U.S. Rice Farmers Turn Sustainability into Carbon Credits, and Microsoft Is First to Buy

By changing how they use water, rice growers in Arkansas, Mississippi and California cut their methane emissions and opened a door for agriculture in carbon markets.

The world's largest software maker made a novel purchase recently—from a handful of rice farmers.

Microsoft bought carbon offsets from rice farmers in Arkansas, Mississippi, and California who had worked for the better part of the last 10 years to implement conservation measures on their farms.  Through a complicated measurement and verification process, these conservation steps ultimately translated to carbon offsets purchased by the software giant.

The transaction this month was the first of its kind and, in the complex and controversial world of carbon markets, it represents a milestone for agriculture.

"Now we know what it takes to do this," said Debbie Reed, director of the Coalition on Agricultural Greenhouse Gases, a group that works with agricultural producers to reduce greenhouse gas emissions.  "It's not symbolic, so much as proof-of-concept."

For years, researchers, advocacy groups and private-sector environment-focused investment groups have eyed agriculture's potential contribution in carbon markets to help address climate change.  But carbon trading is complex under any circumstances, and particularly so when the entities generating the offsets grow rice or corn or raise cows.  Measuring emissions—or, rather, emissions reductions—accurately and consistently from agricultural sources can be more complicated than for wind energy or solar power projects.

"Developing a protocol with farmers that's verifiable and rigorous enough so you can sell it in the market—that takes a long time," Reed said.

Rice production emits methane, a potent greenhouse gas with significantly more warming power than carbon dioxide over a shorter period, though there is far less of it in the atmosphere.  Globally, methane accounts for about 16 percent of human-caused greenhouse gas emissions.  The largest human-caused methane source is the oil and gas industry (about 33 percent), but raising livestock comes a close second (27 percent), and rice production alone contributes 9 percent of methane emissions.

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