Carbon Sequestration – Is it Viable and Profitable?

I sometimes get asked about the potential for carbon sequestration credits for farm owners and operators, and what is the expected profitability of such a contract. After doing some research and attending a discussion at Purdue University on this topic, I thought I would share what I've learned.

Firstly, this is a very new market with only a couple of states, like Maryland and California, even recognizing the concepts formally. Currently no state has included farmland in their accepted practices, and we are not even sure we are measuring it correctly in farmland and wooded land.

That said, the current rates being posted are around $10 per sequestered ton and we think that there is around one ton per acre that can be sequestered. We are not sure that this level can be sustained for more than a few years, but if you are paid to sequester it, it cannot be undone for a substantial period or it defeats the purpose.

It is estimated that we need to be closer to $50 per ton for sequestering to make financial sense for both farmers and landowners. Since it is the farmer who acts to sequester the carbon, but the owner’s land that holds the carbon, it is difficult to determine who gets the payment and how much each will receive.

If this isn’t bad enough, they don’t want to give any payment or credit for practices that are already in place, such as no-till and conservation. Only new practices and new carbon stored will be paid.

The government will also be required to monitor the contracts and randomly test to be sure the carbon on a particular land is there and has only been sold to one company. The agency and process for this has yet to be created or funded.

By most estimates, any viable payment or process related to Carbon Sequestration is at least 10-15 years away. While it’s something to keep an eye out for, I don’t recommend spending much time on it in the short term.

In the meantime, if you’re interested in learning more, or wish to discuss the potential of Carbon Sequestration for your operation, please get in touch with me. I’m happy to talk it through.