Incentives in your backyard:
Two MU alumni help put carbon in the bank
and money in your pocket
by Dalena Hardy, posted Sept. 13, 2007
Eastern streaks of light peek between trunks of oak, ash, and sycamore, wild-cherry and walnut trees. The sounds of chirping can be heard high in all directions. Downward there are scurries of creatures hidden by the tall, thick grasses and forbs between trees. All are the markings of a new day and reason for landowners like Joe Heckemeyer of Sikeston, Mo., to smile a little bit wider because there is money to be made.
Heckemeyer, a 1988 MU agricultural business graduate and cattle, poultry and timber farmer, is sure he will be smiling when he receives payment for the carbon his 1,400 acres sequester. Heckemeyer, like many landowners in the state, is taking advantage of the emerging carbon market. He recently enrolled his land with Dogwood Carbon Solutions
“I would like for my land to be approved,” Heckemeyer, 41, said.
Many market-based initiatives have been established to address global warming and its main culprit carbon dioxide. Carbon sequestration, or carbon banking, allows landowners to make extra money by enrolling their forest, cropland and pastures to store carbon for industry, primarily for energy companies, chemical companies, manufacturers and municipalities via the Chicago Climate Exchange, known as CCX.
The CCX is a U.S. corporation started in 2003 with a series of grants from the Joyce Foundation, a Chicago-based philanthropy known for its public policy initiatives. Grants were given to Richard Sandor of the Kellogg School of Management at Northwestern University to support his study that examined whether cap-and-trade markets would be effective in the U.S. to lower greenhouse emissions. By 2003, Sandor's model was alive and 13 corporations joined and agreed to reduce emissions. Today, the CCX has more than 100 members. These members are committed to reducing emissions by 6 percent by 2010.
“Cap-and-trade and carbon markets are policy tools that can help achieve environmental goals more cost-effectively. What is most critical is establishing an environment goal that will lead to a more stable climate, and then use the tools we have to achieve that goal quickly and cost-effectively,” said Stephen Brick, program manager for the Joyce Foundation’s Environmental Program.
In April 2007, two MU alumni, Bryce Oats, a 1999 environmental studies graduate, and Jake Davis, a 2007 master’s degree of public administration graduate, launched Dogwood Carbon Solutions. Dogwood is based in Columbia and works with its partner company, Tatanka Resources, to provide Missouri landowners with a link to the growing carbon market. Dogwood is responsible for marketing carbon credits programs and coordinating paperwork for enrollment. Tatanka Resources is registered with the CCX and acts as the offset aggregator.
“My focus is creating economic opportunity for landowners in rural communities while at the same time promoting environmental sustainability with farming and forestry practices,” Oates said.
There are several sequestration opportunities that can offset emissions and create marketable credits for landowners. Those opportunities include managing rangeland and grassland to increase plant organic matter, no-till farming and adopting sustainable crop-rotating practices, but the activity that creates the most credits is tree planting and managing forest.
Forest land provides multiple opportunities including erosion and pollution prevention. Most Missouri forests are privately owned and not properly managed, said Hank Stelzer, an MU extension forestor. Stelzer said that only 10 percent of Missouri forest owners are actually managing their land. In order for a forest to be productive and sequester carbon, an owner must thin and care for his or her forest, he said.
“It is the silver bullet for foresters to get people to manage their forest,” Stelzer said.
Heckemeyer, who describes his practices as sustainable forestry, maintains his lush, mature trees by thinning, and plants new trees underneath mature ones.
“When I cut a tree, I plant a tree,” Heckemeyer said.
Land practices are evaluated according to how much carbon dioxide per year, or carbon credits, the bankers can absorb from the atmosphere. The total sequestered carbon is measured in metric tons per credit and given a dollar value. Participants are paid once per year and the price is dependant on the price of carbon. Dogwood receives 10 percent. According to Dogwood, a typical Missouri hardwood forest earns $12 to $15 per acre, but there is a possibility to earn more depending on the variety of tree.
Heckemeyer, whose land sites consist of pine and hardwood, is anticipating profits, and because of his tree varieties, he will likely receive an above average return.
Carbon banking programs are getting a lot of attention and represent opportunities for landowners and investors.
“The international price for carbon hovers at five to 10 times that of the U.S.,” said Oates. “As an investor, that’s the type of market signal you look for when you invest, and that’s what you might see if we’re headed in the same direction.”
The U.S. cannot legally trade emissions internationally due to the U.S. not signing the 1997 Kyoto Protocol, the treaty most industrial countries adopted but was rejected by the U.S. and China. So for right now, trade is limited to our backyard, and the two MU alumni who started Dogwood Carbon Solutions are leading Missourians to extra money and peace of mind.
“I think it’s likely that cap-and-trade legislation will pass within the next few years,” Oates said.
For more information on Dogwood Carbon Solutions, visit its Web site.
