There is so much happening in the carbon credit space right now, even those with over a decade in the business are taking a cautious approach.
Alastair Handley, founder of Radicle, based at Calgary, Alta., says he’s got two words of advice for farmers itching to sell carbon credits to the voluntary market: slow down.
“There’s so many companies in North America, literally hundreds of companies in North America that are saying, ‘We’re gonna help producers generate carbon credits, we’re gonna bring you carbon credit revenue.’ And the reality is, there’s challenges associated with getting that carbon credit created and getting that carbon credit sold,” he says.
Handley says because there’s so much happening quickly, there is value in slowing down. Carbon markets are not going away, he says, and the prices for carbon credits in the voluntary market have been appreciating quickly. Rushing into a carbon agreement without more market clarity could be a mistake.
Some farmers may already be hearing from companies that are looking to help them generate credits. Handley says there are several things to ask before signing on the dotted line.
For example, in the Alberta carbon market, which has been around the longest in Canada, there have been clear price signals and clear demand, but the voluntary market is less clear.
“If someone’s saying ‘Sign a contract today, it’s going to be fantastic!’ My number one question is, what’s the market price? What are these credits worth today? Number two, do you have a buyer for the credits? Are you going to be able to sell every credit that I generate? If you can’t sell every credit that is generated on my property, what are you going to do with the rest?” he says.
Adding to that discussion, is asking how a company plans to pay out if only half of the credits get sold, for example.
There’s also key contract details that farmers should fully understand, such as the term of the contract, what the termination clause looks like, in case the entire relationship goes south, Handley says.
Coming online soon will be the compliance market, created by the Canadian government creating a federal compliance protocol. And that could potentially complicate things for the voluntary market. Farmers who sign up voluntary credits now, should be fully aware that there could be longer term implications, such as not being able to participate in the compliance market.
Listen on for the full discussion regarding carbon credits, carbon markets, compliance protocols, and more, all recorded at the 2022 Canadian Federation of Agriculture annual general meeting at Ottawa:
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