Jan. 19—The idea of selling carbon credits is an emerging market that holds the promise of companies buying credits from farmers who practice farming techniques that reduce the amount of carbon escaping into the air.

But the concept is still at a stage where many questions remain.

"We're still very early into these carbon markets. It's the Wild West," said Matthew Berger, an attorney with Gislason & Hunter. He was on a panel Wednesday at the MN Ag Expo in Mankato.

But Berger, who specializes in ag law, said he's hearing from more and more farmers who are interested in the idea.

Drew Kessler, of Houston Engineering, said carbon markets are attractive for companies — be it Target, an ethanol plant, Amazon or others — who have pledged to reduce their carbon footprint to aid in slowing climate change. When those companies can't reduce their carbon output enough by changes to their own operations, they can purchase carbon credits from farmers or other businesses that put in practices that cut their carbon output. The idea is that there will be an overall reduction in greenhouse gases escaping into the atmosphere.

Berger said there are a wide variety of contracts out there for companies or other groups that want to buy carbon credits from farmers. He said farmers need to know what the contracts say and what the risks and benefits could be.

He said some contracts require farmers to take specific steps to reduce carbon loss on their farms, be it not tilling the fields or doing less tillage. Tilling the soil releases carbon trapped in the soil. Other contracts require the farmer to reduce their carbon output in whatever manner works for them.

"You need to know your obligation," under the contract, Berger said.

There are also different ways farmers get paid, including a one-time payment, ongoing payments or by basing the payments on what the price of carbon credits are selling for on the open market at any given time. Setting the price on the carbon market can bring higher payments to the farmer if prices are up, but also has more downside risk if carbon markets are low.

Berger said farmers also need to understand the fine print of contracts when it comes to dispute resolution, who is going to do the testing to measure carbon reduction and who is able to access the detailed information that is supplied about a farm under the contracts.

Farmer A.J. Krusemark said another issue is whether farmers should get credit for what they are already doing voluntarily on their farms or only get carbon credit payments for new practices.

On his multi-generational farm, they by choice already do no-till or strip tilling and plant cover crops on all their land. But he said it's not clear if they can get credit for continuing those practices or can only get financial benefits from adding additional practices.

"It's very much an emerging market," he said.

Berger said that when he negotiates contracts, he pushes for the farmers to get financial benefit from continuing to do things they are already doing voluntarily as well as any additional steps they take. But he said many of those purchasing carbon credits are only interested in pushing farmers to take additional steps to further cut their carbon release.

Leif Fixen, of the Nature Conservancy, said there may be a lot of details that need to be worked out as carbon markets are refined, but the goal of reducing the release of carbon is important.

"We need to get more conservation efforts on the ground. We want to see this made scalable and cost-efficient," he said of the carbon markets.

Gov. Tim Walz spoke at the Expo, telling guests he is optimistic about the ability of farmers to continue to supply safe, abundant and cheap food to the world. Walz said the robust ag sector is part of a diverse economy in the state that positions Minnesota well for future growth and prosperity.

The Ag Expo continues Thursday at the Mayo Clinic Health System Event Center in Mankato.