Both parties hope the partnership will accelerate regenerative agriculture and carbon credit generation across Europe.
InSoil, a Lithuanian climate finance company, has struck a €100m agreement with Key Carbon, a voluntary carbon market financier, which will enable conventional farmers to move to renegerative methods across one million hectares of European farmland.
The deal gives Vancouver-based Key Carbon right of first investment to InSoil’s green loans financing model, which offers small and medium-sized farmers who are transitioning to regenerative agriculture 0% debt capital for up to 10 years in return for a fixed share of carbon credits. In addition, EU Soil Carbon Corp, a subsidiary of Key Carbon, will pay for the expansion of InSoil’s carbon farming business, which assists farmers with technical and financial advice.
With farmers across Europe facing headwinds both from climate change and tighter regulation, financial and technical support from companies such as InSoil can play a key role in creating a more resilient food system and lowering carbon emissions, according to InSoil CEO Laimonas Noreika.
“Reliance on industrial farming methods has significantly depleted the health and vitality of our soils,” Noreika told Impact Investor by phone, in between a number of farm visits in Lithuania.
“In the industrial agricultural system farmers are forced to use increasing amounts of fertilisers, driving up their costs while yields fail to keep pace. At the same time, food quality declines, soils become further depleted, and farmers’ incomes shrink. As a result, greater subsidies are required, and consumers end up with less healthy food on their tables,” Noreika said.
Carbon credit appetite
Agriculture greenhouse emissions have nearly doubled over the past 50 years and may increase by another 30% by 2050, according to last year’s estimates by the UN Food and Agricultural Organization.
Farmers transitioning to regenerative methods, such as boosting biodiversity, building soil health and improving water cycles, will get help from InSoil’s measurement and reporting framework, which ensures the carbon credits generated are both accurate and aligned with EU rules. This includes laboratory-grade soil sampling, advanced remote sensing technologies, expert agronomic assessments, and additional data-driven methodologies.
“Corporate appetite for carbon credits is increasingly shifting towards high-integrity, removal-based and localised solutions to meet the evolving compliance standards,” said Luke Leslie, CEO of Key Carbon. “Our partnership with InSoil will provide increased access to funding for farmers, enabling the transition to regenerative agriculture and growing Key Carbon’s supply of high-quality carbon credits.”
To date, InSoil has deployed over €80m in financing to over 3,000 farmers in Europe. The deal with Key Carbon will allow InSoil to work with an additional 2,500 farmers, mostly in grain-producing countries including its key markets in Lithuania and Poland, as well as in Ukraine, Germany, Spain and France, Noreika estimated.
