Farmers See Prices Tank For Carbon Credits

One of the biggest fronts in the battle against Cap and Trade legislation has been the debate over just how much money in carbon credits the ag community stands to make under the proposal. The USDA analysis seems to think that the estimated $50 million in carbon credit payments the industry stands to receive under the program will offset the estimated increase in energy costs. Without going into an extended analysis about the false assumptions built into the EPA and USDA calculations, Colorado Farm Bureau has held from the start that the exact opposite is true.

In fact, any payments that the industry stands to receive will be far outstripped by the skyrocketing energy costs and reduction in GDP that the country will experience under the Cap and Trade scheme. Not only will many producers have difficulty in implementing carbon capture technology and strategies (planting trees, no-till, fallow, methane digesters, etc.) but the price of the carbon credits that farmers will be able to trade is grossly overestimated. Farmers are already seening the value of carbon offset credits drop to near worthless levels.

According to the AP

Farmers enrolled in a program that rewards them for reducing greenhouse gasses are finding the market for their carbon credits has shrunk amid the recession and uncertainty about climate legislation being crafted by Congress.

Carbon dioxide credits are fetching about 60 cents a metric ton, down from a high of about $7 a year ago, according to the National Farmers Union, which runs the program.

“We’re just kind of treading water at this point,” said Roger Johnson, president of the National Farmers Union and former North Dakota agriculture commissioner.

Farmers, ranchers and landowners earn credits by growing grasses and trees or using no-till farming practices. Livestock producers can participate by installing systems to capture methane from manure.

The program pools the credits for sale on the Chicago Climate Exchange, a private agency that trades greenhouse gases and other pollutants just as other exchanges trade commodities such as crops and livestock. Corporations, cities and other exchange members buy the credits to help offset their emissions.

About 3,900 farmers and ranchers in 40 states are enrolled in the program, with about a quarter in North Dakota, where it began three years ago, said Dale Enerson, director of the National Farmers Union program.

The program’s participants in 2006 and 2007 captured carbon dioxide from 2.8 million acres, or about the amount produced by 320,000 cars per year, Enerson said.

Farmers usually receive payment for their credits — typically a few thousand dollars — in July. But those checks haven’t been sent this year because most of the carbon credits pooled in 2008 have yet to be traded, Johnson and Enerson said.


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