How Carbon Programs Operate

Panxchange experts Seth Boone and Alex Molesko break down the carbon credit opportunity for hemp producers—and why this fibrous crop is uniquely positioned to benefit.

Carbon credits represent one of the most exciting emerging revenue streams for farmers, and hemp producers may be uniquely positioned to capitalize. On iHemp Hour, Panxchange’s Seth Boone (Director of Hemp & VP of Business Development) and Alex Molesko (Manager) explain how the carbon credit market works, what hemp farmers need to know, and why prices could quadruple in the next five to ten years.

What Are Carbon Credits?

A carbon credit represents one metric ton of CO2 (or CO2 equivalent) that is removed or reduced from the atmosphere. These credits can be sold to companies and individuals looking to offset their carbon emissions.

“Carbon credits are really only as good or only as valuable as the data and the auditing process behind them,” Molesko explains. “If you have really great data and a really great auditing process that’s concrete and scientifically sound, buyers are more receptive and would want to pay a premium.”

Who Buys Carbon Credits?

The demand side of the carbon market is robust and growing. Buyers fall into two main categories:

1. Image-conscious corporations – Big banks, big tech, and major manufacturers investing in their environmental reputation to attract customers, clients, and investors.
2. Heavy emitters – Oil companies, manufacturing firms, and other industries with significant carbon footprints seeking to offset their emissions.

“More and more Fortune 500 companies are including climate change and carbon emissions footprint in their investment mandates and investor presentations,” Molesko notes. “It’s a must in terms of being addressed—otherwise they’re actually deterring investment.”

Even individuals are entering the market—celebrities purchasing credits to offset tour travel or film production, demonstrating that this isn’t just a business-to-business market.

Why Hemp Is Ideal for Carbon Credits

Hemp offers multiple pathways for carbon sequestration, making it particularly attractive for carbon credit projects:

1. Soil Carbon Sequestration

Through photosynthesis, CO2 is absorbed by the plant and propagates through to the soil, where it’s stored as organic carbon material.

2. Plant Biomass Storage

Hemp is incredibly fibrous, sequestering significant carbon within the plant itself.

3. Stable End Uses

Unlike crops that are consumed and re-emit CO2, hemp can be refined into permanent carbon storage products:

• Hempcrete for building construction
• Hemp plastics (non-biodegradable varieties)
• Hempwood and other durable materials
• Industrial composites

“Hemp is a great tool in terms of removing carbon from the atmosphere since it’s such a fibrous crop,” Molesko explains. “It sequesters a lot both in the plant and into the soil, and then it also has a lot of stable end uses where that CO2 that’s captured in the plant can actually store the CO2 for the long term.”

4. Rotational Crop Potential

“Hemp opens up its viability as a rotational crop for traditional farmers,” Boone adds. “Traditional row crops might have the biggest challenge of actually adopting carbon methodologies, and hemp would be a very versatile tool for all of those farmers to utilize and sequester more carbon.”

The Five Steps to a Carbon Credit Project

Molesko outlines the process for hemp farmers:

Step 1: Contact a Carbon Program

Connect with an entity like Panxchange that can match your operation with appropriate guidelines (methodologies) for carbon credit generation.

Step 2: Establish Your Baseline

Document your current practices and carbon levels. This typically requires approximately three years of historical data on your operation—though you don’t need three years of hemp farming specifically. Data on your farmland and practices is sufficient.

The baseline is “dynamic,” meaning it’s corrected for outside factors like weather and climate. “People want to create carbon credits to reward people for what they actually do and not what the planet is doing by itself,” Molesko explains.

Step 3: Implement Your Project

Make meaningful changes relative to your baseline—whether that’s:

• Switching to regenerative practices
• Implementing no-till farming
• Transitioning from traditional row crops to hemp
• Increasing planting density or yield efficiency

Step 4: Third-Party Audit

An independent auditor verifies your data collection, testing methods, documentation, and compliance with methodology requirements. This independence is critical—auditors must be completely separate from the carbon program to ensure credibility.

Step 5: Credit Issuance and Marketplace Listing

Once verified, credits are issued and can be listed on a marketplace like Panxchange to connect with buyers.

How Much Can Hemp Farmers Earn?

Current agricultural carbon credit prices range from $15 to upper $20s per credit (per metric ton of CO2).

For hemp specifically:

Soil Sequestration:

• Typically 0.5 to 2 credits per acre annually
• Hemp tends toward the higher end of this range
• Results depend on practices, efficiency, yield, and planting density

Plant Biomass:

• Approximately 1.6 tons of CO2 per ton of hemp
• A fiber crop producing 5+ tons per acre has significant potential
• Must prove the biomass goes to a permanent carbon storage end use

The Exciting Part: Price Projections

“We’ve seen a number of projections where it wouldn’t be outlandish to say within the next five to ten years we could see those prices quadruple,” Molesko shares. “I don’t think that’s outrageous given the barriers to introducing supply into the market and the sheer amount of demand increase.”

For context, the EU carbon marketplace already trades above €80 per metric ton (approximately $90+ USD). The global mandatory carbon trading market exceeded $800 billion in 2021.

Important Considerations

Permanence Matters

Buyers demand that carbon removal be permanent—typically defined as 100 years or a statistical proxy suggesting that duration.

This is why hemp’s end use matters:

• ✅ Hempcrete in a building = permanent storage
• ✅ Hemp composites in manufacturing = permanent storage
• ❌ CBD oil consumed by humans = CO2 re-emitted through respiration
• ⚠️ Biodegradable bioplastics = Eventually break down and re-emit (unless landfilled permanently)

Traceability Requirements

For plant-based carbon credits, you need traceability “from point A all the way to the final user of that product,” Boone explains. This can be accomplished through blockchain or detailed accounting methods.

Minimum Acreage Considerations

While traditional soil-only projects typically require around 1,000 acres minimum to be economically viable, hemp operations can work at smaller scales because of the multiple sequestration pathways (soil + plant + end use).

“If it’s a fiber crop that’s producing five-plus tons per acre, there’s a lot of potential there even at smaller scale,” Boone notes. “But you have to prove where that biomass is going.”

This Is Value-Added, Not Primary Revenue

“You’re not going to farm for carbon credits,” the hosts clarify. “It wouldn’t make sense to do it just for carbon credits. You have to have this—this is a value-added proposition.”

Carbon credits complement your existing hemp operation rather than replacing your primary market.

Regenerative Practices That Generate Credits

Several farming practice changes can increase your carbon sequestration relative to baseline:

• No-till or minimum tillage – Prevents overturning soil and releasing stored CO2
• Cover cropping – Keeps living roots in the ground year-round
• Crop rotation – Especially transitioning from conventional row crops to hemp
• Increased organic matter – Building soil health over time
• Optimized planting density – More plants = more sequestration

“If you’re farming hemp and you’re just as intensive as corn and soybeans, it’s going to be significantly lower than what you’re hoping,” Boone cautions. “There’s always going to be a give-and-take relationship when you’re optimizing and trying to maximize yield versus what you’re actually putting back into the soil.”

The Bigger Picture: Agriculture’s Role in Climate Solutions

“Soil is not going to sequester all the carbon we need by itself,” Boone acknowledges, “but it is a valuable tool in the matrix of everything we have to offer. Of all the options we have to sequester carbon, it is a tool that we can’t afford to not use.”

Molesko adds the human element: “It’s a great thing to finally reward people like farmers who are doing these really great regenerative practices. Not only are we noticing that they’re doing great practices and really helping heal the planet, but now we’re providing a pathway to help financially incentivize and reward them for doing so.”

How to Get Started

Contact Panxchange: 📧 carbon@panxchange.com

Panxchange offers a “triple threat” of services:

1. Project Development – Methodologies and guidelines for carbon credit generation
2. Marketplace Platform – List credits and connect with buyers for maximum value
3. Market Intelligence – Data on supply, demand, and pricing to navigate the market

The company is currently enrolling farms and establishing baselines, with initial credit issuance expected as early as this year.

About Panxchange: Panxchange provides commodity exchange platforms and analysis for hemp and other agricultural markets. Seth Boone serves as Director of Hemp and VP of Business Development, while Alex Molesko manages the carbon and frac sand community exchange platforms. Both will be presenting at the 2022 Midwest iHemp Expo, May 20-21 at the Lansing Center.

Learn more: Visit Panxchange.com or email carbon@panxchange.com

About iHemp Michigan: We advocate for wellness, complete people, and the planet through hemp—and it all begins with the farmer. Join us at iHempMichigan.com