How American Ranchers Benefit from Carbon Grazing: Q&A with Kateri CEO, Ben Veres

1. How does Kateri’s Carbon Grazing Program work?

Our program is structured in two phases: a 10-year practice change period and a 20-year conservation period. Our main requirement is that you want to actively pursue adaptive grazing for the full 30 years, but the first ten are the most critical. You’ll keep receiving payments as long as you are adapting your grazing to improve your bottom line each year. 

2. Why is Carbon certification important, and whose standards are followed?

Certification is crucial because large corporations want assurance that the carbon credits they’re buying meet global standards and don’t result in greenwashing. There is a whole alphabet soup of organizations that issue guidelines and standards. The most are the ones that align with the goals set by the United Nations, in particular ICVCM, ICROA, and CORSIA. From these guidelines, there are then Registries that set out specific protocols for each field of carbon credits. For example, there are separate protocols for forestry improvement, no till cropping, pasture management, etc. The “big 4” Registries that have the most available protocols and meet the international standards are Verra, Climate Action Reserve, ACR, and Gold Standard. Verra is the largest and has typically been the focus of the market - but that could change. There are also new Registries and protocols being developed constantly. The role of your carbon developer is to pick a protocol that is legitimate and appropriate for your operations as well as ensure that you’re following the rules set forth in that protocol. A bad carbon developer might set you up with a protocol that is “easy” (low duration, minimal practice change, etc.), but you’re at risk that those credits won’t sell and you may make yourself ineligible for legitimate protocols.

3. What project costs are covered, and what is the profit share for ranchers?

Our program covers all associated costs, including soil sampling, virtual fencing, GPS tags, and ranch advisory services. Ranchers then receive 70% of the profit share from the program, or even 75% if they are Audubon certified. The average payment ranges from $5 to $10 per acre, though this varies by location and each years’, “yield”. For example, ranchers in New Mexico may tend to earn around $3 per acre, while some in Florida ~$18-19 per acre. There’s no cap on the upside, so if carbon prices increase, or producers can increase production, ranches will benefit from the higher value.

4. What technology and infrastructure support does the program provide?

The program includes a technology component, covering virtual fencing or GPS tracking tailored to rancher needs. We collaborate with companies like Vence, Halter, Gallagher, and Moovement for this technology. Additionally, we offer EnrichedAg cameras for further data collection. There’s also an infrastructure fund of $10 per acre, which can be used for water, fencing, or managing encroaching vegetation like mesquite and cedar.

Image: Ranchers gather at a Kateri educational event with Conservation Northwest to learn about virtual fencing and grazing insights from Alejandro Carrillo 

5. What is the role of additionality in the program?

Additionality is a key requirement under the guidelines mentioned in Question #2. Additionality means that carbon reductions should result from new actions beyond business as usual - which in terms of grazing means working to further adapt and enhance your grazing practices. To ensure this, we conduct thorough soil sampling and send a ranch advisor to assess the property before signing a contract. This approach makes sure the land is truly suitable for long-term conservation (10-30 years) and that our data and our partners’ production practices support an unwavering commitment to additionality.

6. What protocols are used for soil enrichment and grasslands, and what validation is required?

The program currently uses three main protocols for U.S. grasslands: the Soil Enrichment Protocol (CAR), VM0032, and VM0042. VM0032 is our primary choice, as it’s in a stable version, while VM0042 and CAR SEP are under revision. We anticipate our first large scale issuance in 2025, following rigorous validation and verification. Ranches completed their baseline measurements in early 2023.

7. How else are carbon credits substantiated? 

We collect meter deep soil and also stratify sampling zones within the property for statistical relevance, maintaining a sub-5% margin of error. This sampling provides an accurate representation of different soil zones. In regions with homogenous soil, samples may be taken every ~100 acres, while others with more varied landscapes and geological variety, like in mountainous terrain, can require samples as low as every 12 acres! This method allows us to capture precise data on soil carbon levels. 

8. How does the program ensure credits are not double-counted?

We partner with third-party providers like MillPont that create a digital record of the property and its associated carbon credits to prevent double counting. Unsurprisingly, for large firms in the beef supply chain it can be challenging to validate due to the complexities in their supply chains. Essentially, they can’t trace individual cows back to ranchers, so they rely on broader, “supply shed” claims. We source our credits directly from grasslands based grazing - so we know where to point our verification system up close for higher fidelity sequestration claims. 

9. What considerations are there for ranchers with lease agreements?

For ranchers on leased land, we assess the lease’s stability. If a lease is nearing expiration or faces renewal or operating risks, it might not make sense to join. For example, if a lease has been with a family for decades, it’s likely stable, and we can secure the carbon rights through paperwork. We’ve had success working with public lands as well in places like Montana, Wyoming, and Colorado, and have seen owners negotiate a 25% share of the carbon payment to incentivize their participation.

10. How does the program address the carbon credit market and pricing protections?

Storytelling is a powerful tool in carbon credit markets, and major buyers (e.g., Shell, Microsoft, JP Morgan) control a majority of the market. They keep purchase prices confidential to maintain supply control. Our program includes price risers and market matching mechanisms, allowing for natural price increases over time. Kateri secures a mix of upfront capital at reduced prices to remove risk from the rancher as well as spot market sales to ensure high price upside. This balanced approach allows us to cover ranchers costs while also providing exposure to carbon market improvements. We’ve also secured a quality floor price which means we’re not at risk if the market has temporary downturns.