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7/30/2019 Guide Carbon credit
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In association with the Commonwealth Project
Community-University Partnership Supported By:
A Landowners Guide toCarbon Sequestration Credits
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INTRODUCTION
CONTACT INFORMATION:
CLIMATE CHANGE
CARBON SEQUESTRATION
WHAT CARBON CREDITS ARE
HOW CARBON CREDITS ARE EARNED
HOW PAYMENTS FOR CREDITS WORK
CARBON CREDIT PRICES
OTHER NOTES
THE CHICAGO CLIMATE EXCHANGE (CCX)FUTURE OF THE EXCHANGE
SEQUESTRATION METHODS CURRENTLY ACCEPTED BY THE CCX:
CONSERVATION FARMING
GRASS PLANTINGS
ANAEROBIC METHANE DIGESTERS
TREE PLANTINGS
LONG TERM COMMITMENT
VERIFICATION AND AGGREGATION
VERIFICATION
AGGREGATION
POTENTIAL AGGREGATORS FOR MINNESOTA LANDOWNERS
The Delta Institute (DI)
Aggregate Credit Corporation (AGC)
The National Farmers Union (NFU)
Forecon EcoMarket Solutions. (Forecon)
LANDOWNER OBLIGATIONS
STACKABLE INCENTIVES
EXAMPLE STEPS TO ENROLLMENT
POTENTIAL INCOME CALCULATIONS OVER THE LIFE OF THE CONTRACTEXAMPLE CONTRACT:
CCX CARBON ACCUMULATION TABLES
SOIL OFFSET MAPS
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Table o Contents
Page 2
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Introduction
This guide oers a path or local landowners to earn additional income while helping diminish adverse
eects o global climate change through implementation o carbon sequestration and other stackable
incentives. This document is a tool to help landowners make the decision whether or not to enroll
their land in carbon sequestration. It discusses background inormation on carbon sequestration and
global climate change; current methods o sequestration, including orestry, conservation planting,
methane capture and others; and steps a land owner must take, including contracts, verication, and
implementation, once they have made the decision to enroll their lands in a sequestration project.
Contact Inormation:
Dean Current, Research Associate
Center or Integrated Natural Resources and Agricultural ManagementUMN Dept o Forest Resources
115 Green Hall, 1530 N. ClevelandSt. Paul, MN 55108(612) [email protected]
Kent Scheer, Project Coordinator
The Commonwealth ProjectWadena, MN(218) [email protected]
John Harting, Undergraduate Research Assistant
University o Minnesota, College o Food, Agriculture and Natural Resources Science
1716 Rollins Ave SEMinneapolis, MN 55414(608) [email protected]
Diomy Zamora, Assistant Extension Proessor
University o Minnesota Extension Service708 Maple St. Brainerd, MN 56401(218)[email protected]
Linda Ulland, Executive Director
Central Region Sustainable Development Partnership1830 Airport RoadStaples, MN [email protected]
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Climate Change
Background Inormation
In every corner of the globe on land and in water, in melting ice and disappearing snow, during heatwaves and droughts, in the eyes of hurricanes and in the tears of refugees the world is witnessing
mounting and undeniable evidence that natures cycles are profoundly changing.
-- Al Gore, An Inconvenient Truth
Scientists around the world began raising the idea o global climate change more than 40 years ago,
when man-made changes to the atmosphere rst began to be recognized.
There are multiple actors causing climate change, many o which are human-induced, including
deorestation, urbanization, emissions rom burning ossil uels, and industrial agriculture. Changes
in climate have seen exponential growth as both natural and man-made actors build upon one
another. As emissions in the atmosphere restrict more o the suns solar rays rom refecting o theearth and back into space, the temperature rises and the ice and snow on the poles begin to melt.
Historically this ice and snow have refected light o the earth, but as it melts and the underlying
ground is exposed, higher levels o solar rays are absorbed, urther increasing temperatures and
continuing to accelerate the speed at which climate change occurs.
This discussion ocuses on global climate change, not global warming. Global warming implies
the earth temperatures will increase, that the entire earth with heat up. Global climate change, the
subject o this discussion, results in severe changes in temperature, precipitation, and the number
o severe storms. These changes in weather patterns may result in changes in vegetation, wildlie
habitat and habitat ranges and even economic opportunities. In Minnesota and the northern United
States, or example, these changes may maniest themselves through the encroachment o savannahlandscapes, the loss o deciduous orests, and less overall accumulation o precipitation along with
higher degrees o intensity when precipitation does occur. This could change winter based recreation
by reducing opportunities or snowmobiling or skiing. Less precipitation can aect armers and the
type, quality and quantity o crops produced.
In early 2007, the Intergovernmental Panel on Climate Change, a scientic eort spearheaded by the
United Nations (UN) and supported by scientists rom countries around the world, ound there is a 90
percent probability that human actions are contributing to global climate change, statistically a very
high probability. Additionally, the lead scientist or and the president o the American Association or
the Advancement o Science, John Holdren, noted that evidence o climate change and its eects are
absolutely stunning.
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Carbon SequestrationCarbon sequestration is the capture and secure storage o carbon dioxide that would otherwise be
emitted to or remain in the atmosphere. Terrestrial carbon sequestration is carbon stored in the
biomass created by perennial vegetations such as root systems and tree trunks.
Transormation o ree foating atmospheric carbon to a xed-state carbon in can be achieved through
the ollowing methods:
Tree plantings (primary ocus o this document)Soil Organic Matter (decayed plant remains which hold carbon within)Perennial grass plantingUnderground traps, including large bodies o water
What Carbon Credits are
Credits that you as a rural landowner can receive in exchange or implementing perennial
vegetations on your land which result in high levels o carbon sequestration. These credits arethen sold on the CCX or cash payments.
How Carbon Credits are Earned
Carbon credits encompass two ideas:
The prevention and or reduction o carbon emissions produced by human related activities1. rom
reaching the atmosphere by capturing and diverting them to secure storage. Methane digesters or
conservation arming, which are discussed on ollowing pages, are examples o this and work to
reduce to amount o carbon released into the atmosphere in the rst place.
The removal o carbon rom the atmosphere by various means such as agroorestry or2. perennialgrasses and securely storing it in orms such as biomass or soil organic matter.
Thereore, as a landowner, you will earn carbon credits or implementing CCX approved sequestration
methods (see ollowing page or list o approved methods).
How Payments or Credits Work
The Chicago Climate Exchange (CCX) is the trading platorm or carbon credits, trading them in large
bundles. In order to sell credits on the CCX, landowners need to work through an aggregator. An
aggregator combines credits with several landowners to create a bundle o credits large enough to
trade on the exchange. When a landowner enters into a contract with an aggregator, the landownerhas given the aggregator the rights to the carbon sequestrated in exchange or payment. The
aggregator chooses when to sell the credits to the market established by the CCX, and within 24
hours o the sale will receive payment rom the CCX into the aggregators account. Then, at varying
times throughout the year, depending on the aggregator, sales are totaled and payments are made
to program enrollees (landowners). The payment allocation and disbursement system varies rom
aggregator to aggregator.
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Carbon Credit Prices
Prices or credits on the CCX have varied greatly over time, yet have shown a general upward trend.
When the exchange originally opened in December 2003 credits were selling or $0.98, and they
have been as high as $4.40 in November 2006. Recently, credits closed the month o December
2006 at $4.10/credit, January 2007 at $3.30/credit, and February 2007 at $4.05/credit. One creditis earned or each metric ton (mT) o carbon sequestered. (See page 14 or an example situation that
examines potential earnings rom carbon credits.)
Other Notes
The CCX takes 20 percent o a landowners initial credits and places them into a reserve pool. Thispool is an insurance measure against a stochastic event (a random event, resulting in large scaleenvironmental degradation such as a orest re or blow down). I at the end o a landownerscontract there has not been a stochastic event, the landowner is eligible to receive these creditsback in ull. These credits are at that time eligible or sale.
Each year there are varying but specied open enrollment times or carbon credits, usually ending
by the beginning o summer. However, it is expected that in the uture additional enrollment timeswill be oered in the all.
The Chicago Climate Exchange (CCX)
The development o the CCX began in the years 2000 and 2001 as the demand or tradable market
credits or pollution based emissions began to grow. The primary research behind the exchange was
conducted by Northwestern University, and ater a trading platorm was designed, the CCX launched in
2003. The purpose o the CCX is to purchase carbon sequestration credits rom landowners who haveimplemented carbon sequestering practices on their lands, and in turn sell those credits to carbon
emitting companies and industries, thereby reducing their net carbon emissions.The Chicago Climate
Exchange is the only active market currently operating within the United States. Markets have been
proposed in Caliornia and the New England area, but nothing else is yet active.
Currently the CCX is 100 percent voluntary, meaning no industries, public or private, are requiredto purchase credits.
Enrollment in the exchange by both landowners and industry members is voluntary. However,once contracts are entered into and nalized within the exchange, all contracts become legallybinding agreements.
The Chicago Climate Exchange began operations in 2003, recently completing Phase 1 in 2006.The exchange has now entered Phase 2, which runs until 2010. According to the CCX, it isunclear what will happen ater December 31, 2010, although the same problem was presentedduring Phase 1, and the exchange was just renewed through Phase 2. Thereore, contracts areonly legally binding through 2010. I the exchange continues, landowners will have the optiono renewing their contract or exiting rom the exchange.
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Additionally, i a landowner can demonstrate that a project has been sequestering carbon atveriable rates in years beore entering into a contract, oset credit payments can be earned thatdate back to 2003, the year the exchange began. This is, however, a very rigorous processand annual records must include inormation such as spacing, width measurements, ages, etcbeore eligibility is determined. To date, no landowners have received payments or plantingsundertaken prior to enrollment in a trading contract.
The CCX requires each landowner to set aside 20 percent o each years oset credits as insuranceagainst a rapid release o carbon rom stochastic events, such as orest res or wind storms. Thelandowner still owns the reserve pool credits, but cannot sell them until 2010. I a landownerdoes not have enough reserve pool credits to cover losses, they must buy oset credits rom themarket to make up the dierence.
Future o the ExchangeAs previously mentioned, the uture o the exchange beyond 2010 is unclear. One associate rom
the Delta Institute (see pg. 10) believes that the CCX will wait to see what the Federal government
does beore deciding to extend the program. It is likely that the CCX will continue in some orm
beyond 2010. The most plausible scenario is or the CCX to continue as the trading platorm, while
relinquishing rulemaking and regulatory control to the U.S. Environmental Protection Agency.
Sequestration Methods Currently
Accepted by the CCX:
Conservation Farming
Eligible projects implement no-till or strip-till (low till) practices on agricultural lands that did not
previously employ these methods. The CCX credits the carbon benet at 0.4 or 0.6 metric tons o
carbon dioxide (CO2) per acre per year.1 In addition to carbon sequestration, this practice involves
cultivating crops to reduce soil erosion by leaving crop residue on the soil surace rather than plowing
or disking it into the soil. According to Sustainable Conservation2, conservation arming can save a
armer an estimated $40-$70/acre/yr through savings in uel, labor, material inputs and maintenance
costs. Weeds are controlled through the use o cover crops or herbicides rather than through cultivation.
Water is also used more eciently as the water-holding capacity o the soil increases and water losses
rom runo and evaporation are reduced. For crops grown in drought-prone soils, this more ecient
water use can translate into higher yields.
1 Recent review o past research indicates that, although limited tillage systems have many positive impacts, they may notactually sequester more carbon that conventional tillage systems. (Lennon, Megan J. and Nater, Edward A. 2006. BiophysicalAspects o Terrestrial Carbon Sequestration in Minnesota. http://wrc.umn.edu/outreach/carbon.)
2 http://www.suscon.org/dairies/conservationtillage.asp
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Grass Plantings
The CCX credits grass plantings implemented ater January 1, 1999 at 1.0 metric tons o CO2 per
acre per year. Perennial grass plantings turn green aster, stay green longer, and produce more
biomass. This equates to more protein and higher value orage or both wildlie and livestock along
with sequestering carbon through the buildup o biomass. I possible, a mix o native species ograsses has been shown to have the most ecient accumulation o biomasses. Up to one cutting per
year is allowed through CCX approved contracts.
Anaerobic Methane Digesters
Eligible projects are those that were in operation any time ater 1999 and have installed biogas fow
monitoring and/or electrical metering equipment. The CCX credits methane digesters at 18.25 metric
tons o CO2 per ton o methane per year. Anaerobic methane digesters work by placing arm waste
such as manure into an air tight chamber which then harnesses emitted gasses and converts them to
energy that can be used to power nearby appliances, electronics, and even homes. The remains can
also be used as excellent sources o ertilizer.
Tree Plantings
For orestry projects, the CCX uses the level o carbon in the atmosphere on January 1, 1990 as its
baseline to measure against current levels. Thereore, orestry projects can be enrolled i the plantings
were initiated on or ater January 1, 1990 on land that was not orested, or on orested land that had been
degraded (a decrease in the quality condition o the orest) or deorested (harvested) as o December
31, 1989. Projects include aorestation, reorestation via plantings, orest enrichment (increasing the
planting density), and passive reorestation. Tree plantings in the upper mid-west average 3 to 4 metric
tons o CO2 per acre per year with some as high as 7 metric tons per acre per year.
Carbon sequestration rates are highest or orestry methods such as plantings or reorestation. (See rate
table on page 18). Sequestration rates or tree plantings will initially increase, yet will eventually decrease
over time as they are directly correlated with tree growth rates. During the early stages o plantation
establishment, trees experience the highest levels o growth, actually growing at exponential levels to
begin with. As such, they require and absorb higher levels o carbon dioxide rom the atmosphere
through the process o photosynthesis. Some o the carbon then becomes xed as it is used to maintain
the vigor o the tree through respiration. Once trees mature, and their growth rates decrease, they
sequester less carbon. However this does not begin to happen until ater 20-25 years and oten longer,
depending on the species.
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Long Term CommitmentThe backbone o carbon sequestration projects is long-term sustainability. This means that projects
enrolled into the CCX must be designed with long term commitment in mind. There are multiple ways
o demonstrating this commitment, with a ew o them highlighted below:
Establishing a conservation easement, or a term o no less than eighty years, providing that theproject land is to be maintained as orest or the duration o the easementTranser o ownership o land parcels to a land trust, qualiying non-governmental organizationor governmental body, which establishes legal protection that the project land is to be maintainedas orest or no less than eighty yearsEnrollment into CRP contract o no less than 15 yearsSigning a letter o intent stating that you as the rightul landowner will continue to manage yourlands in accordance with the CCX and aggregator contractsEvidence o membership in American Tree Farm System or other sustainable management system
Verifcation and Aggregation
Verifcation
Third party verication o sequestration levels is required or projects that sequester more than 2,000
metric tons (mT) o carbon per year. The landowner hires a CCX-approved verier to perorm the work.
For enrolled land sequestering less than 2,000 mT o carbon per year, the CCX will perorm a paper
verication, by reviewing carbon calculations and documentation submitted by the landowner.
Aggregation
Because exchange members incur transaction costs when buying and selling oset-credits, they
preer to buy credits in large amounts. As a result, the CCX requires landowners to work through an
aggregator i the project sequesters less than 12,500 mT per year. The aggregator pools credits rom
multiple landowners into a marketable package and trades the credits on behal o the landowner,
allowing exchange members to purchase large quantities o credits with low transaction costs. When
the landowner enrolls, they are making a contractual commitment with the aggregator, not the Chicago
Climate Exchange. All aggregators remove a small ee rom gross carbon credits payments in order
to sustain their business. The Chicago Climate Exchange also takes an enrollment and trading ee o
$0.20 per ton. All aggregators can enroll credits rom conservation tillage, grass and tree plantings,
and methane digesters.
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Potential Aggregators or Minnesota Landowners
The Delta Institute (DI)The Delta Institute is an Associate Member and Registered Aggregator o the Chicago ClimateExchange. The Delta Institute manages two carbon sequestration programs the Illinois Conservation& Climate Initiative and the Michigan Conservation and Climate Initiative. Although the Delta Institute
has specic programs in two states, they can aggregate credits rom any state. The Delta Institute isalso developing a CCX-approved pilot program that measures the carbon sequestration potential omature, managed orestlands. This program is expected to be available in early 2008.
Contact Information:Bill Schleizer, Associate Todd Parker, Associate53 W. Jackson Blvd. Ste 230 600 W. St. Joseph St. Ste 10Chicago, IL 60604 Lansing, MI 48933312-554-0900 x 24 517-482-8810
www.deltacarbon.org
Aggregate Credit Corporation (AGC)
The AGC, ormerly part o the Iowa Farm Bureau, is working to aggregate carbon credits rom Iowa and surroundingstates landowners or sale on the Chicago Climate Exchange. Credits can be earned through soil conserving
arming methods, tree plantings and methane capture.
Contact Informationhttp://www.iowaarmbureau.com/special/carbon/deault.aspx
(515) 225-54315400 University Ave
West Des Moines, IA 50266
The National Farmers Union (NFU)The NFUs Carbon Credit Program has earned approval rom the CCX to aggregate carbon credits. FarmersUnion will enroll producer acreages o carbon into blocks o credits that will be traded on the Exchange.
Contact Informationhttp://www.nu.org/issues/environment/carbon-credits/Dale Enerson 800-366-8331 ext.116
Forecon EcoMarket Solutions. (Forecon)Forecon is a multi-disciplinary orestry and natural resources consulting company. EcoMarketSolutions, a wholly owned subsidiary o Forecon, is an approved CCX aggregator that ocuses on
orest oset project development. They assist clients in capturing nancial returns o their orests bydeveloping, evaluating, registering, reporting, and trading orestry oset carbon credits.
Contact Informationwww.oreconecomarketsolutionsllc.comJohn Giord 716-664-5602 x-301or [email protected] East Main StreetFalconer, NY 14733
Aggregation Fee: 8 %
Payment periods:
Semi-Annually
AggregationFee:10%
PaymentPeriod:Within
30 days o the sale o
credits.
Aggregation Fee: 10%
Payment periods:
Semi-Annually
Aggregation Fee: 10%
PaymentPeriod:Payments
occur within days o the
sale o your credits
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Landowner ObligationsComplete an application orm and contract and submit the documents directly to the aggregator.1.
Required Documents (Delta Institute)
Signed Contract
Enrollment Worksheet
Farm Service Agency (FSA) Maps
FSA Crop Certication Summary (FSA-578)
Conservation Practices Documentation(CCC-509 or AD-1026)
CRP/CREP Contracts, i applicable
Tree Planting Documentation(Mgmt Plan or Planting Invoice)
Conservation Easement or Letter o Intent
Grass
XSO*
XSO
Tillage
XSO
XSO
Forest
XFO**
XFO
* XSO: Exchange Soils Osets Program ** XFO: Exchange Forestry Osets Program
Note: other documentation, such as CRP enrollment orms, may be required.
For small projects, simple landowner calculation o sequestration levels based upon provided criteria2.and variables (usually ound within a contract) is required. The status o the lands and practicesyou enroll into the exchange are subject to external review at any time.Manage lands according to the contractual agreement between landowner, the aggregator and the3.Chicago Climate ExchangeSubmit yearly project report (one-page orm) to aggregator demonstrating conormance with the4.contract requirements, veriying the number o acres enrolled in the program, the project type, and
project locations (not required by all aggregators)
A representative rom the selected aggregator will help interested landowners work through the
enrollment and verication processes.
Stackable IncentivesStackable incentives oer opportunities to reduce start up costs o entering into a carbon sequestration
project and to increase the economic viability o carbon sequestration or small landowners by
stacking other credit and cost-share programs.
The ollowing section is divided between cost-share programs that help landowners overcome the
initial cost o converting their lands to carbon sequestering methods and programs that provide
cash payments in addition to the carbon credits or lands in carbon sequestering states. Local
organizations that administer these programs will need to be contacted to ensure qualication. For
urther inormation on any o the EQIP cost reducing opportunities please see the Conservation Practice
Payment Document at www.eotswcd.org. EQIP programs are only eligible during the nal year o a
CRP contract or i no CRP contract has existed.
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Cost ReducingOpportunities
EnvironmentalQuality IncentivesProgram(EQIP) Critical
Area Planting
EQIP - ResidueManagement
EQIP Forest Site
Preparation
EQIP Tree/ShrubEstablishment
EQIP Restoration andManagement oDeclining Habitats
ContinuousCRP Cost-Share
Assistance
Erosion, SedimentControl & WaterQuality Cost ShareProgram
www.maswcd.org
Percent oCosts Covered
50% o up to:Earthwork:$1000/acreFertilizer: $35/acre
Veg Cover: $260/acreWeed Control:$10/acre
100% o up to$30/acre
50% o costs up to
$130/acre
50% o up to:Tree Planting, Coniers:$270/acreHardwoods:$310/acreVeg Cover: $350/acre
Site Prep: $110/acre
50% o up to:Tree Planting,Coniers: $270/acreHardwoods:$310/acreVeg Cover: $350/acreSite Prep: $110/acre
Up to 50%
Up to 75% or highpriority practices
Up to 50% orsecondary
LandownerInvolvement
Installment oPracticesPerorm uplandtreatment actions,
and adequatelyaddress potentialadverse impactsto conservation
Installment oPracticesPerorm uplandtreatment actions,and adequatelyaddress potentialadverse impactsto conservation
Installment o
PracticesPerorm uplandtreatment actions,and adequatelyaddress potentialadverse impactsto conservationpractices
Installment oPracticesPerorm uplandtreatment actions,and adequatelyaddress potential
adverse impactsto conservation
Installment oPracticesPerorm uplandtreatment actions,and adequatelyaddress potentialadverse impactsto conservation
Establishmento approvedcover on eligiblecropland
Installment opermanent,non-productionpractices designedto protect andimprove soil andwater quality
PracticesCovered
Permanent Vegetative
Cover - Mixed Native
Grasses
Low till armingNo till farming
Clearing of previous
vegetations to allowfor the installation of
new forests
Tree Plantings:
Conifers and
Hardwoods
Site Preparation,
seed, stock, planting
and necessary
tending
Tree Plantings:
Conifers and
Hardwoods
Permanent vegetative
cover, native
ecosystem mix
Establishing
perennial vegetations
on previously
cropped land
Critical area
stabilization
Field Windbreaks
Strip Cropping
Terraces
Other
One time payment o $40/acreUp to 10 acres may be enrolledMust be on lands that would have beenplanted as row crops
Annual payment o $30/acre/yr or up tothree yearsUp to 250 acres can be enrolled
Regeneration will be accomplished according
to a detailed orest management plan.Regeneration practices shall be done inaccordance with procedures and guidelinescontained in Forest Site PreparationForest Site Preparation should be usedin conjunction with Tree and ShrubEstablishment or seedlings and planting.
Covers between 400-800 trees per/acreWeed Control where required will beaccomplished within 24 months romplanting.At this time, the only authorized repellants areDeer Away Big Game Repellent Powder and
Plantskydd Deer Repellent.
A detailed plan is required, in accordancewith the specications outlined in the NRCSpractice standard.
Land must have been cropped our out o theprevious six years
Contact your local Soil and WaterConservation District or urther inormation
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Government
Payments
Sustainable Forest
Initiative Act
(SFIA)
http://cc.cans.
umn.edu/nryb/nrr/
SFIA_NRR.pd
Conservation
Reserve Program
(CRP)
Forest Legacy
Program (FLP)
Permanent
Conservation
Easement
www.dnr.state.
mn.us/orestry/
index.html
Payment Forms
Annual paymentbased onMarket vs.
Current UseValuesMinimumpayments o$1.50/acre,oten around$5.00/acre
Payments arebased uponthe productivityo the landin traditionalarmingmethods
One timepayment equalto the dierence
in market valueo propertybeore andater easementrestrictions are
set in place.
Landowner
Involvement
Must havea orestmanagement
plan by anapproved planwriter andrecord a 8year covenantrestricting the
woodlandrom beingdeveloped.
Installment opracticesMust providecontracts whenapplying orCarbon Credits
Prepare amultipleresource
managementplan as part othe conservationeasementacquisition.
Practices
Covered
Dedicationo land tosustainable
orestmanagement
Conversiono specied,usually highlyerodible,land intoconservationpractices suchas perennialgrasses or trees
Dedication tosustainableorest
management
Other
Annual incentivepayments aretreated as taxable
income to theproperty owner, nota rebate on propertytaxes.
As part o hisethanol push,President Bushhas proposed thatno new GeneralCRP contractsbe awardedduring 2007 &2008. However,Continuous CRPand CREP are stillbeing acceptedand the practicesallowed dovetail
well with carbonsequestrationprograms
Landownerssurrenderdevelopment rights
to the property inexchange or a onetime paymentThe ederalgovernment mayund up to 75% oproject costs, with atleast 25% comingrom private, State orlocal sources.Land must belocated within oneo seven legacyareas.
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Example Steps to EnrollmentI am a Landowner who would like to put 100 acres into mixed hardwood tree plantings for carbon
sequestration, what do I need to do?
Steps to be taken as a landowner:
You must be able to demonstrate that your land is or was degraded beore the restoration/1.
sequestration project began. For example, i you are replanting a previously harvested stand, then
you have a reorestation project. I you are replanting abandoned agricultural land, then the CCX
considers your project to be aorestation.
You must demonstrate a long-term commitment to maintain the land in trees, through either a2.
conservation easement, letter o intent, or CRP contract. Note there are no dates associated with the
letter o intent. It is an honor letter o intent. Aggregators may require additional documentation,
such as a orest stewardship plan, to demonstrate your commitment to maintain the lands in
trees.Contact an aggregator who will combine your credits with those o others until the total reaches a3.
suitable level or sale on an exchange.
In order or the aggregator to work or you, you must complete a contract with them. For small4.
projects ( < 2,000 mtCO2/yr, generally 400-500 acres) this contract includes:
Forest Oset Enrollment WorksheetCarbon Calculation Worksheet, where you calculate the amount o carbon your land willsequester based on species, age and density o planting.Veriying that you do intend to enter the land into the carbon sequestration program and thatyou will continue to manage the land in a conservation based manner or many years tocome. Your chosen aggregator will provide urther details.
Convert the land into mixed hardwood orest cover. Included in this step is the land preparation, the5.purchase o the seeds or saplings, tillage and plowing, ertilizing and planting o the trees.
Submit necessary documentation to aggregator and/or CCX.6.
Receive payments based on the sale o your credits according to sequestration accumulations.7.
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Potential Income Calculations Over
the Lie o the Contract
From the example project, based on CCX rate table through 2010, the end of the guaranteed
contract:
1. First calculate how many metric tons o carbon will be sequestered each year:
100 acres x 3.5 mT/acre = 350 mT
2. Then calculate how much o that will go directly into the reserve pool:
350 mT 20% (reserve pool tonnage) = 280 mT/yr
3. Multiply this number by the going rate or carbon credits:
280 mT/yr x $4.00/mT (based on avg. CCX rate) = $1,120/yr
4. This is your gross annual income, beore CCX and aggregator charges are applied. Proceed to
subtract these charges:
$1,120 8% aggregator fee = $1,030.40/yr
$1,030.40 (280 mT x $0.20/mT CCX trading fee) = $974.40/yr
5. This is your net annual income. Multiply this number times three (or 2007, 2008 and 2009)
to calculate your income over the rst three years:
$974.40/yr x 3 years = $2,923.20 through 2009.
Then in 2010 you get to add in your reserve pool credits. So, in 2010, the total amount o
credits or sale are 560 (350 annual tonnage plus 210 reserve pool tonnage).
560 mT = $1948.80 after fee removal
6. Total Income or the lie o the contract: $4,872.00
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Notes:
In the above example there were no stochastic events. I a stochastic event does occur on anyCCX land, credits will be taken out o the reserve pool equally rom all landowners and willthereore reduce your total income as these are no longer available or sale.
Since current contracts only run through 2010, plantings undertaken in 2007 will only beguaranteed payments through 2010, although it is likely that the program will continue beyond2010. I this is in act the case, payments have the potential to be higher in the years ollowingas the sequestration rate increases, assuming the market rate or credits remains the same (seerate table or urther details).
This hypothetical income calculation in no way refects costs that a landowner may ace whenbeginning a sequestration project, nor does it include additional, stackable payments such asCRP that a landowner may receive. Although, as previously mentioned, landowners can recoupa large proportion o the costs through government programs.
For urther inormation on the current market rate or carbon credits please visit the ChicagoClimate Exchanges website at www.chicagoclimatex.com
Example Contract:
Note: Only the irst page is provided, to view contracts o other aggregators, please visittheir websites
View the contract on the ollowing page.
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APPLICATION FOR PARTICIPATION IN FORESTRY OFFSET POOLAnd
SALES CONTRACT for EXCHANGE FORESTRY OFFSETS (XFOs)
Mail Contract to:
Carbon Credit ProgramFarm Bureau Management Corp
5400 University AveWest Des Moines, IA 50266
I you have questions, Please call:515-225-5431 Contract NumberXFO-______________________
Contract Size Classifcation: Please check the appropriate size classifcation
Small________ Medium__________ Large___________
Annual CO2: less than 2,000 MT 2,001 MT 12,500 MT More than 12,500 MT
I, ___________________________, hereby apply or participation in a orestry carbon pool managed by the Farm Bureau ManagementCorporation to register Exchange Forestry Osets (XFOs) with the Chicago Climate Exchange (CCX) or the years 2003-2010 on _________acres o property that I own or control. I hereby attest that I hold ull legal title to the Greenhouse Gas mitigation rights registeredas CCX Osets that are associated with the acilities and sites included in the registered project. I hereby agree that the orest projecthas as a primary purpose the long-term storage o atmospheric carbon in accordance with the CCX terms o participation and thatit is the intentions o the owners o the enrolled orested lands to maintain such lands in compliance with the principles and practiceso sustainable orestry production systems. I hereby attest that the project is in the U.S. and* involves orestation (which includesaorestation or reorestation) and orest enrichment, via plantings and/or natural regeneration initiated on or ater January 1, 1990, onland not orested, or on orest land that had been degraded or unorested on December 31, 1989 The quantity o XFOs to be issued toa CCX-registered orestry project shall be based on the annual increase in stored carbon (expressed in metric tons o carbon dioxideequivalence) on eligible sites included in the project during years the 2003 through 2010. I urther agree that I will abide by the rules othe CCX as they pertain to XFOs and to the conditions or Pool participation as set orth in this Agreement.
Statement o Intent to Maintain Forest Cover and Manage Forestry Oset Land in a Sustainable Forestry System: I hereby attest thatit is the intent o the owners o the property enrolled in the Chicago Climate Exchange Forestry Oset program through this Iowa FarmBureau Management Corporation contract to maintain the enrolled land in orest cover and to manage such lands in compliance withthe principles and practices o sustainable orestry systems.Purchaser agrees to buy and seller agrees to sell and deliver to purchaser ree rom liens and encumbrances at 5400 University Ave,West Des Moines, Iowa, the rights to the Exchange Forestry Osets (XFOs) created during the years 2003 through 2010 on land locatedat: (See Forestry Enrollment Worksheet)Seller warrants that the XFOs covered by this contract comply with all rules o the Chicago Climate Exchange and the rules orparticipation in the orestry carbon pool. In the event that the project ails to meet these requirements, all XFOs rom such land shall benull and void and any payments or XFOs delivered prior to January 1, 2011 shall be repaid subject to interest and penalties as providedin this agreement.*The transer price o the XFOs covered by this contract shall be the sales price as determined by sale through the Chicago ClimateExchange less a 10% service ee retained by Iowa Farm Bureau. Contracts acilitated by an Associate Aggregator will be subject toan additional 10% service ee which will be paid to the Associate Aggregator. Exchange oset registration ees and oset verifcationcosts are the responsibility o the oset project owner. Oset registration ees will be deducted rom pool proceeds prior to paymentcalculations.Sale o XFOs covered by this contract shall be at the sole discretion o the Purchaser, however all XFOs shall be pr iced no later thanJune 30, 2011. Payment or XFOs covered by this contract shall be made on a semi-annual basis ater pricing o the XFOs through the
Chicago Climate Exchange. The parties to this contract hereby agree that the title to the XFOs shall be automatically delivered to thePurchaser on the frst day o January ollowing the year in which sequestration occurs. Seller urther warrants compliance with the termsand conditions contained in the Agreement or the period rom January 1, 2003 through January 1, 2011.
_________________________________Date____________
Sellers Signature Purchasers Signature
_________________________________Date_____________
Farm Bureau Management Corp
Seller
Address
Farm Name
Date
Phone
Associate Aggregator
Firm Name
Address
Aggregator Number
Phone
City, State, Zip City, State, Zip
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CCX Carbon Accumulation Tables
Table 1-1: CCX Reorestation Carbon Accumulation Tables
Dense Planting (>250 stems per acre)
Metric tons CO2 per acre per year
6-10
1.86
1.75
1.51
2.80
2.68
2.45
1.63
1.981.75
1.28
3.38
4.78
2.45
4.54
5.13
2.80
2.45
1.40
1.40
0.70
US Region and Species*
SE Loblolly
SE Slash
SE longlea pine
Delta loblolly
Delta slash pine
Southern plains loblolly
South Central Bottomland hardwoods
Appalachian loblollyAppalachian shortlea pine
Northeast white/Norway spruce
Northeast red pine
Lake States, white spruce
Lake States, red pine
Corn Belt mixed hardwoods
Corn Belt mixed sotwoods
Central States Bottomland Hardwoods
Northern Plains, mixed hardwoods
Rocky Mountains, ponderosa pines
Pacic Coast Douglas r
Pacic Coast ponderosa pine
0-5
1.51
1.51
1.40
2.21
2.10
2.10
0.23
1.631.51
1.28
2.68
3.61
2.10
3.50
3.96
1.16
1.98
1.40
1.05
1.63
11-15
6.99
6.52
5.24
7.81
7.69
6.87
2.56
7.116.52
1.40
3.50
4.66
2.56
4.66
5.36
3.03
2.45
1.51
1.28
0.82
16-20
6.17
5.83
4.78
7.92
7.69
6.87
3.49
6.415.71
2.56
3.50
5.01
4.31
4.78
3.50
1.63
2.45
2.33
3.26
0.93
* I the species and region combinations do not match your project, apply the carbon accumulation values or
the species you have that are applicable to a climatically similar climate.
Region Defnitions:
SE (Southeast): AL, FL, GA, SC
Delta: AR, LA, MS
Southern Plains: OK, TX
Appalachian: KY, NC, VA, TN, WV
NE (Northeast): CT, DE, MA, MD, ME, NH, NJ, NY, PA, RI, VT
Lake States: MI, MN, WI
Corn Belt: IA, IL, IN, MO, OH
Northern Plains: KS, ND, NE, SD
Rocky Mountains: AZ, CO, ID, MT, NM, NV, UT, WYPacic Coast: CA, OR, WA
Special Addition:
For Arkansas Oak (hardwoods), CCX has established the ollowing carbon sequestration rates:
Years Since Planting
6-10
2.48Oak (Hardwood)0-5
1.63
11-15
2.07
16-20
2.07
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Gulf of Mexico
Atlantic
Ocean
Pacific
OceanMexico
-120-130
-110
-110
-100
-100 -90
-90
-80
-80
-70
30
30
40
40
Zone A: 0.6
LRR G/H: 0.6, if irrigatedZones D/F: 0.2
Zone C: 0.32Zones B/E/G: 0.4
Carbon Sequestration Rate (metric tons/acre/year)Conservation TillageSoil Offset Map
Carbon Sequestration Rate (metric tons/acre/year)Permanent GrasslandSoil Offset Map
Gulf of Mexico
Atlantic
Ocean
Pacific
OceanMexico
-120-130
-110
-110
-100
-100 -90
-90
-80
-80
-70
30
30
40
40
1.0 0.4