Catalyst with Shayle Kann - The dirt on soil carbon credits

Episode Date: August 25, 2022

Soil is a massive carbon sink that’s stored away emissions for centuries. But years of destructive farming practices have released much of this carbon. Could incentivizing farmers help restore—and expand—soil’s carbon-carrying capacity?  In theory, yes. But the market for soil carbon credits—literally paying farmers to improve their practices—needs serious reform.   In this episode, Shayle talks with Freya Chay, program manager for carbon removal at CarbonPlan. The fundamental problem is that the existing carbon credits don’t do what they say they will do: permanently lock away additional carbon. Freya and Shayle survey the big challenges of the market and explore potential fixes, covering questions like: How do we measure—using models, samplings and satellites—the amount of carbon in a plot of soil? What tools do we have to make sure the carbon will stay in the ground, such as buffer pools and ton-year accounting? The additionality question: Without the credit, would the carbon have been captured anyway? Or would it have remained locked away anyway? What role could third-party grading systems play in differentiating high-quality credits from low-quality ones? Resources: CarbonPlan: A buyer’s guide to soil carbon offsets CarbonPlan: Unpacking ton-year accounting Canary Media: Carbon storage gets dirty: The movement to sequester CO2 in soils Sylvera: Carbon Credit Ratings: Frameworks & Processes White Paper   Catalyst is a co-production of Post Script Media and Canary Media. Catalyst is supported by Antenna Group. For 25 years, Antenna has partnered with leading clean-economy innovators to build their brands and accelerate business growth. If you're a startup, investor, enterprise, or innovation ecosystem that's creating positive change, Antenna is ready to power your impact. Visit antennagroup.com to learn more. Solar Power International and Energy Storage International are returning in-person this year as part of RE+. Come join everyone in Anaheim for the largest, B2B clean energy event in North America. Catalyst listeners can receive 15% off a full conference, non-member pass using promo code CANARY15. Register here.

from the studios of PostScript Media and Canary Media. I'm Shale Khan, and this is Catalyst. Just at the high level, how would you characterize the state of that market, the market for the creation and sale of soil carbon credits? To be quite frank, I would say it's kind of a mess at the moment. Earn income with carbon farming. That's how one big ag tech startup makes the pitch to farmers that they should participate in the nascent but burgeoning soil carbon credit market.

But there are questions. Pretty big questions, actually. Let's get into it. When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility, built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants

that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale. Predictive, verifiable, and designed to perform when it counts. Learn more at energy hub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand-new podcast.

podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy, and building the clean economy. Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. I'm Shale Khan. I'm a partner at the venture capital firm, energy impact partners. Welcome. So let's start with the good news. It appears that there are a variety of changes to practices that farmers can make to their soil that both improve the long-term health of the soil and plants and substantially increase the total volume of CO2 that is stored in the soil, in the process, removing it from the atmosphere and creating carbon removal. The bad news is that on all the measures that we really care about

when we think about, quote-unquote, quality for carbon removal credits, these practices are pretty challenged, measurement and verification, permanence, additionality, and so on, which doesn't mean it's necessarily not worth pursuing, but it does mean we need to be very clear-eyed about the challenges. I feel strongly about this. I worked in the carbon markets 15 years ago, and I watched them never take off. I think in large part because of a lack of trust that a credit actually meant something, or more specifically, that a credit meant a ton of CO2. And I think if this market is going to be different, it needs to behave accordingly. So let's get the lay of the land on soil carbon crediting today, or rather the lay of what lies under the land, I suppose. My guest is Freya Che of

Carbon Plan, which has done, in my opinion, some of the best work applying serious rigor and analysis to the standards surrounding emerging carbon markets and particularly soil carbon. Here's Freya. Freya, welcome to Catalyst. Thanks so much for having me. Excited to talk about soil carbon markets and soil carbon credits. Let's start with the premise here. Can you just sort of walk us through the idea behind why changing practices on farms might or should result in carbon removals that could generate credits? So to begin with, soil carbon is a

huge carbon reservoir. It holds more carbon than the atmosphere, more carbon than all the terrestrial biomass combined. And our agricultural practices have done a pretty good job of depleting carbon in the soil. And the idea behind soil carbon credits is that through practices, change in practices in agriculture, we can restore some of that carbon and sequester additional carbon in healthy soils. A number of practices can help do this, things like reducing tillage, things like cover cropping, improving how you graze. All of these things, in general, we think of as improving soil health and resulting in carbon sequestration. But of course, exactly how they work and exactly how much carbon is sequestered really varies a lot

based on where you are in the world, what else is happening in your context, and other implementation details and uncontrollable details that really change what exactly happens when you apply these practices. Right. So we'll talk more about why the devil's the details and what that means for generating these credits, I think. But the basic premise is that there's this dual benefit, which is that most of these practices should be not only should they sequester more carbon in the soil, but also, as you said, they should improve soil health. Do we have a sense of if they should improve soil health independently? What has been the

barrier to farmers adopting these practices anyway, even in the absence of carbon credits? That's a great question. First of all, all, I don't spend a lot of time with farmers myself, so I think farmer communities can answer that question best. But changing practices can often be expensive. There's often a kind of barrier to entry, a period of time where you have to, on your really low margins, maybe invest in new materials or learn something new or reduce yields for a period of time before your soil health improves. And that kind of gap between where you are and a new equilibrium that you would like to reach is an absolute barrier that can be hard to bridge for, again, farmers who are often operating on really low

margins, both in terms of energy and in terms of dollars. All right. So the idea here is there are practices farmers can implement. They will improve the soil, but in addition, they will increase the amount of CO2 that is sequestered in the soil. If they do, if, if they do, if you, If we can create an incentive for them to do that, and they wouldn't have otherwise done it, which we'll come back to, then we will have sequestered more CO2 in the soil. We will have removed CO2 from the atmosphere. And so we will be creating carbon removal and thereby should generate credits to sell to anyone who wants to purchase carbon removals or carbon offsets.

So that's the idea. Create this financial mechanism to incentivize farmers to do that kind of thing. What is, just at the high level, how would you characterize the state of that market, the market for the creation and sale of soil carbon credits? To be quite frank, I would say it's kind of a mess at the moment. There are kind of layered challenges, but maybe I would zoom out and first talk for a moment about what is a quality credit. So we talk about offset credits. People say they represent a ton of carbon. But when is an offset credit really good? Well, it has to have a couple of qualities. One, it needs to actually represent a ton. You have to actually know what happened. Two, you need to think about how that credit is being used. And not just the ton itself, not just the quantity of carbon, but the duration overwork. which it's being stored. So when we use offsets, we are often using them to offset fossil emissions. You know, you burn fossil fuels, that carbon enters the atmosphere and impacts climate outcomes

for literally millennia, really, really long time scale. Credits in the current market might represent anywhere from 10 years of carbon storage to, you know, maybe a couple of decades, or at the very, very high end in forests, but on soil is 100 years. So you're talking about a really different time scale than the emissions you're trying to offset. A third dimension,

so we had kind of like, is the quantity we're talking about real? How long are we saying we're storing it? And how does that relate to what we're trying to offset? Is it additional? Dishonality is this idea that if you want to take credit for a climate benefit. By buying an offset credit,

your money needs to be enabling something new and good to happen. Otherwise, you are just paying for business as usual. So that's kind of the third main dimension. And I would say in the current voluntary carbon market, there are challenges on kind of all three of these fronts. So we did a really interesting review of all of the

protocols, so all of the crediting rules that are currently used to issue credits to soil carbon in collaboration with Jane Zelikova. And basically, you know, you have these PDF documents that, maybe you have multiple PDF documents, and you're trying to

stitch them all together and figure out what the minimum bar of a credit, like what minimum quality bar is promised by these crediting rules. So we analyzed the protocols across these three dimensions and some other details. And basically what we found is you have lots of protocols who maybe aren't even measuring the soil. So it's actually really

hard to tell what's going on. And kind of across the board, you have low permanence, so low durability, short contract terms. And across the board, you're really missing. additionality protections that are meaningful. So not only are there a diversity of kind of opaque rules for crediting soil carbon, but kind of across the board, you would hope that a higher quality bar was guaranteed by these rules. So let's dig into each of those three areas, because I think these are the three core challenges with soil carbon credits. They're also similarly challenges with forestry credits and a bunch of other stuff. But we'll talk about it in the context. of soil for now.

So let's start with the first one, which is, you know, sort of measurement and verification, basically. So let's just take an example of one practice, something like reducing tilling, for example. What is happening in these protocols now? What are they doing, if anything, to verify or request measurement of whether the tilling actually occurred and whether it resulted in more carbon sequestration? So there's a huge diversity of approaches to this quantification. A lot of protocols allow you to simply model what has happened.

So take a soil carbon model. Maybe it's not even calibrated to your fields based on soil samples. And you can just say, hey, model, you have some conception of what it means for me. Maybe it's also location-based. So maybe it's me and my location to reduce my tillage. And the model spits out an answer about how much carbon sequestration you can expect. What's really challenging about that is that we know the soil carbon is highly variable across time, across space, across depth. It varies on these really granular scales.

So especially if you haven't been really careful about calibrating a model to a particular context, confidence is really low in that kind of estimation. You really, you know, consensus is you really need to sample your soil in the place that you're trying to quantify outcomes if you want to have a robust quantification that you can use for an offset. There are a couple of examples of people who are thinking about really robust sampling, which is awesome. and broadly would encourage anyone looking at this space to pay a lot of attention to the rigor of the sampling protocol and ensure that sampling is happening. Right. So there's the lowest bar is the modeled approach. The lowest bar is the modeled non-specific approach. So I tell you, I till less, you tell me how much CO2 I sequestered. There's like one level above that that's I tell you how much CO2 I sequestered. There's like one level above that that's I tell you how much telling I didn't do you to, and I tell you where I am and you tell me how much CO2 I sequestered.

And then there's, I think there's something in the middle too, which is there's been a kind of movement around using imagery, satellite imagery, hyper spectral imagery from planes, things like that to estimate soil carbon impacts. And then what you described is physical sampling, which is actually taking soil samples, measuring CO2 composition in the soil and doing that on some regular basis to measure over time. What do you think is the sort of minimum bar of viable quality? I think right now we need to be measuring. But yeah, maybe kind of two tangents to go on.

First is if you're in a market and everything looks like a ton. So I could take any of these approaches and get to, tons that I can sell and they look the same in the market. You really result in a race to the bottom. It's way easier to not sample anything and get some tons. It's cheaper. You can sell your tons for cheaper. And that's really attractive and it's an unfortunate feedback loop.

So one thing I would call out is just this dynamic where even if you have a couple of protocols that are requiring rigorous sampling, they have to compete against protocols that allow people to really cut major corners. So huge challenge. Second thing I would call out is around the kind of satellite imagery. You know, there are a couple of approaches that are, you know, really doing, there are a couple of people who are doing really interesting work trying to figure out how satellite-based verification might contribute to MRV in this space. And I would say we're just kind of not there yet.

It's hard to see the soil. You can't actually see the soil. You can see kind of corresponding factors on the surface. So I would caution people against right now being ready to take a satellite-based approach. I really think we're in a place where we still need to be measuring soil carbon, building up public data sets and approving our models and understanding. of how these dynamics play out over space and time. All right, so that's challenge number one,

measurement and verification. And should note that that measurement and verification is an ongoing challenge. It's not a one-time challenge. You need to continually measure the soil in the, or measure the carbon in the soil, rather, to verify that that removal continues to have occurred, which speaks to the second challenge you described, which is durability.

So here, as I understand it, challenges, again, we'll just stick with this example, reducing tilling. You can reduce your tilling, but if you then till later, you then go ahead and still release that CO2 into the atmosphere from the soil. So saying that you have removed a ton really is you have removed a ton for now. And at some point, it will get re-released into the atmosphere depending on, and that at some point, depends largely on future practices from on that farm, on that land. So what's the current state of affairs with these protocols and ensuring durability? And then what would be the kind of gold standard in your mind? That's actually a really big question because it touches on what the role of temporary carbon should be in the land of offsets writ large, but maybe I'll set that aside and we can

return to it a little bit later. Right now, standard practice is that you enter into a contract in which you promise to maintain your practice or your carbon storage for a certain amount of time. Many of these protocols require decadal scale commitments, so as little as 10 years or maybe up to 30 or 40 years. these contracts are usually insured by a mechanism called the buffer pool. So when I am issued credits, I don't get to keep all of them. I have to put some portion of them into kind of a shared bucket of extra credits that can be used to compensate for any unintentional losses over the claimed permanence period. So if I decide, if something happens, if I go bankrupt or

there is some sort of natural disturbance that means that I lose a lot of soil carbon during this period that I've promised to maintain it. The theory behind a buffer pool is that it makes good on the ton. It ensures the ton for the permanence period that the contract dictates. It represents. We've seen really big challenges with buffer pool insurance mechanisms in lots of sectors, including forestry. We've gone really deep on the California forest buffer pool. But in general, that's kind of the shape of how these permanence claims are generally made in the voluntary market right now. Right. And so we're not talking about forestry, but I've seen some of the work you guys have done on the California forestry buffer pool. I mean, it's basically depleted because of wildfires now, right? We've essentially eliminated all of it because forest fires have burned down a lot of those trees.

Yeah, it's not all the way gone, but we have, we have used. used up all of the credits that were meant to protect against forest fires for the next 100 years in the first 10 years of the program. So really severely undercapitalized and not reflective of risks that were likely to face. And there's kind of no reason to expect that the challenges we've seen in that system aren't mirrored in other sectors and other registries. Right. And in the soil carbon context, like you're not going to see forest fires like you do with forestry, but you could imagine farmers five, 10, 15 years from now changing practices for a variety of reasons and not adhering to that contract they signed long ago. You'd also imagine a farm getting sold and new owner

changing practices. There's lots of ways that that buffer comes into play. Albeit, I imagine, not at the same sort of like singular massive scale that you can see with a forestry buffer if you have wildfires. Yeah, I wonder, I haven't gone deep on this, but I wonder what analogous dynamics could emerge around drought. And also worth calling out that a lot of these systems differentiate between intentional reversals and unintentional reversals, and they're treated somewhat differently. But I think the high-level point stands that, you know, you might have a question about how this buffer pool insurance mechanism actually guarantees the claimed permanence.

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Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Okay, now let's move on to the third issue, which is actually my... high horse usually when I talk about carbon markets, which is additionality. And the reason it's my high horse is that I worked in voluntary carbon markets for a little bit back in 2007 very long ago in the early days. At that point, there was the minting and creation of a lot of what were called carbon offsets for which, you know, people were talking about additionality,

but there was no additionality. So the classic example of this would be operating renewable energy projects. And so the concept of additionality is basically, is your purchase, is your, is the minting of this credit and the sale of this credit, the thing that is enabling the carbon reduction or removal to occur? If it's

not, then those dollars are achieving nothing. If the thing would have happened otherwise anyway, then there was no point in minting the credit. I've heard people make arguments to the contrary that I don't take, I don't give a lot

to wait to that's sort of like, well, you're making it richer. So you're, you know, creating economic incentive for future projects to get bill. I just don't, I don't think that works in the context of a market where a credit is supposed to represent a ton. So, so additionality is a challenge across all, I mean, it is, it's important for any carbon credit that's going to get minted. How does it look in the context of soil carbon? Really challenging. Yeah. So there, are many dimensions of additionality that you might be concerned with. At a very high level, we, in our review of soil carbon protocols, did not see sufficient additionality protections. A couple of patterns to call out. One, a lot of these protocols allow people to get credits

for practices they started a while ago, like maybe up to 10 years ago. And while it's really important to reward people who did the good thing before we incentivize them too. Doing so in the context of offsets is really challenging because you then produce these credits that represent something that probably already would have still kept happening because they've been doing it for the less 10 years and you justify emissions on their back. So, you know, that is one space in which you, if you were outside of the offsetting context, rewarding, people for practices they have been doing that are really beneficial for soil health and carbon outcomes would be great. But in the context of offset credits, big red flag. Another is kind of high-level

challenge is just that we're still looking at prices for these credits that are pretty low. So you might be looking at $15 a ton. And I think there's fairly wide consensus that to really kind of bridge that gap and really enable someone to invest in what it takes to adopt new practices, that price would need to be a lot higher. So that kind of raises a big picture additionality question about whether the trading of these credits can actually support novel adoption that wouldn't have happened otherwise. But across the board, you see additionality screens that, in my opinion, look a lot more like box checking exercises and a lot less like kind of a rigorous questioning around how these dollars enable new practices.

I think admittedly it is, additionality is tough to measure and to guarantee in the context of a sort of behavior change type credit. This is where it's appealing to have something like direct air capture where you're just like, look, this thing provides no economic value but for the carbon removal. So obviously the purchase of the carbon removal. enabled it to happen. In the context of soil and, you know, changing agriculture practices, it is trickier. So just what would you imagine that questioning to look like? How can you get any degree of certainty around the idea that the minting of this credit was the thing that enabled the practice to occur? Well, I think you called out a really interesting pattern that is

additionality and the challenges with additionality very really widely based on the sector you're talking about. So way easier to establish additionality for something like direct air capture than for soils or improved forest management. You know, I'm actually, I don't know what it would look like to take this complicated space where farmers are making really, really complicated decisions based on economic factors and family factors and the weather and establish that this payment for this credit is the thing that is enabling them to do something new. For me, that points me to the conclusion that maybe these practices are best supported via another mechanism, like zooming way out.

If these are good things that we want to happen, can we separate that from the minting of carbon credits that justify ongoing emissions and require those credits to represent, you know, some really robust idea of a ton. I've made that point sometimes, too, which is, you know, when people argue, well, like, maybe we don't need additionality. We just want to incentivize these practices. My point in response is, okay, so let's not measure these in individual tons that are traded as if they offset some other equivalent ton then.

We should absolutely subsidize this stuff, right? Yeah. there should be money flowing to it, no question. But if we're going to represent tons that somebody else can then use to net out their own actual emissions, then we need to have fairly strong certainty of all these characteristics you're describing. Totally. Yeah, I think the dynamics really change. If you take away this justification step, if you take away the offsetting step, all of the sudden, you know, your flexibility around MRV really changes, your need for it to be permanent or to kind of adjust things based on

its short duration, that really changes. The need for it to be perfectly additional goes away. Supporting these practices, I think, becomes a lot less fraught when you take it out of the offsetting context. On the downside, you probably lose the market. You lose a big chunk of the market, right, who is in the carbon market, not in the business of subsidizing practices they like from farmers somewhere else. So that's the trade, I think.

If I can interject, just, you know, I think there's a really interesting conversation, for instance, around net zero right now, which recognizes that if you want to really offset or compensate for ongoing emissions, you have to be talking about permanent carbon removal. So carbon removal that sequesters carbon on the timescale of the impacts of your emission.

And you need to be talking about stuff that has really high MRV rigor. So I think there's, and kind of the traditional or conventional sectors of forests and soils are being put in this new bucket of beyond the value chain mitigation. And I think there's kind of lots of interesting conversation happening right now around how those credits should be used

or treated or related to climate claims. But I think it's kind of a shifting conversation right now that might provide more space for something that looks a lot more like philanthropy in a really positive way. So you mentioned some folks think we should just have permanent or very, very highly durable. That's a good segue into kind of a broader conversation

stepping back for a second. So the nature of carbon markets, let's just focus on carbon removal. to be more specific at the moment. So we'll forget avoided emissions for a second. The nature of the evolving carbon removal market right now is that you've got one category of credits being minted, technologies being developed that are in the high durability category,

let's say a thousand years plus of durability, at least expected thousand years plus of durability. And then you've got another cat, and the prices for those are in the hundreds of dollars, a ton at a minimum, some over $1,000 a ton for kind of first of a kind of kind of stuff. And then you've got the second category of the admittedly less durable, which I think is predominantly soil and forestry, which, as you said, could be in the, who knows, a couple of years of durability to 100 years of durability.

But they're also priced much cheaper in the market, you know, in the tens of dollars a ton, for sure, not hundreds of dollars a ton. There's some stuff in the middle as well, things like biochar, which have potentially hundreds of years of durability. And so the way that the market sort of looks at the moment and seems to be evolving to me is that the way you account for differences in permanence and to some extent the way you account for differences in sort of like certainty around measurement and verification and additionality is via pricing. It's considered a lower quality credit, so it's a lower price. do you think that that's the end there have been attempts to sort of quantify this better in ideas around things like ton year accounting which you can explain to us but at the high level do you think that that's the right way to think about it should we have varying prices based on quote unquote quality which is a sort of amalgamation of all the factors we've been describing well that only works if there's some pressure for buyers to want high quality stuff and not to want cheap stuff.

So I think there's a big question there about closing the loop and making it really clear that not all tons or tons, that you aren't choosing between one thing that is $10 and one thing that is $500 that you can use in the same way, that they actually represent really different assets. Yeah, and that doesn't really exist yet, although we see it emerging in both individual buyers who have decided to really value different parts of this ecosystem.

Stripe is an example where they basically said, we want to support permanent stuff because we know it's real and we know we need a lot more of it. So we're only going to buy stuff that represents a thousand plus years of durability. But the vast majority of buyers in the world right now, you know, maybe don't even know what the difference is between one of those really expensive, high-quality credits, and something that maybe is much lower quality or really doesn't

represent a benefit at all. So huge gap there. Is that a gap to be filled by third-party standards bodies who can, and you see some of these both for-profit and nonprofit that are, I think, attempting to do this and sort of assign grades to different types of credits based on quality and all these other characteristics. Like, is there, if we ultimately within this voluntary carbon market that is still kind of wild westy and has been for a long time, if we ultimately settle on, you know, one or a small number of independent standards bodies who have done the work to separate these groups from each other and figure out what the right robust methodology is to do so. Do we then end up in the

right place? Or is your view that like the moral hazard of creating quote unquote tons of credits from lower quality sources is just always going to be so high, it's probably not worth it? I want us all to tell the truth about what is happening. And maybe that comes from a standard body that people really buy into. Maybe it comes from SEC making everyone disclose what their net zero claim actually is backed up with. Maybe it comes from some other regulatory source that demands that certain types of claims connect with certain types of credits. I could imagine lots of ways for consensus to emerge around which credits you can use for which claims. But I do think it's just tremendously critical. You see emergent efforts, for instance, SBTI, Science-Based Targets

initiative. They have actually made a really clear statement around which types of credits you can use to compensate for residual emissions. So, you know, you've done all of the reduction. You can, which really has to happen first. That is absolutely the priority. And then you get to 2050, and you have some residual emissions. Maybe you're applying nitrogen-based fertilizer. Maybe you're doing something else that's just really tremendously hard to decarbonize. How do you compensate for those ongoing emissions? SBTI says really clearly, well, you need permanent carbon removal.

They also say you can buy all of these other credits beyond the value chain, which to me looks a lot like philanthropy. And I think, you know, if there is real clarity around that and if it is enforced is a really positive outcome. So where exactly that kind of truth-telling or kind of closing of the loop comes from, I don't have a super strong opinion about, but it's really clear to me that, you know, there are lots of people working on it, and it's a critical piece of the puzzle. I guess final thing I mentioned it, but I do want to spend just a minute on it because I know you've put a bunch of work into this as well. One of the ways, I take your point that, you know, if pricing ends up being the factor that differentiates these credits from each other, then you need incentives for buyers to buy high quality credits.

Otherwise, they'll just, you know, the market will, we'll get flooded with the low quality stuff. Assuming that, assuming that there is a mechanism for that, one of the proposed solutions to how do we determine what? the value of a 10,000-year credit, highly verified additional credit is versus a 20-to-40-year soil credit that's a little harder to verify, is this idea of ton-year accounting. Can you just give an overview of what ton-year accounting purports to do and then what you think the sort of opportunity is or isn't there? Sure. So Tanya Accounting emerged in the late 90s, early 2000s, as a kind of family of methods for thinking about the value of temporary interventions in forests to preserve forests.

And what it purports to do is create an exchange rate where you can say, I need X tons of carbon, for one year or five years or some other temporary term. And if I have that kind of disproportionate amount of short-term stuff, we can consider that equivalent to a smaller quantity of longer-term stuff. So fundamentally, Tanya accounting is trying to create an exchange relationship, an equivalence relationship between different quantities and duration of carbon storage. You know, Tanya accounting is actually a lot of things. There are different methods, but I would lead by saying, I really don't think we should do it. I don't think 10-year accounting represents the physicality of temporary carbon storage in a meaningful way. So we know that the timing of our carbon storage

really matters for the climate benefits that we care about. People, you know, There's been some great research recently, characterizing the potential role of temporary carbon storage, for instance, in relation to its ability to reduce peak temperature. In that framing, it really matters whether we have 100 tons of one-year storage or two tons of 100-year storage. The ability for those different storage scenarios to impact peak temperature and provide this benefit that we think is really valuable is tremendously different.

And I think Tenier really drops the ball on representing those physical outcomes in a way that is meaningful for comparison between different durations of storage. What I do think is really great is that the re-emergence of Tenure accounting has prompted a kind of renewed conversation about what the value of temporary carbon storage actually should be. So if you have 20 years of soil carbon storage, how should we actually value that? Right now we just call it a ton. It's sold on the market like it's just a ton. But we've known for a long time that that's kind of goofy.

We want to think more robustly about the dimension of time. So I think there is huge opportunity for creating a more robust framework that probably first looks really in a rigorous way at the actual physical impacts of temporary carbon storage through the lens of climate outcomes that we care about, like temperature. And then probably to do these temporal tradeoffs and comparisons, it requires moving into the land of economic valuation, which is always going to be normative and is always going to be challenging. but to pretend that we can get this done completely in the physical world, I think really hides the ball on the tradeoffs we are willing to make.

So in summary, I think we should leave Tony Your Accounting behind, and I think there's a lot of room for creating a more robust framework for thinking about the value of temporary carbon storage. All right. Complicated stuff in soil carbon world, which is why I wanted to talk about it. Thank you so much for helping to illuminate. at least somewhat. Sure. Yeah. Always more layers to uncover, but I appreciate you asking some good questions. Frea Che is a program manager at Carbon Plan, where she focuses on carbon removal.

So what did you think? There are strong opinions on soil carbon I've learned as I've explored the market myself. Let us know what yours are. Find the show on Twitter at At CatalystPod. You can also find me there. If you like to show, as always, go over to Spotify or Apple Podcasts, wherever you get the podcast and leave us a rating and review. This show is a co-production of PostScript Media and Canary Media. You can head over to canarymedia.com for links to carbon plans reports. And as always, PostScript is supported by Prelude Ventures, a venture capital firm that partners with entrepreneurs to address climate change across a range of sectors, including advanced energy, food and agriculture, transportation, logistics, advanced materials in manufacturing, and advanced computing.

This episode was produced by Daniel Waldorf and Delvin Abouaji, mixing by Graemeh. Greg Ville Frank and Sean Marquand, theme song by Sean Marquand. Our managing producer is Cecily Mesa Martinez. I'm Shail Khan, and this is Catalyst.