Carbon Credits

Carbon markets provide financial incentives for projects that reduce, avoid, or remove greenhouse-gas emissions. A carbon credit generally represents one metric ton of carbon dioxide, or its equivalent, that has been reduced, avoided, or removed from the atmosphere under the requirements of a particular carbon-credit program.

Forests can remove carbon dioxide from the atmosphere and store carbon in trees, soils, and wood products. Peatlands also store substantial amounts of carbon and, under some carbon-market programs, conservation or restoration activities that avoid or reduce greenhouse-gas emissions may be eligible to generate credits.

Minnesota’s school trust land portfolio includes extensive forestlands and peatlands that may have potential for participation in carbon markets. Depending on the program and characteristics of the land, carbon projects could provide an additional source of revenue from carbon storage, increased sequestration, avoided emissions, or other qualifying activities.

Developing a carbon project can involve significant technical, financial, and legal requirements. Projects generally must demonstrate and document measurable carbon benefits, comply with an established carbon-market standard, undergo monitoring and verification, and address requirements related to the duration and permanence of the claimed benefits.

For school trust lands, the potential value of a carbon project depends on more than the price of carbon credits. Evaluation also includes project-development and monitoring costs, expected net revenue, contract duration, restrictions on future land management, effects on timber or other revenue opportunities, market and regulatory risks, and the long-term value and earning potential of the land.

Carbon markets may provide an additional revenue opportunity from suitable school trust timberlands and peatlands. Evaluating project economics, contract terms, management obligations, and effects on other land uses can help identify where carbon projects may add financial value to the portfolio.