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DALE HOGG/Great Bend Tribune

Carbon stored in western Kansas crops may become a valuable resource as carbon-producing companies look to purchase the rights to emit more of the polluting gas carbon dioxide. Western Kansas farmers will soon be eligible to take part in this carbon trading program.

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February 8, 2007

Buried treasure?

By DALE HOGG dhogg@gbtribune.com

Eying the daily fluctuations in crop prices is nothing new to farmers. But, farmers in western Kansas will now have one more price to track, that of tons of carbon trapped in the same soil that produces those crops.

In a voluntary program long popular in Europe and gaining in popularity elsewhere in the United States, Kansas farmers west of U. S. 81 will soon be able to register the greenhouse gas carbon dioxide absorbed by crop residue in their fields and trade it to companies seeking to emit more of the toxic gas.

The concept is based on carbon sequestration, or the holding of carbon dioxide in the ground, said Charles Rice, a professor of agronomy at Kansas State University. “The idea of carbon credits is that companies can offset carbon emissions by buying them elsewhere.” The goal — stabilize or reduce total carbon emissions.

A unit or “credit” of carbon is the equivalent of one ton.

Plants such as trees, grasses and crops scrub CO2 from the air and trap it in the soil. A company can either cut emissions internally or purchase the carbon locked into the earth, Rice said.

These companies are essentially paying farmers to store carbon on their behalf.

Rice will be in Great Bend at 1 p.m. Monday, Feb. 12, at the Knights of Columbus Hall, 723 Main, to discuss the credits. The meeting is being organized by the Great Bend Co-op and area producers.

Just like crops and livestock, these credits are traded on a daily basis. This happens at the Chicago Climate Exchange, known as CCX. “It’s an exchange for reducing or trading green-house gasses,” said Rafael Marques of CCX.

Firms such as Ford, Dupont and IBM sign on for four-year phases to cut pollution. “They set targets,” Marques said. “They can sell if they make these. If they don’t, they have to buy.”

Marques said the program is voluntary, but legally binding once they commit to it. The first phase ran from 2003 through 2006. The next runs from 2007 through 2010. Once signed up, they have stay in the program for all four years.

The CCX is a private company started in 2003 by veteran economist Richard Sandor who applied his experience in futures and bonds trading to green-house gases. But, the roots of this idea go back to the Clean Air Act and concept of “cap and trade” and sulfur, Marques said. This means a company can set a cap on the gases it emits or it can trade for more.

Carbon dioxide is the most common of the six green-house gases, which also include sulfur, methane and various industrial gases. In the U.S., carbon dioxide is not a federally regulated gas. That is why the carbon credit program is voluntary.

“We’re applying to the United States the premise of the Kyoto Protocol,” Marques said. The protocol is an international treaty aimed at reducing pollution that the U.S. didn’t sign.

But, not just any farmer can walk in to the CCX and trade carbon credits, said Dave Miller of the Iowa Farm Bureau. The IFB is one of the farm organizations in the lead with carbon trading.

Miller said a producer of any size has to go through an “aggregator,” or a go-between, in order to trade. “We are the country elevator of carbon credits.” The Farm Bureau, along with the National Farmers Union and other groups, act as cooperatives through which farmers are represented on the CCX.

To take part, farmers must use conservation farming practices such as no-till or reduced till and agree to participate for four years. According to Miller, a typical western Kansas no-till dryland farm acre sequesters 2/10s of a ton of carbon per year. Because of more plant growth, an irrigated acre stores a half a ton annually.

“These credits are traded daily,” Miller said. Over the past couple of months, the price has ranged from $3 to $4 per ton. This amounts to roughly 60 to 82 cents per acre on dryland (about $1,200 per year) and $1.50 to $2 on irrigated ground (about $3,500 per year).

Miller said producers are paid on an annual basis after the growing season is over. The IFB is preparing to distribute the $5 million generated in 2006.

The CCX doesn’t just pick an area and say its eligible to take part in the trading program, Miller said. The exchange researches an area to determine the soil’s sequestration ability to set standards. Land planted to grass in western since 1999 became eligible a couple years ago. Now, with in a week or two, cropland can be included.

“I haven’t committed to it yet,” said Great Bend farmer Don Kuhlman. “I don’t know enough about it.” He was one of those who helped organize the Monday gathering.

As the Environmental Protection Agency continues to clamp down on industrial pollution, “I see these credits as growing in value,” Kuhlman said.

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