Carbon credit trading area expanded

SALEM, Ohio – Carbon credit trading may seem like a lot of international hot air, but there’s a way to turn that talk into onfarm income.
The National Farmers Union recently expanded its carbon credit trading enrollment area to include most of Pennsylvania, all of West Virginia, much of the Eastern Seaboard states and down through the Southeast.
Fifty-three of Pennsylvania’s 67 counties are covered. The northwestern corner and a northeastern strip of the state are not.
NFU’s national program started Oct. 9, 2006. Ohio landowners were eligible at that time and continue to be eligible to participate. New York landowners are not part of the Farmers Union program, with the exception of a section from Buffalo east along Lake Ontario.
How it works. Through the Chicago Climate Exchange, a commodity trading board, the program pays cash if farmers implement and sustain acceptable conservation practices that “store” carbon in their soil, said Larry Breech, president of the Pennsylvania Farmers Union.
Any size farm, or any block of acreage, can be enrolled, Breech added, because the National Farmers Union serves as an “aggregator” to combine farms into blocks of credits that can be traded. The minimum an individual can enter is one acre.
The sign-up deadline is Aug. 15.
No-till, pastures eligible. What are they looking for? Conservation practices like switching to no-till cropping or improving pastureland or seeding long-term grasses.
Land that you’ve already been no-tilling, or existing grass or pastureland are eligible to earn carbon credits, but only if the practice was started after Jan. 1, 1999, Breech said. So if your Conservation Reserve Program stand was planted before 1999, for example, it’s not eligible for the carbon credit program. But if you’ve improved a pasture since 1999 and can dig through your receipts or other records to prove it, you could enroll that land.
The purpose is to encourage carbon sequestration, Breech explained of the 1999 trigger. “Each year, they want to reduce the amount of carbon. If it was already in pasture, they haven’t encouraged you to do anything extra.”
“We’ll reward you if you can improve it.”
Breech said producers can “double dip” and earn carbon credits on land that is enrolled in other USDA programs like the Environmental Quality Incentives Program (EQIP), or the Conservation Security Program.
The NFU carbon credit project is not a government program and does not affect federal program participation, Breech added.
Tenant, not landowner. In the case of rented land, it is the producer, not the landowner, who receives the carbon credit payments, Breech said, because the producer is the one who makes the cropping decisions. And that means producers need a long-term contract with the landowners through 2010, or the life of the contract.
If there is a share-rent agreement, separate contracts can be written to reflect the landowner’s and tenant’s shares.
And the contract is legally binding, Breech said, so if land under a contract is sold, the new landowner would have to agree to the arrangement or the original landowner faces penalties for breaking the contract.
How much? Climate, geography and soil types all dictate how much carbon stays in the soil. And cropping practices also affect carbon sequestration. The Farmers Union program set a conservative estimate for broad geographic regions for the program.
In most of the Midwest, Southeast and Eastern regions, no-till is worth 0.6 ton/acre carbon offsets annually.
The price per ton varies daily on the Chicago Climate Exchange, but the current price is around $3.50 a ton. That’s roughly $2 per acre for no-till land, but the Farmers Union does charge a 10 percent administrative fee.
Twenty percent of the “tons earned” is placed into an escrow account each year, with a lump sum paid at the end of the contract. That’s to ensure that producers honor the contract and don’t plow up enrolled land, for example. There are penalties for a change in land management practices that alter the carbon storage.
“You can’t put it in hay and turn around and plow it up in two years,” Breech said.
Forestry. Even woodlots are eligible for the carbon credit project, depending on management practices like replanting, but the application and substantiation is more complicated, Breech said. The credits vary with size of trees, density, species and other factors. Christmas tree stands and orchards may also be eligible.
Learn how. Breech said registering is easy online by visiting www.nfu.org. There’s a map that shows regions covered.
“If they’re in the blue, this is the program for them,” he said of interested producers.
Individuals register and are assigned a number, and can then download and print out the papers and sign up.
You will need some of your acreage and cropping information, Breech said. Producers familiar with USDA’s Farm Service Agency forms can use their Form 578 (crop reporting form) for most of the numbers and proof of production. An aerial map, available through county conservation districts, is also needed.
If you’ve not participated in federal farm programs, you ‘ll need to provide other documents verifying cropping practices.
Once you sign up, be patient. There’s paperwork involved and the climate exchange has to verify tonnage, Breech said, so it may not be until December, or more likely January, that checks hit the mail.
To date, the National Farmers Union program has more than 1,200 participants in 14 states. The North Dakota Farmers Union began the program in the spring of 2006.
(Farm and Dairy Editor Susan Crowell can be reached at 800-837-3419 or at editor@farmanddairy.com).