
estimate carbon stock changes for offset projects registered by the American Carbon Registry.
For more information, see
FS, FIA, Forest Carbon Science and Reporting website at https://www.fia.fs.fed.us/forestcarbon/default.asp.
FS, Northern Research Station, Carbon Tools website at https://www.nrs.fs.fed.us/carbon/tools.
American Carbon Registry, Methodology for the Quantification, Monitoring, Reporting, and Verification of
Greenhouse Gas Emissions Reductions and Removals from Afforestation and Deforestation of Degraded
Land, Version 1.2, May 2017, https://americancarbonregistry.org/carbon-accounting/standards-methodologies/
afforestation-and-reforestation-of-degraded-lands.
In March 2021, as part of the Biden Administration’s Executive Order on Tackling the Climate
Crisis at Home and Abroad, USDA issued a notice in the Federal Register requesting public
comment on a series of questions related to climate-smart agriculture.100 The department also held
10 stakeholder listening sessions with over 260 participants. In May 2021, USDA released a 90-
day progress report based on this feedback that outlines seven recommendations for a “climate-
smart agriculture and forestry strategy.”101 One recommendation focuses on ways USDA can
support new and better markets for products generated through climate-smart practices. This
includes recommending support for identifying and verifying GHG benefits and facilitating the
participation of farmers, ranchers, and landowners.102
In September 2021, USDA announced that it would use the Commodity Credit Corporation to
fund a new climate partnership initiative.103 According to the request for information notice

resources-and-sustainable-agricultural-systems/soil-and-air/docs/gracenet -introduction.
98 For additional information on CIG, see NRCS, “Conservation Innovation Grants,” at https://www.nrcs.usda.gov/wps/
portal/nrcs/main/national/programs/financial/cig. For GHG market -specific CIG projects, see those listed under the
“Greenhouse Gas Markets” heading of the NRCS Environmental Markets website: https://www.nrcs.usda.gov/wps/
portal/nrcs/detail/national/technical/emkts/?cid=nrcseprd1396024.
99 For additional information on the SHD, see NRCS, “ CIG On-Farm Conservation Innovation Trials,”
https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/programs/financial/cig/?cid=nrcseprd1459039.
100 USDA, Office of the Chief Economist, “Notice of Request for Public Comment on the Executive Order on T ackling
the Climate Crisis at Home and Abroad,” 86 Federal Register 14403, March 16, 2021.
101 USDA 90-Day Progress Report 2021.
102 USDA 90-Day Progress Report 2021, pp. 9-10.
103 USDA, “USDA Announces $3 Billion Investment in Agriculture, Animal Health, and Nutrition: Unveils New
Climate Partnership Initiative, Requests Public Input,” press release, September 29, 2021. For additional information
on the CCC, see CRS Report R44606, The Com m odity Credit Corporation (CCC).
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published in the Federal Register, the Climate-Smart Agriculture and Forestry Partnership
Program would focus the use of climate-smart practices in the marketing of agricultural
commodities.104 The term climate-smart commodity “refers to an agricultural commodity that is
produced using farming practices that reduce GHG emissions or sequester carbon.”105 The notice
requested information and ideas of how to overcome market related barriers such as lack of
standard definitions of climate-smart commodities; lack of standards for measurement of climate
benefits from conservation practices; high transaction costs; potential double-counting of
benefits; and limited smal producer participation. USDA is requesting comments on options to
reduce or remove these barriers and to promote select climate-smart practices for new or
increased market access. The USDA notice also posed specific questions, many similar to those
outlined in the “Legislative Developments” section.
Legislative Developments
Legislation introduced in the 117th Congress would address policies and activities associated with
agriculture and forestry offsets and carbon markets. As of the writing of this report, the Senate
had voted on one of the bil s. None had received a vote in the House. The various proposed
legislation discussed in this section would not set a price for carbon, create a federal carbon bank,
or create or regulate a carbon market.
The Senate passed the Growing Climate Solutions Act of 2021 (S. 1251) on June 24, 2021. Its
companion bil (H.R. 2820) was introduced in the House in April 2021, with original cosponsors
from both parties. Both the House and Senate bil s would authorize the Secretary of Agriculture
to develop a program to reduce barriers to entry for farmers, ranchers, and forest landowners in
voluntary environmental credit markets.106 Among other components, these bil s would create a
USDA certification program for third-party verifiers and for providers of technical assistance to
farmers and ranchers considering or implementing carbon offset protocols. The USDA
certification program would establish qualifications for third-party verifiers and providers of
technical assistance, and the legislation would require USDA to establish and maintain a list of
USDA-backed protocols for voluntary environmental credit markets.107
Reactions to this legislation have been mixed. Among supporters, the legislation’s sponsors assert
that it would “help solve technical entry barriers that prevent farmer and forest land owner
participation in carbon credit markets.”108 Among opponents, the Minority Leader of the House
Agriculture Committee has cal ed it a “big-government solution in search of a problem.”109 On
September 23, 2021, the House Agriculture Committee held a hearing on “Voluntary Carbon

104 USDA, CCC, “Climate-Smart Agriculture and Forestry Partnership Program,” 86 Federal Register 54149,
September 30, 2021.
105 Ibid.
106 T he text of this bill refers to “environmental credit markets” and not specifically “carbon markets.”
107 T he bills define a voluntary environmental credit markets as “a voluntary market through which agriculture or
forestry credits may be bought or sold.” T hey define an agriculture or forestry credit as “a credit derived from the
prevention, reduction, or mitigation of greenhouse gas emissions or carbon sequestration on agricultural land or private
forest land that may be bought or sold on a voluntary environmental credit market.”
108 Abigail Spanberger, “ On Earth Day, Spanberger, Bacon Reintroduce Bipartisan Growing Climate Solutions Act
with Broad Coalition of Support from Farm, Environment, & Industry Organizations,” press release, April 22, 2021.
109 House Committee on Agriculture Republicans, “ Republican Leader T hompson Issues Statement on Growing
Climate Solutions Act ,” press release, June 24, 2021.
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Markets in Agriculture and Forestry.”110 During this hearing, Members expressed a variety of
perspectives including both support for and opposition to a USDA role in standardizing voluntary
carbon markets for agriculture and forestry.
Other bil s introduced in the 117th Congress more specifical y address forest carbon markets. For
example, the Rural Forest Markets Act of 2021 (S. 1107/H.R. 3790) was introduced in the Senate
in April 2021, and in the House in June 2021. This legislation would direct the Secretary of
Agriculture to establish an investment program within USDA to provide financing of up to $150
mil ion per project to facilitate the sale of forest carbon offsets in a carbon market (voluntary or
other). The investment program could be through the issuance of an “environmental impact bond,
loan, or other investment vehicle” as determined by the Secretary; the legislation does not define
or provide any additional parameters regarding the financing. Eligible projects would use a
protocol approved by a “credible, third party entity” and be on land that was historical y forested
using native tree species. The Secretary of Agriculture would be required to consider ways to
minimize, to the extent practicable, disruptions to traditional forest products markets.
Another bil introduced in the 117th Congress would address generating forest offsets on federal
lands. The America’s Revegetation and Carbon Sequestration Act of 2021 (S. 2836) was
introduced in the Senate in September 2021. Section 201 of the legislation would direct the NFF,
in consultation with the Secretary of Agriculture, to establish and use a protocol for calculating
the predicted increase in carbon sequestration—or avoided release of carbon due to reduced
wildfire risk—for specified improved forest management (IFM) activities. The protocol would
include estimating the carbon associated with timber harvesting and stored in durable wood
products. The legislation would authorize the NFF to manage financial transactions between the
federal government and any nonfederal entity related to the generation of carbon credits on
specified NFS lands or participation in a carbon credit program, as defined in the bil .111 The
legislation would further authorize the Secretary to receive and use those funds for implementing
specified IFM activities.
Questions for Potential Policy Consideration
Congressional, corporate, and public interest in GHG mitigation and interest in the potential to
create new financial opportunities for farmers, ranchers, and forest landowners has grown in
recent years. New carbon market programs for agriculture and forestry continue to emerge in
response. Carbon markets and carbon offsets in the agriculture and forestry sectors raise a number
of questions for ongoing policy consideration. Included below are examples of some of the
questions that Congress and others may consider during policy deliberation.
General Questions
Generating high-quality and credible carbon offsets from agriculture and forestry can be
expensive. Financial costs include program design; digital platforms for recordkeeping and data

110 U.S. Congress, House Committee on Agriculture, Hearings, Voluntary Carbon Markets in Agriculture and Forestry,
117th Cong, 1st Sess., September 21, 2021.
111 S. 2836 (as introduced) would not apply to National Forest System (NFS) lands east of the 100 th meridian or those
lands administered through the Bankhead-Jones Farm T enant Act (7 U.S.C. §1010 et seq.; this generally refers to NFS
lands designated as national grasslands) (§201(a)(4)). The bill defines a carbon credit as a carbon or greenhouse gas
credit, offset or other defined unit as approved by a credible, third-party entity and as determined by the Secretary of
Agriculture (§201(a)(1)). T he bill would define a carbon credit program as a voluntary program or market that issues,
assigns, trades, or sells carbon credits (§201(a)(2)). T he bill would exclude activities which compete with or are
adverse to the issuance, assignment, trading, or selling of forest carbon in the pr ivate sector (§201(a)(3)(E)).
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collection, which may include sample collection or remote sensing with satel ites; third-party
verification; and carbon offset registration.
 Who might, or should, pay these administrative and transaction costs? The
project developer? The participating farmer, rancher, or forest landowner? The
end-purchaser of the carbon offsets? How might “who pays” be aligned with
“who benefits”?
 If the participating farmer, rancher, or forest landowner pays for the transaction
costs, what impact would this have on the potential profitability of enrolling in a
carbon project?
 Are any of these programs likely to impose higher costs on consumers for
finished goods? If so, which approaches may be likely to impose the most cost
and which the least?
Private carbon market programs for agriculture and forestry have different recordkeeping and
data sharing requirements. Participants must agree to these requirements.
 What protections, if any, should private carbon market programs implement
regarding the security and privacy of participant data?
 Should private carbon market programs limit the data they collect in order to
balance quality control with the time commitment and financial cost to
participants?
Carbon offset supply and demand can be volatile in carbon markets.
 What factors drive demand for carbon offsets, and how may different policies
affect demand?
 As project developers enroll more participants, and more carbon offsets are
generated, how might this increase in supply affect the price of carbon offsets?
 Wil participant concerns about the profitability of carbon offsets limit the supply
of carbon offsets?
Most carbon markets seek new GHG reductions or carbon sequestration. As such, farmers,
ranchers, and forest landowners who are already implementing climate-smart practices—or early
adopters—are often either ineligible to participate in carbon market programs, or cannot
financial y benefit from generating carbon offsets.
 Should carbon markets consider or compensate early adopters, and if so, how?
Carbon market programs have different criteria regarding eligibility, al owable practices, and
verification, among others. Less stringent requirements may reduce barriers to entry for farmers,
ranchers, and forest landowners, but may cal into question the additionality or permanence of the
offsets they generate. More stringent requirements may increase barriers to entry, but strengthen
the additionality and permanence of generated offsets. Offsets that do not meet stringent
additionality or permanence criteria potential y may be sold in voluntary carbon markets.
 Are agriculture and forest carbon market programs achieving their intended goals
of using agriculture and forestry practices to offset GHG emissions?
 Should there be safeguards or assurances for the quality of offsets sold in
voluntary carbon markets?
 How should carbon market programs balance their accessibility to farmers,
ranchers, and forest landowners, and their quality standards for carbon offsets?
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Considerations for Congress
Some have suggested that the federal government should play a role in establishing or supporting
carbon markets, or in creating an enabling environment for the participation of forest landowners
and agricultural producers in existing carbon markets. Others have argued that nonfederal entities
should continue to play these roles without federal government involvement. Congress may
consider a variety of questions as part of this debate.
Potential Federal Role in Establishing or Supporting Carbon Markets
As Congress considers policy options related to carbon markets for the agriculture and forestry
sectors, general questions remain about whether the federal government should be involved and if
so, how much or how little involvement the federal government should have.
 Should the federal government play a role in establishing, implementing,
overseeing, auditing, or participating (as a federal landowner) in voluntary
carbon markets? What would be the federal government’s proper role, if any?
 How might federal involvement impact the existing voluntary market structure?
For environmental services to be bought and sold in a marketplace, some basic market
mechanisms must exist, including supply, demand, and rules for exchange. In most such markets,
environmental services supply and demand is driven by government regulation. USDA is not the
lead agency implementing federal regulations that typical y underpin the establishment of
environmental markets, including carbon markets.112
 How large a role should or could USDA have in carbon markets?
 Is there a role for regulations in this area, or are voluntary incentives sufficient to
achieve the GHG mitigation?
Some have suggested that the federal government should play a role in stabilizing carbon offset
prices by establishing a “carbon bank,”113 while others have criticized this proposal.114
 Should the federal government play a role in stabilizing carbon offset prices? If
so, what role? And why?
The number of private carbon market programs for agriculture and forestry is increasing. Each
program has different requirements, potential costs, and potential benefits for participants. The
Growing Climate Solutions Act of 2021 (S. 1251/H.R. 2820) would have USDA play a role in
standardizing (1) protocols and (2) qualifications for third-party verifiers and providers of
technical assistance associated with carbon markets.
 Is there a public benefit from the federal government compiling and comparing
protocols, qualifications, and programs associated with carbon markets?

112 For example, EPA oversees water quality trading under the Clean Water Act and the U.S. Fish and Wildlife Service
(FWS) administers conservation banking in response to the Endangered Species Act. For more information, see EP A’s
water quality trading website at https://www.epa.gov/npdes/water-quality-trading, and FWS’s conservation banking
website at https://www.fws.gov/endangered/landowners/conservation-banking.html, respectively.
113 See, for example, Robert Bonnie, Leslie Jones, and Meryl Harrell, “ United States Department of Agriculture
(USDA),” Clim ate 21 Project, November 2020.
114 See, for example, Zack Colman, Liz Crampton, and Helena Bottemiller Evich, “ Biden Mulls Giving Farmers
Billions to Fight Climate Change. Even Farmers are Unsure about the Plan,” Politico, March 29, 2021.
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 Should the federal government assist farmers, ranchers, and forest landowners in
evaluating private programs for their particular circumstances, or otherwise
facilitate their participation in carbon markets?
Protocols and Carbon Offset Quality
Transparent and scientifical y sound GHG mitigation and sequestration protocols are typical y
required to build the confidence of carbon offset purchasers and other stakeholders in the quality
of carbon offsets generated. Private carbon standards and carbon programs have developed
different protocols for generating carbon offsets through various climate-smart practices in
agriculture and forestry.
 How are private sector entities building stakeholder confidence in the quality of
carbon offsets generated though agriculture and forestry?
 Is there a role for the federal government in researching and quantifying baseline
conditions against which GHG mitigation or sequestration gains achieved
through agriculture and forestry practices are measured?
 What role, if any, should the federal government play in developing efficient
means of measuring or modeling soil carbon sequestration or GHG mitigation in
agriculture and forestry?
 Should the federal government play a role in researching and developing
scientifical y sound protocols for generating carbon offsets in agriculture and
forestry?
 Should the federal government play a role in curating, evaluating, certifying, or
standardizing such protocols? If so, what should that role be?
 What role, if any, should the federal government play in rewarding early adopters
for past agriculture and forestry practices or for continuation of these practices?
Equity and Access to Carbon Markets
Congressional policymakers may consider whether al forest landowners and agricultural
producers have equal opportunities to engage in carbon markets, and whether to act to address
any barriers to participation. Some stakeholders have expressed concerns that factors such as land
tenure and operation size may limit carbon market participation to certain landowners and
agricultural producers. Regarding land tenure, farmers who rent at least some of the land they
farm might not be in a position to enter into multiyear contracts under a carbon market
program.115 Regarding operation size, from one perspective, farmers, ranchers, and forest
landowners with larger operations may have more opportunities to participate in carbon markets
due to economies of scale and their likely lower transaction costs compared with those with
smal er operations. Alternatively, those with smal er forestlands, farms, and ranches might have
more opportunities to participate, because they are more likely to own their land and operate more
diverse systems (e.g., they may farm a variety of crops or implement a variety of forestry or
agricultural practices).
 What additional information, if any, would improve understanding of potential
barriers to participation in carbon markets for agriculture and forestry?

115 For more information on U.S. farmland ownership see USDA, Economic Research Service, “Farmland Ownership
and T enure,” November 17, 2020, https://www.ers.usda.gov/topics/farm-economy/land-use-land-value-tenure/
farmland-ownership-and-tenure.
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 What role, if any, should the federal government play in resolving potential
barriers to participation?
 What effect might existing federal policies and programs play in relieving or
exacerbating such participation-related concerns?
Unequal access to high-speed internet—particularly in rural areas116—may affect farmer, rancher,
and forest landowner participation in carbon markets. Some climate-smart agricultural practices
require a high-speed internet connection to achieve optimal results (e.g., precision agriculture for
fertilizer reduction).117 Certain GHG mitigation protocols to generate forest and agriculture
carbon offsets may also require broadband access (e.g., automated monitoring, reporting, and
verification).
 What effect might existing federal policies and programs play in relieving or
exacerbating broadband-related concerns of farmers, ranchers, and forest
landowners, and what role might that play in access to carbon markets?
Other Approaches: Alternatives to Carbon Markets
Throughout the U.S. economy, mil ions of discrete sources generate GHG emissions: power
plants, industrial facilities, motor vehicles, households, commercial buildings, farms, and
livestock. If Congress were to seek GHG reductions (or removals) from al or some of these
sources, policymakers would face a range of options and considerations. For example, Congress
could require emission reductions from specific sources or sectors through regulations, such as
performance standards, or use market-based approaches to incentivize certain activities. Either
approach could involve direct participation of the agriculture and forestry sectors. Analyzing
whether agricultural and forestry emissions and potential to sequester GHGs should be included
in a compliance program raises a range of issues, including those discussed in this report and
others that are beyond the scope of this report. Such issues may include considerations of
economic efficiency, implementation chal enges, fairness and equity, among others.
Congress may consider supporting project-based GHG mitigation, particularly in the agriculture
and forestry sectors, through policy frameworks that do not involve carbon markets. For example,
policymakers could encourage GHG mitigation projects in sectors not covered by mandatory
programs (e.g., emission caps or carbon taxes or fees) through direct funding programs or
adoption of tax incentives, without linking the projects to a compliance market. To some degree,
this approach has been underway through several programs implemented by USDA (see
“Selected USDA Policies and Activities”). A compliance market program could provide funding
for such approaches. For example, if Congress enacted a market-based approach, such as a carbon
price or emissions cap for certain sectors, it would likely generate a new source of federal
revenue that could be used to fund a program that supports a range of policy objectives through
various actions, including GHG mitigation in the agriculture and forestry sectors.118

116 For more information, see CRS In Focus IF11918, Infrastructure Investment and Jobs Act: Funding for USDA
Rural Broadband Program s.
117 Precision Agriculture T ask Force, Interim Report to the Federal Communications Commission, “Examining Current
and Future Connectivity Demand for Precision Agriculture,” October 28, 2020.
118 For a further discussion, see CRS Report R45625, Attaching a Price to Greenhouse Gas Emissions with a Carbon
Tax or Em issions Fee: Considerations and Potential Im pacts.
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Appendix A. Selected Existing Compliance Carbon
Markets
This section discusses the two existing compliance carbon markets in the United States and the
European Union’s compliance market. It includes information about the role of carbon offsets in
these programs.119 To date, carbon offsets from agricultural activities have played a relatively
minor role in existing compliance carbon markets—in terms of both approved offset project types
and actual carbon al owances generated. Offsets from the forestry sector have played a more
substantial role.
California Cap-and-Trade Program
California established a GHG emissions cap-and-trade program that went into effect for the
state’s electric power sector and selected industries in 2013 and for fossil fuel distributors in
2015.120 The program covers approximately 80% of the state’s GHG emissions.121 In California’s
program, approximately half of the emissions al owances are provided at no cost to covered
sources and half are sold through quarterly auctions.122 In the auction held in August 2021, the
settlement price was $23.30/metric ton of carbon dioxide equivalent,123 the highest auction price
in the program’s history to date.124 Covered entities in California’s program can use offsets to
satisfy 4% of their compliance obligation.125 Approved offset types include the following
categories:
1. Livestock manure management projects
2. Mine methane capture projects
3. Ozone depleting substance projects
4. Rice cultivation projects
5. U.S. forests, including forestry management and avoided conversion projects
6. Urban forests, including tree planting and maintenance projects

119 For a comprehensive list of compliance markets worldwide, including emission trading and carbon price programs,
see World Bank, State and Trends of Carbon Pricing 2021, 2021.
120 For further details of this program, see the cap-and-trade regulations CARB, “Cap-and-T rade Regulation,”
https://ww2.arb.ca.gov/our-work/programs/cap-and-trade-program/cap-and-trade-regulation.
121 CARB, “FAQ Cap-and-T rade Program,” https://ww2.arb.ca.gov/resources/documents/faq-cap-and-trade-program.
122 California Legislative Analyst’s Office, Cap-and-Trade Extension: Issues for Legislative Oversight, 2017.
123 T his measure is used because GHGs vary by their global warming potential (GWP). GWP is an index that allows
comparisons of the heat -trapping ability of different gases over a period of time, typically 100 years. Consistent with
international GHG reporting protocols, EPA’s most recent GHG inventory (April 2021) uses the GWP values present ed
in the Intergovernmental Panel on Climate Change (IPCC) 2007 Fourth Assessment Report.
124 CARB, Summary of California-Quebec Joint Auction Settlement Prices and Results, August 2021.
125 In a cap-and-trade program, covered entities must submit emission allowances to an implementing agency to cover
the number of tons of GHGs emitted during the compliance period (e.g., the past year or the past several years). T his
requirement is referred to as the entity’s compliance obligation. In California’s program, covered entities can submit
offsets in lieu of emission allowances to account for 4% of their obligation. In previous years, the offset limitation was
8% (2013-2020). T he limitation increases to 6% in 2026. See California Code of Regulations (CCR), T itle 17, Sections
95801-96022, https://ww2.arb.ca.gov/our-work/programs/cap-and-trade-program/cap-and-trade-regulation.
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As of September 2021, the state has approved and issued approximately 225 mil ion offset
credits.126 To put this number in context, the cumulative al owance budget for the state’s cap-and-
trade program was approximately 2.5 bil ion al owances between 2013 and 2020.127 U.S. forest
projects have accounted for 82% of these offset credits; livestock projects have accounted for
4%.128 Carbon offsets, particularly forestry projects, issued in California’s cap-and-trade program
have received scrutiny and criticism.129 A discussion of these issues is beyond the scope of this
report.
Regional Greenhouse Gas Initiative (RGGI)
Eleven U.S. states participate in RGGI, a cap-and-trade program that went into effect in 2009 and
applies to CO2 emissions from electric power plants.130 The CO2 emissions from covered entities
in the RGGI states account for approximately 18% of al energy-related CO2 emissions in the
RGGI states.131 The vast majority of RGGI’s emission al owances are sold in quarterly auctions.
In RGGI’s September 2, 2021, auction, the clearing price was $9.30/ton of CO2, the highest
auction price in RGGI’s history.132 RGGI limits offsets to 3.3% of a source’s compliance
obligation. RGGI offset projects must satisfy a set of detailed requirements (specific to a project
type) and be certified by a third party. RGGI offsets must be located in RGGI states. RGGI limits
offset projects to three project types:
1. landfil methane reduction;
2. forest sequestration, including afforestation, reforestation, improved forest
management, and avoided forest conversion; and
3. avoided methane from manure management practices.

126 ARB Offset Credit Issuance Table, available at CARB, “ARB Offset Credit Issuance,” https://ww2.arb.ca.gov/our-
work/programs/compliance-offset -program/arb-offset-credit-issuance.
127 T able 6-1 in CCR Section 95841.
128 ARB Offset Credit Issuance Table, available at CARB, “ARB Offset Credit Issuance,” https://ww2.arb.ca.gov/our-
work/programs/compliance-offset -program/arb-offset-credit-issuance.
129 See, for example, Grayson Badgley et al., “Systematic over-crediting in California’s forest carbon offsets program,”
bioRxiv, 2021, https://www.biorxiv.org/content/10.1101/2021.04.28.441870v1; the results of this study were discussed
in Lisa Song and James T emple, “T he Climate Solution Actually Adding Millions of T ons of CO2 Into the
Atmosphere,” ProPublica, April 29, 2021; CARB responded to questions from Lisa Song (author of the ProPublica
article) and made its responses available here, https://ww2.arb.ca.gov/sites/default/files/2021-04/nc-carb-response-to-
propublica-forest -questions.pdf.
130 Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey (rejoined in 2020), New
York, Rhode Island, Vermont, and Virginia (joined in 2021). T he Governor of Pennsylvania has taken steps for the
state to join RGGI, but lawmakers in Pennsylvania’s legislative bodies have voiced strong opposition to joining RGGI
and the Governor’s actions to join the program without enacting n ew legislation. For more information, see the
Pennsylvania Department of Environmental Protection RGGI website, https://www.dep.pa.gov/Citizens/climate/Pages/
RGGI.aspx.
131 Based on 2018 CO2 emissions data from the Energy Information Administration, https://www.eia.gov/environment/
emissions/state; and 2018 RGGI covered CO2 emissions from the nine RGGI states participating in 2014, at
https://rggi-coats.org (“ Emissions Reports”).
132 See RGGI’s auction results at https://www.rggi.org/auctions/auction-results. RGGI measures its allowance prices in
dollars per short tons. For comparison to other programs, this auction price equates to $10.2/metric ton.
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The RGGI offsets tracking database lists one offset project: a landfil methane reduction project
in Maryland that created approximately 53,000 emission al owances.133 As a point of reference,
the RGGI cap in 2021 is approximately 120 mil ion al owances.
Offset projects in the RGGI program may garner increased interest, as RGGI’s emission
al owance prices have increased in the past year. The September 2021 auction price of $9.30/ton
was 37% higher than the auction price from September 2020 ($6.80/ton).134
European Union Emissions Trading System
In 2005, the European Union (EU) established the Emissions Trading System (ETS), a cap-and-
trade program that covers emissions from the electricity sector, selected energy-intensive
industries, and domestic aviation.135 The EU-ETS covers about 40% of total GHG emissions in
the EU.136 The EU-ETS is a key component of the EU’s climate mitigation policies. In December
2020, the EU updated its National y Determined Contribution (NDC) under the Paris
Agreement137 to include a target of 55% reduction in GHG emissions by 2030 compared with
1990 levels.138 Between September 2020 and September 2021, EU-ETS emission al owance
prices increased from 30 Euros/metric ton to 60 Euros/metric ton (approximately $35/metric ton
to $70/metric ton).139
Between 2008 and 2020, the EU-ETS al owed covered sources to use specified amounts of offset
credits developed from projects located within the EU or in non-EU countries. Starting in 2021,
offset projects are not al owed as a compliance option within the EU-ETS program.140 A
discussion of the factors that led to this shift in policy is beyond the scope of this report.141
Certain project types, particularly land use, land-use change, and forestry (LULUCF) projects,
were never eligible to generate offset credits within the EU-ETS.

133 See RGGI’s website at https://www.rggi.org/allowance-tracking/offsets.
134 RGGI allowance prices are in dollars per short tons. T o convert RGGI allowance prices to dollars per metric tons,
multiply by 1.1. For example, $9.30/short ton equals $10.23/metric ton.
135 For more information, see the European Commission EU ET S website, https://ec.europa.eu/clima/policies/ets_en.
136 European Commission, “EU Emissions T rading System (EU ET S),” https://ec.europa.eu/clima/policies/ets_en.
137 T he Paris Agreement is part of the United Nations Framework Convention on Climate Change (UNFCCC), which
has been the primary multilateral vehicle since 1992 for international cooperation among national governments to
address GHG-induced climate change. For more information, see CRS In Focus IF11746, United States Rejoins the
Paris Agreem ent on Clim ate Change: Options for Congress.
138 For more information, see CRS In Focus IF11431, EU Climate Action and Implications for the United States.
139 EU-ET S allowance prices from Intercontinental Exchange, https://www.theice.com/index. Conversion to U.S.
dollars based on exchange rate of 1.16.
140 For more discussion, see the EU-ET S website, “Use of International Credits,” https://ec.europa.eu/clima/policies/
ets/credits_en.
141 Experience with certain offset projects likely played a role in this shift. T he non -EU projects were developed within
the framework of the Clean Development Mechanism (CDM) developed under the Kyoto Protocol. Projects were
assessed on an individual basis and approved by an Executive Board in the United Nations. An independent third-party
verified the projects emission reductions. Some offset projects developed under the CDM raised concerns of
additionality and likely damaged the credibility of offsets in general to some degree. See, for example, Matthew
Ranson and Robert N. Stavins, “ Linkage of Greenhouse Gas Emissions T rading Systems: Learning from Experience,”
Clim ate Policy, vol. 16, no. 3 (2015).
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link to page 43 Agriculture and Forestry Offsets in Carbon Markets: Background and Selected Issues

Appendix B. Historical U.S. GHG Emissions and
Selected GHG Emissions Targets
The Biden Administration communicated a new National y Determined Contribution (NDC) to
the Paris Agreement,142 which contains a new greenhouse gas (GHG) target for the United States:
to reduce net GHG emissions by 50%-52% below 2005 levels by 2030.143 According to the Biden
Administration, the NDC “exceeds a straight-line path to achieve net-zero emissions, economy-
wide, by no later than 2050.”144 For comparison, the previous U.S. NDC set a target of 26-28%
below 2005 levels by 2025, which President Obama had indicated was on a straightline trajectory
to a reduction of 80% below 2005 levels by 2050. The content of NDCs is national y determined
and nonbinding, but it should reflect what a party to the Paris Agreement intends to achieve.
Figure B-1 shows historical net GHG emissions with the 2015 and 2021 NDCs and the Biden
Administration’s net-zero emissions goal for 2050. In 2019, U.S. GHG emissions, after
accounting for removals by carbon sinks, were 5,769 MMTCO2e.145 The 2019 net GHG
emissions were about 13% below net 2005 levels and about 4% above net 1990 levels.

142 A key requirement of the Paris Agreement is that all Parties communicate their “Nationally Determined
Contributions” (NDC) every five years, containing a GHG reduction pledge and actions, though this content of an NDC
is not binding. As the United States has newly (again) become a Party, the United States must submit a new NDC.
143 T he White House, The United States of America Nationally Determined Contribution Reducing Greenhouse Gases
in the United States: A 2030 Em issions Target, April 22, 2021. Hereinafter, 2021 U.S. NDC.
144 2021 U.S. NDC, p. 23. Net-zero emissions refers to a situation where any continued human-caused GHG from an
entity (e.g., country, subnational government, company) is balanced by human, or anthropogenic, carbon removal from
the atmosphere that stores the CO2 in geological, terrestrial, or ocean reservoirs or in products.
145 U.S. gross emissions (not net of sinks) were 6,558 MMT CO2e in 2019. U.S. sinks removed about 789 MMT in
2019, about 12% of gross emissions (U.S. Environmental Protection Agen cy, U.S. Inventory of Greenhouse Gas
Em issions and Sinks: 1990-2019, 2021).
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Figure B-1. Historical U.S. GHG Emissions and Selected GHG Emissions Targets

Source: Prepared by CRS. Historical emissions from the U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2019,
2021, https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks.
Notes: Net greenhouse gas (GHG) emissions includes net carbon sequestration from land use, land use change, and forestry (LULUCF). This involves carbon removals
from the atmosphere by photosynthesis and storage in vegetation and soil. Mil ion metric tons of CO2 equivalent (MMTCO2e) is used because GHGs vary by global
warming potential (GWP). GWP is an index developed by the Intergovernmental Panel on Climate Change (IPCC) that al ows comparisons of the heat-trapping ability of
different gases over a period of time, typical y 100 years. Consistent with international GHG reporting requirements, EPA’s most recent GHG inventory (April 2021)
uses the GWP values presented in the IPCC’s 2007 Fourth Assessment Report.
The GHG emission targets are the U.S. National y Determined Contributions (NDCs) pursuant to the Paris Agreement. For more information on these targets and the
Paris Agreement, see CRS In Focus IF11746, United States Rejoins the Paris Agreement on Climate Change: Options for Congress.

CRS-38

Agriculture and Forestry Offsets in Carbon Markets: Background and Selected Issues

Author Information

Genevieve K. Croft
Jonathan L. Ramseur
Analyst in Agricultural Policy
Specialist in Environmental Policy

Katie Hoover
Megan Stubbs
Specialist in Natural Resources Policy
Specialist in Agricultural Conservation and Natural

Resources Policy

Disclaimer
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