Carbon-payment program ends

A five-year-old program to pay farmers for practices that left carbon dioxide in the ground is coming to an end, according to information from the program’s operator, the North Dakota Farmers Union.

The Carbon Credit Program will continue to operate for farmers with current contracts but no new contracts will be issued and existing contracts won’t be renewed.

“It has to do with the market,” said Anne Denholm, editor of the Union Farmer. “The legislation isn’t supporting the creation of value for sequestering carbon.”

Plants take in carbon dioxide and emit oxygen. The carbon removed from the carbon dioxide is stored around the roots of the plant until the soil is disturbed by tillage when the carbon enters the atmosphere. Farm practices such as no-till or limited tillage or planting permanent-cover crops sequesters the carbon, or keeps it in the soil.

The Carbon Credit Program, operated by the North Dakota Farmers Union, issued contracts to farmers to maintain these farming practices. These contracts were sold on the Chicago Climate Exchange (CCX) to businesses that wished to offset the amount of carbon they emitted into the atmosphere.

An acre of no-till farmland sequesters 0.4 tons of carbon per year, according to standards established by the CCX. An acre of land planted to grass sequesters 0.75 tons per year. Acreages were accumulated into contracts of 1,000 tons and listed with the CCX where the contracts were sold at auction.

The peak prices, according to the CCX website, occurred in early 2008 at slightly more than $7 per ton. Since then prices have plummeted.

Most of the recent volume in carbon offsets has been handled through direct sales rather than through the auction process of the exchange, said Brookly McLaughlin, media relations spokesperson for the CCX. The last soil-carbon sequestering contracts were sold in July 2010 for between $0.50 and $0.55 per ton.

The CCX will continue to offer offset contracts with new programs beginning in 2011.

“There will be some changes to protocol,” McLaughlin said. “But opportunities for farmers will exist.”

However, the current low volume and prices prompted the North Dakota Farmers Union to discontinue the program.

“Right now there is no value in sequestering carbon,” Denholm said. “Cap and trade (legislation) would have created value but that never got passed.”

Cap and trade legislation would cap or limit the amount of carbon industries could emit into the atmosphere or they could trade for offset credits from practices that reduced carbon in the atmosphere. The legislation is currently not under consideration in the United States.

Over the course of the five year program, NDFU distributed $7.4 million to 3,900 participating farmers. The organization would not divulge average per-acre or per-farm payments. Of the 3,900 participating farmers, 850 were North Dakota producers.

Sun reporter Keith Norman can be reached at (701) 952-8452 or by e-mail at knorman@jamestownsun.com

Tags: north dakota, agriculture, news, carbon, agribusiness