To dairy farmers, carbon credits, or offsets, are best known in association with anaerobic digestion. These projects require big farms with significant amounts of manure and plenty of capital, resulting in credits sold to buyers outside of the dairy or even the food and beverage industries.

Brown lauren
Senior Program Manager, Carbon Reduction Data and Analytics / Neutral

The parameters of carbon credits and offsets are changing and evolving rapidly. For instance, California's recent Voluntary Carbon Market Disclosure Act was groundbreaking legislation designed to bring transparency and accountability to the voluntary carbon credit market and carbon-related claims. The act mandates that entities selling carbon offsets in California's voluntary carbon market must provide clear and comprehensive information about their offsets. This includes details about the project type, location and methodology for calculating emissions reductions. Similarly, in the European Union, carbon-neutral claims are allowed pending specific certification approval. These changes are designed to ensure the credibility and effectiveness of carbon reduction projects.

Organizations are looking for ways to reduce emissions and accomplish these reductions along their supply chains by investing in, implementing, and realizing on-farm reductions and removals. Commonly referred to as Scope 3 reductions or insets, they can impact the footprint of your farm, your cooperative, consumer packaged goods brands and even retailers.

Dairies' on-farm emissions primarily come from three main sources: enteric methane emissions, manure management and feed production. Additional emissions come from energy use and the opportunity for removals through soil carbon, forestry and silvopasture.

Enteric methane emissions projects use feed supplements and various seaweed supplements. Supplements are in different stages of regulatory approval, which is currently one of the most significant barriers to adoption, followed by cost. These projects, however, are typically quick to implement and require minimal record keeping, such as dry matter intake (DMI), cow numbers, feed records and invoices. Some supplements come with other benefits, such as feed efficiency improvements and improved body composition. For most projects, the cost of the product is reduced for the farmer by the price organizations are willing to pay for the carbon benefit.


Beyond the traditional anaerobic digestion projects, installing solid-liquid separators or converting flush systems to scrape systems can improve manure management and reduce methane emissions. It may be a fit for a variety of operations. These projects often require longer project terms and some manure sampling to ensure the accuracy and accountability of the level of removed solids. Project financing can occur as up-front and annual payments for emissions reductions. The California Air Resources Board has various public resources on project modeling, implementation and modeling criteria adapted for other states.

Feed production includes various project types that are likely familiar to those working in cropping systems. Nitrogen fertilizer reduction, cover crops and reduced tillage are some of the most common practices. Feed production may also include improved grazing practices, pasture refurbishment and adding perennial species. Various programs are willing to pay for these reductions as offsets or insets, but it is essential to know the requirements of the project you are starting.

Removals refer to the opportunity for carbon sequestration below or above ground on your farm. Removals require significant monitoring over many years to ensure permanence. Still, increasing soil carbon and silvopasture or agroforestry projects are great ways to improve the productivity and profitability of your operation while also receiving an incentive to do so.

Dairy farms have a crucial role to play in addressing climate concerns. The improvements that occur on your farm can have a positive impact on purchasers of your milk, as consumers increasingly demand sustainable products. Look to your cooperative and consumer packaged goods brands to identify project opportunities applicable to your operation. There are many programs to support offset and/or inset development on dairies to meet the growing demand for greenhouse gas (GHG) reductions, and you can tap into them.

The increased regulatory and public pressure is creating a net new funding source for carbon reduction projects on dairies, and farmers should take advantage of these opportunities. These projects not only deliver a climate benefit but also a host of benefits that can make your operation more profitable and easier to manage. By participating, you can improve the sustainability of your farm, reduce your carbon footprint, and increase your revenue through the efficiencies you gain from the additional benefits of the projects. In a few cases, you may also obtain revenue by selling carbon credits.