Forestrycarbon.com – Other questions (FAQ)
Q: What is carbon exchange?
A: Carbon trading has emerged recently as a means of reducing carbon emissions into the atmosphere. Through the Chicago Climate Exchange (CCX), greenhouse gas “credits” are exchanged with one carbon credit being equal to one metric ton of carbon. Companies looking to voluntarily regulate their carbon emissions can purchase credits to offset their carbon emissions; these credits come from landowners who can sell the carbon that has been sequestered on their land through either forestry or agricultural means.
Q: Where does this money come from?
A: Companies or municipalities who are regulating their carbon emissions purchase carbon credits in order to offset their own emissions.
Q: What incentives do companies have to join CCX?
A: At this time participation in the CCX is voluntary in the US; however, in the European Union, and other nations currently participating in the Kyoto Protocol, carbon exchange is an important aspect of meeting emission limits that are enforced by law. This may soon be the case in the U.S. as well, and companies may benefit legally from taking early action. By voluntarily following emissions limits, companies can enhance the environmental sustainability of their business, an aspect that many consumers are looking to support as environmental awareness grows.
Q: How does planting trees or grasses reduce carbon in the atmosphere?
A: Scientists and groups such as the Intergovernmental Panel on Climate Change have determined that the release of carbon dioxide, CO2, into the atmosphere from fossil fuel use is the leading cause of global warming. Various living systems, such as the world’s oceans, soils and vegetation act as CO2 reserves. For an example, as a plant grows, it takes in CO2 from the atmosphere, and through photosynthesis fixes the atmospheric CO2 into carbohydrates, which make up the biomass of the plant. Therefore, by planting trees or grasses and keeping those plants in reserve (not harvesting), they are fixing certain amounts of carbon annually, and therefore reducing the excess CO2 in the atmosphere.
Q: How will it be verified that the land meets qualifications?
A: The CCX requires that all offset projects go through the standardized registration, verification and crediting process.
Q: What is an aggregator?
A: An aggregator is registered with the CCX to serve as a representative of several landowners.
Q: Will I pay fees to the aggregator?
A: Yes, different aggregators will take varying percentages of the payments earned in the CCX before sending the landowner their portion of the revenue.
Q: How many trees do I need to plant per acre?
A: Generally about 250 stems per acre qualify.
Q: Does it matter when I planted these trees?
A: Yes! Since the Kyoto Protocol was established to reduce emissions from the 1990 level, only trees planted, or regenerated, after 1990 are eligible.
Q: What are vintage credits?
A: Carbon credits for forestry projects are retroactive. This means that any forest planted or regenerated since 1990 can be enrolled for vintage carbon credits for each year that it has been growing. There is a limited amount of vintage credits available, so enroll soon to maximize your profits!
Q: How much land do I need to own to qualify?
A: There are not necessarily any limitations; credits are measured in acres.
Q: Would I earn more or less money due to various types of land use?
A: Yes, forested land fixes on average nearly 4 times as much CO2 as land planted in grasses.
Q: If my land is not currently forested, how will I be able to finance seeds/saplings or labor?
A: If unable to finance the initial investment in trees, simply allowing a natural regeneration of species will also qualify (provided this action has been initiated since 1990). However, the CCX does not permit contracts where landowners cut all their timber in order to replant (to get planting credits). There are more stringent guidelines for working forests, and these are currently under development at the CCX (as of September 2007).
Q: What paperwork will I need to complete?
A: If you are already receiving Conservation Reserve Program credit, the process if fairly simple. If you have tree plantings (since 1990) but are not a participant in a state or federal conservation program, see the "Am I Eligible" page
Q: How much money can I expect?
A: This depends on the amount of land that is enrolled as well as the land use. Woody trees fix more carbon annually than herbaceous grasses. Generally, an acre of forest fixes approximately 4 tons of carbon annually, where an acre of grass would fix approximately 0.75 tons annually. Please note that these numbers are general and vary more or less depending on region and other circumstances. For every 1 metric ton of carbon that your land is sequestering annually, you would have earned one carbon credit. At this time (September 2007) each credit is valued at $3.05.
Q: Will I be paid only one time, or will it be continual?
A: At the end of each calendar year, credits will be sold on the CCX, and proceeds will be sent to the landowner.
Q: Will the amount of money fluctuate or change?
A: The value of carbon credits will most likely increase. Just as the stock market values fluctuate due to varying demands, the carbon exchange functions in a similar manner.
Q: Will being involved in this program change my taxes, subsidies or other government funding?
A: Carbon credits are simply an additional form of income. If you are already receiving Conservation Reserve Program credit for your land, carbon credit exchange will not deplete this revenue. However, because payments are considered income, you must report them with your taxes (as you would any earned income).
Q: Is there any maintenance work involved?
A: Minimal maintenance may be necessary to maximize plants’ abilities to fix carbon. Thinning practices or weed control may be necessary. If the land is already enrolled in the Conservation Reserve Program, continue following maintenance practices as outlined by the CRP Job Sheet.
Q: Is there a contract; do I need to keep land forested for a certain amount of time?
A: Currently, contracts require that forests or grassland be maintained until 2011, after this, contracts can be renewed if desired. These contracts are legally binding once signed. During the years that the land is in contract, the CCX will retain 20% of carbon offsets in the carbon bank. If the contract is not broken, then at the end of the contacted agreement, the credits will be sold and revenue will go to the landowner.
Q: Can I harvest timber after a certain amount of time?
A: After the contract expires, the landowner is free to use the land however they please if the contract is not renewed.
Q: If I do not harvest timber can I renew my contract and continue to receive money?
A: Yes, trees will continue to sequester carbon and the contract may be renewed (this is subject to potential changes in CCX forest guidelines).
Q: Can any species that I plant qualify, or will some species earn more money than others?
A: Faster growing species, will accumulate carbon faster, thus increasing the amount of carbon credits; however, having diverse carbon crops is not only more ecologically sound, but will bring other benefits as well as buffer from losses due to disease or pests.
Q: What are some benefits of planting slow-growing hardwoods and native species over pines or grasslands?