What are agricultural carbon credits?

I often get calls from Nebraska crop and livestock farmers interested in carbon credits. This article provides basic information on what carbon credits are and how they work. Here are some frequently asked questions and information you need to know:

What are carbon credits? Carbon credits are created when farmers or ranchers increase the rate of carbon sequestration on their land by changing production practices or adding a new practice. A common example is adding cover crops or reducing tillage when growing row crops.

Who will buy my carbon credits? Probably a corporation that wants to reduce its carbon footprint – at least on paper – to meet corporate requirements or targets for reducing carbon dioxide emissions.

What can I get paid for my carbon credits? That depends on how many you generate. You can get a good estimate of your operation's carbon credit potential at the NRCS website comet-farm.com. One ton of stored carbon equals one carbon credit. Carbon credits have reportedly been selling for between $10 and $15 per ton recently. Producers in Nebraska likely get less than one ton of stored carbon per acre per year. The US average is 0.6 tons per acre per year.

How can I get my carbon credits to sell? You must cooperate with agricultural carbon company such as Agoro, Bayer, Cibo, ESMC, Nori and many others. After you sign a contract with them, they will work with you to implement practices that will lead to further carbon storage. Each carbon company usually has its own system for measuring and verifying carbon storage, such as soil sampling at the beginning and end of the contract period.

Are carbon credits traded? Not on the public exchange. Therefore, it is difficult to get up-to-date price information other than from the carbon companies.

What do I need to know before signing a carbon contract? Take the contract to your lawyer for a legal review. This cannot be overstated. There will be a lot of legal fine print in the contract and you need a lawyer to explain what all that fine print means. There is no "standard" carbon lease yet, and each company has its own. (David Aiken)