Farmers and landowners could receive extra income from already-existing land management practices by selling carbon credits on the Chicago Climate Exchange, says Lenny Farlee, a Purdue University expert.

“Farmers and landowners have an opportunity to sell carbon offset credits into carbon trading markets if they implement certain conservation practices,” says Farlee, Purdue Extension forester. “Eligible practices include no-till farming, if implemented between 2006 and 2010; grassland plantings that have been done since 1999; as well as forest tree plantings done since 1990.”

Carbon offset credits are emissions credits earned by eligible offset projects that sequester, destroy or displace greenhouse gas emissions.

Farlee says that forestland owners involved in the Classified Forest Program through the Division of Forestry also have an opportunity to trade carbon offset credits on the growth of their forest properties.

Before jumping in, Farlee says there are a couple things farmers and landowners need to consider when determining whether or not to sell carbon offset credits.

“You are signing a contract to keep a practice in place,” Farlee says. “If the practice is removed, you would have to pay for the carbon that you’ve already been paid for.

“Once you understand that you are entering a contractual agreement and you are sure you are going to keep the practice, putting carbon credits on the market is actually another way to get a little bit of income.”

Last summer carbon had a value of $7/ton. For an idea of just how much potential income selling carbon offset credits could provide, Farlee says no-till yields 6/10 of a ton of carbon per acre on Indiana farms. So for one 50-acre field a farmer could generate $210 of additional income with carbon valued at $7/ton. Grassland plantings yield 1 ton carbon/acre/year and tree plantings can range anywhere from 1 ton to 3 tons/acre/year. However, the value of carbon has done what many other things have done and that is drop significantly, Farlee says.

Today, carbon offset credits are worth about $2/ton of carbon.

“The price attractiveness is not quite as high as it was this summer, but we’ve got some interesting developments,” he points out. “The new administration has indicated an interest in a cap and trade program.

President Barack Obama’s New Energy for America Plan states that they will implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80% by 2050.

“A program like this would put absolute caps on emissions of carbon and allow for trading to help meet those caps through industry buying carbon offset credits from folks who are fixing carbon.”

Before a landowner can trade carbon credits, they must work with an aggregator, someone who accumulates pools of carbon from several different properties to get enough carbon to meet the trading thresholds required by the Chicago Climate Exchange. Essentially the aggregator acts as a stockbroker, Farlee says.

A list of aggregators is available on the Chicago Climate Exchange’s Web site at http://www.chicagoclimateexchange.com/content.jsf?id=64. Purdue Extension also has a publication called “Cash for Carbon: A Woodland Owner’s Guide for Accessing Carbon Markets,” which includes a short list of aggregators in the Central Hardwoods Region. The publication is available online at http://www.ces.purdue.edu/extmedia/FNR/FNR-228-W.pdf.

“Selling carbon credits is something that farmers and forestland owners should certainly watch as a real opportunity in the future to make some extra income off their property management practices,” Farlee says.

For questions and more information about carbon credit trading, contact Farlee at 765-494-2153 or lfarlee@purdue.edu.