Friday, February 29, 2008

Climate Change Legislation Is Coming - possible in 2009!

CAMPAIGN 2008: Possible McCain running mate predicts U.S. climate law by 2009 (02/26/2008)

Environment & Energy Daily
Darren Samuelsohn, E&ENews PM senior reporter

Minnesota Gov. Tim Pawlenty -- mentioned widely as a potential Republican vice presidential candidate -- predicted passage today of a law aimed at curbing U.S. greenhouse gases within the first year of the next administration.

Climate Change: Taking stock of Industrial Emissions -- An E&E Special Report

"Each remaining candidate for president, as far as I understand it, now supports taking action on this area in the nature of some sort of cap-and-trade program," Pawlenty said in a Washington speech.

"The Congress, I think, is inclined in that direction as well," he added. "So I think there's going to come an important moment, here in the next 12 months or 18 months or so, where that moment will be realized as a national initiative. That's real exciting."

Pawlenty, 47, has been discussed as a possible running mate for the presumptive Republican nominee, Arizona Sen. John McCain. Now serving his second term as governor, Pawlenty is chairman of the National Governors Association and is one of six co-chairman of McCain's presidential campaign alongside former Texas Sen. Phil Gramm and Utah Gov. John Huntsman.

Speaking with reporters before his speech at the Pew Center on Global Climate Change, Pawlenty outlined energy and environmental policy items that he said should be top priorities for the next president.

Pawlenty urged the federal government to make an even stronger push to help "next stage" cellulosic ethanol reach commercial markets. He said he wants to see similar goals for carbon capture and storage. "People are hopeful about that, but candidly, it isn't ready yet in a stable and economical form," he said.

And on nuclear power, Pawlenty called for greater study of fast-burner reactions and reprocessing of spent nuclear fuel rods. "The federal government has prohibitions on both," he said. "They need to get comfortable around the research of that."

Overall, Pawlenty said he agreed with the leading presidential candidates that environmental policies and private investment could create millions of "green collar" jobs.

"I think you're going to look back 20 years from now and say this was an entire new portion of our economy that was created," he said.

Climate plan must be 'reasonable'

Last year, Pawlenty signed into law a series of goals for reducing greenhouse-gas emissions in his home state, including a 15 percent reduction from 2005 levels by 2015 and a long-term 80 percent cut for midcentury. Minnesota has since taken a leadership role in setting up a Midwestern regional climate plan that remains in its infant stages, but the governor said he would be open to a larger U.S. government role.

"I support a reasonable cap-and-trade system," he said. "I think it'd be good for the federal government to take that up rather than have states take it up as clusters of regions."

Asked about Republican opposition to cap-and-trade legislation, Pawlenty raised concerns about the country's international competitiveness.

"I think many in the Republican Party, not all, would feel better about it, including me, if it included India and China," he said. "A chunk of them say cap-and-trade might work or might be worth exploring, but not in isolation. We don't want to create ourselves up as a competitive island in a global market."

Pawlenty also said he sees room for the right U.S. climate policy to win industry backing. "If it's done reasonably and not overbaked, a lot of the business community will, if not support it, at least be comfortable with it," Pawlenty said. "You're seeing that already."

Under Pawlenty, Minnesota also has set up a first-in-the-nation requirement that 20 percent of its gasoline include ethanol. Here, he signaled the federal government should defer to state leadership. "It's not in effect yet because EPA won't give us permission, but we hope they will," Pawlenty said.

'Don't wreck the economy'

A task force of industry, environmental and other community leaders are working in Minnesota on a number of recommendations for how the governor and Legislature should curb rising levels of emissions. A final report from the group isn't due until the end of the week, but drafts already released convinced Pawlenty to take a moderate path.

"It would be foolish for any one state to go out on a limb and make themselves so costly and so anticompetitive in this area that they drive business out of their state, especially when the economy is reeling," he said. "I'm in favor of making progress ... but we also have to make sure we don't wreck the economy."

Ideas Pawlenty would outright dismiss? "We're not going to make everyone drive 50 miles per hour, that's not realistic," he said. "The idea here is to not get people to stop doing things. It's to get them to do it in smarter ways."

Friday, February 22, 2008

Lieberman-Warner bill WILL NOT cause Fuel Switching

As the agriculture industry thinks about getting more involved in what is now an inevitable climate change bill, there are many interests -- with agendas of their own, who are pushing hard on the ag industry to oppose the Lieberman-Warner bill. The #1 argument out there is that the Lieberman-Warner bill will "crush the economy" and "cause fuel switching" which will mean "through the roof" fertilizer prices and high energy prices for farmers.

I have tried to explain how this scenario is just not possible in the Lieberman-Warner bill -- that these nightmare scenarios are only possible when you take away the flexibility mechanisms and the offsets provisions in the bill -- WHICH IS WHAT MANY ENVIRONMENTAL GROUPS WANT TO DO.

You don't have to take my word for it -- how about looking at the economic modeling done by the Clean Air Task Force which used the energy-economy model created by the Department of Energy's Energy Information Administration -- this is the model Congress uses to forecast the costs of various energy proposals. The model is called NEMS: National Energy Modeling System and it was run assuming a reference case representing no climate action and also run to project the costs if the Lieberman-Warner bill were to pass into law. The model's timeframe looks out over the years 2012-2030. Below are some of the key findings that this model found if the Lieberman-Warner bill were to become law:
  • No fuel switching to natural gas
  • Stable residential and commercial natural gas bills
  • Almost imperceptible macro-economic impacts
  • A future for coal in carbon constrained world
  • Robust future for nuclear energy & low to zero carbon renewables
  • Large dispersion of funds to accelerate technology deployment and help affected communities
  • GDP is only 0.7% lower in 2030 under the Lieberman-Warner bill than in the business as usual (BAU) case
  • BAU growth in GDP compared to present is 104% in 2030. Under the Lieberman-Warner bill, growth is 102% in 2030.

WHY did these findings result? Because of the many cost-mitigation and market mechanisms in the Lieberman-Warner bill [which is also the reason many environmental groups are starting to oppose the bill]. Some of these mechanisms include:

  • Strong incentives for geologic carbon capture & storage
  • Domestic and international offset market allowing up to 30% of emission reductions to be purchased at lower level than allowance prices
  • Allowances designated to cost mitigation or “transitional assistance” mitigate any residual economic impact
To see the full economic modeling study, click here

What's happening now, politically, is that the far right is starting to recognize that their days of stopping all climate bills are really limited. It may not be this year, but they can not fight the combined power of corporate America + public opinion + the next President and Congress for much longer. For many of the constituency groups in this camp, (some coal utilities, some oil), the preference is to go for a carbon tax -- since they can maintain their profit margins and avoid reducing their emissions. This option GUARANTEES higher energy costs -- and they WILL be passed on to consumers, but it creates NO opportunity to generate a market for offsets or renewable energy. All this option does is create another appropriations process in Washington where members of Congress will hand out the "carbon money" to low carbon projects. It will be a political divvying out of money that has very little to do with actually reducing emissions or promoting renewable energy into commercialization.

The carbon tax crowd is aiming to get agriculture to back down from supporting the one bill that would actually create billions of dollars in revenue for their own industry. They are trying to convince you to work against your own economic interest. Why? Because they want that money for themselves. I understand their interest -- I just want the agriculture industry to understand that its interest does not line up with the fossil fuel industry ON THIS ISSUE.

Duke Standard Questions-n-Answers

As more folks in the agriculture industry are deciding to get engaged in and potentially, protecting the potential of the ag offsets market in mandatory climate change legislation, questions about how ag offsets would work in a climate market and how to deal with the issues of measurement, monitoring and verification of ag offsets keep getting asked. This post is intended to provide an overview of the issue as seen through the great work of Duke University's Nicholas School for Environmental Solutions -- these are the folks who pulled together what's considered the "gold standard" in measurement, monitoring and verification of ag and forestry offsets.

Harnessing Farms and Forests in the Low-Carbon Economy: How to Create and Verify Greenhouse Gas Offsets, (click the link for a preview)
is a technical guide published this year by Duke Press, for farmers, foresters, traders and investors. Duke’s Nicholas Institute for Environmental Policy Solutions developed the guide in collaboration with the nonprofit advocacy group Environmental Defense, and engaged scientists from Texas A&M, Colorado State, Rice, Princeton, Kansas State and Brown universities, as well as other experts.

Check out NI's Climate & Offsets Q&A fact sheet by clicking this link: Duke's Nicholas Institute for Environmental Policy Solutions - Offsets Q&A

Thursday, February 21, 2008

Global warming inspires enterprising solutions

By Paul Davidson, USA TODAY

The phone-booth-size machine humming away in a Tucson lab may look like a science-fair project on steroids. Its inventors, however, say it's a potent new weapon in the battle against global warming.

Its task is elegantly direct. The 9-foot-tall device, encased in see-through plastic, scrapes the chief global warming gas — carbon dioxide — right out of the atmosphere. As air wafts through, CO2 sticks to large chemically coated panels while oxygen and other innocuous gases breeze by. The carbon inhaler's developer, Global Research Technologies, is among hundreds of U.S. companies scouring for ways to reduce the world's greenhouse gas emissions and cash in on federal requirements anticipated by 2010 to combat global warming.

"It's a gold rush," says Peter Fusaro, head of consulting firm Global Change Associates.

The CO2-busting industry is exploding as federal legislation to cap the emissions of utilities and other industries grows more likely, offering the prospect of huge profits. Nearly 400 start-ups are operating 600 carbon-mitigation projects in the USA, with the number of companies set to triple the next two years, says consulting firm Point Carbon.

Their product? Carbon offsets. One carbon offset, or credit, equals a ton of CO2 removed from the air.

Hedge funds and investment banks are starting to trade offsets like stocks and bonds, betting they could soar in value if greenhouse gas caps are imposed. JPMorgan (JPM) expects to buy and sell hundreds of millions of offsets this year, up from tens of millions last year.

For several years, entrepreneurs have had modest success selling credits to corporations and consumers who want to be good citizens and offset the carbon that's produced when they drive cars or use electricity.

Many are deploying tried-and-true techniques such as burning the noxious emissions of landfills and cow manure and restoring forests. Others are testing grander but more controversial strategies, such as growing carbon-absorbing plankton in the South Pacific.

The voluntary market for U.S. offsets is still meager, though it more than doubled last year to $150 million to $200 million, says research firm Ecosystem Marketplace. In Europe, which has complied with mandatory carbon limits since 2005 under the Kyoto treaty, the offset market hit $10 billion last year. Sales in the USA, the world's biggest carbon emitter, could be as high as $175 billion by 2020 if a federal cap is approved, says research firm New Carbon Finance.

Such legislation has grown all but inevitable. Although President Bush opposes carbon caps, Democratic presidential candidates Hillary Clinton and Barack Obama, and Republican front-runner John McCain all favor curbs. Many analysts expect a law to be passed by 2010 and caps to start as early as 2012.

Under a bill that cleared a Senate committee in December, global-warming discharges by major polluting U.S. industries would be cut 71% by 2050. A cap and trade system would be created to spur progress. Utilities, oil companies and manufacturers that exceed their emissions caps would buy allowances — which don't yet exist — from others in those industries that fall under their limits. Unlike an offset, which is a ton of carbon extracted from the air, an allowance lets a company emit a ton of CO2.

The number of allowances would fall over the years, driving up prices, as the government lowers maximum emissions.

Costs come down on consumers

The two carbon currencies — allowances and offsets — will likely merge. The leading proposal in Congress would let companies offset up to 30% of their emissions by buying carbon credits. In other words, instead of cutting its own pollution or purchasing allowances, a utility could buy offsets that fund carbon reduction elsewhere in the USA. That would be a boon for offset suppliers, which could sell credits at much higher volumes and prices than they do now.

Today, offsets cost $3 to $8, Evolution Markets says, but they're expected to track the prices of allowances as those enter the market. Allowances are expected to cost at least $25 by 2020 and $60 by 2040.

Those costs largely would be passed on to consumers. Electric rates in some areas could rise up to 45%, and gasoline prices could go up 25 cents a gallon by 2020 under some forecasts.

If allowance prices get high enough, it will become economical for emitters to make permanent fixes, such as adding pollution-cutting equipment to a carbon-belching coal plant.

Yet some frown on offsets. David Doniger, a policy director for the Natural Resources Defense Council, fears excessive use of offsets early in a cap-and-trade program could encourage polluters to put off investments to slash their emissions.

Offset suppliers face other uncertainties that could torpedo their plans. It's unclear what types of projects would qualify for offsets and whether credits that predate a new law would be eligible. Officials also would examine whether a project would have gone ahead even without offsets, likely disqualifying it for credits.

Despite the hazy outlook, emitters are starting to buy offsets in the hope they'll be able to use them to meet federal mandates. In the largest such deal, American Electric Power, (AEP) the nation's biggest coal-fired power generator and greenhouse gas emitter, agreed last year to purchase 4.6 million carbon offsets from Environmental Credit from 2010 to 2017.

Environmental Credit will generate the offsets by burning the methane produced by the manure of 400,000 cows at 200 farms. Although burning methane produces CO2, methane is 21 times more harmful to the atmosphere. Livestock manure accounts for 6.6% of U.S. greenhouse gas emissions.

By purchasing the offsets in future years, when carbon caps are likely to be in place, AEP thinks the Environmental Protection Agency will be more likely to approve them. And by inking a deal now, the utility seeks to lock in lower prices.

"We're firmly of the mind there will be some kind of global-warming program in the not-too-distant future," says AEP Chief Executive Michael Morris. "To that end, we're trying to build a bank of credit."

Morris would not say what AEP will pay for the offsets. But Environmental Credit executive Derek Six says it's more than today's $5 price of an agricultural offset but less than the roughly $20 tab projected in the next decade under a federal program. Environmental Credit is spending $25 million to buy equipment for the AEP project and will share offset revenue with farmers.

Lofty environmental goals

Others are eyeing bigger carbon bounties. Blue Source plans to capture the carbon dioxide spewed by a Kansas fertilizer plant and sell it to petroleum fields to boost oil output. It's spending about $70 million on equipment to corral the carbon as well as on pipelines to send the gas about 100 miles to the oil fields. Blue Source already has five similar setups in the USA.

It will snare about 650,000 tons of carbon a year from the Kansas plant, the equivalent of removing 113,000 cars from the road. At today's offset prices, Blue Source will recover its investment in about five years. But projected prices in the next decade under a federal cap would halve the payback period, says CEO Bill Townsend. More than half of the offsets Blue Source sells go for a premium because they're for post-2010 projects that emitters hope will meet federal caps, up from 10% six months ago, he says.

"It wasn't a bad business before, but it's not the business (a federal cap) will bring us," Townsend says.

Some start-ups are grounding their businesses in Mother Earth. Equator Environmental plans to restore forests, at a cost of about $1,000 an acre. Deforestation accounts for about 20% of the world's global warming gases.

With an acre of trees swallowing just 2 to 8 tons of CO2 each year and offset prices under $10, the business is barely profitable until a cap brings higher prices, says CEO Jeff Bortniker. Meantime, Equator plans to harvest trees for extra revenue, planting new ones to keep the forest population in balance.

Still others are tinkering with technologies they say could offer breakthroughs under a federal system that pays top dollar for carbon reductions. The carbon-absorbing machine being tested in Tucson was funded by Gary Comer, the founder of Lands' End (SHLD) who was moved to combat climate change in 2001, when he was able to sail the Arctic Ocean without the aid of an icebreaker. Comer died in 2006.

If deployed in large numbers, the carbon-filtering machines could slash new emissions and vacuum decades-old gases out of the air, says Allen Wright, president of Global Research Technologies.

Wright envisions machines the size of 40-foot-long shipping containers that could be trucked to vast isolated stretches where carbon would be buried when technology to do so is available.

With each device able to remove a ton of carbon a day, about 30 million units could scoop up 10 billion tons a year, or about a third of the world's emissions, he says. Costs to capture carbon initially would be about $250 a ton, far more than the projected $100 per ton price of U.S. allowances in 2050. But Columbia University geophysicist Klaus Lackner, who teamed with Wright to invent the machine, says mass production could drive prices to $30 a ton.

There are skeptics. Electrodialysis, which separates the carbon from the panels, uses so much electricity that it produces nearly as much carbon as it removes. Capturing and storing CO2 from the biggest single source — coal plants — as researchers are working to do, would be far more efficient, says Gary Rochelle, professor of chemical engineering at the University of Texas. "These kinds of projects are a terrible distraction," he says.

Lackner says the CO2 separation instead could be driven by an electricity-free thermal process.

Another carbon-buster with big ideas is turning toward the open seas. Climos wants to dump up to 1,000 tons of pulverized iron over a patch of ocean as large as 15,000 square miles in a bid to germinate plankton. Iron ore has been shown to promote the growth of the microscopic ocean algae, which inhale as much CO2 in six months as a forest consumes in decades.

Yet critics, such as Rutgers University biophysics professor Paul Falkowski, say the plankton also releases some carbon as it decomposes before it sinks to the ocean bed. As it decays, it produces nitrous oxide, which is far more damaging to the atmosphere than carbon, Falkowski says.

Climos CEO Dan Whaley, co-founder of travel site, agrees such risks must be studied but says early research suggests the carbon absorbed exceeds toxic emissions enough to make the project viable. If such seedings are repeated annually for 25 years, they could suck in 1 billion tons of CO2, he says.

With each seeding costing several million dollars, Whaley says a large-scale program would be feasible only under government regimes in the USA or Europe that provide for high offset prices. Yet neither the European system nor proposals in Congress permit ocean-based offset projects. Whaley believes such constraints could be lifted after demonstration projects prove the technology.

"If it works, then it's a large solution," Whaley says. "We need all the horsepower we can get because the problem is way bigger than we imagined."

Carbon offsets today are largely bought by utilities and corporations such as PepsiCo that want to offset the carbon dioxide they produce from trucks and cars or generating electricity. If the federal government caps carbon emissions, certain industries would have to buy carbon allowances and offsets to continue to pollute, which would give them an incentive to cut emissions. Examples of how offsets and allowances work:


Each offset is a ton of carbon dioxide removed from the atmosphere or prevented from entering the atmosphere.

An allowance is a right to emit a ton of carbon dioxide. Carbon allowances don't exist now.

Carbon offset supplier works with a farmer to generate 300,000 offsets when methane produced by cow manure at farms is burned. Methane is 21 times more damaging to the atmosphere than carbon.
U.S. government each year would distribute allowances to major industries that emit carbon dioxide, auctioning some and giving away some free.
Investment bank buys offsets for $5 each, or $1.5 million, betting they'll rise in value. Offset supplier and farm owners split revenue.
A utility that relies heavily on coal-fired power plants might have to buy up to half its allowances in the early years, getting the other half free. Allowance costs would be passed on to consumers.
Utility buys offsets from investment bank for $7 each, or $2.1 million, hoping they can be used to meet future federal greenhouse gas limits.
The cost of allowances would rise over the years, increasing the utility's incentive to invest in cleaner energy, such as a nuclear reactor or a wind farm, to reduce emissions.
Offset prices are expected to soar when they can be used to supplement allowances to meet federal caps.

Sources: Evolution Markets, USA TODAY research

Wednesday, February 20, 2008

Measure to Kill Offsets Market Rising!!

The story below is talking about movement on Capitol Hill to push an economic "safety valve" into the Lieberman-Warner bill when it comes to the Senate floor. This is one of the things I've been warning agriculture about. If there is a safety valve -- which is a price cap on carbon, it is really like creating a carbon tax. There is no overall carbon market since businesses just pay the tax and don't reduce their emissions.

Agriculture should understand that safety valve = NO AG OFFSET MARKET. Right now, there is only a limited number of folks in the ag industry who are weighing in at all on this -- and yet, that doesn't stop the issue -- it just means the issue will be decided without ag's input.

Environment & Energy Daily

Sponsors of Senate emissions bill seek compromise on cost provisions (02/20/2008)
Darren Samuelsohn, Greenwire senior reporter

Senate sponsors of a major global warming bill are trying to find compromise on the vexing question of how to cap U.S. emissions of heat-trapping greenhouse gases without damaging the economy.

Climate Change: Taking stock of Industrial Emissions -- An E&E Special Report

Legislation expected on the Senate floor this spring already includes a provision establishing a Federal Reserve-like board designed to monitor a new U.S. carbon market and make changes if the system gets too rocky.

While that idea satisfies some key constituents, it is not enough for other players on and off Capitol Hill.

Electric utility companies, labor groups and several senators who hold critical votes on the measure still want to set some type of price ceiling on the annual price of a carbon credit.

In recent weeks, a small group of Senate staff, academics and members of the U.S. Climate Action Partnership started holding informal and formal talks in search of a deal. But they must convince environmental groups that any new cost provisions do not undermine the integrity of the new climate program.

"There's a really serious conversation going on in a lot of venues about how this doesn't become that last issue standing, and it's a take-it-or-leave-it for environmentalists," said Tim Profeta, a former senior aide to Sen. Joe Lieberman (I-Conn.) who now runs Duke University's Nicholas Institute for Environmental Policy Solutions.

Finding the winning formula won't be easy.

Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) opposes the inclusion of a "safety valve" in the climate bill originally drafted by Lieberman and Sen. John Warner (R-Va.).

The safety valve is a favored concept among economists and business types who maintain that a set carbon ceiling gives them enough certainty that the new global warming program would not sink their businesses. They insist it can also help to assure nervous lawmakers about the limited economic effects of the legislation.

In one bill introduced last year from Sens. Jeff Bingaman (D-N.M.) and Arlen Specter (R-Pa.), carbon prices in the cap-and-trade system would not go above $12 per ton in the first year. After that, the ceiling would rise 5 percent per year above the rate of inflation.

Three Republican senators -- Specter and Alaska's Ted Stevens and Lisa Murkowski -- crossed a major threshold by signing up as cosponsors for the bill in part because of the safety valve.

But Boxer and her traditional allies in the environmental community argue a safety valve would send the wrong message to industry. A price limit on CO2 would discourage companies from making investments in new low- or zero-carbon technologies.

"Any legislation that would move forward would have to have very strong market signals," a Boxer aide said yesterday. "It'd also have to ensure that the greenhouse gas reductions are achieved."

Backroom talks

The closed-door talks on a solution to the cost debate are in the early stages. But some ideas already are being kicked around that signal some of the key features of the Bingaman-Specter approach are open to modification.

"There seems to be a general agreement that cost certainty, or confidence about costs, are most important in the early years of a new program," said Jason Grumet, executive director of the nonpartisan National Commission on Energy Policy, an early supporter of the Bingaman-Specter bill's safety valve.

Grumet said one idea under discussion involves "how you can start with a more fixed system that could phase out or be more flexible over time."

And he also left open room for the $12-per-ton figure to change. "I've never seen a number in Congress that's nonnegotiable," he said.

Environmental groups have been united in their opposition to the safety valve concept since it first surfaced more than a decade ago during the Clinton administration.

"This is a cap-buster," Jennifer Havercamp, a former senior Clinton trade official now working as counsel to Environmental Defense, said last week during testimony to the Senate Finance Committee.

Brent Blackwelder, president of Friends of the Earth, said he expected Boxer to pull the Lieberman-Warner legislation from the Senate floor if a safety valve were added to the legislation.

"It's got to get stronger," said Blackwelder in an interview. "Safety valves are a way of copping out. It'd absolutely derail the entire process."

Yet some longtime climate policy observers predict the negotiations over a cost provision may still yield agreement.

"I've had the sense in informal conversations that when it comes to a deal, if there's really a deal on the table, they could live with that," Richard Morgenstern, a senior fellow at Resources for the Future, said of environmental groups.

Morgenstern, who worked at U.S. EPA and the State Department during the Clinton administration, added, "They don't want to offer it up too soon."

It’s Not Just about NoTillers & Carbon Sequestration!!

Farmer Post from: Dick Wittman, Past President, PNW Direct Seed Association and member of Ag Working Group on Carbon Markets

On February 9 I presented a Carbon Trading Overview to an Ag Executive Program including over 100 US and Canadian producers – some of the most diversified and brightest in our industry. A poll of the group prior to the session revealed that only two in the audience had pursued any effort to market carbon offsets. After a 4-hour educational workshop interest in carbon offset opportunities was in an explosive mode. These producers now see carbon trading has huge potential in areas that goes far beyond carbon sequestration and no till. Opportunity areas not commonly seen include generating offsets from: Precision Ag implementation (reduced fossil fuel, chemicals, fertilizer, and Nitrous Oxide), methane capture in dairies by using methane digesters and lagoon covers, offsets from renewable fuels displacing fossil fuel, and sequestration from CRP planting and forestry projects, just to name a few. In only a few minutes of discussion it was clear that we have only begun to define an array of innovative offset projects that could be developed to help deal with global warming concerns.

One progressive farm couple quickly assessed their potential “portfolio” of offset products looking at CRP, notilled acres, and interest in a dairy facility and quickly calculated a potential of $125,000 in potential carbon credits or offsets that could be marketed on their farm. Another highly diversified farmer from South Carolina was appalled that he had heard so little about carbon potential from the commodity organizations in which he was actively engaged. “Where have my folks been in helping us get on top of this (referring to Cotton Growers, Soybeans, Corn Growers, Wheat Growers, and Farm Bureau)? We’re not hearing about this in our conventions, newsletters, or common vehicles for communications with growers.” When told about efforts of the Ag Working Group on Carbon Markets, this farmer was ready and willing to engage in the national effort to influence climate change legislation and expand grower knowledge on carbon trading issues.

The lesson from this experience is that we’ve barely scratched the surface in efforts to engage politically and to educate producer constituencies. Climate change legislation looks like it is coming, and opponents are coming out of the woodwork with junk science and mythological misstatements aimed at discrediting agriculture as a source of offsets. To protect agriculture’s right to be a player in the climate change solution process, agriculture’s leadership organizations need to redouble efforts at national, regional and local levels to communicate the issues and engage in the legislative process.

Dick Wittman, Past President, PNW Direct Seed Association and member of Ag Working Group on Carbon Markets

Monday, February 18, 2008

Changing the Slope

The story below is the latest in a trickle of media now reporting on how FLAWED the Searchinger study on ethanol and climate change really was. Compare this to the massive media coverage of the study itself which made the outrageous claim that ethanol/biofuels were 2 times as bad in terms of climate change, than oil based gasoline.

Climate change law is being written right now -- if policymakers and the public go into that process believing that gasoline is the "low carbon fuel" they will massively undercut the opportunities for the largest expansion of biofuels industry. Neat little trick for the oil industry to pull off -- of course, with the help of many environmentalists.

This is what happens when an industry is not PRO-ACTIVE in claiming the environmental credit it deserves out of fear that engaging in the issue will lead to a "slippery slope." The same is likely to happen to the ag offsets issue if the agriculture industry as a whole continues to be passive and not stand up and fight for its own interest.

People, the slope is coming. You can not change that. But you can shape it!!!
____________________________________________________________________BIOFUELS: DOE scientists challenge assumptions of big study (02/18/2008)
Jenny Mandel, Greenwire reporter

A landmark study arguing that land conversions for biofuel crops are responsible for a significant increase in emissions of heat-trapping greenhouse gases is full of inaccuracies and bad assumptions, according to two federal scientists.

Energy Harvest: Power From the Farm -- An E&E Special Report

Their criticisms are directed at an Feb. 7 article in Science magazine by Tim Searchinger of the German Marshall Fund that maintains direct and indirect expansions in agriculture related to biofuels essentially double the greenhouse-gas emissions of the fuel per mile driven as compared with gasoline.

That article was published the same day as another that reached similar conclusions and estimated that land-use change for biofuel production causes emissions that could take as much as 400 years to be offset by the superior performance of the fuel itself (E&ENews PM, Feb. 7).

Michael Wang of Argonne National Laboratory's Center for Transportation Research and Zia Haq of the Energy Department's biomass program responded to Searchinger's article in an open letter to Science that challenges several of the study's assumptions. They said the model used to show land-use change from domestic corn ethanol production, which Wang developed and presented in a 1999 paper, was out of synch with recent biofuel production and needed updating.

Wang and Haq also challenge several other aspects of the study. Their arguments: Searchinger's group relied on constant corn crop yields when in fact they have steadily increased over time; that certain ethanol production byproducts are more valuable than recognized and thus displace more corn feed than the group credited; that historic land-use change patterns could not be predicted because world governments have responded to deforestation and other concerns linked to biofuels; and that further efficiency improvements in ethanol production would reduce greenhouse-gas emissions per gallon of ethanol.

Perhaps most significantly, Wang and Haq said the study looks at a scenario for ethanol use unlikely to occur, because it envisions 30 billion gallons of domestic corn ethanol being produced annually by 2015, when the energy bill passed late last year calls for 15 billion gallons from corn.

All wrong or false

In an interview, Searchinger dismissed the criticisms. "Everything they say is either logically irrelevant or false," he maintained.

Searchinger said several of the criticisms, like those targeting future land-use patterns and ethanol production improvements, say essentially the study was too pessimistic. But forecasting is inherently difficult, he said, and the assumptions could just as easily be overly optimistic. He said that on several other points the group's assumptions were extremely conservative, and total emissions could likely be higher.

Wang and Haq also said Searchinger's group sited a recent 62 percent decrease in U.S. corn exports, but he said that reference was wrong. That figure referred to a future scenario in which by 2015, corn exports would be 62 percent lower than they would have been without biofuels, Searchinger said.

On the question of the total U.S. target for corn ethanol, Searchinger said the group used the 30 billion figure because the model they drew from used it and the model is difficult and time-consuming to rerun. He said the figure was immaterial to the study's results, though, because his group looked not at the total number of acres converted but at the greenhouse-gas emissions per acre.

Overall, Searchinger said the results of extremely positive or negative assumptions are less likely to bear out than a more middle range. His group's study estimated that net greenhouse-gas emissions linked to biofuels are double that of gasoline; under extremely unlikely conditions, that could really range from corn ethanol having the same emissions as gasoline to a quadrupling of emissions, he said.

Kansas legislature "carbon tax" update

Here's an update on the Kansas legislature and the carbon issue I wrote about awhile back. The good news is that it looks like the state is dropping the effort to put a cap on the price of ag offsets at the paltry amount of $3/ton. The bad news, as the Wichita Eagle points out in the story below, is that the state may make decisions now that cost it dearly in the next few years because they refuse to accept the reality that a mandatory, national climate law is coming soon.

[Kansas] Legislature refuses to tackle carbon issue

The Wichita Eagle


The Kansas Legislature seems determined to pay no attention to the sweeping changes under way on energy and environmental issues outside our state's border. In the Holcomb coal-plant debate, lawmakers are acting like children who stick their fingers in their ears and make loud gibberish noises to block out what they don't want to hear.

The Senate last week voted 33-7 to approve a bill that authorizes the huge coal-plant expansion near Holcomb and overturns Kansas Health and Environment Secretary Rod Bremby's permit denial, which was based on the 11 million tons of annual carbon dioxide the plant would emit. The House is rushing to pass a similar bill, setting up a showdown with Gov. Kathleen Sebelius.

Climate change? Not to worry. Carbon regulation? Won't happen here.

In fact, you'd be hard-pressed to find any serious discussion of climate change and how it affects state energy policy under the Capitol dome.

That stunning provincialism and state of denial could be setting up Kansas for a serious economic backlash in years ahead.

Among the warnings coming from beyond our borders: Rep. Henry Waxman, D-Calif., last week questioned the financing of coal-fired plants -- and specifically of the Sunflower Electric Power Corp. project -- in a letter to the U.S. Department of Agriculture's Rural Utilities Service.

"If RUS failed to take (carbon dioxide regulations) into account," he wrote, "it has put both taxpayer funds and Kansas ratepayers in jeopardy. If this plant is built, Kansas ratepayers may be stuck with billions of dollars in stranded assets and skyrocketing costs for power."

Waxman's concerns echoed those of three of the largest Wall Street investment banks, which recently issued a new rule that utilities seeking financing of coal plants must demonstrate in their business plans that they've taken into account the projected future cost of carbon regulation.

Sunflower's project estimates do not appear to include those costs. Is that an economic roll of the dice the Legislature is willing to take? Is this what passes for energy policy in the state?

Kansas lawmakers can choose to ignore these signals if they want.

They can choose to believe that global warming isn't a problem and will have no impact on the state. They can choose to ignore the climate action plans that 36 other states have undertaken. They can choose to override state regulatory rulings. They can even choose to ignore the opinion of a majority of Kansans, who by a 2-1 majority in a recent poll expressed their support for Bremby's Holcomb plant decision.

But that doesn't change the stubborn reality that Washington, D.C., and most of the world are preparing for big changes in energy and environmental regulation that will change the cost-benefit analysis of coal plants.

By choosing to ignore those well-signaled trends, Kansas lawmakers are flirting with economic disaster.

Friday, February 15, 2008

Sierra Club & Politics As Usual

The story below is just more proof that the environmentalist community is migrating away from the Lieberman-Warner bill. What's so great about this article is that the Sierra Club outright admits to their hyper-partisan political reasoning for opposing the bill. They, along with FOE and Greenpeace are laying the groundwork for a massive campaign that will attack the environmental integrity of the Lieberman-Warner bill -- for no other real reason than politics. These groups are riding high on the belief that they will have a Democratic sweep of the President and the Congress next year.

What's really interesting -- is that they are willing to bet at all. Since climate change is the "most important issue of all time" to these people, they should be focused on getting started NOW.

If, as they say they believe, the bill needs to be tightened or tweaked -- they can do that after it passes MUCH easier and faster than waiting for the perfect bill to gain enough political support to pass (which just doesn't happen in Washington). We are talking about a bill that sets out action until 2050 - DOES ANYONE REALLY BELIEVE THERE AREN'T GOING TO BE CHANGES AS WE GO??

Its not like the Lieberman-Warner bill has just emerged -- these enviro groups said PLENTY of positive things about it when it first came out -- all sorts of praise for Warner getting "engaged" in the issue.
But now, with real political momentum growing behind the bill -- its as if the closer the Lieberman-Warner bill gets to passing, the further away the environmentalist groups are going. Hence, I return to my assertion that these groups do not really want to pass a bill on climate change -- they want to raise money off the issue a little longer.

The interesting thing to watch will be whether all the other "green groups" follow suit -- or whether some of them have the political courage to remain in support of the best bill out there to get us started dealing with climate change in a market-friendly way.

What is SOOO disturbing for people like me who really care about this issue, is that the Lieberman-Warner bill is a DAMN good start -- and it strikes a balance between reducing emissions and not crashing the economy -- something that will HAVE to be done in order to pass ANY bill EVER.

For agriculture -- the stakes are high here as well -- because one of the "tweaks" that groups like the Sierra Club would make in creating the perfect climate bill -- would be to eliminate the ag offset market completely. If you are afraid of higher energy costs in the Lieberman-Warner bill (which are completely overblown) just WAIT for the bill that gets the support of the lefty enviros -- THAT is the scenario people should be opposing.

Environment & Energy Daily

Sierra Club chief questions emissions bill compromises (02/15/2008)
Darren Samuelsohn, E&ENews PM senior reporter

The Sierra Club's executive director wants environmentalists to oppose any weakening of a major piece of global warming legislation given the prospects of a more friendly Congress and White House less than a year from now.

Climate Change: Taking stock of Industrial Emissions -- An E&E Special Report

"We are being urged to compromise -- to put a system in place quickly, even if it is the wrong system," Carl Pope wrote in a guest essay published yesterday on the online environmental magazine Grist.

"Given that we only have one chance to get this right before it's too late, our top priority must be to make sure that we do not settle prematurely and sign a weak bill into law in the name of doing something about global warming," Pope added. "With momentum for strong action and a friendlier Congress and White House building every day, it's no coincidence that some wish to settle their accounts now."

Pope leads the country's largest "grass roots" environmental group, with 1.3 million members. He has spoken out forcefully several times over the last year on the Democrat-led campaign to enact climate legislation.

But his latest set of remarks offer the most comprehensive assessment of what it would take for Congress to win the Sierra Club's support. The essay also comes as Arizona Republican Sen. John McCain stands on the verge of winning his party's presidential nomination, all but guaranteeing the next president will support a stronger U.S. climate policy compared with President Bush.

Pope's essay outlined four key criteria that signal the Sierra Club wants to see changes to the fastest-moving vehicle on Capitol Hill, a bill from Sens. Joe Lieberman (I-Conn.) and John Warner (R-Va.) expected on the Senate floor this spring.

Congress should ratchet up the bill's emission limits to 20 percent by 2020 and 80 percent by 2050 for the entire U.S. economy. It also should auction off all of the emission credits needed for compliance with the new U.S. cap-and-trade system. If any credits go out for free, Pope said they "must be limited in size and restricted to a short transition period."

As written, the Lieberman-Warner bill seeks to limit emissions to roughly the same limits as Pope suggests. But the bill would cover about 85 percent of the country's greenhouse-gas sources, leaving out commercial and residential buildings. The bill includes both an auction and free allowances, but not on the scale sought by the Sierra Club.

Opposing coal, nuclear power

The Sierra Club also wants to channel auction revenue away from the development of new coal or nuclear power plants. Instead, it suggests that the funds go toward renewable energy research, to help offset energy costs for low-income consumers and to give in-transition assistance to workers and regions affected by the new climate policy. [Sara's note: WHAT!! So they want to take down the bill that actually PROVIDES rebates to people affected by higher energy costs . . . generated from the auctions they so hate -- and instead, put more money into RESEARCH . . . yeah, that's had a GREAT track record of bringing down costs by itself.]

In a nod to industry demands, the Lieberman-Warner bill leaves open the prospect that auction revenue can go toward nuclear power and carbon capture and sequestration from coal plants. Industry groups, in fact, want to see even more explicit language on both items.

Pope likened the current dilemma over a compromise on climate legislation to the 1970 debate over the Clean Air Act.

Then, electric utilities successfully pleaded with lawmakers to grandfather the existing fleet of coal-fired power plants from having to install state-of-the-art pollution controls. That agreement led to a lengthy legal fight that still continues to this day over the law's New Source Review permit and enforcement program.

"This time if we get it wrong, we can't argue we didn't see it coming," Pope said of industry calls for free emission allowances.

Environmental groups have offered Congress a wide set of opinions on what to do with global warming legislation during this election year.

Friends of the Earth is running print and television ads urging lawmakers to "Fix or Ditch" the Lieberman-Warner bill. By contrast, Environmental Defense earlier this week testified before the Senate Finance Committee in favor of moving the Lieberman-Warner bill this year with only minor modifications.

Tuesday, February 12, 2008

Farmer Testimony on Lieberman-Warner Bill

You have heard a lot from me about the agriculture industry's need to get engaged in the climate change bill that will become law in the next few years. I've also pointed out that while its not perfect, the Lieberman-Warner bill has the best provisions and potential for agriculture of the bills likely to move through the Congress.

Now, I'm encouraging you to read the testimony of a real farm leader -- Will Roehm with the Montana Grain Growers Association. Will testified in front of the Senate Environment and Public Works subcommittee led by Senators Lieberman and Warner -- and did a great job of laying out the reasons why he and the National Association of Wheat Growers came to the conclusion that it is in ag's interest to get engaged in the issue. There are also some very good facts about soil carbon sequestration potential and great recommendations for improving the bill for ag in this testimony. I highly recommend it to you!
Before the

October 24, 2007

Mr. Chairman, Ranking Member Warner and Members of the Committee: My name is Will Roehm, I am Vice President of the Montana Grain Growers Association and a third generation wheat farmer from Great Falls Montana with my crop selection focusing primarily on winter wheat.

On behalf of the National Association of Wheat Growers and the agricultural sector generally, I would like to commend you Chairman Lieberman and Senator Warner for developing legislation to control greenhouse gas emissions that recognizes the important role that agriculture can play in capturing and storing greenhouse gasses.

I believe your proposed legislation takes an important first step in providing the necessary infrastructure for agriculture to be recognized for the immediate, cost effective and real greenhouse reductions and offsets our industry can provide.

The American farmer has long been a careful steward of the land and the environment and contributing to the reduction of environmentally harmful levels of greenhouse gasses is a logical extension of what we see as our stewardship responsibilities.

I can state today that the National Association of Wheat Growers intends to actively support your efforts and we look forward to working with you and your staff as the process moves forward.

There are many critics of US farm programs, and while we believe many of these criticisms are not well founded and a strong farm safety net program is essential to maintaining our ability to stay on and work the land, we are also constantly seeking out entrepreneurial value-added opportunities. A robust, uninhibited offset market presents just such an opportunity. The
carbon offset program should generate real, measurable and verifiable emissions reductions or offsets but should not limit the market’s ability to utilize this important tool to reduce greenhouse gas emissions. To that end, one significant improvement to your legislation would be to remove the 15% limit that would be applied to the offset market.

I understand there are some critics who believe agriculture offsets should not
be allowed because they are unreliable or difficult to verify. The National Association of Wheat Growers (NAWG) Board of Directors three weeks ago unanimously voted to move forward with a business plan that would establish NAWG as a carbon aggregator. I was a member of our Environment and Renewable Resource policy committee that likewise voted
unanimously to make this recommendation to our Board. A report commissioned to provide direction on moving forward with this endeavor noted “Thus, one of the key differences moving into a mandatory system, will be the need – in fact the demand by buyers, to have projects that are able to pass measurement and verification tests.”

In moving forward in our role as a potential aggregator, we intend to follow the measurement, verification and monitoring requirements set forth in the field manual put out by Duke University Press titled “Harnessing Farms and Forests in the Low Carbon Economy.”, commonly called the “Duke Standard”. The scientific consensus that supports this work should provide answers to those critics that claim agricultural offsets are unreliable.

And the potential for agricultural offsets in the US is enormous. The Pew Center for Global Climate Change reported that agricultural soils currently sequester approximately 20 million metric tons (MMTC) of carbon per year. Based on research in the field, there is the potential for soils to sequester 60 to 200 MMTC/yr more under soil conservation practices providing 12 to 40% of the reduction that would be needed for the US to return expected 2010 greenhouse gas emissions to 1990 levels.

The potential value for producers is also significant. In my state of Montana, if one were to assume .45 MTC per acre @ $15/ton and further assume a limited enrollment of 10% of eligible producers we would realize a significant market of $3.5 million annually. If half the state wheat acres are enrolled at that price, the income would be an estimated $18 million. This is not an unreasonable expectation since the report notes that 93% of Montana Grain Growers surveyed expressed an interest in aggregating their carbon tons with NAWG.

At the national level, using the same assumptions as above the market is valued at $408 million just for wheat alone. Keep in mind that the practices that create the carbon crop also increase soil fertility, water quality and wildlife habitat.

It is apparent why agriculture should support, and actively pursue, as open and unrestricted greenhouse gas cap and trade market as possible. To that
end, I would like to offer the following policy recommendations:

• Provide adjustment funds to help defray the cost of measurement,
monitoring and verification.
• Encourage USDA to establish standardized measurement, monitoring
and verification protocols to determine changes in soil carbon for
market-based applications;
• Avoid policy that forces agriculture and forestry offsets to compete
for limited market pools. Create markets that are large enough for all
verifiable and measurable offsets to come to the market.
Remove any artificial limits on the potential carbon offset market.
The carbon offset market should be unlimited.
Oppose any artificial price cap on carbon. This would have the effect
of capping the price for carbon credits as well and drive away buyers
who would treat the price cap as a carbon tax rather than offsetting or
reducing emissions.
Support dramatic and immediate expansion of agriculture greenhouse
gas mitigation research. Expanding the carbon “crop” to its full
potential will mean more research on various practices and crops that
store carbon more efficiently and knowledge about how best to model
and measure carbon gains in a cost efficient manner.

I hope that you will support agricultural offset policies that not only allow us to help solve pressing national problems, but also generate new revenue streams for agriculture. I strongly believe that a market- based system that treats carbon as a commodity would spur new technologies and generate significant revenue for agricultural practices that sequester carbon. However, a key to our ability to fully participate in this new market – which would be
one of the five largest agricultural commodities in the United States – are policies that do not limit our ability to participate or cap prices.

In closing Mr. Chairman, I want to again return to the idea that we see our contribution to help reduce greenhouse gas levels as part of an ongoing stewardship responsibility practiced by US agriculture. That responsibility was best summed up by one of the great conservation President’s of the 20th century, Theodore Roosevelt who in 1910 observed:

“I ask nothing of this nation except that it so behave as each farmer here
behaves with reference to his own children. That farmer is a poor creature
who skins the land and leaves it worthless to his children. The farmer is a
good farmer who, having enabled the land to support himself and to provide
for the education of his children, leaves it to them a little better than he
found it himself. I believe the same thing of a nation.”

I urge you to adopt policies that create opportunities for us to leave the land a little better than we found it ourselves.

Thank you for your consideration.

Monday, February 11, 2008

Industry & Lieberman-Warner

As I have discussed here and on my other eco-pragmatism blog, Friends of the Earth and some other liberal environmental groups are continuing to wage their war on the Lieberman-Warner climate bill. Check out their web campaign by clicking here.

Industry is starting to come to the conclusion (rightfully so in my view) that this type of action from the left shows just what they might be facing if they wait to pass a climate bill in the next administration when these groups may have more sway over Congress and possibly the President. Take a look at an excerpt from the blog of OpenCongress -- a website that tracks whats going on at Capitol Hill:

But just as the blog and non-profit driven opposition to Lieberman-Warner is starting to be considered an actual threat, the energy industry is increasingly throwing its powerful support behind it. Ryan Grim of the Politico quotes a top House aide saying that there is “'consensus among leadership that there is a good chance' a climate change bill will pass in 2008, partly because industry — worried about getting a tougher bill in 2009 — is getting behind it." And Tom Athanasiou of Foreign Policy in Focus quotes an anonymous congressional staffer saying that "Lieberman-Warner is increasingly looking like 'the best deal that American business will ever get.'”

A couple of weeks ago, representatives of the coal, gas and oil industry met for a conference and agreed to support the Lieberman-Warner bill because, as David Parker, president and CEO of the American Gas Association, said, "future legislation could be even harder on the industry." A link to a full video of the conference has been posted in the bill's comment section on OpenCongress.

To read the full article on this, click here for OpenCongress

Friday, February 8, 2008

Climate Bill, Energy Costs & Farmers

A funny dynamic has started to occur on the climate change issue: agriculture is starting to wake up to their own interests on this bill -- and to the fact that their interests are not always the same as the larger fossil fuel industry. As this has started to happen, there have also emerged a big push to put agriculture "back in its box" using ag's political capital and friendly rural faces to go down with the ship in terms of fighting climate change legislation -- while the fossil fuel industry makes its own side-deals with lawmakers on what they now see as an inevitable law.

One of the key strategies that is being trotted out and used against those in the agriculture industry who have decided to engage in shaping a climate bill to be the best it can be in terms of creating a carbon offset market, is that the cost of any climate bill -- let alone Lieberman-Warner are SO high -- that farmers would be participating in their own demise by working on such a bill. This scare tactic is very effective if you have not been following the full climate issue and don't realize just how inevitable a climate bill is. To these cost scare tactics, I offer the following thoughts:
  1. The only way that the "do nothing" crowd on climate change should be believed or listened to at all is if they can guarantee that there will not be a mandatory climate bill in the next few years. I triple dog dare them to come up with thoughtful analysis that shows that Corporate America + a Democratic congress + a President from either party that supports climate legislation = no bill ??
  2. Higher energy costs ARE a concern -- AND THAT IS EXACTLY WHY ITS CRITICAL FOR FARMERS TO GET INVOLVED. Ag offsets are the only way to allow coal-fired utilities to keep burning coal and keep energy costs down while the reductions in GHG emissions move forward. If you are concerned about higher energy costs for farmers, then you'd better MAKE SURE that farmers have the option of selling their carbon on the market to reduce those costs for themselves and for the entire economy. We are not talking about getting involved in this bill because farmers want climate action now -- we are talking about farmers getting involved in a bill that WILL pass and making it better.
  3. The cost estimates that the "do nothing" climate crowd are using are HYPER inflated and assume all sorts of things that the Lieberman-Warner bill does not call for and will not create -- at least according to multiple universities and government agency economic modeling -- compared to a for-profit firm hired by the Edison Electric Institute to develop the worst case scenario.
  4. Keep in mind that those who tell you we must have a "safety valve" or price cap on carbon -- are only guaranteeing a price cap for industry -- they are NOT dealing with YOUR higher energy costs which the energy companies will still pass on to you (farmers), but which you will not be able to reduce for yourselves because there is no carbon offset market when you have a price cap on carbon -- which becomes essentially a carbon tax.

States Ask FTC to Develop Guidelines for Climate Offsets / Associated Press For the 2/10/08 edition

CARBON COPIES? Leery about the potential for fraud in the carbon offset market, officials in 10 states have asked the Federal Trade Commission to develop guidelines for businesses that sell credits.

Carbon offset is the term applied to credits bought by people and companies to offset their contributions to global climate change by supporting environmental projects.

The inherently intangible nature of carbon offsets and the lack of standards and definitions among those selling them make it hard for consumers to know whether they got what they paid for, according to the attorney general for Vermont, William Sorrell, and his counterparts in nine other states.

The market for carbon offsets has ballooned into a $100 million-a-year business, but it needs regulation, the attorneys general said in a seven-page letter Jan. 27.

Bank of America Backing Away from CCX

Many of you are familiar with the Chicago Climate Exchange (CCX) which is a voluntary climate market in the U.S. and Canada. As a pilot project for understanding carbon trading, CCX has been a very helpful platform. But as we move into the "end game" of climate policy resulting in a mandatory climate market, the forward value of CCX is debatable. This is especially true for the offsets that they offer since these offsets are not measured and therefore, buyers would take on great potential liability from environmental groups that already oppose all forms of offsets if they can not prove how much carbon they have actually reduced through their offset purchase.

The story below talks about Bank of America pulling out of a joint venture they were pursuing to commit to buy more carbon from CCX (for whom National Farmers Union and the Iowa Farm Bureau aggregate soil carbon offsets). There are likely many reasons for this turn of events -- but it brings up an important point to consider as farmers think about their carbon commodity. Why would you sell something that is likely worth 3 times the voluntary market price -- when a mandatory market is just around the corner??

Many farmers may not realize the strong likelihood that mandatory climate legislation will pass in the next 2 years. Businesses, however, are keenly aware of the state of climate policy and politics -- and it strikes me that this may be at least part of the reason why companies are starting to re-evaluate whether it makes sense to continue buying carbon from CCX when there is no guarantee that those reduced tons or offsets will be recognized by the mandatory law. In fact, it is more likely that they will not be recognized.

If you are a farmer -- you have to ask yourself if now is the right time to commit to selling a commodity whose true price is about to be discovered with the creation of a real market with real economy-wide demand.


Bank of America pulls out of Climate Exchange Deal

Greenwire 2/7/08

Bank of America has pulled out of an agreed joint venture with Climate Exchange and will not buy $25 million worth of shares in the company, a spokesperson for Climate Exchange said on Wednesday.

Bank of America said Climate Exchange, the company that runs the Chicago and European Climate Exchanges for trading carbon offsets, remains a strategic partner. Climate Exchange said the pair had ditched the venture because it was not needed "to pursue projects of mutual interest."

As part of the venture, Bank of America agreed to market the Chicago Climate Exchange's carbon offsets to its customers on the bank's own trading platform, and it committed to purchasing 500,000 tons of carbon on the CCX over three years. Bank of America said it was no longer obliged to purchase the carbon, but added that it remained committed to reducing its carbon footprint (Bowker/Wills, ReutersFeb. 6).

In July 2007, Bank of America announced that, as part of its $20 billion initiative to support the growth of environmentally sustainable business activities to address global climate climate change, it would join the CCX, making it the largest financial institution to claim membership in the exchange (Greenwire, July 25, 2007). --PR

Thursday, February 7, 2008

The Next President WILL support climate legislation

As the tag line of this blog says, if you are not at the table, you are on the menu. Now that Romney has dropped out of the race, its practically a done deal that McCain will be the Republican nominee.

This means that regardless of who wins the presidential election this year, THERE WILL BE CLIMATE LEGISLATION NEXT YEAR !! Check out the quote from someone who worked for Pres. Bush at the White House Council for Environmental Quality -- he's calling it a "certainty."

The time to make sure agriculture gets its carbon market out of this bill is NOW before all the deals are cut and the environmentalists manage to cut ag out of the picture altogether!!
Environment & Energy Daily

CAMPAIGN 2008: Climate debate shifts as Romney ends White House bid (02/07/2008)

Darren Samuelsohn, E&ENews PM senior reporter

Former Massachusetts Gov. Mitt Romney suspended his campaign for the Republican presidential nomination today, a move that all but guarantees the 2008 general election will feature major party candidates who agree on the need for mandatory limits on emissions of heat-trapping greenhouse gases.

Climate Change: Taking stock of Industrial Emissions -- An E&E Special Report

Romney's withdrawal cements Arizona Sen. John McCain as his party's front-runner. During the primary campaign, McCain repeatedly came under attack from Romney over his long-standing position in support of legislation to establish a cap-and-trade system for curbing greenhouse gases.

Appearing at the Conservative Political Action Committee's annual conference in Washington, Romney said the need for unity among Republicans led him to leave the presidential race.

"If I fight on in my campaign, all the way to the convention, I'd forestall the launch of a national campaign and make it more likely that Senator Clinton or Obama would win," he said, referring to the two leading Democratic candidates, New York Sen. Hillary Rodham Clinton and Illinois Sen. Barack Obama.

McCain spoke two hours later. Without mentioning his position on global warming, which has been unpopular with conservative Republicans, the four-term senator acknowledged his stance on many issues has often put him out of step with his party's core constitutency.

"It is my sincere hope that even if you believe I have occasionally erred in my reasoning as a fellow conservative, you will still allow that I have, in many ways important to all of us, maintained the record of a conservative," McCain said.

'With what conditions?'

McCain's emergence as the likely Republican nominee sets up an intriguing dynamic for the general election.

Robert Stavins, a Harvard economist who tracks climate issues, said the basic agreement among McCain and his Democratic opponent on global warming could push the topic to the back of the debate agenda.

"It's good news for policy, it may not be good news for the drama of politics," Stavins said.

Still others see McCain's success as another sign that the United States within the next three years will set a mandatory limit on greenhouse gases.

"I've long thought it was very likely that we would have a climate bill of some sort in 2009 or 2010," said Sam Thernstrom, a former spokesman at the White House Council on Environmental Quality who now works as a scholar on environmental issues at the American Enterprise Institute. "McCain's nomination now makes that almost a certainty."

Yet McCain and his climate change position still remains a question mark in some eyes as rank-and-file Republicans start to define his campaign.

"He was specific enough for a Republican primary to distinguish himself from the other Republicans in the race," said Tony Massaro, senior vice president for political affairs at the League of Conservation Voters. "But over time, he's going to have to spell out even more for this to be the kind of thing that really propels it forward in a landmark way."

National Mining Association spokesman Luke Popovich predicted the climate debate was far from over.

"It's fair to say all the candidates that appear to be in the running favor mandatory controls," Popovich said. "But the question is going to become, 'With what conditions?'"

Popovich added, "That's where I think logic and fact have to have the opportunity to carry the day here, so that in the end we have a president who understands the limitations of this rhetoric and now starts figuring out how we make controls consistent with common sense."

Former Arkansas Gov. Mike Huckabee and Texas Rep. Ron Paul remain in the Republican presidential contest, but neither is expected to pose McCain with a significant challenge. Primary and caucus contests continue Saturday in Louisiana, Kansas and Washington state.