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Who Owns The Carbon Credits?

Keystone Agricultural Producers has received numerous phone calls since the announcement regarding beneficial management practices (BMPs) under the Environmental Farm Action Program (EFAP) and Manitoba Sustainable Agriculture Practices Program (MSAPP) Sept. 2, 2009. The calls were regarding confusion about who owns the project-related carbon credits.

The application form states that carbon offsets (if any) achieved from greenhouse gas reductions and removals through BMPs incented by MSAPP and/or EFAP will be owned by the Province of Manitoba and the applicant(s) in proportion to the original contributions provided for the project by same until the retirement or sale of the credits.

We interpret this to mean if they fund 70 per cent of a project, they own 70 per cent of the credits for the duration of the Growing Forward agreement – which is four years.

This provides the producer an opportunity for the first time to get real value for the carbon offsets they create. The dramatically higher percentage of funding in this round of BMPs and all of the extra funding under MSAPP is directly connected with the province’s desire to collect some of the agricultural offsets to meet their commitment to be “greener” in government practices.

HERE ARE SOME EXAMPLES THAT ILLUSTRATE HOW IT WILL WORK

Increased perennial legumes in annual crop rotation: Converting sensitive lands from annual crop rotation to perennial forages reduces greenhouse gas (GHG) emissions by reducing nitrogen fertilizer rates and increasing carbon sequestration.

MSAPP will pay 75 per cent up to $15,000. Therefore, the province will retire the proportion of carbon credits associated with the provincial contribution to the project (75 per cent up to $15,000). The ownership period is the same as the project duration – up to the end of 2012.

Reduced GHG emissions from manure storage slurry storage covers: Covering liquid manure storage facilities can be an effective way to reduce GHG emissions. Eligible costs for constructing new or upgrading existing manure storage infrastructure will include engineering design, contractor fees, materials and labour.

MSAPP will pay 90 per cent of the costs of the BMP, or up to $100,000. Therefore, the province will retire the proportion of carbon credits associated with the provincial contribution to the project (90 per cent or up to $100,000). As for the ownership of the carbon offsets associated with this BMP, the province will retain ownership for a period of 10 years.

Manure solid-liquid separation: Manure treatment can reduce odour and pathogens, reduce GHG emissions, and increase efficiency of nutrient management. Program funding will pay 50 per cent of the costs up to $150,000. Therefore, the province expects to retire the proportion of carbon credits associated with the provincial contribution to the project (50 per cent up to $150,000). The province will retain ownership of the carbon offsets for the duration of the project (i. e. until March 31, 2013).

KAP lobbied for higher percentage amounts for BMPs and considered that since the province was paying for a portion of the project it could own the percentage amount of the carbon credit. Since there is currently limited value for credits and very limited market opportunities for trading, the higher percentage helps producers and the limited ownership of the credits helps the province.

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