A Publication of WTVP

Carbon Credits is becoming a familiar term in the industrial and agricultural sector of the economy. Derived by public and private entities, the basic concept involves industries such as utilities buying carbon credits from farmers who store carbon in the soil by using conservation practices on their land. Utilities and industries are consumers of fossil fuels and are assigned emission limits, but since updates of physical facilities and equipment or building new plants may be too costly, they’re allowed to pay others to store carbon in exchange for the right to release CO2 in excess of their limits into the atmosphere.

During the past century, CO2 levels have risen. There’s debate about the reasons…whether it’s a natural cycle or the result of increased CO2 emissions due to human activities. There’s a general agreement that human activity accounts for part of the increase, especially with the continuing increase of CO2 levels following the onset of the industrial age.

Agriculture in general can help reduce the level of CO2 in the atmosphere through the adoption of a wide range of conservation practices. In Illinois and Iowa, soils used for agricultural production could become a massive carbon sponge and a viable entity in the carbon credit market. Farm practices that sequester carbon include no-till practices, vegetated buffers along streams, withdrawal of cropland from production, reforestation, management of timberland, and abatement of methane from livestock waste. These might all earn money as utilities and industries pay for those practices by purchasing the resulting carbon credits.

Along with carbon credits, carbon sequestration could also help enhance the soil quality of farmland. Soil organic matter can improve soil structure and soil physical and chemical properties. It promotes beneficial soil organisms, which increase in vigor and number with more diverse crop rotations and higher organic levels. Organic matter may also bind pesticides, suppress disease organisms, and improve crop health as soil biological activity and diversity increase.

The Iowa Farm Bureau has been the pacesetter for recognizing the carbon market and organizing pools of farmland from which carbon credits can be sold. The first pool totaled 80,000 acres; the second totaled 255,000. A third pool currently forming could have land enrollment from eight or nine states.

So far, most of the credits sold resulted from no-till planting. A no-till corn or soybean field stores roughly half a ton of carbon per acre per year. On a 500-acre farm, on average, it ends up being around 270 credits per year. If credits are worth $4 per ton, that’s a little over $1,000 a year.

The market for carbon credit trading is the Chicago Climate Exchange, an electronic platform similar to the NASDAQ stock market. Providers offer the carbon credits for sale, and exchange members who need the credits to offset their greenhouse gas emissions are the bidders. IBI