Canada’s defined benefit pension plans aren’t taking full advantage of regenerative agriculture practices, says Shidan Gouran, founder and chairman of Bluesphere Carbon, a New York-based carbon credit marketplace.
“Agriculture is a good way of sequestering carbon, though it can be a very bad way, too. . . . Any pension fund that owns a lot of land should be looking to generate carbon credits. If you’re a landowner or involved in heavy industrial activities, you should be speaking with consultants to figure out how to generate more money.”
Globally, the amount of carbon held in soil is believed to be greater than the amount held within the atmosphere. According to a Scientific American report, as much as 18.9 billion tons of carbon is sequestered within U.S. farmland, though some practices drastically reduce the amount that can be held by as much as 50 per cent. “Not tilling the land can be a great way of keeping carbon in the ground,” says Gouran. “You’re not moving the soil around so it stays in there.”
Regenerative agriculture techniques seek to increase the amount of carbon dioxide stored in farmland. It’s believed that some of these techniques help improve profits by cutting labour costs because they limit the amount of ploughing required on fields. According to a 2020 article published in the academic journal Carbon Balance and Management, fields using regenerative farming techniques had yields 29 per cent lower than traditionally farmed ones, but profits that were 78 per cent higher.
According to Gouran, many institutional investors are already taking advantage of some of the benefits of regenerative agriculture, but they aren’t seizing opportunity to convert sequestered carbon into capital. “There’s such a large number of carbon credits out there that aren’t sold.”
These unrealized carbon credits are more meaningful than some carbon sequestering schemes that are already being monetized, he says. “There are so many countries and regions involved with so many different rules. Ideally, a carbon credit should represent what’s removed of the atmosphere. But if you’re a company growing palm trees in the rain forests of Indonesia and some of the land you know isn’t going to be used for 50 years and use that to generate carbon credits, you aren’t helping the world.”
While Gouran isn’t opposed to institutional investors buying forests specifically to sell carbon credits, he’s skeptical of the case made by the Canada Pension Plan Investment Board in a report following its 2021 investment in a Peru-based carbon capture scheme. In it, the investment organization suggested prices on voluntary carbon credits could rise between 12- and 50-times higher by 2050.
“I have a vested interest in carbon credit prices getting higher and I’ve heard those statistics — I just don’t believe they’re real. . . . It’s between $3 and $4 a ton now and I could see it doubling. I don’t see it going up into the hundreds per ton.”
The world — and portfolios — would be better served if institutional investors turned more capital to emerging technologies. “It would be great if carbon investors looked at things like green concrete, nuclear fusion, nuclear fission — things like that are really important. It’s probably the best way funds can look after the world.”
Direct air carbon capture is one emerging technology that Gouran believes holds considerable promise for institutional investors. “I think the chemical and mechanical processes for capturing carbon are the most important things out there. The oil industry is already investing heavily in direct air capture.
“It’s not that hard to save the planet,” he adds. “All it requires is co-operation and co-ordination.”