Trading Carbon Credits

[Larry]

Anybody know about the program?

A brief description about how it works that I copied off a website.

How Carbon Trading Works

[/size][/b]

Landowners earn annual payments for storing carbon in their forests and soils via Dogwood Carbon's linkage with the Chicago Climate Exchange (CCX). Founded in 2003, the CCX is attempting to provide a market-based mechanism for reducing greenhouse gas emissions. Large-scale greenhouse gas producers (energy companies, paper mills, factories, etc.) voluntarily participate in the CCX as carbon credit buyers. These companies look to landowners, farmers and other carbon sequestering projects as carbon credit sellers to offset greenhouse gas emissions. Carbon credits are traded between buyers and sellers on the Chicago-based CCX much like soybeans and pork bellies are traded on the Mercantile Exchange. For more information, go to www.chicagoclimatex.com.

A link to the brokers site.
http://www.dogwoodcarbon.com/index.htm

I'm asking because I have forest land in a CRP contract with 13 remaining years.  From what I've read, my ground meets all the eligibility requirements.  All I would have to do is enroll to receive back payments plus future payments.  Missouri hardwoods average $18 per acre, per year at present.  Seems a little to good to be true when ya add that payment on top of CRP payments.

[Texas Ranger]

How much are your kids or grandkids gonna have to  pay back when they cut them suckers?

[Gary_C]

To me, these programs are a fraud. There has been nothing gained by buying your right to polute.

There has long been a similiar program with wetlands. If a developer wants to fill in a wetland for a development, all he has to do is buy up an equivalent amount of wetland and set it aside from future loss. So there is still a wetland loss and the developer paid for the right to erase a wetland. Sure, the other wetland owner gets a good price for his wetland, but is that any help at all in stopping wetland loss?

[Ron Wenrich]

That wetland scam also has it where they can "make" a wetland someplace else.  Seems to me that if there was a need for a new wetland, mother nature would have made one there a long time ago. 

As for the dogwood site, it states you have to plant trees.  That implies that you can't enroll your forest that is currently growing trees. 

It sounds like its set up by a bunch of bean counters that really don't know much about how a forest grows.  Younger forests sequester more carbon than do older forests.  And, as stated, what happens when you cut them down?  Do they get their money back?  You should be able to grow more than $18 worth of wood per acre on your current forest without any constraints.

[WDH]

I am familiar with wetlands mitigation.  If you develop a wetland, you have to mitigate by buying an equal amount from a Mitigation Bank.  A Mitigation Bank is a tract that was formerly wetlands, say a bottomland field or a ditched and drained site converted to a pine plantation, that is being fully restored back into its original vegetation.  When you buy into the mitigation bank, the amount bought is under a servitide contract that requires the area purchased be maintained in the wetland in perpetuity..  In order to mitigate a developed wetland acre, you just can't buy any acre of wetland to replace it; you have to buy an acre that was once converted, but is now being restored.  It also has to remain in wetland for perpetuity, so once all the acres in the Mitigation Bank have been purchased, the bank is maintained forever.  It can never be developed or changed in any way. 

[Tom]

I know a little about them too.  The 200 acres to the east of me is a wetlands mitigation bank (or at least credits in the bank).   They took a perfectly good hill, cut 2 feet off of it and planted cypress and gums that have never come up.  The credits have been sold as well as the 2 feet of dirt they took off of the top. Not only do they not have a wetland, but they don't have a highland either.  They destroyed an ecosystem that isn't politically fashionable to accept, to create an ecosystem that they deem un-developable.  They failed and we are stuck with a cleared piece of property that, I'll bet a dollar to a donut, will be houses within my lifetime.  All it will take is someone with a pocketfull of money and the right connections.

[WDH]

It sure does seem political to me as I learn more about it.  Bureaucratic and political.  I am heading up a project for my company to establish a mitigation bank.  I bet I am in for an education and a frustration .

[Tom]

Well, don't let them bamboozle you into thinking that they are great environmentalists.  :D

The hill next to me was growing great slash, loblolly and longleaf until they decided that it needed to be a wetlands. It seems that they don't consider the ecosystem they are destroying, and the existing wetlands don't qualify for the same amount of money as wetlands that are created.  Some aren't even allowed.

[Tillaway]

There is a new player in in forest land ownership in the NW.  It happens to be an environmental group that is putting its money...err... its investors money, where their mouth is.  Carbon credits are an integral part of their business plan.  For  a measly 1 million bucks you can invest in a  REIT located in the beautiful temperate NW coastal rain forests of Oregon and Washington, that they spent too much $$ to acquire in the first place.  Granted your investment will lag the return of conventionally managed forest land for just fifty years.  After that they expect to out perform conventional management.  That is if the lumber market does not changes between now and then, or Russia does not sell carbon credits in Siberia or ...

They never said they would not develop it... hmmmm.

[Tom]

.....or lightening doesn't set a fire and burn it.  :D

Smoke and mirrors.  It's all smoke and mirrors.  :D

[WDH]

Nope, existing wetlands don't qualify for mitigation. The authorities figure that it is already a wetland, so why should they give credit for it to the developers?  They want to see converted land put back into wetlands.  But remember the book by Thomas Wolfe, "You Can't Go Home Again".  You can't stop, progress, only adapt to it.  Trying to "restore" what once was is in some ways very idealistic.  The taxation laws are driving land owning timber companies to sell their land because they can't compete growing trees.  To me, that is a sad situation.  Food and fiber made this country what it is.  Soon, we will be depending on those folks overseas for it.  Not good IMHO.  I heard today that chicken feed might be contaminated by that same chemical that is killing pets.  Pets, chickens, then us.  I guess it is just global economics, huh ???.

[Tom]

"Global Economics".   Something else that makes me grind my teeth.  That, and the New World Order.  >:(

Converted land returned to wetlands doesn't follow either.  This land next to me has never been developed or filled.  It has always been river swamp and a hill growing pines and hardwoods.  What they have tried to turn into a wetland is/was the tallest "hill" around here. I'm not sure what the Fla. law reads, but it is probably along the lines of Created Wetlands. 

After some litigation, I understand that the river swamp was allowed into the mitigation bank at a very low price per acre, whereas the highlands were allowed at a wallet twisting 20 to 50 thousand an acre.

[Redonthehead]

I read that article in a local newspaper last weekend. I too think much of it is smoke and mirrors, ESPECIALLY on land that is already growing "carbon". ie: so you enrolled your land in CRP/trees. The gov't is already paying you to grow trees. Why should you get "carbon credits" for what is already being done? retroactive?  >:(

Now if you have an existing cornfield and want to start a program and one part of that is the carbon contract, then fine. That's new.

I would like to learn what I would have to do for the wetlands mitigation. Say I own a 100 acre cropfield in the riverbottom. How much would developers pay me to build levees and PERMANTLY convert that land to a wetland mitigation???  Would it pay $1k per acre? Can you double dip with Wetland Reserve Program (type of CRP) and Wetland Mitigation? Surely not. AND then plant willows on it and triple dip with Carbon Contracts - the head swoons.... :D

[Gary_C]

Yes, I am guilty of oversimplifying when I said they just buy a wetland and set it aside from future loss. The way the scam actually works is they buy cropland that has been tiled and then put non perforated tile in the low areas and claim to have restored those lowlands as wetlands. In many cases they can just continue farming the land except in wet years when they just leave those pockets and work around them.

The reality is if you want to fill in a wetland, you sure can if you have enough money.

Can you double dip with Wetland Reserve Program (type of CRP) and Wetland Mitigation? Surely not. AND then plant willows on it and triple dip with Carbon Contracts - the head swoons.... :D

No, won't work. They have specific rules for what you can and can't do.

[WDH]

The prices that I have seen range from $6000/ac to $40,000/ac with $15,000 - $20,000 being the average.  Price depends on the quality of the wetland as calculated by the Corps of Engineers formula.  The greater the restoration in their opinion, the more the bank owner can charge on the market.

[crtreedude]

A subject I actually know something about!

The idea is that you cannot change over a business overnight. Lots of money goes into power plants for example. You can't just decide to take it out of production - so you offset it with growing trees elsewhere. The trees have to be planted and they have to be maintained as a forest for 25 years - after that, it is actually better if they are harvested as lumber, because that frees up the land to produce more carbon products.

Unlike filling in a wetland and making a new one, this does not destroy existing forest - just creates an economic incentive to make more.

I am not overly fond of a global order either - but we are all on the same planet. As I like to tell people, you are probably breathing my air... When someone buys carbon credits, they are merely buying something like buying coal. Legislation making this a requirement is part of a global treaty - but we do things like say people shouldn't fish for certain fish globally, sell elephant ivory, etc. This is because those who buy and those who produce are separated. Much like in the USA we have federal laws and state, and even local.  The law (or treaty) has to be formed at the effected level. What I don't like is when laws are pushed down from the federal level that should be dealt with at the state or local level. For example, a nation wide law on guns is a mistake in my opinion. The needs for gun control in small town in Texas is very different from the needs in NYC.

[OneWithWood]

CR - you are right on that last point.  No need for a gun in small town Texas.  ;D

[Greg]

Anybody know about the program?

A brief description about how it works that I copied off a website.

How Carbon Trading Works

[/size][/b]

Landowners earn annual payments for storing carbon in their forests and soils via Dogwood Carbon's linkage with the Chicago Climate Exchange (CCX). Founded in 2003, the CCX is attempting to provide a market-based mechanism for reducing greenhouse gas emissions. Large-scale greenhouse gas producers (energy companies, paper mills, factories, etc.) voluntarily participate in the CCX as carbon credit buyers. These companies look to landowners, farmers and other carbon sequestering projects as carbon credit sellers to offset greenhouse gas emissions. Carbon credits are traded between buyers and sellers on the Chicago-based CCX much like soybeans and pork bellies are traded on the Mercantile Exchange. For more information, go to www.chicagoclimatex.com.

A link to the brokers site.
http://www.dogwoodcarbon.com/index.htm

I'm asking because I have forest land in a CRP contract with 13 remaining years.  From what I've read, my ground meets all the eligibility requirements.  All I would have to do is enroll to receive back payments plus future payments.  Missouri hardwoods average $18 per acre, per year at present.  Seems a little to good to be true when ya add that payment on top of CRP payments.

I'm aware of an organization in KY that is in the early stages of putting together a similar thing, carbon credit program for private landowners.

At first glance, its basically free money to the landowner, similar concept to CRP. Whats better about this program than CRP or wetlands holdbacks (to me) is that this not a government subsidy.

The problems arise is in order to achieve eligibility there must be a working forestry plan done, plus a biomass inventory. Some landowners already have this in place. If you have to pay for those things separately, the $$$ earned in credits may end up being a wash with the additional consulting work required. Although the market prices will fluctuate, I seem to remember the current ballpark payout of $4 on acre or so, in ANNUAL payments, which aint bad for doing nothing but sitting back and watching your trees grow!

You can still harvest timber on the land, in concert with the management plan, and continue to get the credits, but then again after a harvest, the inventory must be (at least partially) redone, and this costs $$$.

I will check out your link when I have a bit more time. Keep us posted,
Greg

[ely]

i wonder if those are similar to the green credits or whatever they are called that power plants sell/trade with each other.
i think like gary c on that idea, of why should you be allowed to pollute just because you can afford it. it is really just a scam for the gvernment to get more money.
i know that our coal fired generating plant is one that has a few credits left over each year and they do sell them to the other companys not so clean running coal fired plant.

not good in the long run imo.

[Greg]

i wonder if those are similar to the green credits or whatever they are called that power plants sell/trade with each other.
i think like gary c on that idea, of why should you be allowed to pollute just because you can afford it. it is really just a scam for the gvernment to get more money.
i know that our coal fired generating plant is one that has a few credits left over each year and they do sell them to the other companys not so clean running coal fired plant.

not good in the long run imo.

1

I share the opinion of those who are highly skeptical that any improvement in the environment occurs because of these types of programs. (In fact, its arguable they makes things worse in the big picture.)

But saying it is "a scam for the government to get more money" is just plain void of facts. Governments, (other than the setting of legislative caps for emissions that companies must meet, like the EU has) is not invovled, doesn't make or spend a dime on carbon credits. These markets are entirely in the realm of private industry.

Greg

[crtreedude]

Carbon credits have helped plant thousands of hectares down here - yes they do help. Otherwise, a farmer finds it very hard to live while waiting for the wood to mature.

[flip]

Isn't this Kyoto Treaty on a smaller scale?

[crtreedude]

Kyoto Treaty started the ball rolling - but you can buy (or sell) carbon credits without being part of the treaty I believe. The treaty determined the reduction goals (or offset), this is a method.

[Larry]

To answer a few questions...I have a forestry plan, all trees were planted in the mid 90's making it a young forest, and I have documentation of trees planted per acre.  Since the trees are putting away max carbon my acres command a higher price.  I have all of the requirements necessary to sell carbon credits.  I made a few calls today and found the "hook"...I can't cut any trees until after year 2010, unless it is for TSI and in my forestry plan.  After 2010 no other "hooks".  The credits are sold and paid for on a yearly basis so it is possible the rules could change.  No penalty to pay in 40 years when the trees are ready for harvest.  I'm also eligible to collect payment for years 2003 through 2007 when my enrollment is approved.  I'm not thinking about selling carbon credits on mature forest ground.  I found out about this program in a publication put out by the University of Missouri Agroforestry Department...I doubt they would publish anything if it were a bogus program.  Our state forester is fully aware of the program...trying to illicit some info out of the state forestry department at this time...sometimes they are tight lipped about commenting on a private programs.

[Greg]

Like I said, free money, if your ducks are in a row. Good luck!

I will post a link on the KY program once it rolls out.
Greg