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Carbon Credits - What You Should Know

The significant concern over global warming has sparked the development of many initiatives. Across the country, the federal government, state or local governments, NGOs, not-for-profit organizations, and private enterprises have worked to develop various greenhouse gas registries, cap and trade programs, and other market mechanisms. Without over-arching requirements such as the UN Kyoto protocol or federal regulation, most of these initiatives have been developed independently of one another, resulting in differing ideologies, policies, and program requirements.

Some of the more prevalent of these initiatives include the U.S. DOE 1605b program (registry), the California Climate Action Registry (CCAR), the Regional Greenhouse Gas Initiative (RGGI), and the Chicago Climate Exchange (CCX).

Registries provide entities with the means by which to calculate, track, and report changes in greenhouse gas emissions or increases in carbon storage over time. These bodies establish the technical accounting rules that standardize greenhouse gas and carbon accounting and ensure consistency in all participant accounting systems.

Carbon markets are a combination of the rules set from a registry and the platform on which carbon offset credits (usually metric tons of CO2 equivalent or "MtCO2e") are traded, or marketed to consumers.

The Chicago Climate Exchange (CCX) is the only open carbon credit market in North America and is currently trading emission offsets that can be gained through verified net increases in forest carbon stocks.

There are two ways for forest landowners to participate in carbon markets:

through forestlands that have been planted or naturally regenerated since 1990 or
natural forests that are being managed in a sustainable manner.

Individual forestland owners gain access to the CCX through what are called carbon aggregators. These entities are brokers who aggregate acres that can be efficiently traded in large trading blocks. They take care of enrolling your forestland in the program and ensure that your wooded acres conform to market standards. These aggregator work in concert with verifiers to ensure that your forestland has indeed captured carbon. Both the aggregator and verifier charge a service fee that is deducted from the annual sale proceeds to cover administrative expenses associated with managing the program.

There are several aggregators with a good deal of experience in working with forest landowners. Here are links to three aggregators that will help you understand the finer details of enrolling your forest:

These aggregators were selected based upon the number of forest offset projects that have been registered and verified with the CCX. Their listing here should not be construed as an endorsement of one over the other or any of those aggregators not listed here. Finally, remember to "read the fine print" before signing any contract. They are legally binding agreements.