Ray Massey Economist Commercial Agriculture Program University of Missouri

Transcription

1 Ray Massey Economist Commercial Agriculture Program University of Missouri Commercial Residential Transportation 28% Agriculture 9% Industry 29% 1

2 Commercial Transportati on 28% Residential Industry 29% Agriculture 9% Other 7.2 2% Enteric Fermentation % Manure % Key Source MMT CO2 Eq Percent of Total Soil Management % Industry 29% Other 2% Agriculture 9% Transportati on 28% Commercial Residential Enteric Fermentati on 28% Manure 12% Soil Managem ent 58% Key Animal Class MMT CO2 Eq Percent of Total Swine 19 34% Dairy Cattle % Beef Cattle % Poultry 4.5 8% Other 1.4 3% 2

3 Choose not to play in the game Position yourself for a regulated market Position yourself to profit from consumer awareness, absent regulations Niche market seeking profit from a narrowly defined group of potential customers. 7 Billion tons of CO 2 equivalents emitted in the U.S. 56 million tons of CO 2 equivalents emitted in manure. less than 1% of emissions. Outlook of Avoider The profit may never materialize. Agriculture may not be permitted to play in the carbon credit game. 3

4 If, as expected, regulation comes to the U.S., this country's carbon trading market is expected to be worth $1 trillion annually by That's why investment banks, utilities, industrials, and hedge funds among them GE, Goldman Sachs, J.P. Morgan Chase, and AES are rushing into the business of carbon finance. April 28, 2008 Fortune magazine Carbon Finance Comes of Age Emission reductions create a market for new technologies. Sell needed technologies Bundle technologies with carbon credit acquisitions Emission reductions create a market for credits. Aggregate bundle and market credits Speculate multiple year contracts with fixed prices Lobby to create profit opportunities 4

5 CO2 Emissions from Stationary Combustion Coal Mobile Combustion: Road & Other CO2 Emissions from Stationary Combustion Gas CO2 Emissions i from Stationary ti Combustion Oil Direct N2O Emissions from Agricultural Soil Management Mobile Combustion: Aviation CO2 Emissions from Non Energy Use of Fuels CH4 Emissions from Enteric Fermentation CH4 Emissions from Landfills Emissions from Substitutes for Ozone Depleting Substances Fugitive Emissions From Natural Gas Systems Fugitive Emissions from Coal Mining Indirect N2O Emissions from Applied Nitrogen CO2 Emissions from Iron and Steel Production CO2 Emissions from Cement Manufacture Mobile combustion: Marine CH4 Emissions from Manure Management MMT CO2 Eq 8 Dollars/Metric Ton of CO Source: Chicago Climate Exchange 5

6 Dollars/metric ton CO Source: European Climate Exchange 6

7 102 entities that have agreed to voluntarily reduce emissions via the Chicago Climate Exchange Agricultural related companies who have voluntarily agreed to reduce emissions Bayer Corporation Dupont Potash Corporation Agrium, U.S. Inc. Cargill, Incorporated Monsanto Company Corn Plus LLP (Ethanol Production) Premium Standard Farms Smithfield Foods Ford Motor Company Safeway, Inc. 102 CCX members who must reduce emissions 65 offset aggregators 24 offset providers 75 Liquidity providers Many businesses hope to make money off of carbon trading without actually reducing carbon emissions. 7

8 The purpose of the Sustainability Summit is to launch a process to radically reduce greenhouse gas emissions in the fluid milk dairy industry while creating business value. Supporters: Dairy Management Inc., National Milk Producers Federation, and International Dairy Foods Association. Follow the trail and you find Wal mart via the Applied Sustainability Center of the University of Arkansas Production Agriculture 9% Industry 29% Processing Residential Transportatio n 28% Commercial Consumption Distribution 8

9 CO 2 emissions/head (pounds) 4.68 Annual Methane emissions (pounds) 490 Annual CO 2 emissions (metric tons) 4680 Methane combustion efficiency (90%) 468 Aggregator Charge (10%) 468 Maximum CO 2 for sale 3744 Dollars US price ($7/ton) 26,208 EU price ($40/ton) 149,760 Lagoon $400/animal unit 541,184 CO 2 emissions/head (pounds) 0.67 Annual Methane emissions (pounds) 70 Annual CO 2 emissions (metric tons) 3,350 Methane combustion efficiency (90%) (335.0) Aggregator Charge (10%) (335.0) Maximum CO 2 for sale 2,680 Single cell lagoon covers have high greenhouse gas reduction; 2 cell systems have low greenhouse gas reductions Dollars US price ($7/ton) 18,760 EU price ($40/ton) 107,200 Lagoon $400/animal unit 304,640 9

10 CO 2 emissions/head (pounds) 0.28 Annual Methane emissions (pounds) 29 Annual CO 2 emissions (metric tons) 1,400 Methane combustion efficiency (90%) (140) Aggregator Charge (10%) (140) Maximum CO 2 for sale 1,120 Storage tank covers have medium to high greenhouse gas reduction Dollars US price ($7/ton) 7,840 EU price ($40/ton) 44,800 Lagoon $250/animal unit 190,400 Ray Massey Economist Commercial Agriculture Program University of Missouri 10