Harvesting Carbon Credits – the Prairies Next Big Crop?

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Calgary, Alberta CANADA, November 09, 2009 /FSC/ – Agcapita Farmland Investment Partnership (AFIP – 0),

The global carbon market is a large collection of sometimes disparate rules and systems – some regulatory, some voluntary.  In simple terms, a carbon offset is a financial instrument aimed at a reduction in CO2 emissions. Carbon offsets are measured in metric tons of carbon dioxide-equivalent (CO2e).   There are two markets for carbon offsets.

* The compliance market where users buy carbon offsets in order to comply with regulatory caps on the total amount of carbon dioxide they are allowed to emit.
* The voluntary market where users purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources.

The market is growing rapidly.  According to New Carbon Finance, in 2008:

* the value of the global carbon market increased 84 percent to US$118 billion;
* transaction volume reached four billion tons, an increase of 42 percent from 2007; and
* the average transaction price rose to US$29 per ton from US$23 in 2007.

New Carbon Finance expects the carbon market to reach US$150 billion in 2009, despite the global economic slowdown.

Stephen Johnston, partner at Agcapita Partners LP, commented that “Monetising the carbon sequestering capabilities of prairie land has the potential to be a significant revenue stream for funds like Agcapita who can achieve the critical mass on both the aggregation and marketing sides of the business.  The major challenge to date has been the embryonic nature of the Canadian compliance market and the lack of accepted protocols.  This is changing with the introduction of the Alberta carbon market and the contemporaneous growth of the voluntary market across the prairies and in British Columbia.”

The low land prices across the Canadian prairies, particularly pasture land, provide a competitive advantage is generating carbon offsets.  One of the key capital costs associated with agricultural offset projects is finding land for “change of use” at reasonable prices.  The Canadian prairies, particularly Saskatchewan, have low priced land in abundance.

Johnston continued, “It is these low prices, combined with Agcapita’s expectation of long term higher carbon offset prices as the compliance markets continue to grow that makes us optimistic that carbon can become a significant revenue stream for our fund.  We are currently speaking to a number of potential joint-venture partners with the idea of developing financial instruments to allow emitters to purchase, hold and trade voluntary offsets with good liquidity and price discovery. Perhaps one day carbon credits will become one of the prairies major crops, alongside wheat, canola and pulses.”

Agcapita is a Calgary based agriculture focused private equity firm which manages RRSP and TFSA eligible farmland investment funds and is part of a family of funds with almost $100 million in assets under management. Agcapita’s investment team has over 50 years of investment and finance experience and its field team has over 150 years of direct farming experience.

DISCLAIMER:  The opinions, estimates, projections and other information which is contained herein and derived from or attributable to persons other than AGCAPITA is neither endorsed nor adopted by AGCAPITA – it is presented for informational purposes only.  Further, the opinions, estimates, projections and other information contained herein are not intended and are not to be construed as an offer to sell, or a solicitation to buy, any securities including those of AGCAPITA and its affiliates, nor shall such opinions, estimates, projections and other information be considered as investment advice or as a recommendation to enter into any transaction. There shall not be any sale of AGCAPITA securities outside of Canada or in any province of Canada in which such offer, solicitation or sale would be unlawful, and any such sale may only be made to prospective investors who meet certain eligibility criteria and who first receive any applicable offering documentation.

AGCAPITA securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or the securities laws of any state, and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, US persons (as defined by Regulation S under the US Securities Act).  This document is not for distribution on U.S. wire services or dissemination in the United States.

FORWARD-LOOKING INFORMATION: This news release may contain certain information that is forward looking and, by its nature, such forward-looking information is subject to important risks and uncertainties. The words “anticipate”, “expect”, “may”, “should”, “estimate”, “project”, “outlook”, “forecast” or other similar words are used to identify such forward looking information. Those forward-looking statements herein made by AGCAPITA, if any, reflect AGCAPITA’s beliefs and assumptions based on information available at the time the statements were made (including, without limitation, that (i) the demand for agricultural commodities will continue to grow at a pace that is unlikely to be matched by growth in agricultural productivity, and (ii) investment demand for tangible assets such as agricultural commodities and farmland will continue to increase for the foreseeable future).  Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material. Factors which could cause actual results or events to differ materially from current expectations include, among other things:  risks associated with the ownership and operation of farmland, including fluctuations in interest rates, rental rates and vacancy rates; general economic conditions; local real estate markets; supply and demand for farmland; competition for available farmland; weather; crop diseases; the price of grain and other agricultural commodities; changes in legislation and the regulatory environment; and international trade and global political conditions. Readers are cautioned not to place undue reliance on any forward-looking information contained in this news release (if any), which is given as of the date it is expressed herein. AGCAPITA undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.

For further information please contact:
Stephen Johnston – Partner
Agcapita Partners LP
400, 2424 – 4th Street SW
Calgary, Alberta  T2S 2T4
Tel: +1.403.218.6506
Fax: +1.403.266.1541
Email: sjohnston@agcapita.com
Web:  www.agcapita.com

Source: Agcapita Farmland Investment Partnership – http://www.agcapita.com
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Posted on November 10, 2009 · in Press Releases

Tagged as: carbon credits • Carbon Dioxide • Carbon Offsets