Louisiana landowners learn about carbon credits

Linda Benedict, Bogren, Richard C.  |  7/2/2008 8:59:36 PM

ALEXANDRIA – Louisiana landowners are showing interest in carbon trading – an emerging market that pays landowners for removing carbon dioxide from the atmosphere.

More than 200 people packed the C. Woodrow Dewitt Livestock facility at the LSU AgCenter’s Dean Lee Research and Extension Center on May 14, 2008, to hear how they could benefit from selling carbon credits.

In carbon trading, a carbon credit assigns a monetary value to one ton of carbon dioxide that’s removed from the atmosphere and sequestered – or tied up – in plants or in the soil, experts said. A buyer of a carbon credit is paying the seller to keep one ton of carbon dioxide out of the atmosphere.

“Carbon-trading markets have evolved, and now forest and agricultural landowners can participate in these markets,” said Mike Blazier, an LSU AgCenter forestry specialist at the Hill Farm Research Station in Homer. “Carbon trading is one of the environmental service markets landowners can participate in. They’re voluntary and can fit into current management practices.”

The contracts aren’t permanent but cover varying periods – usually 15 years, he said.

The buyers of carbon credits are companies that emit carbon dioxide or other greenhouse gases as part of their businesses, such as power companies with coalburning facilities, Blazier said.

“Because the United States currently has a voluntary market, these companies are voluntarily choosing to offset their emissions largely as a response to concerns about rising carbon dioxide levels in the atmosphere,” Blazier said. “Essentially buyers of carbon credits are doing so because they perceive it as the social cost of doing their business.”

The current approach to trading in carbon credits centers around what the industry calls “cap-and-trade” programs.

Companies that generate more than their cap can reduce the emissions they’re responsible for by buying credits from others that agree to tie up the material, said Michael McDaniel, a professional in residence at the LSU Center for Energy Studies.

Credits take the form of “offsets” that agricultural and forest landowners can generate by agreeing to grow particular plants that take carbon dioxide out of the atmosphere and tie it up – or sequester it – within the plants, he said.

“There’s a booming market right now for offsets in general,” McDaniel said.

Offsets are measured in metric tons of carbon dioxide.

McDaniel said a federal cap-andtrade program in carbon dioxide is likely to emerge, but none currently exists.

“It’s a nascent market that still has to be worked out,” McDaniel said. “The science is still unfolding, but scientists estimate CO2 emission needs to be reduced by about 80 percent.”

“It’s lagniappe,” said C.A. "Buck" Vandersteen, executive director of the Louisiana Forestry Association. “Carbon credits are an opportunity for landowners and our industry to position ourselves to take advantage of energy markets while we continue to grow the forest industry.”

The leading opportunity for landowners to establish carbon credits is to plant trees on land where trees haven’t been planted, said Eric Taylor, an extension forestry specialist with Texas A&M University.

Aforestation – putting new trees where none were before – creates areas where trees absorb carbon dioxide from the air and turn it into woody biomass, Taylor said. That’s the major source of carbon credit.

“Carbon credit depends on doing something outside of business as usual,” he said.

Once landowners establish new tracts of trees, the carbon value can be calculated and sold, Taylor said. The only U.S. market is through the Chicago Climate Exchange, where aggregators – people who acquire contracts for pools of land from various landowners – buy carbon credits from landowners and then sell the credits to individual companies. The price is established at the Chicago exchange.
Rick Bogren

(This article was published in the spring 2008 issue of Louisiana Agriculture.)
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