Corn crop helps grow clean air

At unusual climate market, “carbon credits” sold to offset emissions

By Robert Lee Hotz
Los Angeles Times
Sunday, February 11, 2007

When Doug Gronau looks out the window of his Iowa farmhouse, he sees a profitable investment in the effort to stop global warming. Most people see cornfields. His cropland, which he is prohibited from tilling, is a greenhouse gas credit, sold on the Chicago Climate Exchange. An anonymous trader snapped up the field’s ability to absorb carbon dioxide to offset, on paper, a tiny portion of the carbon dioxide emitted by some distant factory. Gronau, 57, expects a check for $2,800. “That may not sound like a lot, but farming is hard, and it adds to your margin.” The Chicago Climate Exchange

is the first and only legally binding carbon emissions market in North America. In the absence of federal controls on greenhouse gas emissions, it applies an axiom of economic theory to the problem of global warming: People can be expected to do just about anything for a buck, even save the planet. The market’s theory is straightforward. For the right price, a farmer like Gronau will agree to cultivate his fields without plowing, so the soil retains carbon dioxide that would seep into the air. That “carbon credit” is purchased by exchange members and applied against their emissions. Should the price of carbon credits climb high enough, the

theory goes, company executives one day will find it cheaper to reduce their emissions. Critics, however, question whether new carbon emissions markets have done any thing more than generate profits for market traders, while delaying genuine industrial changes that could forestall global warming. “When I was taught economics, I was taught that air and water were free goods,” said Richard Sandor, founder of the Chicago Climate Exchange. But “it was intuitively obvious to me that on a planet of 6 billion or 7 billion people, that was no longer the case.”