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Minnesota farmers showing growing interest in trading of carbon credits

WILLMAR -- Minnesota farmers are showing interest in the National Farmers Union carbon trading program, which is being expanded to include the state this year.

Dale Enerson, who heads the program for the Farmers Union, said he's been receiving lots of inquiries from Minnesota farmers ever since news of the expansion was announced in December.

And why not?

"Farmers are getting paid for something they are already doing,'' said Les Heen, communications and public affairs director for the Minnesota Farmers Union.

He told landowners attending the Hawk Creek Watershed annual meeting last week in Willmar how they can join the many farmers in North Dakota already reaping financial rewards for good stewardship practices.

The National Farmers Union began offering the program initially in North Dakota, where farmers have now enrolled 800,000 acres.

Under standards established by the Chicago Climate Exchange, farmers receive credits for the carbon they sequester in the soil. Farmers can receive credits for no-till and strip-till farming practices in which less than 30 percent of the soil is disturbed. There are credits available for acres planted into grasses since Jan. 1, 1999, including those enrolled in conservation programs.

Also, there are carbon credits to be gained for other on-farm activities that reduce greenhouse gases. They include erecting wind turbines to produce electricity or using methane digesters to manage wastes from dairy operations.

The National Farmers Union serves as the entity to represent the enrolled acres, and trades the credits through the Chicago Climate Exchange.

Companies purchase the carbon credits. Heen said many of the purchasers are American companies doing business in other countries that are party to the Kyoto Protocol.

They must abide by caps on how much carbon dioxide can be emitted. When they cannot meet the limit, the companies purchase credits to compensate for the excess.

Heen said there are also companies and individuals purchasing carbon credits for altruistic motives alone. Travelocity now makes it possible for customers to purchase an airplane ticket and, at the same time, buy carbon credits to offset the carbon created by the airplane flight.

It all adds up to an opportunity for farmers to sequester greenbacks. The credits initially began trading for $1 to $2 per metric ton of carbon. They are now trading in the range of $3 to $4, said Heen.

Farmers earn credits per acre depending on the practices they employ. No-till farming is credited at 0.4 metric ton of carbon per acre, while grasslands are worth 0.75 ton. Heen said that typically farmers are realizing around $2 to $3 an acre for land that is contracted.

"You're not going to get rich,'' said Heen.

He and Enerson both pointed out that the carbon payments do not justify buying new equipment or making major operational changes for their sake. On the other hand, they also noted that carbon trading provides a source of revenue for farmers who are already doing those things that benefit the environment.

Enerson is optimistic that we will see more carbon trading, if only because American farmers have so much to offer. America's farmland offers the potential to sequester large quantities of carbon, far more than the nation's forests do, according to Heen.

Of course, America also produces a lot of carbon. The U.S. emits 6 billion of the 30 billion metric tons of carbon emitted in the world by human activities each year, according to National Farmers Union figures.

Farmland is part of both the problem and the solution. Tillage and other disturbances release the carbon in farm soils to the atmosphere, just like the carbon dioxide fizz of soda when a bottle cap is popped. Keep the soil intact and undisturbed, and the carbon stays put and increases as organic material decomposes.

Heen noted that practices that sequester carbon also are the types of things that improve water quality.

Both Heen and Enerson caution that there are stringent standards to qualify lands for carbon credits, and there are penalties if lands are taken out before contracts expire. There is also a 10 percent administrative fee.

Information on the program and how to enroll is found on the National Farmers Union Web site