Carbon Credits
RMFU’s Carbon Credit program allows landowners to earn income by storing carbon in their soil. Carbon credits can be earned and sold by conservation tillage, long-term grass seeding practices, native rangeland enhancement, forestry, and with methane capture projects.
How to Enroll…Go to http://carboncredit.ndfu.org Producers must complete and submit a signed contract, FSA 578 form, and Farm Service Agency map of enrolled land. |
Carbon storage (sequestration) helps reduce carbon dioxide emissions. Carbon dioxide traps heat in the atmosphere, causing temperature increases and local changes in climate.
Farmers Union has earned approval from the Chicago Climate Exchange to aggregate carbon credits. As a participant in the Farmers Union program, RMFU enrolls producer acreages of carbon projects into blocks of credits that are traded on the Exchange much like other agricultural commodities are traded.
Companies, local governments, colleges and universities can purchase credits on the Exchange to offset their own carbon emissions into the atmosphere. Once the credits are sold, producers earn income based on the acres they have enrolled. This program is entirely voluntary, but once a contract is signed, the terms are legally binding on all parties.
Eligible Land and Credit Earning Potential
Conservation Tillage: Carbon credits are issued at the rate of .2 to .6 metric tons of carbon per acre annually to participants who commit to continuous conservation tillage on enrolled land from 2007 through 2010. In most cases, credit can be earned for the 2006 year. Enrolled acres may be planted in pulse crops (i.e. beans, peas, lentils) no more than three of the contract years. Alfalfa or other planted forage will be considered as no-till for these contracts.
Seeded Grass Stands: Carbon credits are earned at a rate of 1.0 metric tons per acre annually, even if enrolled in CRP. Grass stands seeded prior to January 1, 1999, are not eligible for enrollment in the program.
Native Rangeland: Grassland with a grazing plan, may earn up to .52 tons/acre annually.
Forestry: Forested acres, planted or regenerated after 1990, can earn up to several tons of carbon credits annually, if the trees are managed in a sustainable manner.
Methane Offset: Methane captured and/or destroyed can earn tons of carbon credit. Animal waste systems, including anaerobic digesters and covered lagoons, can be enrolled. Each ton of methane captured earns 18 tons of carbon credits.
Credit Pricing and Selling
Each fall, a random spot check of land tracts is conducted by the Chicago Climate Exchange or its designee. At the end of the year, all of the database information is submitted to the CCX and carbon credits issued to the Farmers Union aggregator trading account.
Farmers Union then sells the credits on the Exchange for program participants. The transfer price is the net sales price (less Exchange fees) minus a ten percent service fee.
Twenty percent of the carbon offsets are retained by the CCX in a carbon bank. If no contract violation occurs, the tons are sold at the end of the contract (2011).
Payment Schedule
At the end of each calendar year, the earned credits are sold on the Exchange. The proceeds, less fees and escrow, are sent to the producer or landowner. Generally, the credits are sold the year after they have been earned. This allows participants to receive current prices for credits each year, even though the contracts cover multiple years.
Payments are made to the land manager: the person who receives crop proceeds and is on file at FSA as the farm operator. In share-rent agreements, contracts are split or signed separately.
Penalties
Enrollees who do not complete the terms of the agreement are subject to penalties and loss of carbon bank tons. If land fails to meet contract specifications, all credits earned from such land are null and void and all payments for credits delivered shall be repaid subject to interest and penalties.
