Agriculture and Carbon Offsets Policy Christopher Galik Duke University Fueling the Farm II Center for Environmental Farming Systems July 10, 2008
Overview Flashback Role & Potential of Offsets in Climate Policy Offsets Accounting and Management
Tim Profeta, Nicholas Institute - July 13, 2007 World Oil Situation $150 $100 $50 $73.44 $131.41 07/13/07 06/27/08 http://tonto.eia.doe.gov/dnav/pet/pet_pri_wco_k_w.htm, 7/9/08
Tim Profeta, Nicholas Institute - July 13, 2007 Climate the Primary Driver of Energy Policy S.3036 The Lieberman-Warner Climate Security Act The most extensive government reorganization of the American economy since the 1930s -WSJ, May 27, 2008
Tim Profeta, Nicholas Institute - July 13, 2007 Multiple Areas of Opportunity for Agriculture Energy Independence and Security Act of 2007 Expanded Renewable Fuels Standard (36 Billion Gallons by 2022) Renewables Target (25x 25) Food, Conservation, and Energy Act of 2008 Cellulosic Fuels Production Subsidy Loan Guarantees Production Subsidies
Tim Profeta, Nicholas Institute - July 13, 2007 Multiple Areas of Opportunity for Agriculture NC Renewable Portfolio Standard (August 2007) NC Greenpower - Carbon Offsets (June 2008)
No offsets 15/15 Unlimited Domestic/15 Unlimited offsets EPA Analysis of the Climate Security Act of 2008: S. 2191 (March 2008) Available at http://www.epa.gov/climatechange/downloads/s2191_epa_analysis.pdf
Million Tons CO2 Equivalent 400 200 0-200 -400-600 -800 265 126.2 Emissions by Uncapped Sector (2006) Agriculture/Forestry 55.7 5.9 1.3-41.8 9.4-95.5-16.3 16.2-10.5-745.1 32 125.7 Other 28.5 28.7 63.9 102.4 21.5 Agricultural Soil Management Enteric Fermentation Manure Management Rice Cultivation Field Burning of Agricultural Residues Cropland Remaining Cropland Land Converted to Cropland Settlement Remaining Settlement (Urban Trees) Land Converted to Grassland Grassland Remaining Grassland Landfilled Yard Trimmings & Food Scraps Forest Land Remaining Forest Land Wastewater Treatment Landfills Natural Gas CO2 Process Losses Petroleum Process Losses Coal Bed Methane Natural Gas Methane Process Losses Industrial N2O Emissions Major emissions and sequestration from uncapped activities in the U.S. (Data from EPA 2006 Inventory) Uncapped based on S.2191
National Mitigation Cost Curve for Agriculture, Forestry, and Biofuel Offsets $/t CO2 $50 $30 $15 $5 $1 Agricultural soil carbon sequestration Forest management Fossil fuel mitigation from crop production Agricultural CH4 and N2O mitigation Afforestation 0 500 1,000 1,500 2,000 2,500 Biofuel offsets MMT CO2 reductions relative to baseline From EPA (2005) Greenhouse Gas Mitigation Potential in U.S. Forestry and Agriculture
Potential Size of the Commodity Up to 168 million tons of CO 2 could be sequestered in U.S. agricultural soils, annually This carbon crop would be valued at: At $10/ton CO2 = $1.7 billion/year At $15/ton CO2 = $2.5 billion/year At $30/ton CO2 = $4.9 billion/ year 10
Income from Offset Market & Allowances (Model predicts carbon prices start at $10/ton and rise to $49/ton by 2030) Source: 21 st Century Agriculture Project Senators Dole & Daschle using DOE/EIA modeling information of S. 2191 11
Policy Development: Harnessing Farms & Forests Guidelines developed by independent scientists & other experts
Policy Development: Broader Offsets Policy
Implementation Issues: Accounting Certainty Additionality Baseline Leakage Reversals
Implementation Issues: Accounting Matters --- Base Year ---Adjusted Base Year ---Default BAU Management ---FIA Mean ---Performance Standard
14,000 Implementation Issues: Accounting Matters 12,000 --- Protocol A 10,000 ---Protocol B metric tons carbon 8,000 6,000 4,000 ---Protocol 1605b C CCX GFC CCAR ---Protocol D HFF VCS RGGI ---Protocol E ---Protocol F 2,000 ---Protocol G 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Year
Implementation Issues: Landowner Resources Sec. 2709, 2008 Farm Bill NRCS, FIA, etc. NGOs Academia, Extension
Thank You, and further questions christopher.galik@duke.edu 919.681.7193
Additional Material Offsets Explained Capped entity emits more MtCO 2 /yr 0 Afforestation 2010 sequesters 2100
Additional Material Baseline Source: Richards, K., and K. Andersson (2001) Climate Policy 1: 41-54
Additional Material Additionality Additionality Test Legal or Regulatory Initiation Date Proportional Common Practice Performance Benchmark Barriers Technology General Description Better than any required actions. Must be initiated before set date. Test often used in combination with another. Credit for only the proportion of project that is additional. A practice better than common practice, better than business-as-usual is used. Better than pre-determined benchmark of emissions or sequestration. Implementation barrier that is not faced by the alternative action. New technology, not the business-as-usual is used.
Additional Material Estimating Leakage Project-Based Tables Equations Source: VCS (2007) AFOLU Guidance National Model (FASOM-GHG)