Farmers, ranchers and other landowners should be careful when selling carbon credits generated by practices on their land and should closely review the terms of any carbon contract according to Clay Pope, Executive Director of the Oklahoma Association of Conservation Districts (OACD).
“Landowners throughout Oklahoma are being approached by numerous groups and individuals in search of carbon sequestration credits generated by land management practices,” Pope said. “While this is a great source of new income for landowners, you should always look at the details of the contract before you sign on the dotted line. The devil is always in the details and no one wants to get locked in a bad deal that may limit their ability for higher income in the future.”
According to Pope, many landowners have contacted their local Conservation Districts after receiving letters offering up to $2 per metric ton of carbon for ten years or more for the purchase of the carbon sequestered through grass plantings, no-till crop production or tree plantings. While at first blush this may seem like a benefit to the producer, Pope said that carbon is a commodity that goes both up and down in price based on supply and demand and overall market trends.
“The carbon market fluctuates like any other commodity. If you were locked into one of these multi-year contracts, the person who you signed on with would pocket the additional dollars generated by the higher price when they sell the carbon to another buyer. Just a few months ago carbon was trading for over $7 a metric ton, so anyone in a $2 dollar contract would be out over $5 dollars and would be in this fix for over 10 years. This is a bad deal for the landowner if they want the potential to maximize profits.” he said.
Sarah Love, Director of the Oklahoma Carbon Initiative (OCI) a division of OACD, agreed. She said other terms and conditions of carbon contracts should be scrutinized before they are signed.
“Some of the contracts that are out there were not written with Oklahoma in mind,” Love said. “We have heard of provisions that could be construed as conflicting with oil leases, conservation plans and other activities on the land in question. Landowners should always read these things closely.”
According to Love, this concern on the nature of carbon contracts is one of the reasons why OACD created the carbon initiative. The goal of the initiative is to make sure landowners receive the most money possible for carbon sequestration, that carbon buyers get a good product for their money and that good stewardship of our natural resources is rewarded.
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