Two carbon credit trading developments signify Canada is finally making progress on that front, say those who hope to one day capitalize on environmentally friendly farming practices.
The establishment of a Canadian commodity exchange specializing in carbon credits, and a multimillion-dollar agreement between a Canadian agricultural firm and a large utility company, are signs that progress is being made to get some farm income out of the Kyoto initiative.
“This is certainly an indication that agriculture has the potential to be a fairly major player in the whole system once it gets up and running,” said Blair McClinton, executive manager of the Saskatchewan Soil Conservation Association.
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But he cautioned that both announcements are speculative in nature and it’s not known how either will play out.
“Right now their true implications are unknown,” said McClinton.
The most recent development occurred during last week’s 11th Conference of the Parties to the United Nations Framework Convention on Climate Change.
That was the forum where the Montreal Exchange and the Chicago Climate Exchange chose to announce a joint venture to establish Canada’s first environmental products market.
The Montreal Climate Exchange’s first offering will be carbon credits. It intends to eventually provide trading, clearing and registry services for a variety of Canadian environmental products.
Heavy polluters and the federal government will be able to use the exchange to buy credits from certified offset projects to meet their Kyoto obligations.
“The creation of the Montreal Climate Exchange is a concrete initiative that will accelerate the development of a structured environmental market in Canada,” Luc Bertrand, president of the Montreal Exchange, said in a Dec. 7 News release
news.
McClinton said the Winnipeg Commodity Exchange made a similar announcement a few years ago that never amounted to anything.
“I’d be a little cautious as to how active (the new exchange) will be,” he warned.
However, if it does handle a decent volume of transactions, the exchange would help establish a price for Canadian carbon credits.
McClinton was also skeptical about a Dec. 5 News release
news issued by AgCert Canada, in which the company stated it had signed a six-year agreement to provide Epcor Utilities Inc. with CO2 equivalent offsets.
Under the agreement, AgCert will deliver 100,000 tonnes of carbon credits per year to one of Canada’s top providers of power and water, starting in 2006.
At the going rate for carbon credits, which fluctuates wildly, the deal could be worth $3 million to $7.2 million.
AgCert has contracted with 350 large Canadian intensive livestock operations that use its manure management systems to reduce greenhouse gas emissions on their farms.
“This is a breakthrough deal,” said Len Eddy, managing director of AgCert Canada.
It is one of the largest emission offset credit purchases ever made in Canada and a sign that the industry is for real.
“There’s hope,” he said.
McClinton agreed it is encouraging news but pointed out that since the federal government has yet to determine how Canada’s offset system will work, AgCert is assuming Ottawa will approve its projects and deem them to be worth the volume of credits discussed in the Epcor deal.
“This is kind of a speculative trade,” he said.
Eddy said the two recent announcements represent significant developments in what he envisions as the two streams of carbon credit trading in Canada.
