Thursday, 27 June 2013 08:37

Carbon offset program helps...but not all agriculture producers

Written by  Garrett Simmons Southern Alberta Newspapers
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Alberta’s carbon offset credit system has put money into farmers pockets  — some farmers.


A system designed as an option for large industrial emitters who need to comply with Alberta’s greenhouse gas emissions reduction program, has allowed those emitters to purchase offset credits from other sectors who have voluntarily reduced emissions.
“They’ve done well,” said Graham Gilchrist, assistant Farmers' Advocate in the Alberta office. “The last calculation showed there was $100 million that has moved through the agricultural industry will all the offsets. Several million tonnes have been sold.”
But not all transactions have gone smoothly, as the middlemen in the process, the project aggregators who sell credits to emitters, have sometimes failed to live up to their part of the bargain, while in other cases, agricultural producers simply have not read over the contracts thoroughly, according to Gilchrist.
He mentioned one specific example, as the Farmers’ Advocate office has learned about a situation surrounding Failsafe Canada Inc., a sister company of Carbon Merchants Canada.
“They have been writing e-mails to their clients saying there is now money and no assets, and they’re offering farmers a switch, to convert the money they owe them into assets in their other companies,” said Gilchrist. “This is a case where farmers sold their credits, and Carbon Merchants is coming back to the farmers and saying there is no money and no assets in Carbon Merchants Canada. We’re received 50 complaints to this office. As far as we know, there was about 54,000 tonnes involved in the whole project.”
He added this puts farmers in unfamiliar territory.
“That means a couple of things for producers, and one is they now have to switch hats. They have to ask themselves, ‘Do I want to be an investor?’ “ Do all your homework and make sure you get a full-blown perspective on this, and get some independent advice.”
The situation with Failsafe is unfamiliar territory for the Farmers’ Advocate as well.
“This is the first time we’ve had non-performance of a contract,”  said Gilchrist, who added other companies have delayed paying out their contracts, and data-management issues with companies have led to Alberta Environment not accepting tonnes.
In a case where non-payment is the issue, Gilchrist added there are really very few options for farmers.
“They certainly have the courts, but at the end of the day, you can’t take blood from a stone.”
He added deals between producers and companies do carry some inherent risk, and when things do go wrong, government intervention is not an option.
“There is no legislation to handle this. It was a policy decision made not to regulate the middleman, so it was a buyer-beware market,” said Gilchrist. “The mechanics of how the system works is it's not a government program. It's a business-to-business program. You (agricultural producers) have to create something that is viable and tradeable, which is sold to emitters.”
Producers do not have the option to get their carbon credits back when deals go bad, and said when those credits are sold, they’re gone. To avoid problems with contractual issues, the Farmers’ Advocate has advice.
“It’s taking management of your data, and taking the time and effort to gather it and have the protocols in place. Read the contract and if it’s not clear, read it again,” said Gilchrist, who added for the most part, the contracts are not complex. “One of the things we did set out to do was remind the industry to write these contracts in plain language.”

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