| | Yes, if you’ve made your farming practices more climate-friendly since 2002. But the cheque isn’t in the mail quite yet.
For years now, Alberta farmers and ranchers have known about an intangible asset they own, and looked forward to the day they could capture some financial value for it.
That asset is carbon credits, and that day is moving closer. On several fronts, the rules for carbon trading are coming into focus and the infrastructure for the carbon trading marketplace is just about set. At the heart of Alberta’s carbon credits system is the Climate Change Central organization.
“We work with Albertans -- industry, government, non-government agencies, consumers and farmers and ranchers -- to understand the actions that result in greenhouse gas reductions,” says Climate Change Central’s Karen Haugen-Kozyra.
Most relevant to farmers and ranchers, Climate Change Central has set up the infrastructure through which landowners can determine whether they have saleable carbon credits, and register to sell them.
Carbon trading basics
The largest creators of greenhouse gases have been mandated to reduce their emissions by 12% annually. They can do this in three ways. First, they can reduce emissions at the source through cleaner technology. Second, they can pay $15 per tonne of greenhouse gas emissions into a Climate Change and Emissions Management Fund – to invest in R&D and building technology for the future. Third, they can purchase Alberta-made carbon offsets. Many large emitters are expected to use a couple of these options to meet their targets.
“A carbon offset is an investment in a project that results in a decrease of greenhouse gas emissions,” says Haugen-Kozyra. She notes that of the 15 approved protocols that support project development in Alberta, nine apply to agriculture. These include the use of biodigesters, growing crops for biofuels and a reduction in field tillage operations.
“There is lots of opportunity for producers to examine their operation and see how they’ve changed their production practices,” says Haugen-Kozyra. Significantly for landowners, these changes must have taken place since 2002. An exception is tillage, which has a unique policy approach to allow early adopters (pre-2002) to still participate in the market. If these guidelines apply to your operation, you might have credits to sell.
Because the main purchasers of carbon credits are large emitters of greenhouse gases, these organizations are looking to buy in volume. Very often, Haugen-Kozyra explains, companies are looking to purchase 50,000 tonnes or more at a time.
This has led to the development of market service providers, also known as aggregators, who purchase credits from smaller sources like farmers, and bundle them for sale to emitters.
“There's a real success story coming soon out of Central Alberta,” says Haugen-Kozyra, “relating to farmers who have reduced their tillage. An aggregator has put together credits for about 1,000 farms.”
In the Alberta carbon credit market, there are buyers and there are sellers. The place they come together is the carbon offsets registry at www.carbonoffsetsolutions.ca/offsetregistry.html . Not unlike an online match-making service, this is where each party lists what it has or needs.
Kerrianne Koehler-Munro, Climate Change Program Planner with Alberta Agriculture and Food, urges Alberta producers to go on the website and see what it offers them.
“Agriculture and forestry are the two industries that can sequester carbon,” says Koehler-Munro. “The offset registry will function as a ‘meeting place’ for buyers and sellers. It will allow Alberta project developers, farmers and/or aggregators to showcase their project and the third-party verification assurance information for prospective buyers.”
The registry will not function as an exchange; all actual trading will occur off-line. The website also features a listing of aggregators looking to contract offsets and bundle for the sale to large final emitters.
How much are your carbon credits worth in cash? At the moment, it’s hard to know. Parties on the website registry don’t list prices, just projects available and the tonnes of offset they represent.
Mimi Lee, Stony Plain-based New Venture Economist with Alberta Agriculture and Food, cites a 2007 World Bank study that indicates an average price of $10.70 U.S. per tonne for project-based emission reduction offsets sold internationally in 2006.
“There’s also a cap mechanism in Alberta that says large final emitters may not have to pay more than $15 per tonne,” she says. “If it reaches that level, they have the option of paying $15 per tonne into a technology fund.”
How many tonnes of carbon credits do you have? Ron Hockridge, Financial Business Analyst with Alberta Agriculture in Leduc, also recommends a visit to the carbon offset solutions website.
“There are a series of accepted protocols that relate to agriculture,” he says. “These are for management changes like going to zero-till and sequestering carbon in the soil, or changing livestock rations to reduce greenhouse gas emissions from the rumen and manure.”
As the system develops further, farmers and ranchers will find it easier and easier to turn their sound management practices into cash. How much cash remains to be seen.
“The dollars aren’t as big as a lot of people had hoped,” says Hockridge. “But for now, the best thing you can do is go to the website and see what’s available for you.”
To learn whether your farm has saleable carbon credits, visit www.carbonoffsetsolutions.ca. |
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