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Carbon Cash
By Jeanne Bernick
2/2/2008
By Jeanne Bernick, Farm Journal Crops & Issues Editor
This year, no-till farmer Terry Davis will get some extra cash for a farming practice he embraced years ago to keep costs down and conserve soil. Davis, who farms near Roseville, Ill., is one of 570 Illinois landowners who enrolled in a program to sell a new crop of sorts: units of carbon dioxide (CO2).
The program, called the Illinois Conservation and Climate Initiative (ICCI), is one of the many carbon trading projects across the country encouraging farmers to adopt conservation practices that limit airborne levels of CO2, which is believed to contribute to global warming.
The participating farmers sign five-year contracts to use no-till farming practices, for example, and those contracts are then sold as carbon offsets on the Chicago Climate Exchange (CCX), North America’s only greenhouse gas emissions trading system. Through the CCX, large companies, municipalities and institutions that want to reduce their CO2 emissions can buy carbon offsets provided by farmers like Davis.
Prices are paid per metric ton of CO2 per acre. Historically, farmers have earned $1 to $2 per metric ton, with an average historic daily volume on the CCX of about 7,000 metric tons. Total volume to date on the CCX is now 2.7 million metric tons.
Though Davis is not yet seeing huge windfalls from selling carbon offsets, he believes the value of a carbon exchange is bigger than money alone.
“As a grain producer in Illinois and a no-tiller, I welcome the opportunity to become involved in the reduction of greenhouse gas while improving the sustainability of the soil for the future,” Davis says.
Carbon’s country elevators. Farmers who are interested in selling carbon credits through the CCX first need to sign up with an aggregator. An aggregator is a group or company that is responsible for “aggregating” or joining together carbon credits from different farmers or landowners in order to sell them in large blocks to CCX members.
To become an aggregator, an organization or company must have $1 million in net worth, with $10 million in assets. Some call aggregators the “country elevators” of carbon credits.
A number of organizations—including the nonprofit Delta Institute, the National Farmers Union and the Iowa Farm Bureau (IFB)—have been approved by CCX as aggregators. The ICCI program Davis is involved with, for example, uses the Delta Institute as its aggregator.
In Iowa, because of the huge response to its carbon credit program, the IFB has launched a new, wholly owned subsidiary to expand its carbon aggregation program. The subsidiary, called AgraGate Climate Credits Corporation, has already registered more than 1.5 million acres in 24 states.
The Wisconsin Farm Bureau Federation (WFBF) is one of the newest partners to work with AgraGate to pool and sell carbon credits in 2008.
“Landowners that sign up for the program will receive annual payments for their carbon credits. We see this as a way for landowners to receive additional income from an emerging market by continuing what they already do with their land,” explains Roger Cliff, chief administrative officer for WFBF.
Basic enrollment. Enrolling in many carbon trading programs can be simple enough. Most aggregators offer applications online that require a legal description of the land to be enrolled. Landowners can use a Farm Service Administration (FSA) map and a few other documents from their local FSA office to describe the area.
To be eligible, the land that is enrolled must be capable of being cropped—that is, the land could be used for row-crop or small grain production, even though it may currently be in use as a harvested grass or forage crop. Once land is enrolled, CCX will send verification specialists to the acreage to insure that the land conforms to the contract requirements for carbon sequestration.
To date, projects representing more than 2 million acres of conservation tillage and grassland across the U.S. have been registered, verified and sold through CCX. In 2005 and 2006, more than 1.2 million acres in the U.S. were enrolled, with landowners and producers earning more than $3 million from the sale of carbon credits, according to CCX. For more information, log on to www.chicagoclimatex.com.
Carbon Collectors
AgraGate Climate Credits Corporation: More than 1.5 million acres across 24 states are enrolled in carbon trading through AgraGate, which was created to expand the Iowa Farm Bureau Federation carbon credit program. Contact: (866) 633-6758 or www.agragate.com.
Delta Institute: The Delta Institute is partnering with state agencies in Illinois and Michigan to help landowners sell carbon offsets. Contact: (312) 554-0900 or www.delta-institute.org.
National Farmers Union (NFU): More than 1.1 million acres in Corn Belt states are enrolled in carbon trading through NFU. Contact: (800) 366-8331 or www.nfu.org.
You can e-mail Jeanne Bernick at jbernick@farmjournal.com.
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