Hemp and climate protection: carbon credits as a new business model
The debate surrounding climate protection is no longer just a topic for politicians and NGOs – virtually no sector of the economy remains unaffected by the issue. The fight against climate change requires new, creative solutions – including in agriculture.
In addition to traditional measures such as reforestation and renewable energies, there is now also the trade in carbon credits. Due to its ability to bind large amounts of CO₂, hemp seems ideal for the carbon credit market and therefore offers not only ecological advantages but also new economic prospects.
What are carbon credits?
Carbon credits are tradable certificates that represent the reduction or saving of greenhouse gases. One credit corresponds to exactly one tonne of carbon dioxide that has either been avoided or permanently stored. Companies can purchase these credits to offset their own emissions and achieve climate targets.
There are two main types:
- Emissions reduction credits are generated when less CO₂ is released – for example, by using renewable energies instead of coal.
- Carbon removal credits are generated when CO₂ is actively removed from the atmosphere and stored – e.g. through reforestation, humus formation in soils or even the cultivation of hemp.
To ensure credibility and make these credits tradable on international markets, they undergo a certification process. Only if the CO₂ sequestration is measurable, verifiable, permanent and additional – meaning it would not have occurred without the cultivation of hemp, for example – are the credits considered valid and allowed to be traded on the market.
Why hemp is so effective at binding CO₂
Hemp is one of the most efficient CO₂ stores in agriculture. One hectare can absorb between 10 and 22 tonnes of CO₂ per year – more than twice as much as a comparable forest, which manages around 2 to 6 tonnes annually. An average European citizen causes around 8 tonnes of CO₂ per year. A single hectare of hemp can therefore completely offset the emissions of one to two people.
The binding process works through photosynthesis. During its growth phase, hemp draws CO₂ from the atmosphere, stores the carbon in its stems, leaves and roots, and releases oxygen at the same time.
What makes it special is that when the biomass is subsequently processed into durable products such as building materials, textiles or bioplastics, the carbon remains locked in for many years. This extends CO₂ storage beyond the plant's life cycle, giving hemp a dual effect – as a short-term CO₂ sink and a long-term storage facility.
From plant to tradable credit
The amount of CO₂ stored in hemp cultivation can be measured and converted into carbon credits. Several steps are necessary to turn hemp cultivation into real carbon credits:
- Data collection and calculation: The amount of CO₂ actually bound by hemp cultivation is measured.
- Verification and certification: Independent bodies check the data to rule out manipulation and ensure compliance with international standards.
- Generation of credits: Carbon credits are created from the verified data – one credit per tonne of CO₂.
- Trading on the market: Companies buy the credits to improve their carbon footprint or comply with legal requirements.
- Income for farmers: The proceeds are distributed to hemp farmers, who benefit directly financially from their sustainable work.
Part of the income also flows back into the programme and research in order to continuously develop the methods and ensure long-term cooperation with farmers.
Opportunities for agriculture and industry
The carbon credit market opens up a completely new business model for farmers and thus an additional source of income. In addition to the traditional yields from seeds, oil or fibres, they can monetise their ‘climate performance’ and are thus rewarded for their sustainable farming methods. Companies, in turn, benefit from being able to achieve their sustainability goals by purchasing credible CO₂ certificates and offsetting their emissions.
Hemp therefore offers advantages on two levels. Ecologically, it contributes to the reduction of greenhouse gases and relieves pressure on forests because less wood is needed as a carbon sink. Economically, it opens up a new business model for farmers: instead of relying solely on income from seeds, fibres or oil, they can monetise their climate performance.
The market is growing rapidly: while carbon credits generated around 500 million US dollars worldwide in 2020, analysts expect this figure to rise to as much as 50 billion US dollars by 2030. Since hemp combines high storage capacity with sustainable cultivation practices, it could play a key role here.
Hemp as a driver for climate protection and income
Hemp is much more than a versatile raw material for textiles, building materials or food – it can also be an effective tool in climate protection. With its ability to bind large amounts of CO₂ and the possibility of generating tradable carbon credits from it, it creates double added value: every hectare of hemp can not only reduce the burden on the environment, but also open up new sources of income for farmers.
The implementation is still in its infancy. Certification, market integration and price stability must first be established. But it is already clear today that hemp is a plant that uniquely combines ecological and economic advantages – and could become an important partner in the global fight against climate change.