Carbon Credits - getting paid to NOT cut your timber

[BSK]

We've been getting mail from companies (actually brokers) who sell Carbon Credits to large corporations, who - by the nature of their business - release carbon dioxide. These "Carbon Credits" supposedly offset the CO2 the corporations are releasing (a physical scam, but that's beside the point). These Carbon Credit brokers will pay landowners NOT to cut their timber, as trees are major carbon sinks. The credit for the mount of carbon stored in the property owner's trees are then sold to the corporations.

I've done a bit of a dive into these companies, and although they're legit, the amount they pay is not high. However, they do pay every year of the 20-30 year contract, and the amounts would probably be enough to pay the annual property taxes. For those who never plan to cut timber, it might be worth a look. But if cutting timber is part of your management plan, you will make far more off the timber sales than what you would be paid by the CC brokers.

 

[DoubleRidge]

Yeah I heard a lady from the Nature Conservancy speak on selling and buying carbon credits. Programs landowners can sign up for, etc. Agree, someone could make enough to pay taxes... Interesing concept but the catch is that 20 to 30 year commitment!
As mentioned, with timber production being part of your management plan there is no way one could commit to such a long contract period. But I guess there could be some out there with zero interest in ever cutting a tree or managing for a healthy forest?....Lastly....I walked away from that forestry association dinner, where this nice lady spoke, thinking to myself that this basically is a program for big corporations to pay money so they can feel good about their emmisions ...so when questioned they can say...."but we pay for carbon credits"...we care!!

 

[Chapman]

If you figured on cutting after 20 years had passed could you do a 20 year contract ? Is 20 years the shortest contract?

 

[MickThompson]

Yeah I heard a lady from the Nature Conservancy speak on selling and buying carbon credits. Programs landowners can sign up for, etc. Agree, someone could make enough to pay taxes... Interesing concept but the catch is that 20 to 30 year commitment!
As mentioned, with timber production being part of your management plan there is no way one could commit to such a long contract period. But I guess there could be some out there with zero interest in ever cutting a tree or managing for a healthy forest?....Lastly....I walked away from that forestry association dinner, where this nice lady spoke, thinking to myself that this basically is a program for big corporations to pay money so they can feel good about their emmisions ...so when questioned they can say...."but we pay for carbon credits"...we care!!

You nailed it with that last sentence. Corporations do this to buy credit for something that was going to happen anyways then greenwash their business practices

 

[DoubleRidge]

If you figured on cutting after 20 years had passed could you do a 20 year contract ? Is 20 years the shortest contract?

The lady I heard speak on the topic said the contracts they offer vary by the size and the type of the property..but the shortest contract I heard discussed was 20 to 30 years...but there may be other options? This lady was with or worked closely with the Nature Conservancy.

 

[Antler Daddy]

I'll take a 20y contract

 

[Boll Weevil]

I looked into it some time ago and passed. Last year I thinned 160ac that were also enrolled in a timber management program. Without even doing the exact math, the proceeds would pay for property taxes for rest of my natural life. Reinvesting the proceeds for even a slim appreciation would go even further.

Carbon credit revenue would come nowhere close.

 

[DPinTN]

Our club went far down the path but when it got down to the brass tacks pulled back. We looked at enrolling SMZs and a few other areas with no plans for timber harvest. When it got down to it the numbers turned out to be much less than initially presented and even then were not concrete since they would still have to be sold on open market.

I think it could still make sense immediately following a timber harvest (TSI/FSI) if you can find someone willing to buy the credits for a term that worked for your plan like 15-20 years.

All in all this is a very new market and as such there are a lot of unknowns and something we didn't feel comfortable entering.