Trading Carbon Credits

[Larry]

Little more I googled up.

Last year the NRCS gave a grant to these states.  IN, OH, MI, PA, IA, NE, KS, MO, IL, ND, NM, NY, VT

The purpose of the grant.

"Carbon Credit Generation Program: Cost Effective Procedures to Estimate, Aggregate, Verify & Deliver Carbon Credits to Private Sector Markets" through the entity of the Chicago Climate Exchange.

Just thought I would post so you guys can find out what your state did with it's grant money.

Some states are doing there own thing...Georgia passed the "Georgia Carbon Sequestration Registry Act".  Whats that all bout WDH?  To much lawyer language in there for me to figure that one out. :-[

[jim king]

I have been to a couple of meetings here in the Amazon about carbon credits and left confused both times.  As I understand it the object is to plant new forests which grow and obsorb carbon.  First thing we would have to do is cut down the old growth forest that gives off more carbon than it absorbs and no one wants that either.

I can see where this might work in an area that has had heavy deforestation over the years such as the States and Central America but it just doesnt seem to fit with reality here.

I have never been able to get an answer to a simple question and maybe some one here can answer it.  Which absorbs more carbon a year, an acre of corn or an acre of old growth forest ?

[WDH]

Larry,

I don't know much about the Georgia Act.  I will look into it ;D.

[Tom]

Jim,
I don't understand it all either,but, the difference is mostly that the corn is ground up and decomposed which returns the carbon to the atmosphere as CO2.   That is another part of the supposed falacy of this argument.  The plants that lock up the carbon must remain intact forever or the carbon is released.  I've read Ron W.'s take on it in several old posts and he brings out the phrase "Carbon Neutral".  I think that is what he used.  It means that there is a cycle there where no "new" carbon is being created.  How far back you wanted to trace this would determine the validity of the Carbon Sequestration argument.  Because, once upon a time, oil and coal were CO2.  You just have to determine how much is in the air for the climate that you want to keep. (or that you think is "right")  We don't know what right is, nor that we can change anything.  I guess it is a guestimate in relativity.

[jim king]

Tom:
Next question.  Is it better or worse if the cows eat the cornstalks and we and the pigs eat the corn or is that worse yet ?

[Tom]

 :D :D  I don't think the legislators have thought past the "growing-the-stalk" yet."

I think that they will have to spray it with a powerful mildicide, insecticide and fungicide, then hide it in the dark, down at the end of a long cave in the mountains(perhaps an old salt mine) and then seal the mouth of the cave for perpetuity.

Sounds kinda like holding Uranium wastes, doesn't it.  Maybe the Atomic energy users have broken ground in this. ;D

We, the pigs and cows will have to become accustomed to not eating.  It released carbon.  Perhaps we could get something doled out in compensation for what is stored. :P

[TexasTimbers]

I have just scannned this thread, and at best I am totally cornfused. All I know is that I know just enough to know I don't know nothin and I don't wanna know nothin and I don't wanna know what I don't know. This is asking to be one of those Global Warming threads.

Carbon Credits. I've heard it all now. Next thing they'll sell duplicate credits on the same acrerage and when found out the feds will make a law and prosecute them for making Carbon Copies.

[ely]

greg, the only money being made in the (government scam) that i refer to was the tax money they would garner from any sales of the credits. if these credits are for sure bought and sold on the open market like stocks and such then i would think they were subject to taxes. i could be wrong as i am already in way over my head.

the only point i will stand behind is, i dont feel the government should allow you to pollute the environment just because you can afford it. and this does happen i know because my company sells there unused credits to other companys with not so up to snuff practices.

[Gary_C]

This idea sounds better all the time. If I could sell carbon credits for the excess food I have eaten and sequestered over the years, just think of all the money I am worth now.  :D :D

[Ron Wenrich]

To me, the analogy of carbon credits is a fat man going on a diet by having someone else eat less.  The estimated market for carbon credits is $2.3 trillion.  Government may not be giving out grants, but they are validating the market and creating it by putting on limitations of output.

The most obvious source of carbon credits is in conservation, but they aren't giving anything out for that.  Let's say I was planning on buying a big hog of a car, but have decided to buy a hybrid instead.  Do I get any credit for not burning fossil fuels?  How about if I put in solar heat or electric?

For what its worth, an acre of forestland can sequester up to 2 tons of carbon per year.  Today's price was $3.70/metric ton. 

[Rocky_Ranger]

I've got two or three notebools of material on carbon credits and I still don't know nothing about them........  As far as I can tell they are not yet regulated so it's buyer (and seller) beware.  In the grand scheme of things I don't see how they will ever be coordinated or asimilated on a global scale.  The two ton of carbon per acre of trees is good, but the first 4 years after, say a clercut, the treatment actually is still a source.  At year 5 and seedlings 4 years old the stand begins to "sink" and will until it is cut again.  Waaayyy more storage than release.  Old growth doesn't count - they are more forms of source so we'd better <gasp> manage the forests.  The oceans provide more sink than anything else so I'm gonna "sell" the Pacific (but only a small protion, say 10 square miles) for $20,000 year.  I'm not greedy, but I also want to capture by payments; 2 billion years X 10 square miles X ......
See ya'll in Maui.

[WDH]

Here is some more info on trading carbon credits........

Carbon Credit Offsets for Trees
Capital Ideas - Alabama Land Owners Association
July 18th, 2007
Host: Hayes Brown, (www.afoa.org/CILive/CI070718.htm)
Guest: Teddy Reynolds (www.reynoldsforestry.com)


1) What are Carbon Credit Offsets and what timberlands qualify for selling Carbon Credits?

Carbon that is sequestered (pulled out of the atmosphere) by trees during photosynthesis is now considered a valued offset to the carbon that is put into the atmosphere by industries reliant on fossil based fuels for energy. Industries that have joined the Chicago Climate Exchange have voluntarily made legal obligations to reduce carbon emissions 6% by 2010 with the ultimate goal to become carbon neutral some time in the future.  This will be accomplished with a combination of real reductions in emissions and the purchase of offsets. The Carbon Credits are marketed to US based companies on the Chicago Climate Exchange, which operates similar to Wall-Street.

Currently there is only one approved program by the Chicago Climate Exchange for trees which is for all "afforested" pine and hardwood timberlands in the United States planted after January 1, 1990. Afforested means trees planted in previously non-timbered areas; for example, tracts that were pasture or row-crops prior to being planted. A minimum stocking of 250 trees/acre is required for signup.

Currently there is a new program under review to include working forests; which includes all forestland regardless of origin, and is expected to be approved and activated within a year.
2) What returns can a timberland owner receive from participating in selling carbon credit offsets on their timberlands?

Carbon credits are currently selling for approximately $3.50/metric-ton on the Chicago Climate Exchange. As an example, Loblolly pine plantations 0-5 years of age sequester 2.2 metric-tons/acre/year while plantations 11-15 years of age sequester 7.8 metric-tons/acre/year.

The signup period and payments are retroactive through 2003 and end in 2010. For example, if you enlist a 100-acre Loblolly pine plantation that was 11-years old in 2003, then you will receive payments for sequestered carbon from 2003 to 2010. Based on current carbon trading rates, during the 8-year signup a 100-acre Loblolly pine plantation will yield $21,945.

However, it should be noted that carbon payments will be reduced by 20% held back in an insurance pool to cover carbon credits potentially lost to catastrophic events during the 8-year sign-up, and refunded at the end accordingly.

3) How does a landowner enlist and what are the fees?

Landowners can enlist through aggregators such as Iowa Farm Bureau and Delta Institute, who have purchased seats on the Chicago Climate Exchange and sell the carbon tons in large metric ton blocks. The aggregators charge an 8-10% commission and the Chicago Climate Exchange charges a fee of 20 cents per ton.

If you enlist less than 2000 annual tons with an aggregator, then all you basically need to provide is contact information, verification of ownership acreage and planting confirmation; however, the verification requirements increase when you enlist over 2000 annual sequestered carbon tons. Is the program worthwhile for qualified landowners? Yes, as it can increase your real annual internal rate of return by as much as 1.6%. It's better than a free interest bearing checking account.

Related web sites and resources:
1) Chicago Climate Exchange Website: www.chicagoclimatex.com
2) Delta Institute - www.delta-institute.org
3) Iowa Farm Bureau - www.iowafarmbureau.com
4) George Rheinhardt, NRCS State Forester; Email: George.Rheinhardt@ar.usda.gov; Office: 501-301-3137 ex.3143.

[Larry]

Thanks for taking the time to post and keep us informed with the latest information WDH.

I'll give an update since my original post.  I've received emails from a few people including our Missouri State Forester who seems to support the program...just make sure you understand the program.  The tract that I was considering selling carbon credits is in the process of being sold.  The new owner is interested in selling carbon credits.  I'm not sure if it will happen or not.  A second tract that I'm keeping was planted to hardwoods that will make either lumber or excellent yard trees for the city folks.  It's not in CRP so I can do either or both.  My stocking rate is over 400 trees per acre so I think I might be able to do a thinning to put into yard trees and come back to sell carbon credits...and if I live to 120 I'll be able to log it also.

[WDH]

Is CRP disqualified for carbon credits?

[Larry]

No.

From what I'm hearing most of  the carbon credits sold will be on CRP acreage...at least in north Missouri and Iowa.   

[Ron Scott]

I understand that there are pretty intensive precruise requirements to determine the number of trees to establish the accuracy for credits determination for the area and then there are required periodic cruises on a scheduled basis to maintain the credits.

Does anyone know of or heard such specifics?

[Larry]

Ron, with my CRP acreage I had to have a forestry plan.  The plan called for tree spacing, number of trees/acre, and than after 5 years the forester came back to make sure I had something better than 60%?? survival rate.  According to the aggregator for Missouri this is the only documentation needed to sell credits.  No periodic cruises required...but your only selling up to year 2010.  The CRP acreage is a contract and if I cut a tree other than for TSI I would put my CRP payments in jeopardy...lot more money there than carbon credits.

I did ask about another non CRP tract where I planted trees but without a plan or forester involvement.  I was told that receipts for seedling purchases would be required and I would need some kind of verification.  I didn't ask questions or check out any details and it seemed to be somewhat of a grey area.

WDH posted this which seems to tract with everything I've heard.

If you enlist less than 2000 annual tons with an aggregator, then all you basically need to provide is contact information, verification of ownership acreage and planting confirmation; however, the verification requirements increase when you enlist over 2000 annual sequestered carbon tons.

[WDH]

I got more information on this today which I will post tomorrow.

[WDH]

Not only can you sell carbon credits, you can buy them as an individual to offset your own carbon footprint.  I haven't come to grips with having to pay for living, beyond the usual taxes :-\. 

http://www.becomeafriend.org/carbon/report.php#capitalfund

[WDH]

More information on the GA Registry:

GEORGIA CARBON SEQUESTRATION REGISTRY
OVERVIEW OF PROJECT STANDARDS

Project Definition
One or more parcels of forest land that has, as primary management objective, the annual accretion and long-term storage of carbon.  No minimum or maximum project acreage is mandated.

The Registry will accept two general types of forest offset projects:
Afforestation:
The planting or direct seeding of trees on lands that were previously dedicated to non-forest use.  Afforestation activities must have been completed on or after January 1, 1990.  Projects may be enrolled in federal, state, or local conservation programs (e.g. CRP).  Documentation of tree planting will be held by the project owner; examples include nursery/planting receipts, tax records, aerial photos, etc. 

Forest Management:
Management practices on existing forest lands that provide for tree growth that facilitates carbon sequestration.  This forest project type may include a wide variety of practices, management objectives, and silvicultural applications.

Forest offset projects may further be classified as 'restricted' or 'unrestricted'.
In order to be classified as restricted project, one of the following conditions must be met:
1.   A long term easement on all project lands that ensures that the land will be dedicated to forest uses.
2.   Transfer of lands to a land trust, non-governmental organization, or governmental body.
3.   Others means deemed acceptable by the Registry.

Unrestricted projects will not meet these requirements.

Carbon Pools Considered:
Required Pools: Above-ground tree biomass (merchantable height only), Below ground tree biomass.

Optional Pools: Soils (afforestation on old field only), forest products.

Forest Sustainability
All forest projects must have one of the following:
1.   Georgia Forest Stewardship Plan
2.   Forest Certification (e.g., Tree Farm, SFI)
3.   A forest management plan that meets the standards of a Georgia Forest Stewardship Plan

Project Location Information
Forest projects must provide:
1.   Legal description of project lands
2.   County, Deed book number and page number
3.   Topographical map(s) or aerial photo(s) of all project parcels, clearly delineated
4.   Latitude and longitude of approximate center of each project parcel

Registered forest projects will be incorporated into a GIS database administered by the Georgia Forestry Commission.

Project Reporting
The Registry is an online database.  Projects may be registered online or via hard-copy mailed to the GFC.  In the initial registration, carbon stocks will be reported for the current report year and projections will be made 10 years into the future.  Projects will report total above ground carbon stocks for each report year from an established starting year, which may be 1990 at the earliest.  The registry will automatically generate the appropriate current and projected carbon stocks based upon registration information.  The registry will also automatically generate annual sequestration rates and cumulative sequestration rates.  Projects may also be reported using inventory information (<= 10% allowable error) and SiMS stand simulation software. 

Participants will file an update for each report year.  All actual decreases in carbon stocks must be reported to the registry.  If the project continues to perform as estimated in the registration, the projected carbon stock increases are registered for the current report year.   

Quality Control
All projects must be reviewed and endorsed by a forester (GFC or independent) who has received training in the Registry program.  The GFC will review all submitted project applications before enrollment in the Registry.  The GFC will conduct project monitoring, verification, and auditing of registered projects.

[the tree lady]

Larry,

One of the CRP landowners I'm acquainted with here in MO has applied thru DC and has not been able to get a response from sending in all his needed paperwork, application, etc.  No money has been received from the landowners, who applied with DC back in April.  I think the carbon credit system will get many of its bugs worked out in the near future, but we may be 6-10 months away from a better-working system.  I continue to keep gagging myself with duct tape so I don't promote it much until the system is fully functional.

The Tree Lady

[Larry]

Welcome to the tree lady...better know as Skip. You probably don't remember me but I remember you.  I received my introduction to GOL and BMP's from you some 9 years ago in the Pusey Forest up in north Missouri.  Just read your article in SM&WL.  Have to see if we can get the boss man to put a forester tree under your handle.

I've backed off some on carbon credits as I sold the ground in CRP.  I'm working on the documentation for another farm...but it is on the back burner as I have a full plate right now.  Thanks to your input it may stay on the back burner until next year.

[beenthere]

From what I am seeing so far, the landowner will get very little of the share of the money paid for carbon...there are so many fingers in the pie along the pipeline, that not much will trickle out the end for the one growing the trees. Now, I will be first to admit I might    could  once was  may be wrong, but not holding my breath. It is, to me, a lot of wind being blown around.  Everyone doing anything with it will want their "fair" share...
the pessimistic one

[SwampDonkey]

Reminds me of the egg marketing story. Grandfather was an egg producer. He got $0.25 a dozen locally, but if he could sell to the US he could get $0.75 a dozen. The kicker was, he had to go through a broker. The broker wanted $0.50 a dozen to move the eggs.  :

[wesdor]

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?