How to Reduce Scope 3 Emissions with Soil Credits?

While we continue to champion corporate sustainability, Scope 3 emissions have proven problematic since the definition includes all indirect emissions that take place in a company’s value chain. Frequently, these emissions represent the majority of a company’s carbon footprint, and have proven difficult for businesses and corporations to eliminate on their journey to net-zero. However, a recent announcement by the Science Based Targets initiative is redefining the sector and allowing environmental attribute certificates, including but not limited to voluntary carbon markets, to partially address these emissions. This marks the start of a new era in corporate and agricultural climate change mitigation strategies.

Understanding Scope 3 Emissions

The concept of Scope 1, Scope 2 and Scope 3 emissions was introduced in the Greenhouse Gas Protocol (GHG Protocol), a framework created to standardise measuring and managing greenhouse gas emissions.

Scope 3 emissions are indirect emissions that occur in the value chain of a reporting company, both upstream and downstream. They are not directly produced by the company’s own operations (Scope 1) or from the energy the company purchases and uses (Scope 2), but are a result of other activities, such as the extraction and production of purchased materials, transportation of purchased fuels, and use of sold products and services. 

Scope 3 emissions often represent the largest source of greenhouse gas emissions for companies and can encompass a wide range of sources, making them challenging to quantify and manage. Addressing them is crucial for companies aiming to reduce their overall carbon footprint and achieve their sustainability goals.

Although, it is vital to highlight that in accordance with VCMI, companies may compensate up to 50% of their Scope 3 emissions with carbon offsets but never 100%. Companies still need to make mitigation efforts, even in Scope 3 emissions.

The SBTi Announcement

The Science Based Targets initiative (SBTi) recently made a pivotal announcement, significantly impacting the landscape of corporate sustainability efforts and the VCM. In an effort to refine its Corporate Net-Zero Standard, SBTi has extended the application of environmental attribute certificates, including but not limited to voluntary carbon markets for the abatement of Scope 3 emissions. This decision is born out of an exhaustive consultative process and represents a shift towards more inclusive and practical climate action frameworks.

This announcement underscores a recognition of the dual role carbon markets play: 

  • as a mechanism for neutralising emissions that are currently unavoidable, but also 
  • as a catalyst for funding the transition to a low-carbon economy that contributes towards achieving the Sustainable Development Goals. 

The SBTi’s move to define specific guidelines and standards for the responsible use of carbon credits in Scope 3 abatement aims to enhance the integrity and effectiveness of these efforts.

Challenges and Opportunities

The announcement presents a promising future for the VCM, as we anticipate a surge in demand for nature-based credits. These credits are poised to grow in value, given their contribution to net-zero goals. 

It’s noteworthy that companies adhering to the SBTi were responsible for over 30 billion tonnes of CO2e emissions in 2023, with a staggering 27 billion tonnes attributed to Scope 3 emissions. This uptick in demand and value of carbon credits represents a significant opportunity, yet it underscores a pressing challenge: should even a fraction of these emissions seek offsets, it could deplete the available global carbon credit reserves in an astonishingly short time frame.

The potential rapid expansion of the VCM underscores the critical need for rigorous monitoring and verification measures to uphold the integrity and efficacy of the market. The increased confidence in carbon credits, fueled by recent developments, could be gone without a commitment to quality and impact across the board. Precise measurement of carbon sequestration is paramount, particularly for soil-based carbon credits, where direct soil sampling stands as the most reliable method of quantification.

Role of Regenerative Agriculture

The SBTi’s recent announcement not only broadens the scope for corporate sustainability efforts but also shines a spotlight on agriculture’s pivotal role in the fight against climate change. By recognising the validity of carbon credits for Scope 3 emission reductions, this initiative opens up new avenues for the agricultural sector to contribute to and benefit from global decarbonisation efforts.

Agriculture, a sector traditionally characterised by its high dependence on natural resources and susceptibility to climate change, now finds itself at the forefront of generating nature-based solutions. Regenerative farming practices, such as no-till agriculture, cover cropping, and improved grazing, enhance soil health and increase its carbon sequestration capacity. These practices mitigate climate change by enhancing soil health and its interdependent ecosystem services including carbon sequestration, thereby supporting the United Nations’ Sustainable Development Goals.

For farmers, the SBTi’s announcement translates into a more substantial and recognised role in climate action initiatives. The increased demand for nature-based carbon credits as a legitimate tool for addressing Scope 3 emissions promises higher value for the credits generated from regenerative agriculture. This, in turn, could provide farmers with an additional income stream, rewarding them for their environmental stewardship and incentivising the adoption of sustainable practices.

The decision by the Science Based Targets initiative to acknowledge carbon credits for Scope 3 emissions abatement signifies a major advancement for agriculture’s role in climate strategies. This recognition not only highlights the importance of nature-based solutions but also sets a promising path for valuing agricultural contributions to carbon sequestration. As the voluntary carbon market evolves, it offers new opportunities for innovation and collaboration, ensuring that agriculture’s move towards sustainability benefits everyone involved. This moment is a step forward in balancing our environmental goals with the prosperity of global communities.

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