BenAllgood
5 year old buck +
Has anyone entered a contract with a company such as NCX where they deferred cutting timber for a year in exchange for payment at the end of the year?
Selling carbon credits
- Thread starter BenAllgood
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Apple Junkie
5 year old buck +
Yes, my timber is under contract now for a 12 month period. The process is not terribly complicated, and I have simply agreed not to harvest timber or remove a significant number of trees during that period. I have been happy with NCX, they are easy to work with and respond in a reasonable amount of time to any questions I have had.
hillrunner
5 year old buck +
What kind of money are we talking about?
BenAllgood
5 year old buck +
They go by what they call Harvest Deferral Credits. You mark on a map, your property outline. They see how many HDCs you qualify for. You place a bid anywhere from $1-$30 per HDC. This period, they are expecting accepted bids to be at most $10/HDC. You are either awarded it or not. At that time, you enter a 12 month agreement to defer harvest. They make sure at the end of the period that you didn't harvest and pay you, or if you did some harvest, they deduct those HDCs from your payment. That's what I've learned so far. It's paying you to delay timber harvests.
Does it have to be timber you actually planned to harvest that year or just any stand of timber?
BenAllgood
5 year old buck +
From what I gather, they ask that it be a timber stand that you may harvest. I haven't seen anything where they require some type of timber cruise.
Hoytvectrix
5 year old buck +
In my line of work, I'm very involved with Carbon Exchanges. I know Indigo Ag quite well.
Mortenson
5 year old buck +
Is it true that they're looking to enroll brand new no-till operations, but long time no-tillers do not benefit from these carbon programs? I've heard that long time no-till farms will plow again, just to be able to collect this money after returning to no-till.
S.T.Fanatic
5 year old buck +
Wouldn't surprise me at all that they wouldn't be allowed to qualify. They should but...
Hoytvectrix
5 year old buck +
It's not that they don't benefit if they have already been no-till, it's just that the newer ones will benefit more. They are rolling out an "additionality" component that pays based on each practice that's added that is accumulating more soil carbon.
I can assure you that even if someone is no-till and has been using cover crops and whatnot, they still have a long way to go before their soils stop accumulating more soil carbon. Indigo is just going at the low hanging fruit first, by working with farmers that are changing their practices after (or immediately before) enrolling in their program.
Indigo has recently changed their strategy a bit and instead of attempting to go directly to growers, they are working with "partners" who are essentially ag retailers.
For what it's worth, every carbon program that is starting up right now has no shortage of demand in the carbon marketplace. Meaning that there are a lot more buyers (think mega corps) than there are sellers (farmers). The price right now is something like $27/ton of C sequestered. Most think this value will eventually get close to triple digits. Payouts to farmers are typically $20-25/acre but could get up to $50-75-100/acre.
Apple Junkie
5 year old buck +
The folks I worked with, NCX, deal in timber carbon credits. In this case, forest parcels are graded using aerial technology which allows them to determine the number of trees, the height and diameter of each, and species. From that information, they assign the number of “harvest deferral credits” you are permitted to offer for auction. I ended up 99 “credits” which they would auction off on a given date. I set my minimum acceptable price at $8.00 per credit. If the price the “buyers” were willing to pay did not reach this level, my credits would not sell and I get nothing. As it happened, the price at auction reached $12.00 per credit and that is what mine sold for. From what I can see, no one is going to get rich, but it does offset some taxes. You get paid at the end of the deferral period (12 mos.) There are other companies similar to NCX, but they are the ones I worked with.
Curious, How many acres was that? And what was the makeup of the timber?
Sent from my iPhone using Tapatalk
roosterstraw
5 year old buck +
This is interesting. So let’s say you have a property that you don’t plan on timbering, but you can still put it up for bid?
Apple Junkie
5 year old buck +
I have 90 acres, of which, maybe 50 is timber, mostly a mix of oak, maple, and hickory. I recently had a sustainable timber harvest, so my woods are not fully stocked by any means. Nevertheless, it still contained 99 credits in the trees that remain. By comparison, my cousin in the same area has 120 acres, with 70 in timber that has not been logged in last 30 years. He ended up with 300 credits. It is more the quality and quantity of mature harvestable timber, more than just the number of acres, that will determine the number of credits assessed.
Apple Junkie
5 year old buck +
At this point I think it just the US, but I am sure Canada will be close behind.
Apple Junkie
5 year old buck +
Yes, that is basically correct. You actually work with a company like NCX that will auction your agreement not to cut timber for one year. That is the broad strokes, there is a little more to it, but not much. Pretty straight forward.
mtholton
5 year old buck +
I just got mine back. What do you suggest I should put in for my bid. Wasn't planning on doing any harvest anyway, so assuming there is no downside, might as well get a small payment? Looks like I'd get 129 credits for the 67 acres they would give credit for (rest is ag).
roosterstraw
5 year old buck +
Who is buying these credits and what do they get out of it, tax write offs?
Apple Junkie
5 year old buck +
In my opinion, half a loaf is better than none, so I put my bid low enough to make sure it was likely to be below the actual auction price. I priced my minimum acceptable price at $8.00/credit. The actual price for credits on this auction went for $12/credit. My credits sold for $12 because my “minimum” price I was below the auction price. If I had priced my credits at $13 each, they would not have sold, so I would get nothing. Like you, I did not intend to harvest my timber anyway, so I bid low so I did not get left out. That was my thinking…. Good luck!
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