Regenerative Agriculture Credit

The core value of a credit is derived from third-party verification of on-farm practices and outcomes. This involves:

• Soil sampling to measure soil organic carbon (SOC) levels.
• Remote sensing via satellite imagery to monitor land use and vegetation cover.
• Adherence to a recognized methodology (e.g., from Verra, Gold Standard) that defines eligible practices and quantification protocols.
• Additionality is a key criterion, ensuring the environmental benefit would not have occurred under a business-as-usual scenario.

While carbon sequestration is a primary metric, high-integrity RACs are defined by their stacked or bundled benefits. A single credit can represent multiple verified outcomes:

• Carbon Removal: Measured in metric tons of CO₂ equivalent (tCO₂e) sequestered in soil.
• Biodiversity Enhancement: Measured through habitat diversity, pollinator support, and reduced chemical inputs.
• Water Cycle Improvement: Achieved through increased soil water retention and reduced runoff.
• Soil Health: Improved soil organic matter, structure, and microbial activity.

Once verified, credits are minted as digital assets on a blockchain. This process, or tokenization, creates a transparent and auditable record.

• Registry: Credits are serialized and listed on a carbon registry (e.g., Verra registry) to prevent double-counting.
• On-Chain Bridging: The registry entry is linked to a digital carbon token (e.g., a Verra VCU tokenized via Toucan or C3).
• Immutable Ledger: The blockchain provides a public, tamper-proof record of issuance, ownership, and retirement.

The final step is retirement (or cancellation), where a credit is permanently taken off the market to claim its environmental benefit.

• Proof of Impact: Retirement is recorded on-chain and often linked to a public retirement certificate.
• Avoids Double Counting: A retired credit cannot be sold or claimed by another entity.
• Use Case: Companies retire credits to offset their Scope 3 emissions or make carbon-neutral claims for products, providing a transparent audit trail for their environmental, social, and governance (ESG) reporting.

The RAC ecosystem involves a coordinated network of specialized actors:

• Project Developers: Farmers and land managers implementing regenerative practices.
• Verifiers & Standards Bodies: Entities like Verra and Gold Standard that set methodologies and validate claims.
• Registries: Digital databases that track credit issuance and retirement.
• Tokenization Platforms: Protocols (e.g., Toucan, C3, Regen Network) that bridge credits to blockchain.
• Buyers & Investors: Corporations, funds, and individuals purchasing credits for compliance or investment.

The market faces significant challenges that impact credit quality and trust:

• Measurement Uncertainty: Soil carbon measurement can have variability; permanence (long-term storage) is a concern.
• Fragmented Standards: Multiple methodologies can lead to inconsistent quality and greenwashing risks.
• Market Liquidity: The voluntary carbon market (VCM) is still developing efficient price discovery mechanisms.
• Technological Solutions: Digital Monitoring, Reporting, and Verification (dMRV) using IoT sensors and AI is emerging to increase accuracy and reduce verification costs.

A Carbon Credit is a tradable certificate representing the removal or avoidance of one metric ton of carbon dioxide equivalent (tCO₂e). It is the foundational unit of compliance and voluntary carbon markets. RACs are a specific type of carbon credit generated through agricultural practices that sequester carbon in soil.

• Compliance vs. Voluntary: Credits are either mandated by government cap-and-trade systems or purchased voluntarily by corporations for ESG goals.
• Core Mechanism: Creates a financial incentive for emission reductions beyond regulatory requirements.

Soil Carbon Sequestration is the process of capturing atmospheric carbon dioxide and storing it in the soil carbon pool. This is the primary biological mechanism behind Regenerative Agriculture Credits.

• Key Practices: Includes no-till farming, cover cropping, managed grazing, and agroforestry.
• Measurement: Quantified through soil sampling, modeling, and remote sensing to verify the amount of carbon stored.
• Co-benefits: Improves soil health, water retention, and biodiversity alongside carbon capture.

MRV is the critical framework for ensuring the credibility of any carbon credit. It refers to the end-to-end process of quantifying emission reductions or removals.

• Measurement: Using scientific methods (e.g., soil cores, sensors) to collect data on carbon stock changes.
• Reporting: Documenting methodologies and results in a transparent, auditable format.
• Verification: Independent third-party assessment to confirm the reported data is accurate and complete. Blockchain can enhance MRV by providing immutable audit trails for data.

Tokenization is the process of creating a digital representation of a real-world asset on a blockchain. For RACs, it involves minting a digital token (e.g., an ERC-1155 or ERC-20 token) that is backed by and represents ownership of a verified carbon credit.

• Benefits: Enables fractional ownership, increases liquidity, reduces administrative overhead, and provides transparent provenance tracking from issuance to retirement.
• Custody: Requires secure digital custody solutions to ensure the underlying credit is properly retired when the token is used.

Additionally and Permanence are two fundamental criteria for high-quality carbon credits, directly impacting RAC integrity.

• Additionally: The project's carbon sequestration must be additional to what would have occurred under a business-as-usual scenario. It must be financially enabled by the credit revenue.
• Permanence: The stored carbon must remain sequestered for a long-term period (often 100+ years). Buffer pools and monitoring commitments are used to mitigate reversal risks (e.g., if a farmer later tills the soil).