Get insight on current land trends and issues from experts across the land real estate industry.

07Sep

Boost Your Income Through Carbon Credits

RLI Admin | 07 Sep, 2021 | 0 Comments | Return|

By Yoann Hispa, Director, CEO & Co-Founder, LandGate

With a recent spike in green initiatives, the act of removing carbon dioxide (CO2) from our atmosphere is picking up steam. As pressure increases on corporations to become more environmentally conscious, private land is becoming an appealing way for them to meet tightening government environmental regulations through carbon offsets and a great way for landowners to make extra income on their land from the carbon it is already storing.

Companies need to offset their carbon emissions. One example of a carbon offset is the financing of carbon removal and reduction projects. And those types of projects can take place on private property and put money in the landowner’s pocket. How much money? There are free estimators, like LandGate’s free Carbon LandEstimate,™ that show the value one could get from selling the carbon credits from carbon offsets on private land.

What is Carbon Sequestration?

Carbon sequestration is the process of capturing carbon dioxide from the atmosphere to reduce its presence in the atmosphere. You may also see carbon sequestration referred to as carbon storage, carbon capture and storage, or CO2 storage. There are three main types of carbon sequestration:

Biological Carbon Sequestration: Carbon captured through photosynthesis and is stored in vegetation, soils, woody products, oceans, grasslands and forests.
Geological Carbon Sequestration: The storage of carbon in geologic formations such as saline formations, depleted or nearly depleted oil and gas reservoirs, and coal seams.
Technological Carbon Sequestration: This newer method uses technological innovations such as graphene production, engineered molecules, and Direct Air Capture.

How Much Carbon Dioxide Can Soil Store?

Agricultural land in the US has the capacity to sequester 650 million metric tons of CO2 every year1. Agricultural land comprises approximately 40% crop land, 35% forests and 25% grazing land. When looking specifically at soils, they are not all the same. For instance, depending on the percentage of organic matter, some soils are storing up to 8 tons of CO2 per acre at a depth of 10”.

CO2 is removed from the atmosphere and stored in the soil carbon pool. This soil carbon pool is often called the Soil Organic Carbon (SOC). Soils have between 2 and 10% of organic matter, which is called Soil Organic Matter (SOM). SOC includes only the carbon component of organic matters, where SOM is the content of all organic matters even those that don’t have carbon. SOC is easier to measure in labs than SOM, and it is more relevant to carbon sequestration.

Here is a non-exhaustive list of the factors that affect the amount of carbon that can be absorbed by soil:

Soil type
SOC current content (and remaining absorption capacity)
Soil hydric content
Rainfall
Grade / slope
Soil erosion
Usage of the soil:
- Tilling, overgrazing, nutrient depletion, intensive soil disturbance, and erosion deplete a soil of its carbon content.
- Regenerative agriculture and managed grasslands will see higher carbon storage.

A comprehensive mapping of US soils can be found on LandGate. LandGate’s scientists have used advanced techniques to integrate all these factors and more into estimating the carbon storage values in “Carbon per ton per year” (ton of CO2/ac/yr) of private land, including soil and tree coverage. You can also find free estimates on the potential earning power of selling carbon credits from land. Search for parcels by zip, city, or county to view the exact soil types found on the land.

The absorption of carbon over very large areas of soils can add up considerably to reduce carbon dioxide from the atmosphere. It can generate revenues for landowners who manage soils in order to maximize CO2 sequestration and want to restore America’s land to what it once was.

How Can Landowners Make Money from Carbon Credits?

Reducing greenhouse gases such as CO2 benefits everyone. As a landowner, these carbon offset methods can help make extra income. And this income is not contingent upon making radical changes to the land, as it is already storing carbon naturally. Land is proving to be valuable for biological carbon sequestration, mainly in soil. Soil carbon sequestration, also known as “carbon farming” or “regenerative agriculture”, is the act of removing carbon from the environment to store in soil beneath land. Scientists have estimated that soils, mostly agricultural ones, could sequester over a billion additional tons of carbon each year.

Emitters of greenhouse gases such as CO2 are having to comply with government regulations to reduce emissions. Therefore, it’s these companies who are looking to pay landowners for their carbon credits. Land can also store carbon alongside other types of “green” leases, such as leasing land for a wind farm or solar farm.

For example, a landowner could receive royalties from a wind farm on their land while receiving carbon credits from carbon offsets, and using regenerative grazing techniques to feed cattle. Another landowner may earn carbon credits by managing their land and also receive royalties from a solar farm, while also growing flowers for bees. Carbon offsets do not tie up your land so it can still be used for a variety of surface activities.

Land Value – Carbon Credits for Carbon Offsets

How many carbon credits one can earn will depend mainly on the size of the land, the soil conditions (as mentioned above) and tree cover, as carbon dioxide is also stored in trees. Climate, such as temperature and moisture also play a large role, as rainfall will help increase the input of carbon to soil and will be more valuable than soil in dry climates.

As of July 2021, a carbon credit trades for around $16 per metric ton of carbon dioxide stored. Depending on the land’s location, its soil type, and the tree canopy, it can absorb between 0.5 and >5 ton/ac/yr. Also called a carbon offset, it is a certificate that represents the reduction of one metric ton (or 2,204.6 lbs) of CO2 or its equivalent of other greenhouse gases. The carbon price (carbon credit pricing) is predicted to increase ten fold by 2030. So in 2030, a landowner could be making as much as $1,000,000 per year on one thousand acres of land!

There are many benefits to pursuing carbon credits:

Make extra income off of private land without changing anything
The land is already storing carbon!
Improve the health and resilience of soil
Retain full surface use of private land and the ability to lease the land for farming, ranching, or recreational purposes
Make a positive impact on the environment

About the Author:

Yoann Hispa, a new RLI instructor, is CEO and co-founder of LandGate. Prior to that, he was Executive Director of Engineering at Ruspetro, and President of Optimix Energy Corp leading a team supervising mineral evaluations, acquisitions, divestitures, and drilling operations for a Private Equity. Yoann has 17 years of experience in the energy industry, mainly with Developers in technical and leadership roles from Geoscientist to Reservoir Engineer. While at Anadarko Petroleum, he worked on US Shale assets, in International Exploration, and as Technical Team Lead of Colorado’s development. He has been an Instructor of Energy Land Resources at UT-Austin. Yoann holds an Executive MBA from the University of Colorado, an MS in Petroleum Eng. from UT-Austin, an MS in Geomechanics from the University of Birmingham (UK), an MSc in Civil Engineering from ESTP (Paris, France), and a BS equivalent in Math/Physics. Yoann is of Hispanic and French origin; he speaks English, Spanish, French, and Czech fluently.