Washington, D.C. - At a meeting with Agriculture Commissioner Roger Johnson and key North Dakota experts in the field of carbon sequestration, Congressman Earl Pomeroy told the group that this new market had tremendous potential for landowners to receive compensation for certain land management practices, but encouraged landowners to read the fine print before entering into contracts on their land.

"Carbon stored in the ground can be a valuable commodity for farmers and landowners," Pomeroy said.
 
Carbon sequestration is a broad term for the process by which carbon is retained in the soil as opposed to being released in the atmosphere. Soil retains carbon through plant matter and different land management practices result in different amounts of carbon retained in the soil. Due to the international negotiations on global warming, some power companies and other major dioxide emitters have looked into the possibility of paying farmers to retain or sequester carbon as part of their land management practices.
 
A few entities are already well into the market. A consortium of Canadian companies (GEMCo) has initiated a carbon offset program. Since announcing the program in late 1999, GEMCo has arranged to purchase 500,000 tons of carbon credits, and aims to contract for up to 2.8 million tons by 2008.
 
Companies have now formed with the sole purpose of linking up landowners with industrial companies interested in purchasing the landowner's carbon credits. Landowners are asked to sign into a "license agreement" for up to 30 years with these "middleman" companies. There are up-front administrative costs to the farmer. In exchange, these companies work with specialized brokerage firms who have industrial clients interested in purchasing the credits, and a contract is negotiated by the brokerage firm and the company representing the landowners. When the deal has been accepted and the credits have been treated, the landowner receives a portion of the money.
 
"I've heard from a number of North Dakotans interested in carbon trading who have been contacted by various companies interested in being that middleman. This is a market in its infancy and I would encourage landowners to read any contract they are about to sign so that they comfortable with the agreement," Pomeroy said.
 
Pomeroy suggested the following questions for landowners to ask themselves before signing a contract:
 
How much up-front cost is required? What does this cost go toward?
 
How long does the contract with the middleman tie you into selling carbon credits through only that company?
 
Once a contract has been signed, what happens if a major weather change affects your carbon storage potential?
 
Does the company have adequate facilities to certify the amount of carbon in your field?
 
Is the landowner comfortable with the land management practices that may be necessary to store the carbon?
For example, does he/she have the equipment to effectively grow a crop using no-till?
 
Does the middleman have adequate contacts available to be able to negotiate the sale of these credits to brokerages dealing with companies wanting to buy these credits?
 
Is the landowner comfortable with not knowing what his share of the actual payment for the credit is?