Aldyen Donnelly – Carbon Economics: Incentivizing sustainable farming
Nori is a Seattle-based startup that aims to reverse climate change through their marketplace for carbon removal. Aldyen Donnelly, director of carbon economics with Nori, discusses how the company is helping farmers get paid to fight climate change, how these carbon removal practices can benefit farmers' productivity and what she believes are the keys for encouraging the corporate world to commit to reducing their production emissions.
The following is an edited transcript of the Ag Future podcast episode with Aldyen Donnelly hosted by Tom Martin. Click below to hear the full audio.
Tom: Welcome to Ag Future, presented by Alltech. Join us as we explore the challenges and opportunities facing the global food supply chain and speak with experts working to support a Planet of Plenty™.
Tom: I'm Tom Martin, and I'm joined by Aldyen Donnelly, a small-business developer and consultant who, in the 1990s, began working on market-driven strategies to reduce the atmospheric carbon concentrations now known to contribute to climate change. She coauthored Nova Scotia’s 2009 greenhouse gas emissions regulations, a first in North America. Nori, the Seattle-based startup Aldyen cofounded, aims to reverse climate change by incentivizing the removal of excess carbon from our atmosphere. It's a significant undertaking in an economic system that makes it easier and more profitable to emit carbon than to avoid doing so. Appropriately, Alden is the company's director of carbon economics, and she's joining us from Vancouver. Greetings, Aldyen.
Aldyen: Nice to meet you.
Tom: So, tell us first, briefly, about Nori. How did a company form around the goal of reversing climate change?
Aldyen: Nori’s original three founders are a couple of individuals who were doing well and in the high-tech space, Silicon Valley kind of world, and one who was part of the Climate Change Advisory Institute at Berkeley. And they met and realized that, personally, they wanted to focus their time and energy on something that would deliver a great social good. So, they came up with this idea, as well as the name, started saving their money and coming up with ideas about what they'd like to do in this regard. And I met them later, when a friend of one of the three original founders’ dad suggested they meet me, and it’s been fine ever since. We are actually a total of seven founding partners, and there are 10 of us in the company in total at the moment.
Tom: And what motivates this focus on the connection between carbon emissions and climate change?
Aldyen: For me, to be perfectly honest, it's not carbon emissions and climate change, per se. I have spent a lot of my life on sailboats, likely using sailboats, and I'm an old lady now, but about 30 years ago, I started seeing very dramatic changes in the ocean life and the way sea life movement patterns were changing while I was on the water so much of the time, and I started asking what was this all about, if it's good or bad. And that's when I first — and this is in the mid-’80s — started reading about the science that related the increasing concentrations of heat-trapping gases, mostly CO2, in the atmosphere and the impact it could have on ocean and sea life.
So, what drove me was what was happening in the ocean. It’s more than climate change. I must admit, that’s still my primary driver. I think the disruption to ocean life has such large potential that that's enough reason to take this very, very seriously. So, yes, there's a broader story about climate change and extreme weather events, which even makes the situation more dramatic, but I think the original events that drew me in were dramatic enough. Thank you very much.
Tom: And just briefly, Aldyen, just curious, what's the story behind the name of the company, Nori?
Aldyen: The original founders picked Nori before I became involved, which is quite a coincidence. Nori is Japanese for seaweed. And in the Japanese history, people have been growing and eating seaweeds since the 700s. Many algae-based seaweed species are potentially an ideal example of a sustainable food source. But also, in the history of seaweed, which is obviously now a long history, there was a point in time where seaweed production almost died out and was rebuilt. And also, it's now an industry that has to be paying attention to the difference between the sustainable and extractive industrial practices. So, that whole history of nori, the seaweed and the future potential role of seaweed as a long-term, sustainable nutrient source is really important. So, it was a great four-letter word through the history, which was exactly what we are thinking about and working on every day.
Tom: Our focus is going to be on regenerative agriculture. Can you give us just a brief definition of that term?
Aldyen: Regenerative agriculture is the new term that was probably mostly thought of as conservation cropping practices when the idea first started to get legs, 30 and 40 years ago. It's also been called “sustainable” agriculture in the past, but that fell out of fashion, and so, that new word is “regenerative” agriculture. And I hope, as many hope, that we will come up with a better, easier-to-say term option sooner rather than later.
But historically, when all nations, not just North America, shifted to highly productive food and fiber production practices, we introduced a bunch of ways of doing things that have the positive effect of producing way more food per acre but (also have) a number of negative effects. To keep the soil in production, we started adding synthetic chemicals, because we were depleting the capacity of the soil to naturally support the food production. In that process, we've done many things. One of the most important things that we have done (is) it’s estimated that, over the last 300 years, we've permanently removed 50% of the carbon that our soils used to support and retain and sustain (themselves) year to year. And we use synthetic chemicals and other processes to make up for that loss.
Over the last 30 or 40 years, a lot of great research has proved that there are ways of changing how we manage the soil and how we manage cropping practices, too, (while working) at the same time, to maintain very high levels of crop production per acre. We turn the soil to its healthiest state and rebuild that present stock, and that's a very, very large opportunity to do two things at the same time. First, (get) extra CO2 out of the atmosphere and store the recovered carbon in soils, which has that huge capacity to retain more carbon than they are right now — and also, in so doing, building a much healthier topsoil. The top 30 centimeters of the soil is what most people are talking about, which is exactly what we need to ensure that our growing territories are resilient in the event of global warming. So, it's one of the only investments you can make that, coincidentally, reduces the risk of climate change while preparing the soil to be more resilient and stay productive in the event of climate change. Best investment anybody could ever make.
Tom: What does it mean that 1.5 to 2 degrees of global warming by 2100 is almost inevitable? It that's a given, what are the likely consequences?
Aldyen: First of all, they say “inevitable” because when we release a ton of carbon dioxide into the atmosphere, its life in the atmosphere is at least 100 years. So, the warming impact of adding that heat-trapping gas to the atmosphere lasts for 100 years after we release it. So, even though it's only 2020, we already know how much CO2 is up there and how much we're likely to release over the next 10 years or so. And that adds up, if you look at the modeling, to that very high risk. By the end of this century, we will have that amount of warming.
Two degrees doesn't sound like much, but it has a lot of potential to make land we think of as productive now (become) unproductive. You know, verification goes with that scenario — massively shifting where food can be produced and how much it can be produced. The model suggests it’s likely due to change weather patterns and result in many more extreme weather events: hurricanes, tornados, rainstorms, thunderstorms, floods and droughts. It's not just drought; it’s floods and droughts. One of the pictures of global warming that is always in my head is just gray, total gray, in that future. Where (there) is snow during the winter now, that’s more likely to be rain and freezing rain (in the future). Freezing after rain is much more destructive than a normal snow event. And it's not a nice picture.
Tom: You know, 2100 may seem distant, it may seem like a long way off, but a person born today likely is going to live to experience this.
Aldyen: They’re going to live to experience it, and everything they do in their lifetime will determine whether or not it happens.
Tom: Your projects have included using emission reduction credits to finance carbon sequestration in agricultural soils. What are emission reduction credits, and how can they be used to finance carbon sequestration in farmland?
Aldyen: Now, I'm going to go all Nori promotional on you because I use the term “emission reduction credits” in my general language, and you're right about that. In Nori, we’re calling them Nori carbon removal times (NRTs). And so, I’m gonna pitch NRTs for the rest of the —
Tom: That’s quite all right.
Aldyen: What we are saying is, (in the) U.S. or anywhere in the world, a farmer can elect to reduce their pillage activity, the amount of plowing of their fields and (subsequently) releasing soil carbon to the atmosphere and exposing it to the atmosphere. That is common practice: to change their crop rotations, to change how they do irrigation, to add cover crops and do other things that essentially accelerate microbial activity in that biogeochemical process that includes photosynthesis, the work that plants do.
So, plants draw CO2 out of the atmosphere and microbes down by the roots of the plant, and soil breaks down that CO2, and some of the carbon goes into plant growth. Some of it goes back up to the atmosphere, and some of it stays in the soil. And the more we retain in the soil, the more productive our plants are and the greater the service they provide in pulling CO2 out of the atmosphere. So, we are saying to farmers, “Find the best combination of changing how you grow food so that you’re maximizing the amount of CO2 you’re drawing out of the atmosphere and, of that CO2, you're maximizing the amount of incremental carbon you store in the soil. And when you do that and we can demonstrate that you have drawn an incremental ton of heat-trapping gas out of the atmosphere, we issue an NRT, and then corporations and individuals who want to offset their own carbon footprint can buy those NRTs (with the) confidence that they know they have bought real interest in 1 ton of heat-trapping gas pulled out of the atmosphere.” And even more attractive (is) that they’ve invested in a healthier, more productive food system at the same time.
Tom: Am I correct that you have created a marketplace for carbon removal? And this sets up ways for farmers to actually be paid to store carbon in their soil? That's the sequestration. How does that work?
Aldyen: Yes. We invite farmers to provide us a bunch of operating data — that’s information we need to know, both historical and going forward, to be confident that they are building up their soil carbon stocks. And when they provide us the data and then an independent third-party verifier provides us assurance that the data is reasonable and replicable — that’s the term we use, “reasonably accurate” — then we issue NRTs to the farmer in our marketplace. And the NRTs are offered for sale. And we only started offering NRTs for sale for our suppliers last September. And to date, when NRTs are listed for sale, they've been selling out within 24 hours.
We often have a backlog of demand for NRTs, and farmers have been earning $15 a ton for those NRTs on average so far. To put that in context, the typical farmer who decides they want to pursue this objective is generating, on average, revenues in the order of $27–40 per acre per year before government subsidies. Now, that represents a wide range of earnings in U.S. farmland, ranging from, say, a loss of $9 per acre to earnings of $80 per acre. The typical farmer can adopt practices that will draw down roughly 1 ton per acre per year. So, adding $15 per acre per year to the earning potential of farmers for whom $27–40 is the normal range is very significant financially. So, again, you're able to deliver new revenues to farmers who really need it. At the same time, you're delivering this very significant environmental service to society.
Tom: In your (Alltech ONE Virtual Experience) presentation, you begin by sharing quite a lot of data to allow your audience to form their own opinions about what it says and how they should react to the information. And in your first slide, you note that even if all nations complied with the aims of the Paris Accord, the world would still need to cut or offset about 15 billion metric tons of greenhouse gas discharges annually by 2030. Of course, we know that all nations are not complying — most conspicuously, the United States, which has pulled out of the agreement. As long as the U.S. refrains from meeting this goal, is it futile for the others to even try?
Aldyen: No. It means a couple of things. It means we've got to do our best, and then we have to figure out how to mitigate the impacts of warming given that, as you said earlier in the interview, it's probably inevitable, for the reasons you just outlined. So, the first part is (that) U.S. crop producers, on their own, have the capacity to draw down — while they're becoming more profitable — up to 1.5 billion tons a year. And all crop producers worldwide do have the capacity to draw down by docking regenerative ag practices anywhere. We're not sure, but (that would equal something) between 10 billion and 25 billion tons per year. Now, we’re not going to mobilize 100% of that capacity tomorrow afternoon, but that is the way to take a significant bite in that 15-billion-ton-per-year deficit that we’ve got to address by 2030. I just don’t see any argument why not (to do this) because, again, when we invest in regenerative ag, we are doing two things: We are taking a bite (out of) that 15-billion-ton-per-year deficit, and we're doing it in such a way that we're making the soils more resilient if the warming that we're worried about actually occurs. So, we should be optimistic that we can do a lot and start doing it.
Tom: How about the corporate world? How’s the corporate world responding to calls to reduce their contributions to climate change?
Aldyen: I perceive — I’m an eternal optimist — that things are changing for the better here. There is a history that’s evidenced in some of the slide that you just referred to, that I present often. There is a history of corporate talking the talk (but) not walking the walk.
Fifty corporations worldwide account for 57% of all of the manmade greenhouse gas emissions, when we account for their production emissions and also the emissions that you and I discharge when we use their product, like the emissions that go out of the tailpipe of our gasoline-powered car. That's only 50 companies. And to be frank, while everybody is saying the right things, none of those companies have yet made a commitment or produced a plan to reorient their core business description to move away from fossil fuels as their revenue source. Again, many are talking the talk. But if you actually look at their financial statements, if you're looking at all of the big oil companies, they are saying the right things, but it's still the case that, year after year, more than 50% of their capital spending plan is dedicated to finding and extracting more fossil fuels.
It really feels like we're on the brink. It really feels like at least some of the big leaders are considering change seriously for the first time. It's really going to be important for the companies we think of as big oil to change their image of themselves and think of themselves as “big energy.” And in that future, they're going to be way, way more focused on supplying electricity and storage capacity, battery storage capacity, than oil and gas. We're not there yet, but it’s starting to feel like we’re on the brink.
Tom: So, you just began to sketch out what, I take, an aggressive climate change action plan would look like, correct? And could you expand on that?
Aldyen: Well, an aggressive climate change action would, again, involve — and it’s big, big companies, but we only need to get to 50 of them — it’s not thousands and thousands — to really change their idea of what their core business is and to think of themselves as in the core business of supplying energy broadly, not just oil and gas. And the really exciting thing about that is, you know what? That's not doing something they've never done before. That's very much like returning their business model back toward something much like what it was in the ’40s and ’50s.
You know, when I was growing up in the ’60s, the first credit card my father had was from a company called Home Oil. And the same company that delivers oil to the tank in our house that we used to heat our home also ran the gas station we took our car to. So, going forward, that energy company is going to want to be both delivering electricity and heat to our home as well as electricity that we need for mobile transport. So, it’s just about them returning to a business model that they executed very, very successfully 50 years ago with different energy sources behind that business model. It's hard to make change, but they can. And that’s one of the key parts of what we need to see happen. I think we need to do a better job of inventing shifts in that direction both in terms of how we design policy and regulations as a society and how we communicate their options to consumers.
Tom: If “the big 50” got on board and everybody involved engaged in a very aggressive action plan, is it impossible to say how long it would take to draw down emissions to acceptable levels?
Aldyen: History tells us — it's not possible to say how long, but history tells us two things. So, we have some amazing pollution reduction success stories in our history — the whole industrialized world, not just North America. We got the lead out of gasoline and paint. We lowered sulfur levels in diesel and in the electricity supply chain. We got the ozone-depleting substances out of refrigerant chemicals and saw that hole in the ozone layer shrink. And in all three of those precedents, once we got rolling, we achieved the environmental goal way faster than we had thought we were going to before we got started.
Whenever we look back, we see two things. If, in policy and regulation, governments decide that it's the role of government to set price or pick the solution and, then, put incentives in place to make the market adopt that solution, we fail. Every time we take that approach, we give up, and it takes a long, long time to achieve our environmental goal — if we even stick to our commitment to achieve it. Alternatively, if you look at all of our historical success stories, whenever a government said, “Okay, you guys, this thing that you’ve embedded in the products and services you sell is creating pollution that's damaging; reduce that input in your supply chain (to) this mandatory rate,” you figure out how to do it. So, you leave it to industry and the private sector to figure out how to price and what solutions to choose. Every time we’ve said to industry, “Take it out over time; you've got this much time; clear it out yourself,” we have actually achieved our pollution-reduction goals ahead of schedule and at way lower cost than anybody imagined when we started.
So, the greenhouse gas version of that would be a simple regulation that says, “If you supply energy in the United States, you report your global supply chain fossil carbon content in that energy supply chain, and you cut it by …” And then we have a big fight over whether that “by,” what comes after “by,” is 3% or 5% per annum — but you don't tell them what to put in, and you don't tell them how to price things and, you know, allocate rights to do things. You just say, you know, “Get the fossil carbon out of your products and services you’re suppling us. Here’s how much time you have, and figure it out.” And I’m sure that if we just moved to that way of thinking, markets like the one we're building in Nori will become commonplace, where participants in the market will, on their own, trade credits to comply with the rule — and we will be surprised. We will be very pleasantly surprised.
Tom: You've noted that 100% of corporate investments in new energy solutions rely on continuing revenues from sales of fossil fuels. Isn't that a pretty serious contradiction, and is it possible to break out of that cycle?
Aldyen: When I say (that) the big companies have talked the talk and not walked (the walk) so far, it’s because, yes, what you just attributed to me is true. And more than that, when you look at the investments they’ve made in new energy solutions, yes, their commitments have always been conditional. And they maintain some revenues from fossil fuels and have margins that they then dedicate (to) new energy solutions. But in fact, most of the time, too, the private-sector investment is conditional on also getting a government subsidy. And as I said, when we get into that trap where reducing pollution requires government to say, “Oh, gee, yes, I approve the solution, and I'm gonna give it this subsidy,” it’s never worked. It's never worked in the past.
It's not just about climate change and greenhouse gas emissions. It's about every pollutant we've tried to move out of our supply chain. We get into this very, very difficult, slow process where market signals are perverted and the ability of the market to do what it does, which is innovate and compete on price, is impaired. So, yeah, I know (that) when we move off that way of thinking and say, “Okay, like I said, if you deliver energy, report your global fossil carbon content per million BTU of energy delivered, I don't care if the energy, you know, what the makeup of the energy product portfolio is you deliver, and leave it to the marketplace to find solutions,” the market will just bloom, and they’ll come up with ideas that you and I have never thought of to date.
Tom: Well, Aldyen, can most of us just go on with business as usual and rely on science and technology to save us from climate change?
Aldyen: No. As I think you’ve heard in my comments so far, I think we need to, as citizens, ask our government to seriously consider moving forward with the kind of command regulation that I just mentioned — again, the key being (that) it’s a command to reduce the fossil carbon content in the product supply chain and not to dictate what they sell and how they price it. We do need that regulation. I would argue we all know that, for example — and I know this is a source of debate in the U.S. at this time — but I think most experts, certainly, agree that the energy efficiency accomplishments we’ve seen realized in the traditional car fleet wouldn't have happened unless our government had said to the manufacturers, “You have to increase the efficiency of the fleet of cars you produce every year on this schedule over time.” That's called the cafe standard.
One of the reasons you need regulations is because even when everyone who’s a leader in the industry thinks they know how to achieve a higher efficiency or deliver a better product, they still have to make a very risky up-front in investment. And often, when you’re in a competitive marketplace, you can’t afford to take the risk of doing that on your own and being the only one. So, sometimes, a simple, straightforward regulation levels the playing field, and then you’re motivating all of those very, very capable companies to compete for market share in the new context, where the requirement to lower the pollution — it’s called the pollution precursor — content in the supply chain exists. When you take that approach of basic regulation to level the playing field and leave it for the private sector to go for it in that context, we have lots of history that tells us (that) we surprise ourselves every time.
Tom: Aldyen Donnelly is a cofounder and director of carbon economics at Nori, a carbon-removal marketplace based in Seattle. She joins us from Vancouver. Thanks, Aldyen.
Aldyen: Thanks for having me.
Tom: This has been Ag Future, presented by Alltech. Thank you for joining us. Be sure to subscribe to Ag Future wherever you listen to podcasts.