Des Moines Register
March 5, 2006 Sunday
BUSINESS; Pg. 1D
Program pays farmers to try greener methods
No-till planting is one way to earn $1 an acre on the Chicago
Climate Exchange
By JERRY PERKINS
REGISTER
FARM EDITOR
Doug Gronau of Vail is earning some green by turning his farming practices green.
Gronau is one of about 200 Iowa farmers participating in a voluntary exchange program
that pays them a dollar an acre for putting carbon back into the soil and keeping it out of
the atmosphere, a practice known as carbon sequestration.
Carbon dioxide, a gas given off by decaying plants, is one of several greenhouse gases
being blamed for causing global warming by trapping heat in the Earth's atmosphere.
Although the causes of global warming have been debated for years, most scientists say
the evidence clearly shows that the release of greenhouse gases, including the burning
of fossil fuels, is harming the environment. One way to curb the release of carbon
dioxide into the atmosphere is to keep plant matter in the soil, much like the Great
Plains' prairie grasses kept carbon stored for thousands of years until farmers plowed
the prairie to grow crops.
Mahdi Al-Kasai, Iowa State University Extension soil management specialist, said
carbon sequestration of plant matter won't solve global warming on its own. "But it can
buy some time and at least help reduce a portion of the buildup of greenhouse gases,"
he said.
Gronau and other farmers can lock carbon in the soil through conservation practices
such as no-till planting, which leaves as much crop residue in the soil as possible, rather
than plowing it up.
The Iowa Farm Bureau Federation has organized farmers and collectively sells their
efforts at the voluntary Chicago Climate Exchange. The exchange links buyers who want
to offset their carbon emissions with sellers, like Gronau.
The Farm Bureau is sending checks totaling $382,500 this spring to farmers in Iowa,
Kansas and Nebraska.
David Miller, director of research and commodity services at the Iowa Farm Bureau
Federation, said the pilot project is pioneering the sale of agricultural "carbon credits" on
the Chicago exchange.
Sale of the credits has offset the emission of 664,000 tons of carbon dioxide being
released into the atmosphere, Miller said, or the equivalent of a month of burning coal by
a 1,000-megawatt power plant.
Richard Sandor, founder of the Chicago carbon trading exchange, said the Farm Bureau
is showing other agricultural organizations how farmers can benefit financially by helping
the environment.
"We wanted to use the exchange to make some bold moves in agriculture," Sandor said.
"We're making progress on the environmental front and on the trading front," he said.
The exchange collects a fee on every credit traded. Trading volume hit a record in
February, Sandor said.
Although the privately owned exchange isn't making money yet, Sandor said, it has
expanded to Europe and Canada, where it has subsidiaries.
One of the first trades that Farm Bureau's pool made was with the University of Iowa,
which was looking for a way to mitigate greenhouse gas emissions from its coal-burning
power plant in Iowa City.
Ferman Milster, the U of I's associate director of utilities and energy management, said
the university paid the Farm Bureau pool $2,800 for offsetting 2,000 tons of carbon
dioxide emissions in 2005.
The university also paid an $80 fee to the Chicago exchange for using its services.
"It was an opportunity to help the environment and partner with somebody from Iowa,"
said Milster. "We have a pretty strong environmental ethic here on campus."
The university has built up enough carbon credits through its program of burning oat
hulls instead of coal at its power plant that it could become a carbon credit seller, too,
Milster said.
Critics of the carbon trading system say that farmers who participate in the exchange are
shooting themselves in the foot by inviting mandatory regulation of greenhouse gas
emissions, which will lead to higher energy prices.
Joseph Bast, president of the Heartland Institute in Chicago, said paying farmers to
sequester carbon in their soil is an appealing illusion.
"Farmers shouldn't fall for promises that they can cash in on the global warming
hysteria," Bast said. "My advice to farmers would be to not support the voluntary
programs because that just lends itself to political support for mandatory regulation."
Because no regulations curb carbon emissions in the United States, the credit trading
system is voluntary and that's why payments to farmers are so low, said Miller, of the
Farm Bureau Federation.
Although the payment is paltry, Miller said the program gives farmers a chance to
participate in the developing carbon market. "It will be in farmers' best interest to be at
the table when that exchange develops so it has agricultural input," he said.
The Iowa Farm Bureau is the only seller of agricultural carbon credits at the Chicago
Climate Exchange, but an Illinois organization plans to join the exchange as a second
agricultural seller.
Miller and the Iowa Farm Bureau program started small in September 2003, when the
Chicago Climate Exchange began.
"We're kind of like a country elevator for carbon credits," Miller said. "We enroll the acres
like an elevator originates grain, then we pull it together and manage the accounts."
More than 330,000 acres of farmland in Iowa, Kansas and Nebraska are enrolled in the
Farm Bureau program.
Miller said Iowa Farm Bureau directors want to expand the program to other Midwestern
states.
"Aggregators" like the Iowa Farm Bureau are needed to sign up large numbers of
farmers as sellers of carbon credits because no farm is large enough to participate in the
exchange individually, Miller said.
In Iowa, the average farmer has 400 acres in the pools. In Kansas it is 1,000 acres, and
Nebraska averages 800 acres.
The program is paying farmers in Iowa and other states about $1 an acre a year for notilling their corn and soybeans. Farmers also are being paid through the Farm Bureau
project for establishing grass on their fields.
There is no fee to join the pool, but Farm Bureau charges a 10 percent service charge
when the credits are sold to defray the cost of administering the program.
Miller is getting seven to 10 calls a day from farmers who are interested. Some are
ineligible because they don't use no-till, he said.
"I'm pleased with the response," Miller said. "Over the next year or two, I'd like to grow
this to 2 million acres."
Gronau was one of the first Iowa farmers to sign up for the Iowa program when it began
in 2003. He's had a couple of checks for less than $100.
Gronau said he wants to increase the number of acres he has enrolled in the program.
The chance to help the environment and earn money at the same time appeals to him,
he said, although a bigger payoff would be a plus.
"A dollar an acre a year isn't too much, but I'll take it," Gronau said. "But two or three
dollars an acre would be even better."
Farm Editor Jerry Perkins can be reached at (515) 284-8456 or jperkins@dmreg.com
What is carbon sequestration?
No-till planting, restoring wetlands, planting grass and trees on cropland, using buffer
strips and cover cropping improve the soil and prevent the release of carbon dioxide.
How the credit exchange works
Buyers who want to offset carbon emissions purchase carbon credits from farmers who
are able to store, or "sequester," carbon. Buyers can claim the carbon storage as their
own to meet emission standards. Learn more at www.iowafarmbureau.com/ spe