Before signing a carbon sequestration contract, you’ll need to fully understand all of the specific terms, conditions, requirements, data ownership and penalties covered in the document’s fine print. In fact, it’s a good idea to have your attorney review the contract and explain your rights and obligations in full detail before signing any carbon sequestration agreement. 

Each carbon credit company has different requirements and conditions, so you’ll need answers to a number of all-important questions before agreeing to be part of a carbon program. All the legalese can have large financial implications over the length of the carbon contract and even for future generations to come on the farm.

Here’s a list of questions to consider when evaluating any potential carbon credit contract.

1. What specific practices or results will the carbon company be paying for?

Typical practices include reducing tillage, changing nitrogen rates or application practices, seeding cover crops, precision nutrient management and varying crop rotations.

Some companies limit the number of carbon credits farmers can receive per acre. For example, if the company limits a farmer to two credits per acre, and the farmer adopts several practices that sequester more than two metric tons of carbon per acre, the grower may not receive full payment for the amount of carbon they sequester.

While some companies will pay for existing practices, most are paying for additionality, or the amount of carbon that can be sequestered by practices that are newly implemented on the land.