A Regina company that sells carbon credits on behalf of farmers will soon send contract holders a final payment for 2003-06.
Jeff Gross, co-owner and general manager of C-Green Aggregators, said the company is close to closing the books on the 2003-06 pool account.
The company has sold about 87 percent of the 6.1 million tonnes of carbon credits signed up for the pooling period, leaving 800,000 tonnes to go.
However, unfavourable market conditions have prompted the company to hold back on sales for the time being.
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“The price has been down so we haven’t been selling,” Gross said.
The value of carbon credits traded on the Chicago Climate Exchange has declined sharply in recent weeks, from around $3.75 US per tonne of carbon dioxide at the beginning of August to around $3.05 last week.
A year ago, it was trading at $4.25 to $4.50 per tonne. Prices have been on a gradual but steady downward slide since peaking at slightly less than $5 in April of 2006.
The price drop has been blamed on the supply of credits offered for sale exceeding demand.
The increased strength of the Canadian dollar has also reduced the value of the credits, which are priced in U.S. dollars on the CCX.
Gross said the total value of C-Green’s 2003-06 pool should be around $25 million Cdn, which works out to an average payment of $11,400 for the roughly 2,200 contract holders. An initial payment of $4,100 was distributed in April.
Payments to individual farmers vary widely, he added, from as little as $100 to as much as $45,000.
Farmers signed up 5.1 million acres per year under the 2003-06 contract, with the bulk of that in Saskatchewan.
Carbon sequestration rates are set at 0.4 tonnes per acre per year for black and grey soil zones and 0.2 tonnes for brown and dark brown.
Based on a price of $3.50 per tonne, that works out to a payment of about $5.60 per acre for black and grey soil zones and half that for brown and dark brown zones.
Meanwhile, the deadline for signing up for C-Green’s 2007-10 contracts was Sept. 10. Under the contracts, farmers agree to use certain zero-till practices and appropriate equipment during the life of the contract. Hay and forage contracts were made available for farmers who had converted crop land to forage after January 1999.
Gross said he couldn’t yet estimate how much land had been signed up for the new contracts.
“I’ve got a stack of applications a foot high sitting on my desk and it will take a couple of weeks to go through them.”
He said interest has been good in Saskatchewan, relatively small in Manitoba and very small in Alberta, adding the situation in Alberta is confused.
For example, sequestration rates in that province are set at 0.14 tonnes of carbon per acre, well below the level in Saskatchewan. Also, the Alberta program makes allowance for summerfallow, which is not the case in Saskatchewan.
