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With the
House-passed climate legislation HR 2454, the American Clean Energy and Security Act of 2009, the market for carbon sequestration credits is on the verge of change. The narrowly passed House bill, which has an
uphill battle to get through the Senate, recognizes soil carbon sequestration as an offset which greenhouse gas emitters can apply toward their mandatory reductions. Under the bill, the demand side of the market for
carbon credits, currently voluntary here in the U.S., would have a compulsory component with potential to increase the value of carbon offsets. Farm operators would have the opportunity to earn and monetize these
credits, and partially negate the expected increase in operating costs associated with the climate change legislation.
CHS is in the process of identifying opportunities and developing a way for farm operators to earn carbon credits. Presently, farming
practices that generate acceptable carbon credits in today’s market are minimum or no-till farming, grassland planting (includes CRP), forestry and rangeland management. There are also opportunities in methane
capture and combustion. Depending upon which protocol is ultimately adopted, operators can earn up to one metric ton per year per acre for carbon stored in the soil and even greater amounts for forestry and methane
projects. Commitments are generally at least five years with the opportunity to earn credits for earlier year adoption. Just like storing grain to take advantage of higher prices in the future, carbon credits can be
held to a later date for pricing once they have been recognized. In addition to the cash market for carbon credits, there is also a futures and option market which provides for marketing opportunities similar to
those in today’s grain and livestock markets. Plan on attending an informational meeting CHS will be sponsoring in conjunction with your local elevator over the coming months.
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