Twenty percent of the CO2 pollution in the United States comes from the Midwest, according to the Environmental Law and Policy Center, so it's no surprise that people in the Heartland are trying to find ways to reduce greenhouse gas emissions. With the Chicago Climate Exchange (CCX), growers can get paid to help reduce pollution.
The CCX began on Earth Day in April 2003 as the first voluntary trading system for reducing greenhouse gas emissions. The CCX is a “cap-and-trade” system. The “cap” is an emissions limit imposed on all members. During Phase I of the program, this cap is 4% below the emissions of a baseline period of 1998 through 2001. Phase I of the program concludes at the end of this year. In Phase II, which will last through 2010, participating members must reduce emissions an additional 2%, or a total of 6% below baseline.
The “trade” part of the system means that, if a member beats the target percent, it earns credits that it can sell to other members. If it exceeds the percent, it can buy credits from those companies that were under the cap. Members monitor their own progress and their need to buy or sell.
Current members include Ford Motor Company, DuPont, Motorola, IBM, Amtrak, the University of Iowa and the University of Minnesota.
Farmers get involved
Minnesota dairy farmer Dennis Haubenschild has an anaerobic digester that uses the manure his cows produce as fuel to generate electricity. He joined the CCX to make extra money for his operation. “I joined up with an environmental exchange — a company specializing in collecting carbon credits for farmers that has a seat on the CCX,” Haubenschild says.
He watches the exchange the same way he does the grain market. Now he makes money for not releasing methane into the atmosphere. He gets one credit for each ton of methane. He sold his first batch of credits for $1.30 each (or $1.30/ton of methane).
Farmers also can sell credits on the CCX by going through an aggregator. David Miller, director of research and commodity services, Iowa Farm Bureau Federation (IFBF), explains that aggregators pool all of the enrolled credits and market them over unspecified time periods.
To participate in the IFBF program, a farmer needs to fill out an application. Participation requires a five-year commitment to continuous no-till on the same acres (2006 to 2010) or new grass establishment on previously cropped acres. “Twice per year, we take the proceeds from the credit sales and allocate them to the pool members,” Miller says. “Each participant receives the average pool price for their credits.”
For more information, contact Iowa Farm Bureau, 5400 University Ave., West Des Moines, IA 50266, 515/225-5431, www.iowafarmbureau.com/special/carbon.
It seems the greener your operation is, the more green you can make. The CCX offers a good way for farmers to get paid for being environmentally conscious. “Government subsidies are going to continue to get smaller unless [farmers] get greener,” Haubenschild says. “The exchange is another tool for us to use.”