Farmers sell corn, soy, rye ... carbon?
Situated amid the green, rolling landscape near Meadow Grove, Neb., Dan Gillespie’s 700-acre farm, with its 1930s farmhouse, looks idyllic. Gillespie, a fourth-generation farmer, tends to his corn, soy, rye and, since 2006, carbon.
“To harvest the carbon in the Great Plains, you do nothing different than Mother Nature did for eons to cover and protect the soil ... and store carbon in the ground,” says Gillespie.
Carbon is a new cash crop for traditional farmers, who are realizing that they can make money and be environmentally conscious at the same time. Gillespie doesn’t literally grow the carbon on his land. He just ensures that by not disturbing the soil during planting, carbon is not released into the atmosphere from decaying plant residue left over from the previous crop cycle.
It may not yet amount to much money, but if President Barack Obama implements a cap-and-trade system to control emissions, as he recently suggested on Earth Day, the future financial payoff could be larger.
Here’s how cap-and-trade works.
A farmer plants his fields without disturbing the soil and releasing carbon into atmosphere. Then he sells the carbon offset to his local farmers’ union. One carbon offset corresponds to 1 metric ton of carbon dioxide not released into the atmosphere.
Miles away in an automobile manufacturing plant, metal plates come together to form an automobile, in the process emitting carbon dioxide, the most abundant greenhouse gas after water vapor. The trade is between the farmer and the polluting plant, with the hope that the net greenhouse gas emission will be zero.
The farmer conserves, and the plant pollutes.
Various intermediaries help in the process. An aggregator (usually a local farmers’ union) collects the credits and gives them to the North Dakota Farmers Union. The union sells the offsets to the Chicago Climate Exchange, the United States’ only market for buying and selling greenhouse gases.
On the buyer’s side of the exchange, companies enroll voluntarily to buy credits in case they go over a certain emissions limit called a cap.
Companies that have chosen to compensate their emissions by buying offsets from the Chicago Climate Exchange include Rolls-Royce and Ford Motor Co.
With Obama and the Democrats increasingly in favor of cap-and-trade, emissions trading may soon become mandatory.
“By closing the carbon loophole through this kind of market-based cap, we can address in a systematic way all the facets of the energy crisis: lowering our dependence on foreign oil, reducing our use of fossil fuels and promoting new industries right here in America,” Obama said in a speech on Earth Day at a wind turbine plant in Iowa.
Emissions trading is voluntary on the seller’s side of the carbon trade as well, with about 10 percent of farmers from across the country signed up, according to Dale Enerson, director of the North Dakota Farmers Union Carbon Credit Program.
No-till is the most popular way to earn carbon credits from the soil. Gillespie, who also works for the Natural Resources Conservation Service, was one of the first farmers in his county to adopt this environmentally aware farming method 22 years ago.
“My father was a farmer. My grandfather built the 1,000-bushel wooden grain storage with his hands,” said Gillespie of his farming heritage.
Gillespie does not plow his fields before planting. By leaving the decaying matter undisturbed below the ground, he ensures that carbon from decomposition is not released into the atmosphere. The technique also prevents soil erosion and allows farmers to trade in carbon for less work.
“I did it out of environmental awareness, but I was also still single at 34 and didn’t have time for tilling,” he says. Now Gillespie is now happily married and has five daughters.
An hour south of Gillespie’s farm is Newman Grove, Neb., a town of 800. Nearby, James Geyer farms 2,200 acres under the no-till method.
Geyer, a Republican, supports Obama’s cap-and-trade bill, as do environmental groups that have started advertising campaigns to gather support.
“It is an opportunity to earn a little extra money in a practice that I already had,” says Geyer. He switched to no-till because of labor costs and soil conservation.
Carbon does not pay much. Last year, Geyer received $3 to $4 per acre of land per year. This year, he expects the payoff to be much less because of the economy. This is in contrast to European markets that trade billions of dollars in certified emissions credits, a program that does not include agriculture.
There are 300 million acres of cropland in the United States and about 10 million to 15 million acres are enrolled for carbon credits. Last year, 2.5 million metric tons of carbon dioxide were traded by the North Dakota Farmers Exchange on the Chicago Climate Exchange, which converts to roughly 300,000 cars taken off the road, according to the North Dakota Farmers Union.
“Harvesting carbon ... does not reduce or dismiss the fact that we still need to find new and develop existing alternative energies and reduce use of fossil fuels,” says Gillespie.