The terms carbon sequestration and carbon trading are familiar to most farmers.
But that familiarity doesn’t necessarily translate into a full understanding of exactly what they mean and how farmers can take advantage of them.
“Farmers know it’s there, they know it can be a benefit, but they don’t know the details and the background,” said Norman Hall, a farmer from Wynyard, Sask., who has made it a point to become informed about carbon and agriculture.
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Ian Wishart, a producer from Portage la Prairie, Man., and president of Keystone Agricultural Producers, agreed.
“Farmers are kind of aware of it, but not the details,” he said. “I think they should be.”
Jeff Gross, spokesperson for C-Green Aggregators of Regina, which sells carbon credits on behalf of farmers on the Chicago Climate Exchange (CCX), said he’s concerned not just about a lack of information but also about the bad information that is circulating.
“A lot of it is confusing, contradictory and self-serving.”
Wishart said KAP hoped five years ago that by now a fully operational federally regulated carbon trading system would be in effect across Canada.
“We need some leadership from our federal government on this.”
A nationwide cap on industrial greenhouse gas emissions is scheduled to kick in Jan. 1, 2010, which will boost the market for tradable carbon offsets. It’s unclear what that will mean for agriculture.
If Ottawa doesn’t create a national marketplace for carbon offsets that includes agriculture, proponents fear the United States will move ahead and do so, and Canada will become part of that system and lose the ability to establish its own standards and protocols.
Hall agreed, saying the federal government needs to move quickly to set up a national program.
In simple terms, carbon sequestration occurs when farmers engage in production practices that increase the organic carbon content of the soil, such as direct seeding and zero-tillage, using grasses and legumes in crop rotations, converting cropland to perennial grasses or trees and restoring wetlands.
An area where agricultural soil has accumulated carbon is called a carbon sink.
Under carbon trading, farmers who engage in those practices and meet certain standards can claim credits for units of sequestered carbon, and then sell those credits to companies that use them to offset their carbon dioxide emissions.
Farmers can engage in carbon trading through companies such as C-Green as well as companies that are trading or plan to trade based on rules established last year by the Alberta government.
The CCX and the Alberta program have different rules and operating protocols that result in differing levels of payments.
C-Green’s contracts with producers covering 2003-06 resulted in payments of more than $23 million to 2,200 farmers, representing 5.1 million acres, for an average payment of $10,500. The company has 1,500 contracts in place for 2006 and 2007, representing 750,000 acres.
Prices on the CCX have been so low in recent months that as of November the company had sold only about 40 percent of available credits. Payments are expected to total $4 to $5 million.
C-Green’s payments are based on sequestration rates of 0.4 tonnes per acre per year for black soil zones and 0.2 for brown.
By comparison, the Alberta Reduced Tillage Linkage Program uses 0.16 tonnes per acre per year for black soil and 0.08 for brown. Based on the long-term average CCX price of $4 a tonne, that produces payments of $1.60 per acre per year for black soil and 80 cents for brown.
Other differences between the two programs include rules covering allowable tillage, equipment, soil disturbance, risk management and the ability to withdraw from the program.
Gross said he hopes the federal government will implement a national program that uses CCX standards and protocols, which he says are more rigorous than other programs and provide farmers with a higher return.
“Ideally we would have one set of rules across North America based on CCX protocols,” he said.
Not everyone agrees.
Blair McClinton, executive director of the Saskatchewan Soil Conservation Association, described the CCX as an unregulated voluntary system and said it’s questionable whether farmers with CCX credits would be able to transfer them to a national regulated market.
Despite the uncertainties and the federal government’s slow pace of action, McClinton said farmers should look at carbon trading as an opportunity.
“It’s probably going to be worth your while to participate because these credits will increase in price over time,” he said.
A number of issues must be resolved before a full-scale, regulation driven market can be put in place: length of contracts, who owns the carbon (the farm operator or the landowner), how farm practices are verified and how to enforce contracts.
