Are Carbon Credits right for you?
I get questions all the time about carbon credits - some ranchers express excitement and financial opportunity while others remain leery and ask “What’s the catch?”. Both are fair reactions to this new and complex market that is continuing to evolve. At the end of the day I usually answer “"It depends”, because there isn’t one right answer and only you can be the one to decide if its right or wrong for your situation. Determining if selling carbon credits are a good fit depends on your current ranch goals and needs as well as your land ownership context. You will have to explore this question through reflection, research, and discussion with your ranch team and your ranch lawyer. Below are some resources I've compiled for evaluating whether carbon credits are right for you as well as guiding topics to work through with your ranch lawyer if you get to that phase. I highly suggest starting by reading over the King Ranch White Paper “Should I Sell Carbon Credits?” and exploring the other videos and links below to better understand if they’re a fit - the answer is different for everyone!
Carbon Credit Resources:
King Ranch Institute for ranch management
Should I Sell Carbon Credits? A Decision Guide for Ranchers - KRIRM Webinar
White Paper Link - Helps ranchers weigh costs and benefits of entering the carbon market in an easy to read guide
Western Sustainability Exchange:
Navigating Carbon Markets: features Kevin Hackett speaking about carbon markets - how they work, what buyers look for, and what ranchers need to know
“The Carbon Credit Conundrum”: Webinar Series by Quivira Coalition
Part 1: Carbon markets 101
Part 2: Carbon market case studies (grazing and cropping)
Part 3: Evaluating whether a carbon project is right for you
National Grazing Lands Coalition
General Takeaways:
Pros: A way to expand your ranch portfolio or leverage funds to accomplish projects on the ranch or pay for improvements such as virtual fence. There is the potential for long term ranch income and reward for good management that adds monthly or yearly income for land stewards. Many carbon credit companies offer other perks including free ranch management consulting, lowered financial barriers to virtual fence or other ranch improvements.
Cons: This is a new market and is subject to volatility - the market may change or hit bumps in the road. Waiting to sell may lead to higher premiums in the future as the market gets more established. Every carbon credit company’s terms and contracts vary so it requires planning and research to determine if the requirements are in your best interest. Some ranches leave a portion of their acreage aside to sell credits on later incase prices increase in the future.
Considerations for every rancher: Carbon credits are not all created equally and can be leveraged to assist an operation or can hinder you long term - you have to do the homework for your operation to determine if its the right fit for you.
If carbon credits are the right choice for you don’t forget to show the agreement to your ranch lawyer and address these topics:
Required and prohibited practices
Payments
Length of contract
Potential Penalties
No stacking credits - other programs you may not be eligible for on in the future
Data/ownership
Verification
Taxes and insurance
If you have more questions, please reach out to kendall@winnettaces.org