EMISSIONS TRADING DOWN ON THE FARM

Originally posted May 7.
To those who rue the coming of a greenhouse gas (GhG)-reducing, global climate change-fighting cap-and-trade system to the U.S. because of the riches it is expected to bring to emissions market players, take note: It will also be an economic opportunity for the family farm.

Nebraska farmers have been selling credits as a pool in the voluntary market of the Chicago Climate Exchange (CCX) and have earned a total of $518,000 since 2005. Pooling credits provides a way into the market for smaller landowners.

Credits are bought/sold by a pool manager (like a mutual fund manager). Credits were $5/metric ton (tonne) in 2007, dropped to $2/tonne and recently went up to $6/tonne following hedge fund and other speculation.

Randy Pryor, educator/land emissions topics authority, University of Nebraska-Lincoln Extension: “It’s an opportunity for extra cash for no-till farms, well managed rangeland and newly seeded CRP acres… it (payment) may be enough to take your wife out to town for supper, or you may not get anything…”

From a 2007 Farm Journal story: The Iowa Farm Bureau reported 1,500 farmers and landowners earned $1.5 million in credit payments in 2006. Nice supper.

Leaders in the Ag sector are determined to be part of the agenda-setting process on the national mandatory cap-and-trade system so the sector will not be left behind as European Ag was. Paul Kenney, member/Nebraska farmer, Agricultural Carbon Market Working Group: “From the onset, (the goal) was to keep agriculture involved in the whole process…”

Kenney’s advice on present, voluntary markets: Practice sequestration farming techniques but don’t sign long-term contracts. Pryor recommends reading the fine print when signing contracts, asking questions and leaning toward farmers' organizations pools.

Randy Pryor: “It’s still in its infancy…”

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On the horizon: Carbon credit market
Lori Potter, April 26, 2008 (Midlands News Service via North Platte Telegraph)

WHO
Ranchers, farmers and stewards of the land; Agricultural Carbon Market Working Group (Paul Kenney, member/Nebraska farmer); Kearney Area Ag Producers Alliance (Paul Kenney, president); Chicago Climate Exchange (CCX); the Iowa Farm Bureau Federation’s AgraGate Climate Credits Corporation

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WHAT
No-till farming and planned grazing systems – as land management practices that promote sequestration of GhGs in the soil – can earn credits for sale in emissions trading markets, bringing farmers, ranchers and landowners significant extra income.

WHEN
- Present voluntary emissions market activity reminds Ag sector observers of ethanol activity before government incentives were instituted.
- Nebraska farmers in Gage, Saline and Jefferson counties have been selling credits in the CCX pool since 2005.
- Contracts are now running 2007 through 2012.
- 1-year certification required, so 2008 new market players will get 2-year first payments in 2009.

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WHERE
- EU agriculture was left out of the European Union Emissions trading Scheme.
- This article focuses on Nebraska farmers, especially in the Kearney area.

WHY
- How the Ag sector will be involved in emissions credits and markets is not completely defined. “Additionality” must be defined so as to prevent caming the system with practices that would happen anyway while allowing best practices. “Permanence” versus “100-year easements” is a controversy.
- Kenney can no-till plant corn into soybean stubble, a credits-earning growing strategy.
- The Iowa Farm Bureau Federation’s AgraGate Climate Credits Corporation sends its landowners into the credits marketplace.
- Presently (per the National Farmers Union): No-till = 0.2 to 0.6 metric ton per acre per year. Also: Seeded grass; native rangeland; forested acres; methane capture animal waste systems.
- CCX trading is 100% voluntary but includes dependables such as American Electric Power, the city of Chicago, DuPont, Ford Motor Company and Motorola Inc.

Ag Bureaus and Farmers Unions all over the country are getting on board the trading train. (click to enlarge)

QUOTES
- Randy Pryor, educator/land emissions topics authority, University of Nebraska-Lincoln Extension: “It’s gonna take off if the government gets involved…”
- Pryor, on the issue of permanence: “No one would ever sign up for a 100-year easement…”
- National Farmers Union: “The program is entirely voluntary, but once a contract is signed, the terms are legally binding on all parties…”