There’s a new cash crop in the Prairies besides traditional grains and oilseeds such as wheat, barley and canola. The new crop is carbon credits, and they’re going for cash on the Chicago Climate Exchange — the first private carbon trading market in the world.

“The climate exchange does lead to income for Saskatchewan farmers,” Mike Walsh, the CCX’s senior vice president, stressed on a recent trip to Regina to promote the exchange. “The farmers are providing one of many mitigation options into the [carbon trading] system.’’

Large greenhouse-gas emitters, such as manufacturers, utilities and energy companies, can purchase carbon credits on the CCX to reduce their attributed GHG emissions. CCX members agree to reduce their GHG emissions by 1% a year; those unable to do so purchase credits from those who can.

Carbon credit sellers, such as C-Green Aggregators Ltd. of Regina, bring together agricultural producers that use environmentally friendly “zero-till” practices that fix carbon in the soil. Zero-till farming reduces tillage to a minimum, minimizing the amount of carbon being released into the atmosphere.

“What the C-Green folks have done is assemble a large pool of farmers who want to participate in this new environmental commodity,’’ says Walsh. “So, in addition to wheat and canola, they have another crop — environmental services.’’

By bringing buyers and sellers of carbon credits together, the CCX can help reduce GHG emissions most experts believe contribute to man-made climate change or global warming, Walsh says.

“The premise is to find the ‘least cost’ ways to reduce GHG emissions. That’s what the whole concept of a market is for — to let us make some progress on global warming without harming our economies.’’

The CCX is the brainchild of Richard Sandor, former chief economist of theChicago Board of Trade. Sandor had come up with the idea of the “cap and trade” system used in the 1990s to reduce sulphur dioxide emissions that cause acid rain.

Sandor is also the person who came up with the then-radical idea of trading U.S. treasury futures on the CBT, marking the beginning of the multitrillion-dollar financial futures market in the U.S.

In 2000, a dozen industrial, government and non-government organizations began to design the world’s first organized and independently audited market for carbon trading — in effect, putting a price-tag on carbon.

By 2003, the CCX launched with 14 members and $18 million in trades — two years before the Kyoto protocol, the United Nations-backed climate-change agreement signed by 166 countries, came into force in February 2005.

Three years later, the CCX has grown to more than 200 members, including such blue-chip companies as DuPont, Bayer AG, IBM Corp., Ford Motor Co. and Rolls-Royce PLC. CCX members in Canada include Abitibi-Consolidated Inc. and Manitoba Hydro.

However, the U.S. has withdrawn from the Kyoto agreement and the Canadian government’s recently proposed Clean Air Act makes no mention of Kyoto. In North America, no government-mandated GHG emission reduction targets exist, nor is there any regulatory regime to enforce them.

Not surprising, carbon values are relatively low at US$4 a tonne of carbon dioxide. For the 2,300 producers belonging to C-Green, carbon credits trading on the CCX are worth about US$1.50 an acre. On 5.1 million acres, that is $7.65 million, or slightly more than $3,300 a producer, not including verification, management fees and other costs.

Saskatchewan farmers won’t get rich selling their carbon credits on the CCX, but a few thousand extra dollars will help pay the bills and help keep the farm going another year.

In Europe, however, where Kyoto came into effect in 2005, carbon prices are three to five times higher than in North America.

Although no one can predict what will happen here, Walsh believes carbon credits “could be a significant income opportunity.’’ And for hard-pressed Prairie farmers — and the environment — every bit helps. IE