Carbon credit pricing is the process of calculating the value of carbon that has been released into the atmosphere. There are a number of factors to consider when calculating this price. Some of these include the cost of capturing the carbon, the cost of importing the carbon and the durability of the product.
Calculating durability
Putting a dollar figure on the price of carbon offsets is no small feat. However, it’s not all doom and gloom. Offset buyers of all stripes are looking for a way out from the recession. As with anything in life, there’s a tradeoff. With a little planning and research, offsetting can be an inexpensive and rewarding activity. But, like the rest of your life, it is a good idea to sanity check what you are buying and how you are using it. Luckily, there are a few companies out there specializing in the art of the deal. So, if you’re considering a new home, a new office, or just looking for a little peace of mind, it’s time to get in touch with a friendly bluffer.
Co-benefits for landowners
Voluntary carbon markets are one way to mitigate climate change. They can also drive sustainable development in communities. Nevertheless, the prices of carbon credits are still low, given the costs associated with the implementation of such projects.
There are two ways to participate in the voluntary carbon market: by selling carbon, or by becoming a project developer. Regardless of the approach, landowners have the opportunity to take advantage of co-benefits.
The co-benefits are generally not well defined. Landowners can benefit from additional cash flows, such as those provided by a carbon offset program, or from the sale of carbon credits. However, the benefit is usually not as dramatic as the cost of participating in a carbon contract.
A carbon credit contract offers landowners the opportunity to sell unused carbon stored in trees. Typically, the landowner is paid for the sequestration of marginal carbon in the trees over a five-year period.
This process may require a project developer to monitor the site and ensure that the landowner is maintaining it as a range. When the landowner is ready to sell, he or she may contact the project developer or other parties. Or the landowner can work directly with the registries to develop a carbon credit project.
An avoided conversion of grasslands project can be a lucrative and effective strategy to help address climate change. It can also provide landowners with additional revenue to fund livestock operations and agriculture-based livelihoods.
Regulations and incentives for carbon capture
Several federal agencies are involved in carbon capture and sequestration regulation, including the EPA, Department of Interior, and Energy Department. These regulations, along with many state incentives, are used to incentivize the deployment of these technologies. While the federal incentive is the most important, other incentives also are available.
The IRS issued proposed regulations on carbon capture tax credits earlier this year. The proposed regulations are in keeping with the current regulatory regime and fit into the existing structure of the tax code. They are taxpayer-friendly, providing a clear path for developers.
One of the most powerful federal incentives for the commercial deployment of carbon capture is Section 45Q, a tax credit for the capture and storage of qualified carbon dioxide. This tax credit is available for a 12-year period starting from the date of equipment placement. It can be used for both the direct air and geologic sequestration of CO2.
The new law provides developers and investors with greater flexibility in financing carbon capture projects. It also allows for the transferability of the credits.
This new law is expected to drive interest in carbon capture projects and provide incentives to accelerate the deployment of carbon capture across multiple industries. Other incentives may include utility cost recovery mechanisms, which provide favorable rates of return on investments.
