Trading Carbon Credits

[Greg]

This thread has had no activity in some time, but I hope someone will look at my question.

Yesterday I heard of a local farmer that signed a contract for 700 acres of Carbon Credits.  I believe (but am not totally sure) that he signed with the Delta Institute.  I understand that he has a contract for $3.85 / acre per year - which comes out to over $2600 yearly payment.

He has received NO payment and is now being told that he shouldn't expect the contract amount.  He is calling back every other week and getting nowhere.

Is this a scam that is filling the pockets of the "aggregators"

In the example I am citing, it seems to me that a contract is legal and binding.  Does anyone know of actual landowners receiving payments in full? 

Depends on the fine print, of course :-\

I'm sure there some lawyer weasel words buried in the contract stating all the various exceptions which allows the holder to not pay out under various circumstances. To say the least, the carbon credit market is very immature and therefore I'd expect alot of risk with it. The firms that issue these credits are making speculative bets that carbon credits hold their value over time (like any commodity trader does...).

So what is the downside exposure to the farmer? Sure he doesn't get his $2600 payment, but what else is he out? Was he required to put money in up front? While it could be a breach of contract, I don't see how its a scam, if so who is making the money/how is this filling pockets of aggregators?

Greg

[wesdor]

You are correct - the farmer is out $2600 that he wasn't getting in the past.  So for him it isn't much of a problem. 

Al Gore and the rest of his crowd seem to be making a big deal of purchasing Carbon Credits and I just don't understand how this is helping anything.  Seems to me that the aggregators are making some money along the way and are not passing it on to the land owners that are giving them the base to sell the credits.

On a wider look, I can't seem to comprehend how forest land that is already there can provide carbon credits to offset pollution by rich people.  As I see it, the forest was already there taking in whatever carbon it had in the past.  Just because someone now puts it in a carbon credit foundation, doesn't mean someone else can pollute without adding to the problem. 

Bottom line - I just don't trust this carbon credit scheme.  Perhaps someone can explain it to me so I can understand how this is helping reduce pollution.  Maybe this is a good idea, but I remain skeptical. 

Thanks for your response.

[Gary_C]

No, I can't explain the carbon credit scam. To me it is just making hyprocrisy feel good.

A good example is the US Congress was made aware the US Capital power plant was old and inefficient. So instead of modernizing the plant, they chose to spend $80,000 and buy carbon credits so they could feel good about continuing to waste energy. And that money probably never got any further than the "aggregators."

[WDH]

My (limited) understanding was that to qualify for carbon credits, the property had to be in a non-tree use (non carbon-sequestrating state) by certain critical dates to qualify for carbon credits (like old agricultural fields planted to trees as in the CRP program).  What has been maintained in trees for a long time (or before the critical dates) does not qualify as I remember.

Personally, I am waiting for things to settle out before I seek to sign-up any of my land in a carbon credit program.

[Ron Scott]

That's my understanding also. The land must have been in either agricultural production or a degraded state prior to the conservation practice eligibility dates.

Grass plantings initiated on or after January 1. 1999 and tree plantings initiated on or after January 1, 1990.

Conservation tillage practices defined by the NRCS and Methane Digesters operational after 1999 with biogas flow monitoring and/or electrical metering equipment are also included.

Delta sells the credits on the CCX and returns the landowner's portion of the sale minus fees. Payment occurs within a month of the sale. Sales occur once per year. The current $3.00 - $4.00 per ton are gross sales prices. Landowners must pay for project planning, verification and CCX registration, as well as aggrgation and marketing costs.

These "transaction costs" greatly reduce the incentive to participate. Prices need to move into the $10.00 - $12.00 range for landowners to make anything.

[SwampDonkey]

Possibly might never reach profitability for the owner, since most those bean counters and scheme dreamers work with the math enough to figure a way to make them money, but not the other guy. ;)

[jim king]

Personaly I think we will be in the next ice age before anyone figures out all these carbon credit programs.

[Tom]

I've already got them figured out, Jim.  :D :D :D

[ckburnett]

If you you are in CRP, talk to your FSA-NRCS office.  The ones in my state are taking applications for carbon credits. :P

[Phorester]

In the Frequently Asked Questions (FAQ) section of the CCX website on afforestation carbon credits, there is the question, "Is harvesting allowed?"  The answer; a flat, unqualified, no- elaboration "No".

Does this mean what it says?  No timber harvesting is allowed on forested acreage used as carbon credits on the CCX?

If so, wouldn't this negate the carbon sequestration benefit of wood, that a living tree will eventually give off more carbon than it sequesters as it moves into an advanced age, but if it is harvested and its carbon "stored" in a product it will sequester carbon forever as long as that product exists?

Also, does this mean that a landowner who sells carbon credits fron his forestland can never manage it, of which harvesting is a part of management?  No thinnings, no nothing? 

[Tom]

It's all about Smoke and Mirrors, rich folks feeding poorer folks a line of bull and reinforcing their belief that money makes you smart.