What Are Carbon Emissions?

To understand carbon credits, you must first understand carbon emissions. Carbon emissions are best described as the release of carbon-centric gases. This primarily consists of carbon dioxide (CO2) and methane (CH4). These are emitted into the atmosphere via the burning of fossil fuels, as well as other means, such as certain agricultural species and practices. Produced greenhouse gases become trapped in the atmosphere, raise our carbon footprint, and allegedly trap heat and impact global climate. According to some, while carbon cycles are natural, human production has far exceeded acceptable levels of greenhouse gases.

What Are Carbon Credits?

Carbon credits are associated with the purposeful attempt to reduce carbon in the atmosphere and retain produced carbon in the soil and plant life.

“Essentially, carbon credits are values that are associated with sequestering carbon in the soil,” said Whitetail Properties Land Specialist Cody Larson.“There are companies paying for those carbon credits with landowners or farmers who are implementing the practice changes that encourage carbon to be stored in the soil.”

According to Conservation International, and other sources, a carbon credit is also described as a “tradeable certificate that represents the removal or avoidance of 1 metric ton of carbon dioxide (CO2) or equivalent greenhouse gas from the atmosphere.”

Typically, carbon credits fall under one of two market types. First, the compliance markets, which are created by government regulations, such as cap-and-trade systems. Or second, voluntary carbon markets (VCMs), which are composed of private companies or individuals who deal in carbon credits to meet prospective goals. In either instance, these are for carbon avoidance, reduction, or removal.

Ultimately, these are efforts used by governments as well as private and public companies, to reduce and otherwise mitigate emissions. Of course, carbon credit programs look different based on geographic location, nearby practices, habitat types, determined goals, and more. However, in all cases, these fund projects that focus on carbon capture or prevention. Then, these projects are verified, implemented, and followed up on to determine compliance of agreed-upon actions and strategies.

Oftentimes, these programs are associated with companies and organizations that compensate for their emissions produced, or those produced by others. Overall, these are implementations of climate-improvement objectives and actions, and subsequent compensation for completing objectives.

What Types of Carbon Credits Are Relevant to You?

There are numerous carbon credit programs available to landowners. Some of these are focused on agricultural practices, most of which limit carbon production and prioritize carbon prevention or retention.

“There are a lot of things that can be done on the cattle side of the farming business,” Larson said. “Maybe we're doing less tillage or planting cover crops. On the pasture side, there are things like rotational grazing, reducing dewormers, and other stuff that helps with carbon sequestration.”

Other carbon programs are focused less on regulating agricultural practices and more on habitat optimization. For example, some programs incentivize landowners to limit or completely eliminate tree cutting on the property. In essence, they pay landowners to avoid or defer timber harvests.

It must be proven these trees were at risk of being cut, but will not be, because of program enrollment. Plus, these programs generally require long-term contract commitments. These might come with five-, 10-, 15-, or 20-plus-year commitments. Breaking these agreements typically comes with extensive fines and penalties.

Furthermore, carbon credits might also factor in renewable energy, as well as other forest and land uses. This might be oil production reduction, installation of wind-generated energy, and more.

It’s all about emissions prevention, which typically entails the installation of renewable energy projects, methane prevention or capture around landfills, dairy farms, etc., and/or preventing deforestation or promoting reforestation. As noted above, soil management is a priority.

Technical solutions also come into play. Examples include Direct Air Capture and biochar. All things considered, project function is a significant element. Regardless of the sub-category, these are based on targeted carbon capture.

What Timelines Are Associated with Carbon Credits?

Contracts associated with carbon credit programs vary greatly. That said, strict compliance is expected regardless of the selected initiative and program. Application of agreed-upon terms is mandatory and heavily regulated. Naturally, validation and verification are conducted by independent third-party auditors, which verify projects are legitimate and completed.

Based on timing, there are various classifications of carbon credits. First, ex-post credits, which are verified credits associated with emission reductions that have already taken place. Second, ex-ante credits, which include anticipated projects that aim to reduce emissions. The latter is typically involved with long-term forestry initiatives.

Who Issues Carbon Credits?

There are various groups and organizations that facilitate carbon credit programs. Typically, these are non-governmental organizations (NGOs) and government agencies. These entities are experts in the field of emissions reductions and removal projects.

“There are different companies and programs out there,” Larson said. “There are some big corporations, such as PepsiCo and ATM. These and others are offering pretty lucrative programs to farmers from a landowner standpoint. There are other companies, like Grass Roots, that are offering some private payments to those people.”

Other organizations to know about include American Carbon Registry, Climate Action Reserve, Gold Standard, Verra, and more. Additionally, some are international programs, such as those with the UN Framework Convention on Climate Change (UNFCCC). Each of these implement developed processes that follow industry standards and regulations associated with carbon credit projects.

How Much Do Carbon Credit Programs Pay Landowners?

Carbon credit program payments vary greatly from one to the next. Oftentimes, from a landowner perspective, carbon credits focused on habitat and reforestation (or prevention of deforestation), pay per acre. From the forest landowner angle, depending on the project, carbon credits can pay upward of $10 to $100 per acre.

Additionally, according to most sources, large-scale price points range as follows:

● Standard projects: $4-$15 per ton

● Premium projects: $50-$200 per ton

● High-tech removal projects: $100-$1,000 per ton

The only way to reach an accurate estimate is to work with a qualified carbon credit program and receive a quote. These vary greatly from property to property. Contact your preferred carbon credit program organization for more detailed information.

Are There Additional Benefits of Carbon Credit Programs?

There are additional benefits of carbon credit programs, but most are not realized in monetary gain. For example, beyond income, certain programs offer free consultations from foresters and biologists. They work with landowners to provide land management recommendations and implementations.

Fortunately, carbon credit programs are available for both small- and large-scale landowners, but there are typically minimum acreage requirements. For the former, the Family Forest Carbon Program is quite popular. For the latter, a much wider range of options exist.

Who Should You Contact with Questions About Carbon Credits?

So, you’re wondering who you should contact with questions about carbon credits. Consider third-party resources, such as NCX, Family Forest Carbon Program, Forest Carbon Works, Tierra Resources, and others. Research available carbon credit registries, choose the one that best fits your goals, and follow up accordingly.

Those seeking more information about carbon credits can contact their local Whitetail Properties Land Specialist. They, or someone on their team, can provide you with the relevant information and connect you with additional resources.