Get to know the basics of carbon markets

Companies have two ways to make carbon capture count 

Carbon markets have their own vocabulary and can be challenging to navigate, especially if you don’t speak the same specialized language. As we steer through these emerging markets, we commit to bringing you along with us. We begin with some basics: insetting and offsetting.

Both insetting and offsetting do a great thing. They reduce or remove one metric tonne of carbon dioxide from the atmosphere, helping companies meet their climate goals. But they also differ.

Insetting means investing to reduce or remove greenhouse gas emissions within a company’s supply chain.

For example: If Cargill works with farmers to reduce greenhouse gas emissions from the production of grain that Cargill buys, this results in lower emissions in Cargill’s value chain.

Offsetting means investing to reduce or remove greenhouse gas emissions outside of a company’s supply chain.

For example: If Cargill invests in a project to reduce deforestation in the Amazon, this helps the company meet its climate goals. Effectively, Cargill purchases emissions reductions from a source outside of its supply chain.

Cargill focused on insetting

Cargill’s RegenConnect program focuses on insetting because the company is committed to meeting our own ambitious climate goals, and our food company customers demand lower emissions in their supply chains. While the same on-farm emissions reductions could be converted into offsets and sold to an airline, there is value in tying the end user’s choices to the beginning of the supply chain on the farm. 

Plenty of sectors are seeing demand for emissions reductions and offsets, but Cargill is in the food business and that’s where, together with farmers, we can provide an immediate benefit to our suppliers, food company customers, and consumers.

Who decides what counts as an offset? 

A number of standards organizations have published approaches to reducing agriculture emissions. These 50- to 100-page documents provide guidance for determining eligible projects, calculating current (baseline) emissions, and quantifying reductions. Carbon offset standards – like Verra, Gold Standard and Climate Action Reserve – are nonprofit entities that independently establish technically sound procedures to reduce greenhouse gases in many different sectors, from agriculture to industrial gases.

The scientific rigor and unbiased frameworks from these standards help create confidence that the offset credits represent real emissions reductions. That in turn makes it easier for companies with climate goals to buy these credits and apply them to their climate commitments.

Offset or inset? Does it matter to farmers?

Whether offsetting or insetting, the goal is the same: reduce greenhouse gases to limit the risk of climate change. 

Within our supply chain, food companies demand insets that come from the agriculture sector. These insets provide a direct link to the food we eat, and how it is grown. But there is clear and growing demand from all sectors for offsets. These reductions could also come from the agriculture sector and be used in another sector like aviation or energy.

Farmers should know that, whether it’s through offsets or insets, agriculture will be part of the climate solution. And we can help make it profitable to incorporate practices that reduce on-farm greenhouse gas emissions.

Cargill Staff