As a landowner, you could potentially generate additional income by selling carbon credits to companies who emit more carbon or greenhouse gases than they are permitted to – here’s a brief intro to this fairly new industry.
You may have heard of carbon credits or carbon sequestration. This is a relatively new industry and it’s somewhat the wild west, meaning there aren’t a lot of hard fast rules applying to carbon credits and carbon sequestration.
So, what can you do as a landowner to produce additional income but also protect yourself? So carbon credits are essentially just permits that allow someone to emit one ton of carbon dioxide or greenhouse gases into the atmosphere. So, companies, large industrial companies for example, they have a limit on how much carbon they can emit, but they can buy carbon credits on the open market from landowners who are sequestering carbon into their land. And, there are several different practices that landowners might already be doing such as no-till farming, crop rotation, buffers, for example. So, it could be a great way for landowners to generate additional revenue.
Again, this is still somewhat the Wild Wild West. I’ve consulted with a couple of different experts on this topic and, it’s recommended, I’ve said this countless times in other videos, always, always hire an expert. Always hire someone who’s smarter than you. I definitely recommend if you’re going to engage in selling carbon credits on the open market, I highly recommend that you consult a broker that specializes in carbon credits and/or an attorney. Personally, I think you should use an attorney on any type of real estate transaction. This is just my personal opinion. This is not legal advice, but I think it would serve you well because carbon credits are so new there really is a lot of misinformation out there and we’re still educating ourselves as well. But, it can be additional income for the landowners and it’s a great tool for companies that may be emitting more carbon than they’re supposed to and then they can buy these carbon credits online. So again, I highly recommend that you consult an attorney that specializes in it or a broker. There are several websites, just doing a simple Google search, but it can be a great way to generate additional revenue for your ranch or your farm.
Now, what can you expect price wise. Well, honestly, it’s very difficult because no two pieces of real estate for example will sell for the same price. So, I don’t think you’re going to be making enough money where you can ride off into the sunset and drink mai-tais on the beach of Maui, for example. But, it could be an additional income source, especially if you might already be doing things of the nature that would qualify, again such as, crop rotation, no-till farming, etc. So, highly recommend that you educate yourself, but this is, again, a relatively new industry. It’s something that we’re actually looking into for one of our properties as well because we already have ag exemption on the property and we want to maintain that. So, we might look into different ways to generate extra income and even if you’re generating a few extra thousand dollars a month that could still pay for the offsets that you’re doing just to maintain it to meet these requirements.
Feel free to reach out to us with questions or other topics you’d like to see covered.
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