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Carbon credits: A buck's a buck
In any given year, tens of billions of tons of carbon move between the atmosphere, hydrosphere, and geosphere. Human activities add about 5.5 billion tons per year of carbon dioxide to the atmosphere. The illustration above shows total amounts of stored carbon in black, and annual carbon fluxes in purple. (Illustration courtesy NASA Earth Science Enterprise)
Ken Roth knows $2 an acre isn't much, but it's enough.
Roth, a Lowell-area cash crop farmer, was the first Michigan farmer to sign up to market his carbon credits through a voluntary program that's limping along in many parts of the country, but slowly finding its legs.
Michigan Farm Bureau and many other groups are encouraging farmer involvement in the program known generically as carbon trading as a way to put a buck or two in their pockets and further prove that farmers are best suited to manage the environment because they're already cleaning other people's pollution.
Carbon credits are earned by farmers and other landowners based on the practices they use - and the crops they grow - that help pull carbon dioxide from the air and seal it - a term called sequestering - in undisturbed soil.
No-tillers such as Roth, for example, earn credits amounting to about $2 per acre - Europe's price is much higher - for no-till crops, hay ground and other untilled land. Forested land brings a higher price, mainly because trees capture more carbon dioxide than field crops. Both sequester it in the ground through their roots.
Who's buying?
Industries that send carbon dioxide into the air - and are facing a federal mandate to cut those emissions - can purchase "carbon offsets" from farmers and thus get credit for cutting their emissions and meet the federal mandate. Cities, too, can buy credits.
Currently, according to Carrie Vollmer-Sanders, environmental specialist with Michigan Farm Bureau's Agriculture Ecology Department, an acre of no-tilled row crops, or hay ground or pasture land, is presumed to remove carbon dioxide from the air at a rate of more than half a ton per acre, at a current payment price of about $4 per ton. But the price could go up. Way up.
"What is a carbon credit going to be worth five years from now?" asked Dave Miller, director of research and commodity services with Iowa Farm Bureau, one of the largest carbon brokers - called aggregators - in the United States. "It started in 2003 at $1 per ton, and now it's $4. As energy prices have gone up, carbon values went up with them."
In other words, the sky seems to be the limit for potential income from carbon trading. And as Roth said, it's not all that difficult.
"I thought the process was quite easy," he said. "I just went to the local Farm Service Agency (FSA) and got all my section maps. I circled the crop land I own that is in hay or grass and my fields that are in no-till. That cropland was verified by the aggregator (Iowa Farm Bureau, in this case) and there was not much more to it. My last correspondence on this was last September."
Payment haven't yet been seen, Vollmer-Sanders said, because buyers and sellers haven't sealed the deal yet.
"A farm may have only 400 tons to sell, but an industry may need 40,000 tons of offset its emissions," she said. "Payments are delayed while the aggregators put all the sellers together to get enough acreage to sell credits on the larger scale."
If farmers seem to be dragging their feet about taking advantage of carbon trading, companies all over the country are sprouting up to broker deals between carbon-dioxide emitting industries and carbon-dioxide-fixing farmers.
In fact, at Michigan Farm Bureau's most recent annual meeting, where policy is finalized for the coming year, members asked Farm Bureau staff to investigate whether the organization should somehow get involved with carbon dioxide trading, even to the point of becoming an aggregator.
The Farm Bureau Board of Directors decided not to carry things quite that far, but to simply provide information and education to its members.
That's not as easy as it sounds, since the buying and trading of carbon credits is such a rapidly evolving enterprise. And it could fade as quickly as it has emerged, since other methods of controlling greenhouse gases are in development.
But for now, without abundant renewable fuel and the ability to move to lower-emitting technologies, off-setting greenhouse gas impacts by sequestering seems to be the immediate stop-gap measure.
And all farmers such as Roth have to do is sign up. No-tillers, obviously, can take immediate advantage of the situation as long as they agree to continue no-tilling for three or four years, Vollmer-Sanders said. Some Conservation Reserve Program and filter-strip acreage can easily have carbon credits sold, she said. Forest owners have it even better, especially if they're actively planting new trees, because younger trees sequester more carbon dioxide than older trees.
"It's a little more complicated than that for forestry, because cutting trees is a no-no," she said.
For more information about carbon trading, visit the Chicago Climate Exchange online at www.chicagoclimatex.com or call Carrie Vollmer-Sanders at (800) 292-2680, ext. 2026.
Aggregators currently working in Michigan include the Delta Institute, Iowa Farm Bureau, the National Farmers' Union, and Phase 3 Developments and Investments.
At the Delta Institute, call Todd Parker at (517) 482-8810. At Iowa Farm Bureau, call Lavonne Baldwin at (515) 225-5431. At the National Farmers' Union, call Dale Enerson at (701) 952-0116, At Phase 3, call Linda Stephenson at (330) 414-5103. Aggregators charge varying rates for their work.
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