Where Can I Sell My Carbon Credits?

Can I Sell My Carbon Credits

Carbon credits are a new revenue stream for farmers, ranchers and landowners who plant trees or manage soil health. The concept of carbon credits first emerged in the early twentieth century, but their formal marketing didn’t begin until 1997, with the UN Kyoto Protocol, the world’s first international agreement to cut CO2. Since then, the market for buying and selling them has grown into a robust and financially lucrative trading system.

The largest trading system is the EU Emissions Trading Scheme (EU ETS). The EU ETS operates under a ‘cap-and-trade’ model, where a cap is set on how much CO2 an organisation can release and companies are free to trade with each other to stay within their allowed allowance, with any excess carbon being sold to offset the remaining emissions.

There are also national and regional carbon.credit markets, which operate independently of the EU ETS. These are generally based on a combination of government regulations and carbon taxes, and can be highly volatile. These markets are primarily for compliance offsets, where companies buy and sell carbon credits to meet their legal emission reduction targets.

Where Can I Sell My Carbon Credits?

While many of the trading and credit markets are regulated by governments, some are voluntary, with no regulatory restrictions. This includes the Carbon Offsetting Market, where individuals and businesses can make payments to offset their own emissions, as well as the Forestry and Peatland Codes, which offer carbon credits for planting trees and managing peatlands and woodlands.

Farmers who wish to participate in the market will need to research the specific carbon market they are interested in and consider any associated financial or legal obligations carefully. If they are not familiar with the regulations, they may benefit from working with a third party that is knowledgeable on this area.

For example, some start-ups, such as Indigo Ag in Boston, work with farmers on a range of climate-friendly strategies, including building up carbon in their soils and trees. Indiana farmer Lance Unger, who works with the firm, made $52,000 in his first year, and expects to do even better this year as demand increases.

Some of these companies will have a presence on the exchanges where carbon credits are traded, with some even offering an online portal to facilitate the process. Others will have their own internal marketplaces where they can match buyers with sellers, and take a cut of the proceeds.

Other carbon credit markets are managed by aggregators, which take the risk of selling the credits and have control over how they are sold and at what price. In return, the aggregator will typically pay the farmer either a fee or a percentage of their revenue. This approach has become increasingly popular as more farmers are able to produce credits. Exchanges have attempted to simplify and speed up the process by creating standard products, such as Xpansiv CBL’s Nature-based Global Emission Offset (N-GEO) and ACX’s Global Nature Token. These standardized products are generally preferred by end buyers of credits, as they ensure some basic specifications are met.