A priority for the USDA in the coming years will be judging the feasibility of setting up, executing and paying for a federal carbon bank to help farmers reduce greenhouse gas emissions and reward them for their actions, Agriculture Secretary Tom Vilsack said Monday.

It won’t be easy or quick, and there’s a lot of work that needs to be done just to figure out the best way to make that happen, but a carbon bank that both reduces GHG emissions and adds support to America’s farmers and ranchers will be key to the Biden administration’s pledge to open new markets for farmers, Vilsack said at Agri-Pulse’s annual Ag & Food Policy Summit.

“When we talk about new markets … there is an opportunity with reference to climate to create new ways for farmers to benefit financially,” said Vilsack, who also stressed that USDA will be looking at other tools than just a new carbon bank system. “We have a good path forward as we look and explore that opportunity … It’s a way of basically providing financial assistance to farmers so that they incorporate into their operations climate-smart agricultural practices, which will not only provide farm income, but it will preserve soil, provide healthier soil and it will be an opportunity to improve the quality of water.”

Currently, there is no federal carbon bank, Vilsack said the existing carbon trading systems are not designed to meet the needs of farmers and ranchers. That’s why USDA is starting at the ground floor and hoping to gather as many ideas and guidance as it can from the public sector.

“When we talk about a carbon bank, many folks are taking a look at the existing carbon markets and asking themselves whether or not it will work for agriculture,” Vilsack said. “I think it’s important to point out that this carbon market is not designed and set up for farmers. There’s a lot of paperwork involved – a lot of complexity involved. The actual payments are not necessarily significant – not enough anyways to compensate for the hassle that’s connected with the carbon market.”

The proof, he said, is in the numbers. Out of about 134 million outstanding carbon credits, only about 2.5 million are agriculture-based.

However a new carbon market is established, Vilsack said, “it has to be set up in a way that speaks to farmers’ needs and is really designed for farmers and about farmers.”

And to do that, he says he wants to hear from farmers and ranchers. Just last week the USDA published a notice in the Federal Register, seeking input from the public on what the department should do to encourage practices with “measurable and verifiable carbon reductions and sequestration and that source sustainable bioproducts and fuels.”

Vilsack said a carbon bank is likely the answer, but many questions remain.

“How can we establish it in such a way that farmers are excited about this opportunity?” he said. “How do we set it up in such a way that it speaks to farmers of all sizes - whether they’re large or whether they are small in size.”

And then there is the matter of how to finance it without taking funds away from existing programs. The Commodity Credit Corporation, Vilsack said, would be an ideal tool to fund a carbon trading system.

“There is significant capacity in the Commodity Credit Corporation and if we fail to take the opportunity to utilize it to find out how things could potentially work to improve or create a new marketing opportunity for markets, then we haven’t done what we need to do on that new market side of the equation.”

The current cap on funds in the CCC is $30 billion, but there are ways to increase that, Vilsack said. He acknowledged that there are discussions about potentially raising it to $50 billion, but that might be difficult.

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Congress, he said, views CCC funding over a 10-year period, so increasing it to a yearly $50 billion would mean boosting funds by $200 billion. Still, Congress has avoided that and addressed the CCC annually before, so it may be possible to do it again.

However, the idea of funding a carbon bank through the CCC is currently running into some GOP opposition on Capitol Hill. The top Republican on the House Ag Committee - Pennsylvania's Glenn Thompson - said he doesn't believe USDA would have authority to use that funding source, and "Secretary Vilsack should know better."

"CCC is just vital to funding the existing conservation programs, the risk management programs," Thompson said. He specifically referenced concerns about being able to fund those programs in a more crowded CCC and cited the so-called "fire borrowing" that took place in the Forest Service budget to address wildfire containment.

"This concept does have bicameral, bipartisan opposition, and I'd recommend USDA not pursue climate action unilaterally, especially when it comes to creating new programs without authority from Congress," he said. "The private markets have seen some success ... and I'd hate to see the federal government bigfoot around in this new and growing market."

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