Agriculture producers may have a crop they can cash in on without having to plant or harvest anything extra, Texas AgriLife Extension Service specialists said.
Dr. Steve Amosson, AgriLife Extension economist in Amarillo, said carbon sequestration is getting a lot of attention of late. Carbon sequestration is defined as the capture and secure storage of carbon.
It is estimated that U.S. agriculture could sequester 275-900 million tons of carbon dioxide annually through processes such as no-till or conservation tillage or rangeland improvement, as well as reducing methane gas emissions, Amosson said.
“It’s a greenhouse gas reduction effort involving a pilot trading program for emission sources and offset projects,” he said. “First they determine eligibility, and then the carbon credits are sold on a market – the Chicago Climate Exchange.”
The ultimate goal of the pilot program, which will continue through 2010, is to reduce the amount of carbon dioxide released into the air, Amosson said.
“Companies that want to market themselves as being clean or green are the ones who are buying these credits,” said Luis Ribera, assistant professor and Extension economist in Weslaco.
“Large manufacturing operations can either do it themselves, by reducing carbon emissions, or they can buy the carbon credits from someone else as an offset,” Amosson said. “Agriculture has been identified as one place they can buy credits from.”
The voluntary carbon market in the U.S. peaked at over $7 per metric ton and is now trading at about $5.50 per metric ton, Amosson said. By comparison, the mandatory European exchange is trading about five to six times higher than the U.S. market. If the U.S. goes to a mandatory carbon market, carbon credit prices could increase dramatically, he said.
“One catch in this game is that in the European market, ag credit doesn’t count,” Amosson said. “So the benefit of future and longer-term programs to agriculture will depend on how that is negotiated.”
The criteria for crop-land eligibility in the pilot program are:
– The land must be in an eligible project area capable of being cropped.
– It must be crop land that recently was turned into grass or no-till or minimum till.
– It must be committed for five years of conservation tillage.
– It must have an annual certification of compliance.
The credits will be transferred every Jan. 1, with 20 percent held in reserve until the end of the pilot project, Amosson said. The transfer price will be determined by sale through the Chicago Climate Exchange, less a 10 percent service fee if an aggregator is used.
If a producer sequesters at least 10,000 metric tons of carbon, then there is no need for an aggregator and he will not have to pay the 10 percent fee, Ribera said.
There are also a verification fee, registration fee and trading fee that will be charged at the time of the transaction, Ribera said.
No-till cropping will result in 0.2-0.6 metric tons per acre, while seeding long-term grasses merits one metric ton and capturing one ton of methane through anaerobic digesters results in 18.25 carbon credits, Amosson said.
In Zone D, which consists of the majority of Texas north of Interstate 20 and parts of Oklahoma, crop land can earn 0.2 metric tons per acre on dryland and 0.6 metric tons per acre on irrigated land if the operator follows a no-till or strip-till regimen, he said.
To determine rangeland project eligibility, the Natural Resources Conservation Service guidelines for managing the controlled harvest of vegetation with grazing animals are used, Amosson said. Stocking rates and livestock distribution criteria are defined according to county and state in the conservation service’s prescribed grazing specification code.
Rangeland values are divided between non-degraded, which earns 0.2 metric tons per acre, and degraded, which collects 0.52 metric tons per acre, he said.
Methane capture is determined on the per head inventory basis, with dairy cows earning about 4.5 metric tons for every four cows on a dairy with an anaerobic digester, Amosson said. Feedlot cattle merit just under two metric tons for every eight to 10 cows.
The Chicago Climate Exchange works through “aggregators,” private agents who can group together different contracts to meet the carbon credit needs of the buyers. The minimum contract size is 10,000 tons from a group of farms and in some cases each farm must have at least 250 acres, Ribera said.
With no-till or quasi-till practices, producers can earn $1-$3 per acre, and rangeland practices can earn and extra $1 to $2.5 per acre, Amosson said. The return for methane control is about $10-$25 per head inventory.
“It is definitely worth a producer’s time to look into it, especially if he is already following these practices,” he said.