Improve Soil Productivity
SCROLL DOWN to the bottom of the page to learn more. Only $44!
You can download audiofiles of NNTC presentations for just $19.95 each.
If you attended a past NNTC, contact us today at (800) 645-8455 for a special discount to get each file for just $4.95 each!
Carbon Trading Pays For Alberta Farmers
Editor's Note: The Calgary Herald published the original article
It's 8:30 a. m. and farmer Greg Appleyard is busy working the phones and shaking hands at his massive agricultural enterprise just north of Strathmore, Alberta.
From an office in the bungalow-sized headquarters, he oversees a mind-boggling 20,000 acres of farmland and a 25,000-head feedlot, one of the largest in Alberta. Cattle pens stretch as far as the eye can see.
Appleyard steals a few minutes out of a whirlwind day to receive a special delivery with a much sweeter smell — a check for about $100,000.
He earned the money in a government-approved system simply for farming the same way he has for years: tilling his wheat, barley and canola crops fewer times over the course of the growing season.
"This is the future," says the smiling 34-year-old Albertan, glancing at the check on his desk. "We were lucky we were already trying it."
For a growing number of Alberta farmers, less carbon is quickly becoming more money in the province's fledgling carbon trading market.
It's the only one of its kind in North America and a program about to be duplicated on the federal scene by the Canadian government in a so-called cap-and-trade system — allowing greenhouse gas emitters to buy and trade carbon credits.
Suddenly, hot air is worth cold cash.
But questions are mounting — including from Alberta's auditor general — about the legitimacy of the credits, whether this market will help combat climate change and how it will affect consumers.
Agricultural producers like Appleyard are reducing their carbon footprint and capturing carbon in their soils, and then selling the provincially approved credits derived from the environmental gains.
On his farm, the soil acts as an emissions "sink" that absorbs greenhouse gases, while changes to farming practices have helped Appleyard reduce the amount of carbon dioxide released from his lands or generated from his cattle's manure.
"It's motivating to try to stay ahead (of the pack)," he says after receiving the check.
Handing over the windfall is Leann Kruger, who's making a quick pit stop as she criss-crosses the province in a green Honda Ridgeline truck doling out dollars.
Kruger's employer, Parkland Agri Services, is part of a larger group of companies known as CROP — Carbon Reduction Offset Projects — that are rounding up farmers like Appleyard across Alberta and helping them generate cash in a way never imagined only a few years ago.
"How easy is it to give out money?" Kruger says. "It's rewarding seeing how this thing is evolving."
About 60 miles to the northwest at the CROP offices in Didsbury, general manager Lynn Kennett is hard at work securing contracts with farmers like Appleyard to provide thousands of carbon credits for power company Epcor and its subsidiary, Capital Power.
The electricity giant, whose coal-fired plants spew vast amounts of carbon dioxide into the atmosphere, needs offsets from farmers to help meet its greenhouse gas reduction targets mandated by the Alberta government.
Alberta's carbon market is an emerging industry worth tens of millions of dollars, and one set to multiply in size as governments around the globe adopt new regulations designed to reduce greenhouse gases blamed for contributing to global warming.
"This isn't likely going to make a farmer rich," cautions Andy Ridge, one of the Alberta government's point men on carbon credits. "But some can do very well on this. It's a check that's going into their pocket. It's sort of an 'Ah ha, this is something real now.' "
Yet, the carbon market has its critics who dispute how real the environmental gains actually are. Even Appleyard questions the true intent of the credit market and its merit.
He doubts the system was launched simply based on it "being wonderful for the environment," but won't raise too much of a stink if it rewards some of his forward-looking farming practices.
"I have an issue with it, but I'm also trying to be leading edge," he says.
Appleyard believes the system, the way it currently exists, is set up to be "a transfer of wealth," suggesting energy producers are simply shuffling revenue to farmers.
But Albertans across the province have a stake in the market, whether they know it or not.
The additional costs to power companies to purchase the credits — and meet their environmental targets — will ultimately trickle down to consumers. That means Albertans could ultimately absorb more than $100 million in environmental levies paid by industry every year, both in carbon credits and into a technology fund.
"Often times, the average consumer sees this as being something that is only the concern of large emitters and big business, and doesn't recognize that eventually those costs are going to flow back down to their utility bill or to the price that they pay at the gas pump," explains provincial Environment Minister Rob Renner.
Alberta's auditor general, meanwhile, has several concerns with how the credit market is functioning, maintaining taining there's no guarantee the offsets being purchased really exist.
"It's an area that's going to have to be resolved," Fred Dunn told reporters following the release of a report earlier this month. "How do you know it's valid?"
Alberta currently has about two dozen activities that qualify for carbon credits. They include everything from farmers tilling their fields fewer times to sequester carbon, municipal garbage dumps cutting their methane gases, to large feedlots reducing the amount of cattle manure and the emissions that go with it.
Complicated formulas, based on crop science and other research, determine the amount of greenhouse gases being captured or reduced. Independent verifiers, including engineering and accounting firms, ensure the reductions are measurable and properly recorded. The government has the option of conducting its own followup audit.
Aside from the cash generated by his crops, Appleyard is looking to double up and become one of the first to also cash in on the government's credit programs for cattle. Another six-figure check could soon be coming.
In a sense, he's now being rewarded for practices that are hardly new to him. He's been experimenting for 7 years with reduced-tillage techniques, while also trying to cut methane emissions from his livestock business.
"We were very fortunate," he says. "The program fell into us."
Alberta's carbon credit market sprung to life in July 2007 — the first of its kind in North America — but there are no flashy stock exchanges or trading floors to buy and sell the credits.
Transactions, for now, are executed privately between credit producers (such as farmers or municipalities), the brokers who bundle the credits, and polluting companies that need to buy them.
Many farmers, the lifeblood of the program, don't even know it exists.
The carbon market is an offshoot of the Alberta government's much-touted greenhouse gas regulations for the province's roughly 100 large industrial emitters.
New rules required these firms — from oilsands operations to coal-fired power plants — to reduce their emissions intensity (amount of carbon produced per unit of energy) by 12% by the end of 2007, and hit that same target in subsequent years.
Companies that can't meet the regulations have three options: purchase credits from facilities that have cut their emissions beyond the target; pay $15 per ton of emissions over the limit into a provincial technology fund; or purchase carbon offsets.
"There was nothing out there before. We had to create this bridge below us," explains Ridge with Alberta Environment.
The government's technology fund and its $15-per-ton emissions levy effectively act as the price ceiling on what companies must pay if they emit beyond their targets. In turn, carbon credits bought and sold in Alberta are priced from about $9 to $13 each per ton.
Farmers jumping into the market have the added incentive of being able to claim credits retroactively to 2002 if their operations fit the provincial rules, meaning 7 years worth of carbon credits can be cashed in one payday.
Last year, there were 28 registered offset projects in Alberta, totalling 3.5 million tons of carbon dioxide reductions — up from the seven projects in 2007, according to Alberta Environment.
The province believes the credit market paid back $11 million to the agriculture sector in 2008.
So far in 2009, there are about 35 projects registered worth about 4 million tons of offsets.
"The first year, we did not see a large participation in the market," notes Dave LaBarre with Blue Source Canada, a carbon broker that registered about a third of all offsets in 2008. "This year, we have a significant number of new players in the marketplace."
Carbon credits are becoming more attractive to budget-wary emitters that need to maximize profits and also meet their greenhouse-gas targets.
Edward Waldner is an unlikely participant in Alberta's carbon market. Clad in a straw hat, brown plaid shirt and black wool pants with suspenders, Waldner strolls the farmyard at the Wild Rose Hutterite colony west of Vulcan, pointing to the towering grain bins they built from the ground up.
For generations, the colony has farmed this same land to sustain a humble, traditional way of life. Fifteen years ago, the 15,000-acre operation changed to no-till to increase its productivity.
Never did they imagine they would be able to cash in on climate change. But the birth of the carbon market is now generating tens of thousands of dollars of unexpected income.
"I didn't even know that this stuff can happen. It's just a bonus," says Waldner, 60, who's headed the colony's agricultural operations for 2 decades.
This summer, the colony received a check for around $70,000 for the nearly 7,500 tons of emissions reductions obtained by low tillage.
Future checks will no doubt be smaller (with the retroactive credits no longer counted), but still total thousands of dollars.
"It's definitely a good way to go," he adds. "Now we are expecting to get it. We'll expect that money."
Environmental gains obtained by no-till are secondary to generating healthier returns on their wheat, barley and canola crops, he says. The strategy reduces operating costs and improves crop yields.
Cash from selling the carbon credits will be dumped back into operations to help pay for mounting fertilizer costs and the millions of dollars of farm equipment that, along with dozens of grain bins, encase the yard.
"Thousands don't get you much anymore," Waldner quips.
Farmers, nevertheless, are flocking to the carbon market to cash in on practices they've been experimenting with for several years, which seems to violate the spirit of the offset system, critics charge.
Provincial rules dictate that carbon credit producers are only to earn offsets if they've changed their operations in ways that reduce greenhouse gas emissions beyond what would have already been achieved.
The environment minister notes farmers who've been conducting low-impact agriculture for years shouldn't be unfairly punished by not being able to access credits that are suddenly available to producers who've just recently turned over a new leaf.
"It's encouraging a whole lot of new people to come into it that never would have come into it without having the financial incentive in place," notes Renner. "The consequence, intended or otherwise . . . is we actually are enhancing the environment."
Nevertheless, Albertans should not be accumulating credits for maintaining the status quo, he insists.
"If no one changed their practices and got a bonus for doing business as usual, I would be unhappy," Renner says.
Yet, that seems to be exactly what's happening in many parts of rural Alberta.
Agricultural producers, such as Waldner and the Wild Rose Hutterite colony, are simply continuing on with the same farming practices they've grown accustomed to over many years.
But Dunn, the province's auditor general, raised concerns about tillage credits being granted back to 2002, "well before the timing of any verification activities" were being conducted.
Environmental groups, meanwhile, are skeptical about the system.
The Pembina Institute, an Alberta-based environmental think-tank, believes there's "significant loopholes" with Alberta's carbon trading system, but that farmers aren't to blame.
Rather, the provincial government is enabling agricultural producers to qualify for offsets that aren't generating any new emissions reductions, the group argues.
"There are huge risks with the system," says Clare Demerse, Pembina's associate director on the climate change file. "It's not that anybody is breaking the rules, it's that the rules allow for this."
Back near Strathmore, Greg Appleyard has his own questions with being rewarded for practices dating back 7 years.
"How long can they keep going back to 2002 before that information starts not being accurate?" he wonders. "What level of science is good enough?"
Nevertheless, he's grateful for receiving his own check, one that's in the six-digit range. And he hopes his feedlot operations will be registered for more offsets.
Reducing the slaughter age for cattle, number of days on feed and altering their "finishing diets" all qualify for separate government credits that could generate anywhere from $10 to $25 (a couple of credits) a head in his 25,000-animal operation.
Add it up and it could mean potentially $500,000 or more from his feedlot — on top of the payday he's already enjoying.
"It makes you think you're on the right track," he says. "Grateful for the check."