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Carbon Credit Question and Answer Sheet What are the Requirements? 1. Zero / Minimum Tillage - 3” openers on 9” spacing; 4” openers on 12” spacing 2. My opener is a ½ “ bigger than what’s allowed on your requirements is that O.K.? - No. It goes by what the size on your bill of sale says. 3. How much of an allowance am I allowed to till? - There is a 2% tillage factor for sloughs and headlands 4. If I have to till up land what happens? - If it is sloughs and or headlands there is a 2% tillage factor. If it is a whole field or half a field we pull that whole ¼ out of the program and replace the credits lost from another ¼ of land. 5. Is Forage eligible? - For forage to be acceptable it must be land that was cropped at one time and seeded to forage on or after January 1, 1999. If hay land contains greater than 50% grass seed it's eligible for 1 ton/acre credit. 6. If I take out my forage how do I stay eligible? - Roundup and then direct seed into it. 7. If I seed a forage crop half way through my contract what happens? - As long as it is direct seeded then all that happens is the rate will be upgraded to the forage rate. 8. If I get hailed out and don’t combine my land is it still eligible? - As long as you don’t do any tillage. 9. Can my cows go and swath graze on the land? - Yes 10. Is native pasture eligible? - No. It is carbon neutral and will not sequester anymore carbon. 11. I have bush on my land is that eligible? - No. 12. I heavy harrow and land roll is that O.K.? - Heavy harrowing is okay; rolling land is okay; Fall NH3 application with spikes is okay 13. If a fire burns across my field do I get disqualified? - No. Only the credits for that year will be lost but there will be no penalty at all. 14. If I chem-fallow what happens to my credits? -No credits issued on that land for that year. 15. If I have to summerfallow what happens to my credits? - Then that land is disqualified for the contract. The credits will then be replaced by the reserve pool or by another ¼ of land. 16. Is chaff removal or baling of straw allowed? - It is not allowed at this time but is probably going to change. It doesn’t disqualify it is treated the same as chem fallow. 17. What crops are eligible? - All insurable crops. However Flax is unique if you chop the straw it is eligible but if you burn the straw it is not eligible. 18. Is organic land eligible? - No - It is not recognized by the Exchange. Procedures: 1. Who polices C-Green Aggregators Ltd. - Crop Insurance 2. Why do you use Crop Insurance? - The reason is infrastructure and credibility. 3. Do I have to be in Crop Insurance? - For producers not in Crop Insurance, we require a Seeded Acreage Report from your local Crop Insurance Office (Producer’s cost) 4. When are the verifications done? - The middle of summer in Saskatchewan and in the fall in Alberta and Manitoba 5. When do the credits get issued? - The credits don’t get issued until the audits are done. Once the audit process is complete a report on the findings is done and then the report is sent down to the NASD for review and if they find everything to be satisfactory then the credits are issued into C-Greens registry account and are floated into the market place. 6. What are the issuance rates? - .20 tons per acre in brown, dark brown and .40 tons per acre in black and grey wooded. Illustration: If at a $4.00/ton selling price: -Black Soil: $4.00/ton x 0.40 tons/acre = $1.60/acre per year - Brown/Dark Brown Soil: $4.00/ton x 0.20 tons/acre = $0.80/acre per year 7. Why is there a 20% hold back? - To mitigate the risk of people who are not in compliance. It also lets us replace credits lost due to non-compliance immediately 8. What are my liabilities? - The producer will never be out of any pocket money. If he has to till we mitigate the risk by replacing credits from his next years credits from other land and if there is a net loss then we take it out of the reserve pool. 9. How long is my liability? - Contracts are done in 4 or 5 year obligations - (2008 – 2011) 10. If I sell my credits are they gone forever? - Only for the year that they are sold. 11. Who gets the credits on rented land? - It is the person who is farming it. Not the landlord. It is also up to them to make there own deal. 12. When do I get paid? - When the pool is completely sold you will be paid out fully. 13. Why would someone buy these voluntarily? - They buy them as an investment or a hedge in anticipation of forthcoming emissions mandates. 14. Who buys these credits? - Thermal power generators, chemical companies, product manufactures, speculators, and various governments. 15. What drives the price of carbon credits? - The main factor is if the government implements a mandatory cap and trade system. The other factors are coal and natural gas prices. Hot summers and cold winters. 16. How can I bank my credits? - At this time there are no companies in Canada that you can buy credits through but it is forthcoming. 17. Where else can I sell my carbon credits? - Nowhere. 18. Why can’t I sell my credits in Europe where they are worth more? - The European trading system does not allow ag soil sinks as a certified emission reduction and never has. 19. I heard these are worth $15 a ton why are yours only worth $4 a ton? - These are two completely different trading systems one is mandatory and one is voluntary. Only one allows ag soil sinks and that is the Chicago Climate Exchange (CCX) The Chicago Climate Exchange - Voluntary-Based The CCX is North America’s first voluntary, rules-based GHG emission registry, reduction and trading system. In this context, rules-based means that its registered companies have agreed to take on targets and achieve them by either taking action internally to reduce emissions or purchase offsets on the trading platform. The CCX is positioned as a pilot initiative to provide its member companies with experience in carbon markets. Although the CCX is a voluntary system, the offsets are backed by contracts – a legally binding aspect that puts a degree of rigor to the system. To some policy makers, the fact that the CCX is in the business of both defining the rules to create its own credits and offering a trading platform for its member companies, is seen as a conflict of interest if it migrates to a regulatory or compliance-based market sometime in the future. Because it’s a voluntary market, the rules don’t need to reflect the requirements of regulated initiatives. This gives the CCX much more flexibility in how it designs its credit creation side. The value of the carbon reflects the voluntary nature of the market – the price has fluctuated between $3 to $4 USD/ton. To support the market, they have reportedly defined standardized guidelines for several project types (although these are not readily available through the CCX – transparency is key to provide confidence in the credits) – select agriculture and forestry projects and others such as renewable energy and fuel switching. These include:
The CCX is developing a subsidiary platform in Canada called the Montreal Climate Exchange. The MCX has recently issued a statement that it will delay becoming active until Canada is clear about the rules for the compliance-based market. Through this statement, the MCX is effectively acknowledging that it would not want to bring in a voluntary approach into Canada, where regulated market requirements could be in conflict with some of the more flexible rules governing voluntary projects. Overall, the framework the CCX is using to deliver offsets to their trading platform is similar to most of the requirements of project-based systems. Why C-Green Aggregators? 1.. How long has C-Green been selling carbon credits? - Since May 11 2006 – the first and only company in Canada to successfully market and sell agricultural soil sinks on a large scale. 2. How do I know you will get the most money for my credits? - C-Green are on a commission and are looking to get the most out of the credits 3. Is C-Green committed to sell the carbon credits on the CCX? - No. C-Green is able to flip these contracts up to the Montreal Exchange if Canada sets up a trading system. Montreal is the only environmental commodities exchange in Canada. 4. Can I sell direct to the CCX? - No they must be put in a pool and sold by an offset aggregator. 5. Why are my credits pooled? - They are pooled because the market is not big enough to handle everyone as an individual so that the market does not get flooded. The rules of the CCX also require a large amount of producers put together for each submission. 6. How long does it take to sell these credits?- It takes as long as it takes. There is no preset time. They are floated into the market as the market will take them and as the price stays at a good level. 7. Why should I sign now? - Because it guarantees that you get in on this pool. The earlier in the earlier you can get a cheque. 8. Why should I get involved? - Involvement helps make agriculture part of any mandated system that comes out. If we don’t get involved we might not be able to take advantage of the financial rewards that are out there. 9. How is this helping the environment because I am already doing it? - It gives other people an incentive to change their ways. It is a proven way of naturally taking CO2 out of the air. 10. Will I as a farmer have to buy credits for my pollution? - No this is a myth. 11. How big is this market? - It is roughly the same size as all of Canada’s emissions. 250 million tons 12. How much paperwork is involved? - About 5 – 10 minutes or 3 pages. 13. If I go direct can I pay less commission? No. Everyone pays the same fees. 14. What are C-Green’s total fees? - The total fees are 15% commission and also exchange fees of 12.5 cents(USD) per ton and verification costs |
