A Regina company that sells carbon credits on the Chicago Climate Exchange (CCX) on behalf of farmers is ready to get back into the market.
C-Green Aggregators had expected to be trading 2006-07 carbon contracts on the exchange two months ago, but computer problems delayed Saskatchewan Crop Insurance Corp’s verification of signed-up acreage.
“It just didn’t want to work, but now it’s been fixed and we’re ready to start trading,” said Jeff Gross of C-Green.
However, he said the company will probably wait for carbon prices on the CCX to improve from their current level of around $4.10 US per tonne.
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“There are some indications it will return to the $5 to $6 range, so we’re going to hold off,” Gross said.
“We’ve already waited longer than we thought we’d have to, so another month isn’t the end of the world.”
The market has been volatile in recent months, moving from a low of around $2 in mid-December 2007 to a high of nearly $7.50 in May 2008 and then dropping again.
Prices were buoyed in the spring by the selection of John McCain and Barack Obama as presidential candidates in the fall’s U.S. election. Both are strong supporters of the cap and trade system on which the CCX is based.
The recent decline has been attributed to a number of factors, including summer holidays, profit-taking by some traders and investors and the registration of 8.4 million tonnes of emission offsets for trading on the CCX by a major U.S. gas company.
However, the fact that the next president will support a regulated cap and trade system based on the CCX points to a continued bull market.
C-Green has 1,500 contracts with farmers for 2006 and 2007, representing 7.5 million acres, the vast majority in Saskatchewan. That total includes about 550,000 acres of hay land, which at a rate of one tonne an acre will provide a gross payment of around $4 a tonne at current prices.
Under the C-Green program, farmers agree to use minimum-tillage practices and appropriate equipment during the life of their contracts.
Carbon sequestration rates are set at 0.4 tonnes per acre per year for black and grey soil zones and 0.2 tonnes per acre per year for brown and dark brown.
At $4 at tonne, those values work out to $1.60 per acre per year in black and grey soil zones and 80 cents for brown and dark brown.
C-Green’s contracts covering 2003 to 2006 produced payments last year of more than $20 million to 2,200 farmers, for an average payment of $10,500.
