AgOffsets

Farmers and the Climate Summit

2009-12-08T12:35:00.005-05:00

A number of farmers and others are getting ready to attend the climate summit that just started in Copenhagen. Keep your eye on this spot for some blog posts soon from Denmark.

In the meantime, here is a piece from Neil Hamilton, professor of law and director of the Agricultural Law Center at Drake University, on farmer involvement and the climate talks in Copenhagen.

From: http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=2009911290317

Guest column: American farmers must step up on climate change

Next month, I travel to Copenhagen for the U.N. Climate Change Negotiations (COP 15) with two Drake agricultural law students. We are part of the Iowa U.N. Association delegation going to witness the international talks on possibly the most significant environmental, social and political issue shaping our futures.

My special interest is what the talks may mean for farmers in the United States and abroad. U.S. policy discussions show much of America's agricultural sector doesn't take climate change seriously. The reality is the impacts of climate change are being felt around the globe - whether or not U.S. farm groups and politicians believe it. Fortunately, most other nations recognize the obligation and opportunity to engage in deciding how best to respond.

The adverse impacts climate change has on food production and the critical role agriculture may play in addressing it means farmers have a major stake in the debate.

The magnitude of U.S. contributions to greenhouse gas emissions make Copenhagen a prime opportunity for America to help lead development of effective responses - leadership the world needs and expects. The negotiations are especially important to farmers, because American agriculture thrives on international rules supporting free trade and open markets. If we engage at Copenhagen, then ideas to protect the environment and increase farm income may emerge, but sitting on the sidelines while others craft the agenda is a recipe for conflict and lost opportunities. Lack of U.S. leadership won't just limit success of the negotiations and limit the willingness of other nations to act, but may signal erosion in U.S. prestige and national confidence.

The Kyoto climate-change treaty created little role for agriculture, but proposals for COP 15 give farmers a large, even central role. Still many U.S. farm groups are ambivalent - not just to Copenhagen but to whether climate change is real or U.S. action is needed.

Some groups like the National Farmers Union and the renewable energy coalition 25X25 endorse cap-and-trade legislation as the basis for ambitious goals for Copenhagen.

Others like the American Farm Bureau Federation oppose cap and trade - and appear uninterested in what the world may do. Farm Bureau members are being encouraged to protest to Congress "don't cap our future," arguing agriculture will suffer increased energy costs with no corresponding economic benefits. Studies show the proposed legislation will have limited impacts on farm costs and Secretary of Agriculture Tom Vilsack argues the law will open new streams of farm income from offsets and carbon markets.

He has spent months explaining to farmers why they should support the legislation. Last week, President Barack Obama announced he and Vilsack will go to Copenhagen to show U.S. resolve to address climate change, even though Congress has yet to act.

Agriculture's opposition to cap and trade is delaying progress on legislation to reform U.S. energy policy. The lack of progress has already led to scaling back expectations for what might happen in Copenhagen. But remember the saying, "If you aren't part of the solution you are part of the problem."

We shouldn't delude ourselves the rest of the world won't act without us or that we are immune from either the natural effects of climate change or the political effects of policies developed in our absence.

Our lack of engagement threatens to make U.S. agriculture the "problem" other nations address and risks development of an international agreement adverse to U.S. interests. Ironically the opposition may also jeopardize our ability to engage in international markets and the trade negotiations central to continued growth of American agriculture.

The opposition to climate-change action is puzzling given agriculture's support for biofuels like corn ethanol as the "answer" to our energy needs. America's farmers have a successful history of innovating to meet new demands. But U.S. politics on cap and trade has become largely a question of "What is in it for me?" rather than focusing on how agricultural practices can help address climate change.

Our responding is not optional - the scientific and international political realities of climate change are real, as is the need to act. Yes, there is debate about whether the practices and policies being proposed will significantly reduce global temperatures, but disagreement about effectiveness shouldn't obscure the fact that doing nothing ensures no progress.

From a legal perspective, something will happen. If Congress fails to act, the Environmental Protection Agency will regulate greenhouse gas emissions as required by a 2007 U.S. Supreme Court ruling. Legislation may raise concerns but it will be friendlier and more tailored to agriculture's needs than EPA regulations.

The world is going to address climate change, and farmers and agriculture in other nations will lead in developing responses - many have no choice if they are to protect their land and futures. The COP 15 negotiations are a stage on which the willingness of nations to act and lead will be measured.

American agriculture is fond of congratulating itself for "feeding the world," even if the claim is far from true. The reality is most of the world tries to feed itself. The tragedy is that over 1 billion go hungry today, and climate change threatens even more. America may not feed the world, but we have long claimed a central role in leading it.

The climate-change debate is an opportunity for the United States - agriculture and farmers included - to live up to our self-image as leaders. Failing to do so risks America being seen as a self-serving nation in decline - a portrait our enemies and critics are happy to paint. My hope is we have the vision, courage and wisdom to rise to this occasion. That is why I am going to Copenhagen.

Ag Weighs in on Senate Climate Bill

2009-10-08T17:58:00.005-04:00

One point to note on this story -- when Rick Krause says that the Senate bill could result in both a cap-trade system and EPA regulation, I think he is missing the point that the legislation will pre-empt EPA regulation, which EPA itself has said it would prefer . . . so you would not have both, you would have the legislation replacing EPA regulation. There is no reason for EPA to regulate GHG emissions under the Clean Air Act if they have a separate and specific piece of legislation directing their efforts on GHG emissions! EPA is proceeding with regulation under the Clean Air Act because they don't have climate law to use instead.

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Most ag groups dislike Senate's version of a climate bill

Dan Looker

Business Editor

10/02/2009, 4:12 PM CDT

Almost universal disappointment.

That's the best way to describe how ag groups reacted this week to a cap and trade bill introduced in the Senate by the Chairman of the Environment and Public Works Committee Barbara Boxer (D-CA) and Senator John Kerry (D-MA), who heads the Foreign Relations Committee.

"We opposed the House bill and we think this bill basically takes one step back from that," Rick Krause, the American Farm Bureau lobbyist working in clean air issues told Agriculture Online.

Like the House bill passed last summer, Boxer's bill includes a long list of agricultural practices that could bring payments for carbon credits--practices such as no-till and capturing methane on big livestock operations.

But the bill leaves the final decision to the President, he said.

"Everything is up to the discretion of the White House as to what gets on the list," he said.

Krause said Farm Bureau, which has been worried about higher fuel and fertilizer costs to farmers and ranchers from cap and trade legislation, is unlikely to support a final bill.

Most Washington insiders say the Boxer-Kerry bill is a starting point and that some of their concerns may be fixed as it moves through the Senate. Senator Tom Harkin, who has stepped down as the Senate Ag Committee Chairman to head the Health Committee, told Agriculture Online Thursday, "We've got a bunch of votes on the Ag Committee and they need our votes to get this passed."

But Krause, National Farmers Union and American Farmland Trust, are all disappointed that provisions in the House bill aimed at agriculture were left out of the Senate Bill.

House Agriculture Committee Chairman Collin Peterson got the House bill amended to put USDA, instead of EPA, in charge of paying farmers and landowners for carbon offsets. The money would come from electric utilities, oil companies and other industries whose carbon dioxide emissions are limited, or capped. The Peterson amendment also prevents EPA from writing regulations for ethanol and biodiesel that include a theory that raising U.S. crops for those fuels leads to deforestation in the tropics. That so-called indirect land use change is strongly opposed by U.S. biofuel producers and commodity groups.

The Senate bill doesn't include Peterson's amendment.

"At least the House bill would have slowed EPA down," Krause said. Farm Bureau will try to get improvements for agriculture into the bill, he said.

Dennis Nuxoll of American Farmland Trust, a group that sees more opportunities for farmers in cap and trade than does Farm Bureau, agrees with Krause that it would have been better for agriculture if the Senate's starting point included Peterson's amendment.

Nuxoll doesn't think many farmers will participate in any carbon trading program if EPA runs it, and the bill calls for capturing two billion tons of carbon a year, in the U.S. and through credits sold to developing countries.

To get to that level, "that's tens of thousands of producers signing up," Nuxoll says.

Many environmental groups trust EPA to run the program more than USDA. But Nuxoll says the EPA doesn't have the scientific background on capturing carbon that USDA has.

WHO CAN DO SOIL SCIENCE?

"For a hundred years USDA has been doing soil science. They don't call it carbon science," Nuxoll said.

If the right changes are made, Nuxoll's group might support the legislation. Nuxoll sees three opportunities that a well-written Senate bill could offer farmers to help counter increased fuel and fertilizers costs. Some farmers will be able to participate in carbon trading and get paid for those practices. Others who can't, for example, a Vermont dairy farm that's too small to put in a methane digester, might be able to be compensated through allowances. In the House bill, much of the allowances will go to coal-fired utilities and to consumers but small portion goes to agriculture. The Senate bill has not yet divided up the allowances. A third way farmers and ranchers who own land could benefit is through the cap and trade bills' requirement that utilities buy more of their electricity from renewable sources like wind generators. Rent from wind generation is another potential source of income that will counter higher fuel costs, he said.

Fred Yoder, a past president of the National Corn Growers Association who has worked on carbon trading issues for several years, says the NCGA hasn't yet take a position of cap and trade legislation. The group has hired Informa Economics to analyze potential effects and its report will be out soon, Yoder told Agriculture Online.

"I don't think it's going to be nearly as costly as some people think," Yoder said of cap and trade. "And I don't think it's going to be the panacea some people think, either."

Yoder, who farms near Plain City, Ohio, hasn't given up on improving the Senate's bill.

"There are a lot of blanks to be filled in," he told Agriculture Online. "I look at it as a chance to make the House Bill even better."

Yoder wants to see the list of farm practices that could qualify to be much broader than methane capture and no-till, which won't increase carbon content much in sandy soils.

"You're going to have to make a list of ag offset projects broad enough that everyone can participate," Yoder said.

Some members of Congress have criticized both the House and Senate bills for paying carbon offsets to landowners in developing countries, but Yoder sees several benefits.

First, if landowners in Brazil are paid to keep land in tropical forest, for example, that means less competition to U.S. corn and soybean farmers, he says.

Then there's the issue of what other nations might do to fight global warming.

AN UNFAIR DISADVANTAGE?

Farm Bureau's Krause argues that cap and trade will put U.S. farmers at an unfair disadvantage the U.S. is along in passing climate change legislation, leaving only U.S. farmers with higher fuel and fertilizer costs.

"That's the issue. We can reduce all of our emissions all we want, but if China and India don't, then we haven't gained anything," he said. And EPA's own estimate of how much the House bill would slow global warming is only two-tenths of a degree by the year 2100, he adds.

But Yoder sees international carbon credits as another way to deal with that problem.

"This is the mechanism we're going to give other countries to do their fair share," Yoder said.

Some authorities on climate change legislation worry that the opposition of some agriculture groups to cap and trade legislation will backfire and hurt farmers with even more draconian regulations from the EPA.

Sara Hessenflow Harper is a former staffer to Senator Sam Brownback (R-KS) who is now a partner in a consulting firm, The Clark Group. She has worked with farmers interested in the cap and trade issue, including Fred Yoder and others in the Agricultural Carbon Market Working Group.

Harper said Friday that people are making too much of the Boxer-Kerry bill's language on agriculture.

When the Senate finally votes on the bill, which may not happen this year, "it's not what's going to be there," Harper said. "It's a place holder."

Both the Senate Finance Committee, headed Senator Max Baucus (D-MT) and the Senate Agriculture Committee, now headed by Senator Blanche Lincoln (D-AR) will make changes in the bill, she said.

Harper said she's disappointed that Farm Bureau mainly opposing the legislation, rather than bargaining harder for changes that will benefit farmers. Large companies, and major fossil fuel industries like coal worked to get better treatment in the House bill, she said. The natural gas industry didn't but decided to participate more in lobbying the Senate. The result is that Boxer s bill is more favorable to natural gas.

A BIG GAMBLE

"If the Farm Bureau thinks they know more than all these people, okay, but that's a pretty big gamble," Harper said.

Harper said she doesn't like big government any more than most Farm Bureau members, but opposing cap and trade legislation, if it succeeds, could just give farmers more regulation by the EPA, which is moving ahead to regulate greenhouse gases on its own.

"We're talking about a cap and trade system, which is a market. The alternative is a government takeove--by the EPA," she said.

If agriculture isn't involved in writing the legislation, she added, "the environmentalists define what the offset should be."

Krause isn't convinced. So far, the Senate bill would set up a cap and trade system, but it wouldn't prevent EPA from regulating greenhouse gases separately.

"Under the Senate bill, you get both, which would be the worst of all possible bills," he said.

Agricultural interests may not be happy with Boxer's bill. But there's little doubt that in the coming months, all of them will be weighing in on potential changes.

Already, the head of the Senate Ag Committee is showing her own skepticism about the Boxer bill.

"I am carefully reviewing the Boxer/Kerry legislation and particularly the draft language for agriculture," the committee's chairman, Senator Blanche Lincoln said in an e-mail message from her staff on Friday. "Though an offsets program may provide some opportunities to farmers, I fear that it will not outweigh the costs."

Lincoln added, "I have expressed my serious reservations about a cap and trade system, and its potential impact on the cost of fuel, feed and fertilizer, as well as food for consumers. As Chairman of the Senate Agriculture, Nutrition, and Forestry Committee, I am interested in holding more oversight hearings on climate change and will continue working with my Committee members, Senate colleagues, and stakeholders."

China To Launch Its Own Voluntary Offset Market

2009-09-23T18:33:00.005-04:00

An interesting thing happened today -- China announced it will launch its own voluntary ag/forestry carbon offset exchange (see the story below). Furthermore, this new exchange will utilize a measurement/verification protocol similar to the Voluntary Carbon Standard project.

For those who believe China will never move forward on climate, think again -- they already have (with higher fuel efficiency standards for their cars and a massive build up of wind power). Interestingly enough, China is hoping to draw investment from the U.S. for its offsets system.

Groups that blindly oppose a cap-trade system with offsets in the U.S. using the excuse that "China and India will never act, so we don't have to worry about the issue" had better get educated about what is really going on in the developing world. I'm not saying that China and India (and other developing countries) are close to agreeing to take a cap on their emissions -- but they are getting more comfortable with becoming a provider for offsets for the emissions reduction market. Those offsets will only count in a mandatory system if the countries generating them, have taken a cap themselves . . . so, you might say, these countries are building the foundation for themselves to be ready for the day when it may make market sense for them to enter the market and cap their emissions.

Its a pity that by that time, China will be ready to swamp the mandatory international market with offsets that we in the U.S. had ample time, research and opportunity to create ourselves.

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CLIMATE: China exchange will set voluntary GHG standard (09/23/2009 -- Environment & Energy PM)

Nathanial Gronewold, E&E reporter

NEW YORK -- China will establish a limited, domestic greenhouse gas offset credit as part of the experimental establishment of a voluntary carbon market, officials announced today.

The offset standard, which the China Beijing Environmental Exchange (CBEEX) is calling the "Panda Standard," will be limited to carbon abatement projects in agriculture, forestry and fisheries.

CBEEX officers and the head of Europe's giant BlueNext carbon allowance and offset exchange pitched the idea here in hopes of drawing interest from U.S. investors and firms interested in financing the pilot system or in secondary trading of the credits once they are created.

Organizers are also hoping that Chinese companies will jump on board, giving firms there a first taste of emissions trading.

Proponents of the voluntary carbon market in the United States often describe it as offering "pre-compliance" practice for companies that could eventually face a federal cap-and-trade system, but officials behind the Panda Standard took pains to make it clear that their foray into voluntary emissions offsetting in no way should be seen as a prelude to cap and trade in China.

The details have yet to be worked out, but CBEEX and BlueNext, both collaborating in what would become the first Chinese-only voluntary offset project verification standard, indicated the system would closely resemble the U.S. Voluntary Carbon Standard or the international Gold Standard and not the Chicago Climate Exchange, which is a membership-based system. That means trading will be open and there will be no established cap on emissions or requirements for meeting reduction targets for participating companies.

There will be "no cap limits, so we have to make it clear," said Mei Dewen, general manager of CBEEX, at a press conference at the New York Stock Exchange.

Mei described the Panda Standard as strictly a pilot project. The main purpose of new voluntary offset credit is to encourage greater corporate social responsibility in China and beyond and for environmental protection. The project is also being strictly limited to agriculture and forestry as a means of encouraging rural development, CBEEX officials said.

The Panda Standard's proponents could not give a date for when investors could expect the standard to be up and running and credits ready for trading. BlueNext officials did say that they hoped to have at least the standard itself finalized before the international climate negotiations scheduled for Copenhagen in December kick off.

It typically took anywhere from two to four years for voluntary carbon market players to develop the existing standards. But the CBEEX says it has no plans to start from scratch and will look at the work of the VCS, Gold Standard and California Climate Action Registry and other examples of carbon offset auditing and verification rules.

"Of course, this element will take a lot of time," BlueNext executive David Rapin said.

Though the Panda Standard is designed to be very limited in scope, excluding many of the heaviest greenhouse gas-emitting sectors in the Chinese economy, Panda Standard developers left open the possibility of opening the project to carbon abatement schemes in manufacturing and industry at some point in the future.

The Virtues of Biochar

2009-08-28T13:19:00.003-04:00

Great article from the Economist talking about yet another amazing way that agriculture can help to reduce climate change WHILE improving soil fertility -- of course, it all depends on the policy recognizing what ag and forestry can do and offering the proper incentives/compensation for this important work!

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A new growth industry?

Aug 27th 2009 | BOULDER, COLORADO
From The Economist print edition

Biochar could enrich soils and cut greenhouse gases as well

Getty Images

CHARCOAL has rather gone out of fashion. Before the industrial revolution, whole forests disappeared into the charcoal-burners’ maw to provide the carbon that ironmakers need to reduce their ore to metal. Then, an English ironmaker called Abraham Darby discovered how to do the job with coke. From that point onward, the charcoal-burners’ days were numbered. The rise of coal, from which coke is produced, began, and so did the modern rise of carbon dioxide in the atmosphere.

It is a sweet irony, therefore, that the latest fashion for dealing with global warming is to bring back charcoal. It has to be rebranded for modern consumers, of course, so it is now referred to as “biochar”. But there are those who think biochar may give humanity a new tool to attack the problem of global warming, by providing a convenient way of extracting CO₂ from the atmosphere, burying it and improving the quality of the soil on the way.

Many of those people got together recently at the University of Colorado, to discuss the matter at the North American Biochar Conference. They looked at various ways of making biochar, the virtues of different raw materials and how big the benefits really would be.

The first inkling that putting charcoal in the ground might improve soil quality came over a century ago, when an explorer named Herbert Smith noticed that there were patches of unusually rich soils in the Amazon rainforest in Brazil. Most of the forest’s soil is heavily weathered and of poor quality. But the so-called “terra preta”, or “black earth”, is much more fertile.

This soil is found at the sites of ancient settlements, but it does not appear to be an accidental consequence of settlement. Rather, it looks as though the remains of burned plants have been mixed into it deliberately. And recently, some modern farmers—inspired by Wim Sombroek, a Dutch soil researcher who died in 2003—have begun to do likewise.

Char grilled

The results are impressive. According to Julie Major, of the International Biochar Initiative, a lobby group based in Maine, infusing savannah in Colombia with biochar made from corn stover (the waste left over when maize is harvested) caused crops there to tower over their char-less peers. Christoph Steiner, of the University of Georgia, reported that biochar produced from chicken litter could do the same in the sandy soil of Tifton in that state. And David Laird, of America’s Department of Agriculture, showed that biochar even helped the rich soil of America’s Midwest by reducing the leaching from it of a number of nutrients, including nitrate, phosphate and potassium.

All of which is interesting. But it is the idea of using biochar to remove carbon dioxide from the atmosphere on a semi-permanent basis that has caused people outside the field of agriculture to take notice of the stuff. Sombroek wrote about the possibility in 1992, but only now is it being taken seriously.

In the natural carbon cycle, plants absorb CO₂ as they grow. When they die and decompose, this returns to the atmosphere. If, however, they are subjected instead to pyrolysis—a process of controlled burning in a low-oxygen atmosphere—the result is charcoal, a substance that is mostly elemental carbon. Although life is, in essence, a complicated form of carbon chemistry, living creatures cannot process carbon in its elemental form. Charcoal, therefore, does not decay very fast. Bury it in the soil, and it will stay there. Some of the terra preta is thousands of years old.

Moreover, soil containing biochar releases less methane and less nitrous oxide than its untreated counterparts, probably because the charcoal acts as a catalyst for the destruction of these gases. Since both of these chemicals are more potent greenhouse gases than carbon dioxide, this effect, too, should help combat global warming. And the process of making biochar also creates beneficial by-products. These include heat from the partial combustion, a gaseous mixture called syngas that can be burned as fuel, and a heavy oil.

Taking all these things together—the burial of the charcoal and the substitution for fossil fuels of the heat, gas and oil produced by its manufacture—Johannes Lehmann of Cornell University and Jim Amonette of the Pacific Northwest National Laboratory in Washington state suggest that a reduction of between one and two gigatonnes of carbon-emission a year might be achievable. That compares with current annual emissions of some 9.7 gigatonnes. But the truth is that the computer modelling involved in making these estimates is a work in progress, as researchers do not know a lot of pertinent things accurately enough: how much material is available for conversion, for example; how much land is available for biochar to be ploughed into; how much char that land could handle. Dr Amonette’s estimate is that 50 tonnes per hectare—a figure larger than that used in most of the experiments conducted so far—could go into soils without harming productivity. Some soils could take even more.

The claims for biochar are not supported by all, however. Biofuels Watch, a British lobby group, worries that a craze for the stuff could see virgin land tilled specifically to grow crops such as switchgrass, whose only purpose was to be pyrolised and buried. That tillage would release carbon dioxide and methane. But the alternative, growing those crops on existing farmland, would encourage the clearance of more land to grow the food crops that had been displaced. Indeed, Kelli Roberts, another researcher at Cornell, told the meeting that, taking all factors into account, growing switchgrass for biochar may do more harm than good. Corn stover, garden waste such as grass clippings, and offcuts from forestry and timber production are better bets, she reckons.

And if sequestration by biochar is deemed sensible, there remains the question of how, exactly, to go about it. Making the charcoal is not a problem. Pyrolising stoves are easy to construct and available models range from the portable to industrial-scale machines costing tens of thousands of dollars. Moreover, Jock Gill of Pellet Futures, a company based in Vermont that makes grass and wood pellets for use as fuel, told the meeting that a teenage protégé of his has invented a stove that can be fed continuously, rather than processing batches of raw material. If that proves successful, it would be a breakthrough of the sort that has enabled other industries (not least ironmaking) to take off in the past.

The benefits of improving their soil should be enough to persuade some farmers to make and bury biochar. Others, though, may need more incentives—probably in the form of carbon “offsets” that compensate for emissions elsewhere. In the rich world, Europe already caps carbon-dioxide emissions, and trades permission to emit the gas. America may soon do so too. CO₂-emitting industries could pay farmers to buy stoves to char and sequester farm waste. That would mean working out how much of what kind of biochar counts as a tonne of CO₂sequestered, and would also need a lot of policing.

A charcoal sketch

If the details can be nailed down, though, farmers in poor countries could get in on the act too, through the Clean Development Mechanism, a United Nations’ programme that allows rich-world emitters to buy offsets in the poor world. And Lakshman Guruswamy, of the University of Colorado, told the meeting of another advantage if poor-world farmers can be brought in. Many of them burn wood, waste and dung indoors for heating and cooking. The soot released into the air as a consequence is also a climate-changer because, being dark, it absorbs heat. Much worse, though, about 1.6m people are killed each year by inhaling it. But pyrolytic stoves produce almost no soot—the carbon is all locked into the biochar. Worldstove, a firm based in Italy, seeks to provide small and simple pyrolising stoves to poor countries.

It is all, then, an intriguing idea. It certainly will not solve the carbon-dioxide problem, but it could be what Robert Socolow of Princeton University refers to as a wedge—one of a series of slices that, added together, do solve it. And there would be a nice historical justice in the substance that was displaced by coal playing an important role in cleaning up the mess that coal has left behind.

Garbage In = Garbage Out

2009-08-24T14:44:00.004-04:00

Another day, another "study" about the costs of climate change legislation. Don't get me wrong. I'm not one of those people who says there will be no cost for taking action on climate change - or that it will be all upside with green jobs, etc. I have always maintained that like any policy, there is a cost of action and a cost of inaction (which often does not get discussed on the climate issue). What I object to - strenuously, is the cherry-picking of scenarios run by economic models that spit out cost estimates for that scenario, not necessarily for the underlying policy which could be implemented or unfold in numerous different ways.

The American Farm Bureau Federation's recent "studies" on the cost of climate change have been guilty of just such cherry-picking of data - assuming what they believe will be the outcome of a climate bill, modeling the economic costs -- and then, and here is the problematic part, marketing that study as if it represents the whole and only way the policy would be implemented.

Today, we have another "scenario study" which was done by the oil industry, specifically sponsored by the American Petroleum Institute (API). It finds -- no surprise, that the policy will be very costly for domestic oil refiners and will actually increase the amount of foreign fuel we purchase while raising costs.

Yet - look into what the assumptions are of this study - and just like the farm bureau, you see that there are assumptions being made that do not reflect what is in the bill, but rather, a potentially worse case outcome designed to show that costs outweigh benefits.

For example, look at a quote from today's Wall Street Journal story on this new "study" sponsored by the American Petroleum Institute:

The API study is based on the current state of the industry, assuming scant use of nuclear power or new technology to reduce emissions of greenhouse gases -- a reflection of doubts over how widely such technologies can be used. The study also assumes there will be no international program allowing companies to offset their emissions by buying pollution credits.

When you limit the market options for a plan like cap-and-trade, you are limiting the market's ability to mitigate cost. So, when you assume, as this newest "study" does that nuclear plants will not come on line (even though the bill sends the largest market signal for more nuclear ever) or that there will be no international offsets/permit trading (even though the bill allows for over 1 billion tons of international offsets per year), then of course you will get a costly, yet skewed cost estimate.

I find it particularly ironic that there is now being so much faith placed in computer models of cost (based on select and skewed assumptions) from the same people who have long criticized the use of computer modeling to predict climate impacts. If computer modeling is bad, its bad -- it doesn't magically become good because someone on the other side is using it.

My answer to these skewed studies of climate legislation costs is this:

Sure, Congress could create this program in a stupid way that will be very expensive if they follow the assumptions being input by these negative cost analyses. That is EXACTLY why it is important for people with common sense to stay involved in this issue and shape it in a way that means the most market options, the most trading flexibility, the most potential revenue for farms, forests and ranches and the least cost for the overall economy.

A climate cap-and-trade bill could be the largest market maker for nuclear power, for renewable energy and for agricultural offsets generated from conservation practices and direct GHG reductions like methane capture from manure -- OR, it could be done in a way that is designed to punish industry, drive up costs and stifle the economy in a vain attempt to drive down energy use.

It seems to me that leaving the debate to those whose only concern is for the environment risks making all these hyped up cost estimates more likely to be realized than engaging in thoughtful policymaking!

New Perspective on Climate Costs & Ag

2009-05-07T14:09:00.003-04:00

One of the greatest concerns about a climate change law is the potential increase in energy costs that could arise. Just like virtually any other policy, a climate law can be done in a way that is very expensive to implement, and thus, very expensive for consumers -- OR, it can be done in a way that creates a modest increase in cost and yields a new market for conservation, renewable energy and leads to far greater energy diversity and security.

The devil really is in the details.

When federal agencies like EPA and DOE model various climate proposals, they usually look at multiple scenarios that could emerge off of a given proposal. In this way, the modeling tries to account for the numerous variables that could affect a climate law's cost and/or implementation.

Unfortunately, this modeling is often complex and very difficult to distill down to a level that the public would be interested in and could understand. As a result, what often happens is interest groups on the right and the left pick and choose the scenarios and the data that they want to see and present that to the public as "the cost assessment" of a given policy.

To get a more accurate view of climate policy, it is important to take full account of all the scenarios and variables involved. In fact, a better way to look at modeling is as a means to detect which policy levers will cause an effect (raise or lower prices) based on how they are utilized in the law.

For example, recently, the American Farm Bureau and the Fertilizer Institute have made claims about the high cost of cap-and-trade climate proposals that may encourage some folks to see it as a net negative for agriculture. However, closer scrutiny of the underlying analysis being used by these groups (a study conducted by the Doane Advisory Services, 2008) shows that this picture is not a complete one and may in fact present a misleading view of the potential economic opportunity that a cap-and-trade system represents. Of course, it all depends on WHICH type of cap-trade system is put into place and of key importance, how many offsets are allowed and how well constructed is the agriculture offset market.

Its worth really understanding this important issue, because otherwise the agriculture industry could miss out on major economic opportunities by not participating in the debate. Meanwhile, the absence of that participation has little chance of preventing a climate bill from passing -- it just means the TYPE of bill that passes is likely to be less positive for the agriculture sector

But don't take my word for it -- a new analysis out by Duke University's Nicholas Institute and Texas A&M professor Bruce McCarl goes through this issue in detail and points out some of the flaws that exist in the Doane analysis.

Below is a brief excerpt of the beginning of their white paper as well as a link to the full report.

Commentary on Impacts of Carbon Prices and Energy Costs on Returns to Agricultural Producers

Brian C. Murray, Nicholas Institute for Environmental Policy Solutions, Duke University

Bruce A. McCarl, Department of Agricultural Economics, Texas A&M University

Justin Baker, Center on Global Change, Duke University

A report issued by Doane Advisory Services in May 2008 titled An Analysis of the Relationship between

Energy Prices and Crop Production Costs, has received recent attention as some interest groups have

used it as evidence of how a U.S. federal cap-and-trade program – or any similar climate policy that

creates a price on greenhouse gases (GHGs) would negatively affect U.S. farmers. The study takes

energy prices from EPA’s economic analysis of the Lieberman-Warner America Climate Security Act

(S.2191) and combines this with USDA data on input costs from the eight largest crops (by value) in the

United States to gauge how the higher energy costs expected under GHG controls translate into higher

farm operating costs. Higher farm operating costs provides the study’s lone measure of farmer well-

being and the authors thereby imply that the economic harm to farmers equals their increased

operating costs.

The Doane report usefully addresses an important set of issues. Yet there are a number of reasons why

the results provide a misleading view of the impact on farmers of a carbon price including:

-- Recent projections of cap-and-trade policy in EPA’s analysis of the Waxman-Markey bill shows

smaller energy sector impacts than the estimates used in the Doane report

-- The study uses a simple crop budget rather than a full structural economic model to capture the

complex market linkages and substitution among inputs that determine net returns to

agricultural producers.

-- The study ignores the following factors that raise the returns to farmers

o higher prices received by farmers reflecting the input higher costs

o biofuels as an income source

o offsets from agriculture as an income source

-- Other recent independent studies of carbon price impacts on agriculture capture many of the

missing features identified above and tell a different story

To read the full report, click here.

EcoTech's Miracle Mineral

2009-05-04T14:50:00.003-04:00

Recently, I and others at my firm completed a scoping report for a company called Ecotech, which mines a natural "miracle" mineral called zeolite. Zeolite is a unique mineral with many agricultural applications that provides environmental benefits, including improved water quality, reduced greenhouse gas (GHG) emissions from manure and fertilizer, and enhanced methane capture in anaerobic digestion. We were looking into the potential greenhouse gas benefits or carbon credits that could come from using zeolite. It turns out that when you feed this mineral to livestock (cattle and pigs especially) it binds the nitrogen in the manure so well that there is very little run off when the manure is then applied to a crop field as fertilizer. Also, when you put zeolite directly into a digester used to capture methane from manure, you are able to increase the amount of methane you can capture by 10-30%.

The ability to reduce nitrous oxide (one of the greenhouse gases coming off of manure) would be hugely significant because it is some 300 times more potent in terms of global warming than the main gas, carbon dioxide. Methane is some 25 times more potent than C02 and will be a very important part of the coming carbon market.

You can check out the report at the Clark Group website by clicking here.

Testifying on the Need for Ag Offsets

2009-05-01T16:52:00.004-04:00

Fred Yoder testified this week before the Small Business Committee on behalf of the National Corn Growers Association regarding the role of agriculture in climate change. Fred is a member of the Ag Carbon Market Working Group and the past President of the NCGA (check out earlier posts on this blog to read about his experiences at the UN Climate Change Conference in Poland).

Fred's testimony focused on the importance of designing an offset policy that allows agriculture to contribute to the solution for climate change and produce revenue for rural America. There was particular emphasis during the hearing on the need for offsets to counterbalance any potential cost increase from cap-and-trade. Fred was joined on the panel by Roger Johnson, new President of the National Farmers Union, alongside reps from other industries (roofing, steel). Fred and Roger both outlined the necessity to create an offset policy that incentivizes farmers to reduce and sequester GHG emissions – and how that would mean crediting early actors, involving USDA, designing effective protocols, and allowing unlimited domestic offsets.

Questions from Committee members covered the role of ag in climate change solutions and the potential for costs to the economy. Fred and Roger both highlighted that the potential for cost increase coupled with the current economic situation underscores the critical need to design an offset policy that lowers the cost to the economy.

The hearing is available online and below.
http://www.youtube.com/view_play_list?p=0B9D4A59DF00BDD2

Fred’s testimony:
http://www.youtube.com/watch?v=GlObhoGk9q8&feature=PlayList&p=0B9D4A59DF00BDD2&index=2

Fred’s discussion of potential costs and the importance of engaging from 1 min 50 to 5 min 25:
http://www.youtube.com/watch?v=1q509kFUy-Y&feature=PlayList&p=0B9D4A59DF00BDD2&index=8

Some Enviro Groups Opposing Offsets in Waxman-Markey Climate Bill

2009-04-23T18:36:00.003-04:00

As I have noted to folks in the agriculture community, the offsets issue is one that not all environmental groups support. In fact, a good number of them are philosophically opposed to allowing agriculture to provide the service of reducing (or sequestering) greenhouse gas emissions in a more cost-effective manner for would-be capped sectors of industry.

Below is a letter that a number of environmental groups have signed and sent to Reps Waxman and Markey in opposition to the offsets title.

A few things to think about as you read this letter:

1) If agriculture is not "at the table" representing this new multi-billion dollar market, it will be folks like these who are listened to and the cost of implementing a climate bill will go up for the whole economy, not just for agriculture.

2) There ARE some environmental groups that have stuck their necks out to work with the agriculture sector on this -- namely Environmental Defense Fund and National

Wildlife Federation . . . so while you may not agree with these groups on everything,

folks in the agriculture industry should take advantage of these partnerships to fight the political battle that is brewing over offsets

**************************************************

April 23, 2009
The Honorable Henry Waxman
Chair, Committee on Energy and Commerce
The Honorable Edward Markey
Chair, Subcommittee on Energy and Environment

Dear Chairmen Waxman and Markey,
We commend you on the effort you have undertaken in crafting your draft “American Clean Energy & Security Act of 2009.” While there is much to applaud in this bill, there are also areas for substantial improvement. While we will be communicating to you separately with respect to other issues, our organizations are concerned in particular about one key element that threatens to undermine its integrity and effectiveness in addressing climate change: the large carbon offsets provisions of the draft bill. As pointed out in recent testimony before your Energy and Environment Subcommittee by the Government Accountability Office, quality assurance for carbon offsets is all but impossible to verify. To craft a bill that allows for 2 billion tons of offsets per year — roughly equivalent to 27% of 2007 U.S. greenhouse gas emissions — is to allow for continued and dangerous delay in real action by our country at a time when the world is looking to the U.S. for leadership on climate change.

Initial calculations suggest that allowing for 2 billion tons of offsets per year would mean that covered entities in the U.S. could use offsets to avoid curtailing their own significant greenhouse gas emissions until 2026. Given current climate science , such a delay in investing directly in new low-carbon energy infrastructure is unacceptable.

Increasing evidence is revealing the Clean Development Mechanism (CDM), the world’s biggest carbon offset market, is failing to deliver real climate or sustainable development benefits. Most fundamentally, the CDM has actually facilitated an increase in overall greenhouse gas emissions —undermining the most fundamental and critical goal of all — stemming the growth of greenhouse gas emissions in the Earth’s atmosphere.

The draft bill intends to reduce emissions from tropical deforestation via two contrasting approaches. The first, called Supplemental Emissions Reductions from Reduced Deforestation, is a fund-based approach with the aim of slowing tropical deforestation emissions by at least 720 million tons per year by 2020. The fund approach as written into the draft bill could enable effective policies, activities and measures to slow tropical deforestation, which unfortunately would be undone through the second approach based on bringing hundreds of millions of tons of international forestry offsets into the U.S. carbon market each year.

Forest offsets as proposed in the draft bill fail to acknowledge forest governance problems, as well as the customary land and forest rights of Indigenous peoples including the rights of free, prior and informed consent of Indigenous peoples in forest regions to participate, or choose not to participate, in the new carbon commodity market. Forest credits have a well-recognized potential to destabilize carbon markets by introducing large volumes of cheap offsets, huge variations in estimates of carbon stocks and fluxes over time, and uncertainties over how to monitor emissions and the impacts of policies upon rates of deforestation and emissions.

Domestically, environmental justice organizations and activists are equally concerned that all offsets — whether in criteria pollutants or in carbon — will add to the pollution burden of already overburdened communities of color while increasing incentives for corruption.

As the United States moves forward on domestic climate legislation, we urge you to ensure that your basic reduction targets for greenhouse gases and other agents, such as black soot are bold enough and achieved quickly enough to keep global temperature rise well below 2 degrees Celsius. We urge you to:

1) Take the lead on strong action on climate change at home by opposing any international carbon offsets, including forest offsets, as part of any compliance regime on climate change; and
2) Ensure that the domestic offset market does not become part of a compliance system to regulate emissions.

Signed,

May Boeve, 350.org
Gillian Caldwell, 1 Sky
Rajya Waghray, Church World Service
Pam Richart, Eco-Justice Collaborative

Mike Ewall, Energy Justice Network
Nia Robinson, Environmental Justice Climate Change Initiative
Robert Weissman, Essential Action
Devin Helfrich, Friends Committee on National Legislation
Brent Blackwelder, Friends of the Earth
Jane Williams, California Communities Against Toxics
Mike Tidwell, Chesapeake Climate Action Network
Neil Tangri, Global Anti-Incinerator Alliance
Bradley Angel, Greenaction for Health and Environmental Justice
Carroll Muffett, Greenpeace USA
Tom Goldtooth, Indigenous Environmental Network
Dr. Arjun Makhijani, Institute for Energy & Environmental Research
Patrick McCully, International Rivers
Kimberly Wasserman, Little Village Environmental Justice Organization
Marie Dennis, Maryknoll Office for Global Concerns
David A. Kraft, Nuclear Energy Information Service
Michael Mariotte, Nuclear Information and Resource Service
Tyson Slocum, Public Citizen
Michael Brune, Rainforest Action Network
Chad Simmons, Safe & Green Campaign
Rabbi Arthur Waskow, Shalom Center
Daphne Wysham, Sustainable Energy & Economy Network Adam G. Gerhardstein, Unitarian Universalist Association of Congregations

No-Till's Carbon Storing Benefits Studied

2009-03-03T13:50:00.000-05:00

Some of you may have heard about recent attack's on no-till or conservation tillage's ability to store carbon in soils at greater rates than tilled fields. Science can be a confusing thing, especially when it is taken out of context and looked at piecemeal. Of course, the science on no-till's ability to store carbon in soils, just like on every other issue, will continue to evolve and should be followed. But the clear majority of the science today indicates that no-till does indeed store carbon in many soils.

Below is a very good paper from the Consortium for Agricultural Soils Mitigation of Greenhouse Gases on no-till's ability to store carbon in soils. I recommend it to you as an excellent overview of the research to date and as an answer to some of the no-till critics.

CASMGS paper

Tillage Effects on Soil Carbon Accumulation
July 31, 2008

Summary:
Data from existing long-term field experiments provides the best source of knowledge about tillage and other production management effects on soil carbon content.  The preponderance of this data shows that that adoption of no-tillage increases soil C, relative to conventional tillage, in most U.S. cropland soils.

Background:
Numerous studies of replicated, long-term field experiments comparing conventional tillage (e.g. moldboard plow, chisel, disk) and no-tillage have demonstrated that most soils, following conversion to no-tillage, show an increase in soil carbon (C) content relative to tilled soils, when the measurements are integrated over the full depth of soil affected by tillage (typically the top 20-30 cm) (see reviews by Paustian et al. 1997, West and Post 2002, Ogle et al. 2005).  In general, positive soil C responses are obtained first after several years of no-till management (Six et al. 2004) and after 20-30 years, the relative rates of C accumulation tend to decline as soil C levels approach a new equilibrium level under no-till conditions (West and Post 2002).   Specific mechanisms by which the physical disturbance from tillage increases soil C loss (and conversely, that reduce soil C loss under no-till) have been proposed and supported by field and experimental evidence (e.g. Six et al. 2000, Denef et al. 2004).  On the basis of this experimental evidence, sequestration factors for reduced and no-tillage management have been developed (Ogle et al. 2005) and implemented for inclusion in the Intergovernmental Panel on Climate Change (IPCC) guidelines for national greenhouse gas inventories (IPCC 2006) and values for C credits due to no-till management have been sanctioned by the Chicago Climate Exchange (CCX).

At the same time, it has been long recognized that not all soils respond positively in terms of gaining C under no-till – in particular, soils with an already high content of soil C and cropland soils in cool, moist climates often do not show increases in C content under no-till compared to plow tillage; for example, this has been found for several experimental sites in eastern Canada (Anger et al. 1997).  The reasons for this lack of response to reduced tillage intensity is not yet clear, although preliminary results suggest that reduced decomposition rates of buried residues under cool, moist climates and ‘saturation’ of physically-protected soil organic C in high C soils are potential mechanisms (E. Gregorich, personal communication; D. Angers, personal communication).  However, the large majority of cropland soils in the US do not fall into this category.

Recently, a few researchers have raised questions about whether no-till, in general, actually leads to a relative increase in soil carbon when viewed at whole soil level, as illustrated in the papers by Baker et al.[1] and Blanco-Canqui and Lal[2].  The foundation of their arguments lay largely in the fact that most measurements of no-till vs tillage systems in long-term experiments have often only measured the top 30 cm or less of the soil profile, although several sites have been measured to depths of up to 100 cm.  These authors argue that if soil carbon contents are summed to a greater depth of the soil profile (e.g the top 0 to 60 or 100 cm) then in most cases there is no statistically significant difference between different tillage systems.  The problem with this argument is two-fold. First, it is true that the effects of no-till adoption are typically manifested in the top 20-30 cm of soil, which is the zone of soil disturbance in a tilled system!  The vast majority of tillage comparisons show no significant differences in soil carbon content below the tillage zone (Ogle et al. 2005).[3]  Secondly, because the change in soil C due to tillage management (the ‘signal’) is relatively small relative to the ‘background’ soil C content (the ‘noise’), by adding in the additional C stored in lower parts of the profile (even if differences below the plow layer are not significant), this calculation increases the ‘noise’ in the estimate such that the signal-to-noise ratio decreases and thus it is not surprising that comparisons of C content for the entire soil profile are often not significantly different.  A more meaningful determination is to utilize, as far as possible, measurements for different soil depth increments to the full depth of the soil profile and then to evaluate whether soil C contents are different below the tillage zone, and if not, then the estimates should be based on the measurements encompassing the depth of tillage, where the main effects of tillage management are manifested.  This is the procedure that has been used in developing the IPCC soil C change factors for tillage management (IPCC, 2006).

Other data that has been used to question whether no-till really increases soil carbon are total ecosystem C flux from eddy covariance measurements (Baker et al. 2007).  While eddy covariance (EC) techniques are a highly useful approach in C cycling research, there are several drawbacks which make them inappropriate for drawing inference about soil C changes.  First, there are only (to our knowledge) 2-3 locations in the U.S. where EC is being used to estimate ecosystem C balances for systems under no-till (Baker et al., Verma et al. 2005), thus any inferences made cannot be considered general for no-till systems.  Secondly, EC measurements have so far been for the first 2-3 years following conversion to no-till, in other words, during the transition phase between conventional and no-till when soil C increases are expected to be lowest.  Finally, the typical rates of C accumulation determined from long-term plot studies (e.g. 0.1 to 0.5 tonnes C per ha) are likely to be within the ‘error’ estimate for annual net C accumulation using EC methods, thus there is little confidence in the estimates obtained for annual soil C changes (furthermore, EC estimates to date are typically unreplicated, hence a true determination of the error associated with these annual C changes are not possible).  Hence the best method for determining soil C changes due to changes in soil management practices (including tillage) is through careful soil measurements in which the accumulated change in soil C over several years can be accurately determined.

An important point raised by Blanco-Canqui and Lal (2008) is that we currently lack good data on tillage effects under actual on-farm conditions.  Our best information on tillage impacts are from field experiments administered by land grant universities and by governmental research agencies (e.g. ARS)[4].  However, the approach taken in the paper by Blanco-Canqui and Lal – i.e., paired field (‘across the fence’) comparisons of tilled and no-till practices – involved a number of serious shortcomings.  First, paired comparisons – because they lack a true control – have a high degree of uncertainty.  Even if similar soil and slope conditions are chosen it is impossible to know if soil carbon contents were the same before a change in tillage practices occurred.  Secondly, in on-farm comparisons it is difficult to isolate the effect of tillage from other management variables.  In most of the comparisons described by Blanco-Canqui and Lal (2008), crop rotations and nutrient management, as well as tillage, were different within the paired comparisons – hence apparent differences between fields cannot, in fact, be attributed to tillage.  As the authors themselves point out, several of the apparent tillage differences, if real, are likely due to factors other than tillage, e.g., from pg. 697, “Unlike the NT [no-till] field, however, the PT [plow tillage] field was under winter wheat and rye cover crops, which were plowed under every year.  Thus we hypothesize that the higher SOC [soil organic carbon] with PT may have been due to the use of cover crops.  In MLRA 124, the higher SOC with PT may have been due to the use of continuous corn, a high biomass-producing crop, in contrast with the corn-soybean-alfalfa rotation in the NT field.  Annual burying of coarse corn residues in PT soils may have increased SOC at lower depths compared with the relatively low-biomass-producing rotation adopted in NT farming”.

Instead of using unreliable paired comparisons, new measurements of soil C change under actual on-farm conditions should be based on a resampling over time of on-farm benchmark sites, as part of a nationwide soil C monitoring network.  Such a network is currently under development as part of the National Resources Inventory (NRI) administered by USDA-NRCS (J. Goebel, personal communication).  Resources to establish and build out this network should be a high priority.  In the meantime, our data from existing long-term field experiments provides the best source of knowledge about tillage (and other management) effects on soil C – here, the preponderance of evidence supports the conclusion that adoption of no-tillage increases soil C, relative to conventional tillage, in most US cropland soils.

References

Angers, D.A., M.A. Bolinder, M.R. Carter, E.G. Gregorich, C.F. Drury, B.C. Liang, R.P. Voroney, R.R. Simard, R.G. Donald, R.P. Beyaert and J. Martel. 1997. Impact of tillage practices on organic carbon and nitrogen storage in cool, humid soils of eastern Canada. Soil Tillage Res. 41:191-201.
Baker, J.M., T.E. Ochsner, R.T. Veterea and T.J. Griffis. 2007. Tillage and soil carbon sequestration.  What do we really know? Agriculture, Ecosystems and Environment 118:1-5.
Blanco-Canqui, H. and R. Lal. 2008.  No-tillage and soil-profile carbon sequestration: An on-farm assessment. Soil Science Society of America Journal 72:693-701.
Denef, K., J. Six, R. Merckx, and K. Paustian. 2004. Carbon sequestration in microaggregates of no-tillage soils with different clay mineralogy. Soil Science Society of America Journal 68:1935-1944.
IPCC (Intergovernmental Panel on Climate Change). 2006.  2006 IPCC Guidelines for National Greenhouse Gas Inventories, Prepared by the National Greenhouse Gas Inventories Programme, Eggleston H.S., Buendia L., Miwa K., Ngara T. and Tanabe K. (eds). Published: IGES, Japan.
Ogle, S.M., F.J. Breidt and K. Paustian. 2005. Agricultural management impacts on soil organic carbon storage under moist and dry climatic conditions of temperate and tropical regions.  Biogeochemistry 72:87-121.
Paustian, K., O. Andren, H. Janzen, R. Lal, P. Smith, G. Tian, H. Tiessen, M. van Noordwijk and P. Woomer. 1997. Agricultural soil as a C sink to offset CO₂ emissions. Soil Use and Management 13:230-244.
Six, J., Elliott, E.T. and Paustian, 2000. K. Soil macroaggregate turnover and microaggregate formation: A mechanism for C sequestration under no-tillage agriculture.  Soil Biology & Biochemistry 32:2099-2103.
Six, J., S.M. Ogle, F.J. Breidt, R.T. Conant, A.R. Mosier and K. Paustian. 2004.  The potential to mitigate global warming with no-tillage management is only realized when practiced in the long term. Global Change Biology 10:155-160.
Verma, S.B., A. Dobermann, K.G. Cassman, D.T. Walters, J.M. Knops, T.J. Arkebauer, A.E. Suyker, G.G. Barba, B. Amos, H. Yang, D. Ginting, K.G. Hubbard, A.A. Gitelson and E. A Walter-Shea. 2005.  Annual carbon dioxide exchange in irrigated and rainfed maize-based agroecosystems. Agri. Forest. Meteror. 131:77-96.

[1] Baker, J.M., T.E. Ochsner, R.T. Veterea and T.J. Griffis. 2007. Tillage and soil carbon sequestration:  What do we really know? Agriculture, Ecosystems and Environment 118:1-5.
[2] Blanco-Canqui, H. and R. Lal. 2008.  No-tillage and soil-profile carbon sequestration: An on-farm assessment. Soil Science Society of America Journal 72:693-701.
[3] Baker et al. (2007) argue that one way in which plowed soils could accumulate more C in deeper depths in the soil profile, compared to no-till, is if no-till results in a more superficial distribution of roots, such that comparatively more root residues are deposited in deeper soil zones under plow tillage.  Unfortunately, there are very few measurements of root distributions comparing tilled and no-tilled systems – Baker et al. (2007) cite only one study (from Switzerland) showing a deeper root distribution under plow tillage.  While this potential mechanism is worthy of further research, it does not merit rejecting the many long-term tillage comparisons showing no significant differences in soil C below the depth of tillage.
[4] However, it should be pointed out that the vast majority of agricultural field research being used for management and policy decisions in other areas (e.g. on genetics, yield, nutrient management, etc.) is also derived from controlled field research settings, and not from on-farm studies.

New Resource - A Look Ahead at the New Administration/Congress

2009-01-22T12:12:00.000-05:00

It's a new day in Washington -- with a new Congress and a new President. For the climate issue, that means BIG changes are in store. It is important that the agriculture sector understand the new players that will be running the committees of jurisdiction on this issue and to note what the new President's plans are -- so that the agriculture sector can be prepared to defend its interests.

An EXCELLENT resource that I highly recommend is the Agricultural Carbon Market Working Group. This group is comprised of farm leaders who have been working and leading on the ag-climate issue for nearly 4 years. This group is cross-commodity and geographically diverse -- so they bring many different points of view to the issue.

Of particular value is their Resources page which contains memos and white papers on various parts of the complex ag offsets/climate issue. Today, they have added a new paper focusing on the transition of the new administration and the a new Congress -- and what that means for the ag-climate issue.

You can read the paper by clicking here.

Grazing Management Has Big Carbon Credit Potential

2009-01-21T09:50:00.000-05:00

There's good news out today about how grazing can rack up carbon credits (of course, that's only if the law counts this practice). Below is a great article that my colleague Sara Brodnax found talking about how changes in grazing practices could have a major impact worldwide on reducing GHG emissions.

Let's hope the policy incentives are there to reward and promote this behavior rather than require it outright. The other point to note is again, the importance of dealing with additionality in order to have a project type count as a legitimate offset.

Reuters News

By David Fogarty, Climate Change Correspondent, Asia

SINGAPORE, Jan 20 (Reuters) - Simple changes in grazing practices could soak up millions of tonnes of carbon a year, helping fight climate change, improving farm productivity and earning farmers carbon credits, a scientist said on Tuesday.

But such measures needed to spread globally to more than 120 million farmers working grazing lands, such as savannah and shrubland, Andreas Wilkes of the World Agroforestry Centre in Beijing, said.

The measures also needed to be backed by the United Nations in a broader climate pact to help farmers earn carbon credits as an incentive and to pay for changes in grazing management.

Rangelands hold up to 30 percent of the world's soil carbon and span more than five billion hectares, or about 40 percent of its landmass, Wilkes and a colleague, Timm Tennigkeit, wrote in a recent report.

In grasslands, most of the carbon is in the soil, except for treed grassland, which hold a sizeable portion above ground.

Wilkes said changing grazing practices, such as replanting one or more different plant species, or sealing off portions of grassland, can boost soil carbon content.

"It depends on what the problems causing or preventing proper management are," he told Reuters in a telephone interview.

"In some places, it will be there are too many animals, so you simply reduce their number. If the soil has already begun to degrade, then maybe planting grasses is the best option.

"It's a matter of education and often also supporting conditions, such as policies. None of it is rocket science."

Improved management of grazing lands has the potential to lock away between 1.3 billion and 2 billion tonnes of carbon dioxide-equivalent worldwide up to 2030, the report says.

"Most carbon-sequestering practices also have other benefits. Increasing soil carbon content will generally improve soil fertility," it says, leading to increased livestock productivity.

At present, only U.S. farmers can earn carbon credits through improved grazing land practices.

The Chicago Climate Exchange has created an accounting standard for emissions reductions from rangelands, such as plots farmed with modern equipment that precisely positions seeds and fertiliser instead of energy-wasteful tilling, or to restore previously degraded rangeland through rotational grazing.

But the CCX's standards have been criticised as being lax and doing little to slow climate change, since farmers have carried out such practices regardless of carbon credit incentives.

Wilkes said it was crucial the next phase of the Kyoto Protocol, expected to be agreed by the end of this year, included agriculture and sustainable land management.

He said the centre was designing a pilot project together with the Food and Agriculture Organization in China.

The aim was to submit the project, together with methods to measure and verify rangeland soil carbon sequestration to the Voluntary Carbon Standard.

The International Emissions Trading Association and the World Economic Forum are among the groups backing the VCS, which aims to provide global benchmarks to ensure a credible voluntary carbon market.

"Once the politicians can see the market is putting its money in rangelands and there are viable methodologies that everyone thinks are sound, then that may open up the opportunities at the international level," said Wilkes.

US-CAP offsets plan

2009-01-17T10:29:00.000-05:00

The U.S. Climate Action Partnership released its latest recommended policy actions on climate change - and an offset market is part of their blueprint. Why is this important? U.S.-CAP has a very impressive collection of corporate entities and environmental groups that represent a very influential block. (To see the list of US-CAP members, click here.)

So - what did they have to say about offsets? Below is an excerpt from their just released summary of their policy blueprint:

Offsets and Other Cost Containment Measures
Adequate amounts of offsets are a critical component of the USCAPBlueprint. Emissions offsets are activities that reduce GHG emissions that are not otherwise included in the cap. USCAP recommends all offsets meet strong environmental quality standards (i.e., they must be environmentally additional, verifiable, permanent, measurable, and enforceable). We recommend that Congress should establish a Carbon Market Board (CMB) to set an overall annual upper limit for offsets starting at 2 billion metric tons with authority to increase offsets up to 3 billion metric tons, with domestic and international offsets each limited to no more than 1.5 billion metric tons in a given year.
In addition, the CMB should oversee a system-wide strategic offset and allowance reserve pool that contains a sufficiently large set of additional offsets and, as a measure of last resort, allowances borrowed from future compliance periods that could be released into the market in to prevent undue economic harm in the event of excessively high allowance prices, especially in the early years of the program. USCAP recommends other measures to limit allowance price spikes and volatility including unlimited banking of allowances and effective multi-year compliance period.

Now, I'm not saying this is the best policy for offsets -- but again, take a look at the LONG list of corporations (buyers of offsets) and environmental groups that have signed onto this approach. Agricultural groups that hope to influence the offsets policy mechanism MUST engage and really understand the full scope of what an offsets market is -- what is the purpose of the product that you would be producing -- and how it fits within the larger climate legislation. To do otherwise, risks becoming irrelevant in the formation of potentially one of the largest new commodity markets coming for agriculture.

This is a serious time - and we need serious input and all the involvement from ag groups we can get. Yet still, some of the ag leaders who have followed this issue continue to get criticized for their mere involvement. As if the whole issue would magically go away if all those in agriculture continue to ignore it!?!

Well, here's your choice -- you can let US-CAP fight for offsets alone -- and shape them alone, or your organization, your commodity can have a voice in shaping a product that you could CHOOSE to provide -- a product that has the potential to be the third or fourth largest crop in America!!

Ag leaders who are following this issue on the industry's behalf should be thanked - continuously. Their lives should not be made harder because they care about the future and are willing to roll up their sleeves and find a way through this very daunting issue.

Climate Change Wrapup

2008-12-12T09:50:00.000-05:00

Fred Yoder again, just wrapping up here at the UN Climate Change conference in Poznan, Poland. Today is the last day, and it has been a busy one. Al Gore addressed the delegation this afternoon as sort of a send-off to get ready for the final meeting in Copenhagen a year from now.

As we part from here, I do think there were many positive things that occurred. Yesterday and today, Sara Brodnax and I had meaningful exchanges with representatives from the EU, Brazil and India concerning agricultural solutions to climate change. As I said before, the ag presence here was next to nill, except for Brazil showcasing their low-carbon biofuels production. As we talked to them about soil carbon sequestration programs, it was not even on their radar screen. All who we talked to were very interested in continuing to exchange ideas and possibly develop ag-based solutions for this new treaty. In our discussions, it became apparent this type of program would benefit the developing countries as well since it could be implemented in a size-neutral way, giving everyone a stake in the solution regardless of their size or economic situation. Every country grows food.

As we leave Poznan, I can only hope we can continue to develop these new relationships and form meaningful partnerships. We need to develop ideas that would benefit all of the world's agriculture producers, and come back to the next conference with a real emphasis on agriculture as a major player. Together, we can have a real impact. As the world economic outlook looks bleak at the moment, surely we can be a driver to create efficient and economic incentives through the growing of crops worldwide while reducing our carbon footprint. At the same time I hope to continue building on those relationships with the legislative staff from the US who attended as well as we develop our own climate legislation.

So long from Poland,
Fred Yoder

Poznan Update

2008-12-11T06:58:00.000-05:00

Hello all, it’s Sara B here in Poznan as well. Today is the beginning of the high-level discussions among the heads of state and ministers here in Poland. These sessions of the Conference of the Parties (COP) conclude several weeks of meetings on technical aspects of the agreements that are taking shape in preparation for the negotiations next year in Copenhagen.

It is very clear that everyone is watching the United States to see how we move forward with climate change under the next administration … words like anticipation and expectation come to mind. On the US side, it seems that one likely scenario is that Congress may pass some type of “placeholder” legislation in the next year to outline GHG emission reduction targets and the structure of a cap-and-trade program. This (theoretically) would create the structure needed in order for the US to participate in developing the next international treaty on climate change in Copenhagen while leaving room for future iterations and improvements.

On the ag side, there has been some limited discussion here in Poznan on agriculture and soil carbon sequestration. Many expect that agriculture will increasingly enter the negotiations as ag producer countries such as the United States and Brazil become more involved in crafting the solution to climate change. There has also been a good deal of discussion on Reduced Emissions from Deforestation and Degradation (REDD), a proposal to slow tropical deforestation in developing countries (with implications for land use change and carbon sequestration).

That's all for now, thanks for staying tuned with us here in Poland!

Reporting from the UN Climate Conference

2008-12-11T06:29:00.000-05:00

This is Fred Yoder again reporting from Poznan, Poland at the UN Climate Conference. Well, it has been an interesting couple of days so far. There are lots of meetings to pick and choose from as to what to attend. I have been trying to learn how other countries are regarding agriculture as part of a possible solution in the reduction of GHG. Unfortunately, there are very few countries here that I have been able to find as really engaged from that aspect. Brazil has probably taken the most active role in showcasing their renewable fuel production portfolio and talking about all they are doing in their quest for reducing GHG. Really, from what I have seen so far, we have a lot of work to do in talking up the benefits and possibilities that agriculture has to offer in this arena. This afternoon we are going to attempt to talk to some representatives from the E.U. countries to get their level of interest in pursuing the development of ag credits. There has been some real progress in the protocols to include ways the developing countries can get on board with the new agreement by using credits from the forestry sector whereby over time they can transition into more specific reduction systems. Lots of dialogue, and lots of possibilities. More later.

Fred Yoder

Hello from Poznan

2008-12-10T04:25:00.000-05:00

This is Fred Yoder reporting to you from the UN Climate Conference in Poznan, Poland. I find it striking that as serious a subject that climate and GHG is, and will affect all of agriculture, I believe I am the only producer from the United States that I know of that is here in attendance. So far, Sara Brodnax and I have linked up with many U.S. legislative staff who are in attendance, and have had some great dialogue with others here from the European Union. I am trying to get a perspective of Europe's attitudes toward cap and trade, since they have had some challenges getting their systems to work. Also, it has been interesting to just observe all of the over 650 NGOs here in attendance and their various perspectives of what should happen as possible solutions. It is certainly evident that it is important to be present to represent one's own ideas, because if not, someone else will, and it may not be the desired message.

I am looking forward to a full day of meetings. It is difficult at times to decide which ones to attend because there are many which would be beneficial to sit in on. I just feel it is vitally important these folks understand the perspective and needs of both agriculture and forestry concerning these issues.

More later,
Fred Yoder

Poland Climate Talks

2008-12-05T09:50:00.000-05:00

Hello, it's Sara B again. I will be leaving shortly for Poznan, Poland to observe the UN climate change conference next week.

What's happening in Poznan? Well, the UN climate people (under the UNFCCC or United Nations Framework Convention on Climate Change) and member country delegates (forming the COP or the Conference of the Parties) are meeting to discuss the current international agreement on climate change (the Kyoto Protocol). This conference is part of the process that will shape the agreement to succeed the Kyoto Protocol, which is set to expire in 2012. These discussions started last year in Bali and will end next year in Copenhagen.

What do I expect? Well, a lot of anticipation and speculation about how the US is going to handle climate change under the new Obama administration (note that the Bush administration will be officially representing the US at this COP). That is, will the US ratify the upcoming agreement or move forward with cap-and-trade on their own or ??

I'll be listening in particular for discussion of approaches to mitigation, including policies for soil carbon sequestration and avoided deforestation. There will likely be some buzz about how countries such as Brazil will be approching avoided deforestation. Brazil just announced bold targets for avoided deforestation and signed a landmark agreement with California and other states on REDD (Reduced Emissions from Avoided Deforestation and Degradation, more on this later).

Anyway, stay tuned and check back as I hope to blog from Poland if possible.

Carbon Offset Consultation

2008-11-13T14:53:00.000-05:00

Sara B here, I just wanted to share my thoughts following my participation in the recent Conservation Agriculture Carbon Offset Consultation in West Lafayette, Indiana. The consultation was sponsored by the Food and Agriculture Organization of the United Nations and Conservation Technology Information Center. The conference brought together a collection of experts and farmers from all over the world to share their experiences regarding conservation agriculture and the opportunities for soil carbon sequestration in a carbon market.

The consultation demonstrated the extensive knowledge and research available regarding the successful use of agricultural practices such as no-till to sequester soil carbon. Not only that, but at the end of the conference, the group was able to pull together their thoughts and experiences to develop a consensus document on the urgency of promoting conservation agriculture to offset carbon emissions.

In other words, a group of over 80 scientists, regulators and farmers from different countries got together in a room and agreed (yes, agreed!) that soil C sequestration is a ready, tested and critical piece of the solution to the issue of global climate change.

The consultation made it clear to me that to move forward we need:
o To institute a cap-and-trade system to establish the protocols and to create the market demand for soil C sequestration
o To involve farmers in the research, system design, and decision-making
o To establish flexible and cost-effective solutions to promote widespread adoption
o To agree on the answers to the solvable issues of additionality and permanence
o To avoid the trap of “paralysis by analysis” by fine-tuning and improving as we learn through experience
o To keep the doors open for international cooperation and the exchange of ideas

In the words of Michael, a farmer and aggregator with Carbon Farmers from Australia, the house is on fire and the children are at home ... so let's not argue about the color of the water bucket!

For a copy of the documents from the consultation, please check out the Resources over at the Ag Carbon Market Working Group website.

Defining Offsets

2008-07-30T12:16:00.000-04:00

Below is a story about the National Farmers Union's recent efforts to gin up visibility and support on Capitol Hill for offsets in the next climate bill. While I applaud their efforts for bringing needed focus to the offsets issue, it is dangerous to tie all of agriculture -- and the fate of offsets, to the Chicago Climate Exchange (CCX) model. That model does not contain the rigor in either project design or measurement that will be required under a mandatory climate market.

The danger of being too closely associated with the CCX is that all those groups who campaign against offsets -- saying they are not real, not measured, and just another subsidy for agriculture, have a much easier time of making their case if offsets are confused with CCX pilot program credits. They are NOT the same thing and it is HIGHLY unlikely that the CCX model of generating offsets will be recognized in the new law.

How can I say this? To my knowledge, there is not one major environmental group that supports the way CCX defines ag ghg reductions/offsets. Not even groups that are very supportive of the concept of ag offsets in a carbon market -- and have put a lot of their own political capital on the line, would be supportive of a system like this.

It will be extremely difficult for any member of Congress to push an offsets title that has zero environmental support.

But beyond the politics -- lets remember, CCX was designed to be a voluntary market -- and it has worked well for what it was designed to be. Once you move into mandatory reductions -- and a program that provides credits to pollute -- which is what an offset will be, we are in a whole new world with new challenges that must be addressed.

If lawmakers get the idea that offsets = CCX, the battle to get the maximum market for agriculture will be made that much harder.

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Environment & Energy Daily

CLIMATE: Farmers try to raise visibility of offsets for next warming debate
Allison Winter, E&E Daily reporter0 - 7/30/2008

Farmers are already trying to plant seeds on Capitol Hill for the next climate debate, in an attempt to grow their share of any future cap-and-trade legislation.

The National Farmers Union and key farm state senators met on Capitol Hill yesterday to tout the farm group's partnership with the Chicago Climate Exchange. NFU is sending out checks this weeks to more than 2,300 farmers and ranchers that participate in its carbon credit program, capturing carbon dioxide in their soil in exchange for payments from the carbon market.

The farm lobby wants to highlight its program to lawmakers, in the hopes that agriculture might get more consideration the next time a climate bill comes around. "We want to say, 'Here's something that is working," said National Farmers Union President Tom Buis after a briefing with reporters.

The group was largely preoccupied with the farm bill prior to this year's climate debate, but they are ramping up their presence for the next round on climate legislation. They want to make sure U.S. farmers have a major role in any cap and trade system. And they want a bigger piece of the pie for offsets than the Lieberman-Warner bill would have given them.

Lieberman-Warner put a 15 percent limit on offsets -- the amount of carbon reductions industry can buy from landowners who plant trees, erect methane digesters or practice no-till farming. Lawmakers with a heavy interest in agriculture, such as Sen. Debbie Stabenow (D-Mich.), had an amendment that would have greatly increased the share available for domestic offsets.

Stabenow and Sens. Dick Lugar (R-Ind.) and Ken Salazar (D-Colo.) all praised farmers' participation in carbon markets yesterday. Lugar is a carbon-trader himself. He planted black walnut trees on his Indiana farm to sequester an estimated 3,400 tons of carbon.

But Stabenow said agriculture continues to face a hurdle of proving that it can really reduce carbon. "The big debate is whether or not these are real offsets and can be measured," Stabenow said.

Some environmental groups, like the Natural Resources Defense Council, are skeptical of agricultural offsets. They say the long-term benefits of the offsets are dubious -- if a farmer decides later to till his 'no-till' plot, for instance, he can release much of the carbon he was previously paid to store.

The other major criticism is that offsets might not reduce the carbon in the atmosphere, especially if they are going to farmers who were already doing some of these practices on their land. NFU's program with the Chicago Climate Exchange does not pay farmers for any practice started prior to 1999, in an effort to address that criticism.

"I think there was this assumption, 'Well they're going to do it anyway,'" said Buis. "But if there isn't anything to encourage good behavior, they are going to have to incentivize it."

In addition to the farm lobby, Environmental Defense and other groups are big proponents of offsets as a way to promote conservation, reward private stewardship and reduce carbon. GOP presidential hopeful John McCain supports the use of unlimited domestic and international offset projects for industry compliance (E&ENews PM, May 12).

Offsets are also less expensive than forcing industry to cut its emissions on its own. U.S. EPA and Energy Information Administration studies have shown unlimited offsets could lower the climate program's costs by as much as 71 percent.

The National Farmers Union started its program two years ago. The group is an aggregator for carbon contracts to allow small landowners who would not qualify on their own for the climate exchange's 5,000 ton minimum. NFU identifies farmers who want to participate, enrolls them in the climate exchange and sells their offsets as a group.

Since it began in late 2006, the program has traded more than 86 million tons of carbon offsets and generated $8 million for producers. More than 2,000 farmers participate -- almost half of them in North Dakota, the first state where NFU started the program. Buis said interest continues to grow, mostly by word of mouth.

"What we find is after the checks go out the first year, people go to the coffee shop and tell their neighbors and it grows," Buis said. "We haven't put on a wild marketing program. This is mostly word of mouth."

Geologic vs Biological Sequestration of GHG

2008-07-25T10:07:00.000-04:00

The article below is talking about geologic sequestration, not to be confused with soil carbon sequestration. The difference? Geologic seq (often referred to as Carbon Capture and Storage or CCS) refers to capturing CO2 and pumping it underground into geologic formations (underground caves, caverns, mines, etc) and permanently trapping it there. Soil carbon seq, or biological seq - refers to using plants and roots to convert CO2 into carbon, and storing the carbon in the soil as part of the soil.

A key point to note: If geologic sequestration is found too have too many complicating factors -- or is too expensive to become commercialized, than there may be even more demand for biological sequestration and agriculture offsets in the carbon market.
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Environment & Energy Daily

Long-term effects of carbon [geologic] sequestration concern lawmakers
(07/25/2008)Katherine Boyle, E&E Daily reporter

Capturing large amounts of carbon dioxide emissions from power plants in order to fight global warming may be feasible in the future, but members of the House Energy and Commerce Committee are nervous about unintended consequences.

At an Environment and Hazardous Materials Subcommittee hearing yesterday, Democrats and Republicans alike said they were concerned burying carbon dioxide (CO2) beneath the ground could be risky and cause new environmental problems.

Rep. Hilda Solis (D-Calif.), for instance, is worried about the effects earthquakes could have on buried carbon stores, particularly in California along the San Andreas Fault. "We're preparing for a big California earthquake," Solis said. She questioned the corrosive properties of CO2 as well and asked what might happen when it is combined with lead or arsenic.

Subcommittee ranking member John Shadegg (R-Ariz.) reminded the panel of the gasoline additive methyl tert-butyl ether (MTBE), which was used to reduce tailpipe emissions but later found to contaminate large quantities of groundwater. "It would be a grave error to move forward with technology that would replace one environmental problem with another environmental problem," Shadegg said.

"That is the framework in which the American people will view whatever we do at this point," he added.

Shadegg also questioned how well the United States has examined environmental damage from carbon injection used to force oil and natural gas out of the ground.

Rep. Joe Barton (R-Texas) suggested EPA should focus more attention on CO2 conversion. "It yields more baking soda than we'll probably need, but it's dramatically easier to store" than gas or liquid, he said.

'Ace in the hole'

Newly appointed subcommittee Chairman Gene Green (D-Texas) questioned how carbon sequestration could affect groundwater reclamation from saline aquifers, if the water in those aquifers could be purified.

This week, U.S. EPA released its proposal to regulate the underground injection of carbon dioxide by power plants and other industrial pollution sources.

EPA's proposed rule is aimed at protecting drinking water sources during and after the geologic sequestration process. In carbon capture and sequestration, CO2 is captured from fossil-fuel power plants, industrial facilities or other sources and then compressed. At the sequestration site, CO2 is injected into deep subsurface rock formations via one or more wells.

Proposed EPA permitting requirements address well location, construction, testing, monitoring and closure. The goal is to prevent CO2 from migrating into underground water supplies. If the gas infiltrates drinking water, it could push other substances that occur underground naturally, like salt, into the drinking water source. It could also create a corrosive carbonic acid that could lead to CO2 leaks (E&E Daily, July 21).

Benjamin Grumbles, EPA's assistant administrator for water, emphasized that the EPA proposal is only meant to address drinking water concerns.

He predicted carbon capture and sequestration could reduce greenhouse gases by 15 percent to 55 percent over the next century. "Geologic sequestration may not be a silver bullet, but it may be our ace in the hole," he said.

Scott Klara, director of the Energy Department's Strategic Center for Coal, said DOE is working with universities, private partners, regions and states to ensure geologic sequestration will be a safe and viable way to reduce greenhouse gas emissions. DOE is working with regional partners on pilot projects to learn more about the technology needed.

"The ultimate success of sequestration will hinge, in part, on our ability to measure the amount of carbon dioxide stored on a site, prevent environmental impacts and mitigate" any harmful effects, Klara said. Another essential aspect is determining whether adequate storage space exists throughout the United States and Canada, he added.

Broad Support Emerges for Offsets

2008-07-22T09:06:00.000-04:00

Apologies for my long absence on this blog. During early June, there was a vote on the climate bill and my energies were diverted into working on that. For any of you that follow politics, you know that sometimes in order to maintain the trust of those you are working with -- you just can't share everything publicly in real time.

But, now I'm back to providing as much good info as I can on the ag offsets issue - so please check back often.

Below is a letter with some very impressive signers in support of good offsets policy within a climate bill. This letter came about after the strong efforts of Senators Stabenow, Brownback, Crapo and others who pulled together an amendment that would have created strong offsets policy within a climate change bill.

As you can see by those signing the letter, a strong coalition has finally formed to champion good offsets policy within mandatory climate change legislation. Bravo to the groups who rolled up their sleeves and jumped in to shape what could be agriculture's third or fourth largest market: carbon.

Now it is important that the coalition remain together and continue to work with staff in the Senate and the House so that when a bill comes up and passes in the next Congress, agriculture's interest will have been fully accounted for.
----------------------------------------------------------

June 12, 2008

The Honorable Debbie Stabenow
United States Senate
Washington D.C. 20510

Dear Senator Stabenow:

We are writing to thank you for your leadership
in promoting the key benefits thatoffsets, particularly
agriculture and forestry offsets, can provide in
addressing greenhouse gas emissions reductions. Offsets
projects are critical to ensuring that any legislation to
address global climate change can achieve meaningful
environmental results in a cost-effective manner. In
addition to these economic benefits of emissions offsets
projects, they can help drive new technologies and
services, and provide extensive environmental benefits.

Your amendment to the Climate Security Act (S. 3036)
provides a useful framework for developing offsets policy
that will engage agriculture and forestry interests,
utilities and industry seeking to reduce their emissions,
entities that finance and develop offset projects, and
environmental groups. We look forward to continuing to
work with you and your staff to craft a robust,
sustainable, offsets policy that efficiently reduces costs
and maintains environmental integrity.

Sincerely,

Agricultural Carbon Market Working Group
American Farm Bureau Federation
American Farmland Trust
American Soybean Association
Business Council for Sustainable Energy
Carbon Offset Providers Coalition
--Blue Source
--Camco
--The Carbon Neutral Company
--CommonWealth
--CO2-Solutions.com
--Greenhouse Gas Services, a GE AES venture
--Kolibri Group
--MGM International
--N.serve Environmental Services
Coalition for Emission Reduction Projects
--American Electric Power
--Blue Source
--Deutsche Bank
--Dominion
--Duke Energy
--EcoSecurities
--Econergy
--El Paso Corporation
--Environmental Credit Corp
--Equator Environmental
--First Climate
--Leaf Clean Energy Company
--MGM International
--Natsource
--Stark Investments
Deere & Company
The Dow Chemical Company
DTE
Duke Energy
DuPont
Environmental Defense Fund
FPL Group
General Electric
National Association of Conservation Districts
National Barley Growers Association
National Association of Wheat Growers
National Cattlemen’s Beef Association
National Corn Growers Association
National Farmers Union
National Milk Producers Federation
The Nature Conservancy
NRG Energy
PG&E

New U.S. National Intelligence Report Warns of Security Threats from Climate Change

2008-06-25T10:39:00.000-04:00

ClimateWire
SECURITY: Intel report warns of climate threats to U.S.

(06/25/2008) Lisa Friedman, ClimateWire reporter

A new U.S. national intelligence report out today warns that climate change has serious implications for U.S. national security.

The National Intelligence Council will warn Congress that climate change poses major challenges, from regional instability to water scarcity to new and growing immigration pressures, for America's military as well as its diplomatic and trade missions, according to several experts who have reviewed the first-ever U.S. government report linking climate and security.

"There's a lot at stake," said Kent Butts, a professor of political-military strategy at the U.S. Army War College.

Butts, who will testify today before a joint session of the House Select Committee on Energy Independence and Global Warming and a House Intelligence subcommittee, called the intelligence assessment "broad."

But, he said, "It did what it needed to do. It signaled that climate change is indeed a serious issue, and it's affecting U.S. security interests globally."

The report, "National Intelligence Assessment on the National Security Implications of Global Climate Change to 2030," comes on the heels of several international studies, mostly from Germany and the United Kingdom, warning that a failure to address climate change could destabilize nations and provoke serious threats.

Water scarcity, sea level rises, migration mean increasing instability

Indeed, members of Congress including Rep. Ed Markey (D-Mass.), Sen. Richard Durbin (D-Ill.) and Sen. Chuck Hagel (R-Neb.) called for the intelligence report after a group of retired U.S. military leaders with the Center for Naval Analyses (CNA) last year found climate change to be a serious threat to the country.

Sherri Goodman, former deputy undersecretary of defense and now general counsel of the Center for Naval Analyses, also reviwed the new intelligence report and called it consistent with the think tank's findings.

"It reflects many of the concerns that we found in terms of increased water scarcity, sea level rises, storm surges," Goodman said.

Security experts said the report details destabilizing threats in different regions of the world, focusing in particular on sub-Saharan Africa. The region is considered extraordinarily vulnerable both because of dire poverty and disease and because it will suffer higher temperatures and longer droughts, leading to water scarcity and decreased crop production.

It also points to a rise in immigration pressures, particularly from the Caribbean, as a challenge headed America's way as sea levels rise and storm surges increase. It describes the United States as largely well-equipped to deal with domestic challenges, but does note that wildfires will increase and several coastal military installations could be at risk of storm surges.

Butts said members of Congress specifically asked him to speak to security implications with China. He said he plans to tell the panels that climate change will lead to the United States and China competing for the same resources, particularly in Africa, a major source of oil for both countries. The answer, he argued, is for the countries to start working together now.

U.S. and China should cooperate in Africa

"To the degree we have destabilizing climate change in Africa, it makes sense to see the U.S. and China cooperate and help build the capacities of governments to adapt," he said, adding that the United States would be "well-served to be more proactive."

Monmouth University President and retired Adm. Paul Gaffney, a top contributor to the CNA report who reviewed an early version of the intelligence estimate, said he believes it underscores a need for detailed climate data.

In order for the U.S. government and military to respond to possible threats or step in before problems start to loom, Gaffney said scientists need to provide more localized information about weather disasters.

"When you're talking about security, you need to be more specific. Are we dealing with drought and famine? Are we dealing with floods and storms?" he said. "It makes a difference, because you might need more helicopters in one place, and in other places you might need more food drops."

Agreed Goodman, "Now we're getting a better handle on what are the right questions to ask."

Political risks heightened by food production risks

Mark Levy, deputy director of Columbia University's Center for International Earth Science Information Network, said the intelligence assessment uses a country risk-assessment the organization did recently as one basis for its findings. CEISIN ranked countries based on sea-level rise, increased water scarcity and an aggregate measure of vulnerability to higher temperatures compared to the country's ability to adapt.

"We can pinpoint areas of high projected climate change that are also in historically unstable regions. This suggests that climate change is likely to heighten political risks," Levy said.

Butts also noted that the United States will have to pay special attention to climate disasters that could destroy food production in parts of the Middle East to prevent new regions from becoming terrorist training grounds.

The intelligence assessment does not question the science of climate change, and relies on the fourth assessment of the Intergovernmental Panel on Climate Change, those who reviewed it said.

Butts said he hopes the study helps move Congress toward addressing the problems.

"I hope they will come together and move beyond the cause of climate change to focus on the security dimensions and look for common ground on a U.S. approach to dealing with this," he said.

House Agricultural Policy Climate Change Briefing

2008-06-10T18:00:00.000-04:00

Thursday, June 12^th

1300 Longworth

11am - noon

Designing Offsets Policy: Implications for U.S. Agriculture

Dear Colleague:

As you know, legislation on climate change will be coming to Congress soon. One of the most important aspects of this complex issue is creating a robust and real “offsets” market whereby regulated entities can pay farmers and foresters to reduce greenhouse gas emissions through a number of conservation practices. Getting this mechanism right is extremely important to ensure both a minimal cost to the economy and environmental integrity. Additionally, this issue is of vital importance to America’s agriculture community with the offset and allowance opportunities for agriculture estimated to bring $24 billion annually to the sector.

I would like to invite your staff to a briefing with representatives from Duke University’s Nicholas Institute for Environmental Policy Solutions, as well as experts working with the agriculture sector, to discuss offsets infrastructure issues and recommendations from both the offset buyer and seller positions.

If you have any questions, please contact Ashley Martin in my office at 5-2801.

Date: Thursday, June 12, 2008

Time: 11am - 12pm

Place: 1300 Longworth

Speakers:

Dr. Lydia Olander, author of Nicholas Institute’s Offsets Architecture working group paper
Tim Profeta, director of Duke University’s Nicholas Institute for Environmental Policy Solutions
Sara Hessenflow Harper - The Clark Group - The market potential of agriculture offsets

Mark Gaede - National Association of Wheat Growers - The stakes for agriculture in climate legislation

Sincerely,

/s Stephanie Herseth Sandlin
Member of Congress

Tougher climate bill being proposed by Rep Markey

2008-05-28T15:24:00.000-04:00

Below is a story about a new climate bill coming out from the House of Representatives. This bill is much more stringent than the Lieberman-Warner bill and provides little transition assistance for industry and consumers.

Although this story says the bill will have an offset market, I am very dubious that the architecture of that program will be workable at all since it has the praise of groups like Environment America (formerly known as US-PIRG) and they are notorious in their opposition to agriculture offsets.

Just another thing to keep your eye on -- and another reason why it is so critical for agriculture to be championing its own interest. If the ag industry can not bring something positive to the table, they will get something negative. That's just the way the process works.

CLIMATE: Markey unveils bill for slashing emissions 85 percent (05/28/2008)

Darren Samuelsohn, Greenwire senior reporter

A close ally of House Speaker Nancy Pelosi (D-Calif.) detailed a new global warming bill today that presses for cuts in U.S. heat-trapping emissions that far exceed those in other proposals being debated in Congress, including a Senate measure scheduled for floor debate early next week.

Massachusetts Democrat Ed Markey's climate bill -- to be formally introduced Tuesday -- seeks to curb midcentury carbon dioxide and other greenhouse gas emissions by 85 percent through a cap-and-trade system that would start operating in 2012. (Click here to read the executive summary of the bill.)

Speaking at the Center for American Progress in Washington, Markey said his bill was the byproduct of lessons learned during his 17 months as chairman of the Pelosi-created House Select Committee on Energy Independence and Global Warming. Since January 2007, Markey has held more than 40 hearings on climate and energy issues and led lawmaker delegations to India, Greenland and the Amazon rainforest.

Markey calls his bill the "Investing in Climate Action and Protection Act." For the tech-savvy, he also dubbed it "iCap."

The climate legislation takes a more aggressive stance on emission limits compared with the Senate bill due on the floor next week from Sens. Joe Lieberman (I-Conn.), John Warner (R-Va.) and Barbara Boxer (D-Calif.). That bill would reduce emissions by 71 percent in 2050.

Markey's plan also reaches further than the Lieberman-Warner-Boxer bill in heeding environmentalists' calls for the distribution of hundreds of billions of dollars in emission credits.

At its start, the Markey bill would auction 94 percent of the program's allowances. The auction proceeds would be used for a cross-section of items Markey sees as helping to make the U.S. economy more climate-proof, including tax cuts for low- and middle-income Americans, energy technology research, energy efficiency and adaptation.

The remaining 6 percent of the allowances would be given away to U.S. manufacturers most vulnerable to trade competition, including the steel, aluminum, paper, iron and cement sectors. By 2020, those industries would no longer get any allowances for free as the cap-and-trade program transitions to a complete, 100 percent auction.

Overall, Markey said his bill covers heat-trapping emissions from 94 percent of the economy. That means mandatory limits for some 10,000 major industrial facilities, such as power plants, petroleum refineries and natural gas distributors.

'Breath of fresh air'

Prospects for Markey's bill are far from clear. The lawmaker said he had briefed Pelosi on the new legislation but offered no other assurances it would see action this year.

Markey, a 17-term congressman, holds a senior position on the House Energy and Commerce Committee, which holds jurisdiction over climate legislation. But to date, that panel's chairman, Rep. John Dingell (D-Mich.), has taken a far more methodical approach to dealing with global warming.

"It's intended to be another important part of the debate as we move forward with the House and in the negotiations with the House and Senate and with the administration," Markey said. "It's going to be ultimately many different ideas that are competing. I think it's important for us to put together the legislation that reflects the best ideas of what's been heard."

Environmentalists welcomed the legislation for pushing further than the Senate plan and also for going into greater detail on many of the more complicated and contentious items required of a cap-and-trade policy.

"It's a breath of fresh air," said Emily Figdor, a top federal climate analyst at Environment America (formerly known as US-PIRG)

A Dingell spokesman said Markey’s office hasn’t yet provided the committee with a copy of the new climate bill.

Mirrors Senate bill

On many of the bill's more technical details, Markey's plan follows the Senate bill by Lieberman, Warner and Boxer.

It would give industry a break from high compliance costs by meeting up to 15 percent of the program's requirements through the use of domestic offsets, such as methane capture or soil sequestration. Companies also could turn to international climate activities for up to 15 percent of the compliance requirements.

The Markey bill also does not have any "safety valve" provisions, such as an absolute ceiling on the price of an emission allowance. Instead, Markey's ideas for cost containment revolve around letting companies bank away an unlimited amount of their emission credits for future use.

To engage China, India and other developing countries, Markey calls on the president to study other climate plans to determine which have taken comparable actions to the United States. If they meet the president's criteria, Markey would give the countries access to tens of billions of dollars in new technology and deforestation funding.

But Markey's bill also mirrors the Lieberman-Warner-Boxer plan by providing a trade stick. Countries that do not take comparable action by 2020 would need to purchase emission allowances if they want to import their carbon-intensive goods into the United States.

Markey's bill includes several other notable points. It would override the Bush administration's controversial decision last December to deny California's request for a waiver while following that state's lead in setting up a nationwide low carbon fuel standard.

If Markey's proposal became law, all new coal-fired power plants with construction that started after January 2009 would need to capture and store 85 percent of their greenhouse gas emissions. U.S. EPA would need to set up a legal framework for the underground storage of greenhouse gases.

And EPA would be ordered to set mandatory standards for greenhouse gas emitters not covered by the cap, including coal mines, landfills, wastewater treatment systems and large animal feeding operations.

Dr. Keith Paustian - Colorado State University

2008-05-27T14:14:00.000-04:00

At the Senate briefing I put together last week, Dr. Keith Paustian of Colorado State University presented information on measurement and modeling for soil carbon sequestration. The bottom line is that soil carbon sequestration can be measured accurately and with minimal cost at a national level.

You can view Dr. Paustian's presentation by clicking here.

Ag Carbon Market Potential

2008-05-27T13:49:00.000-04:00

Last week I put together a briefing for Senate staff examining the carbon market potential for the agriculture sector. This briefing looks at some of the issues surrounding a mandatory climate change law that would allow a carbon offsets provision. This is one of the key provisions that agriculture should defend in any climate legislation.

You can view the presentation by clicking here.

Ag Offsets Briefing - This Friday - May 16th

2008-05-14T23:29:00.000-04:00

I want to let you know about a briefing on agriculture offsets that I'll be participating in this Friday. Details are below. The goal of this briefing is to provide an overview of the science of offsets measurement, market potential, and to hear an agriculture perspective from a group (National Association of Wheat Growers) who have been studying the issue for some time and have taken a true leadership role within the agriculture sector on this issue.

Details

Date: Friday, May 16, 2008

Time: 2-4pm

Place: 406 Dirksen Senate Office Building
(Senate Environment & Public Works Committee Room )

Speakers:

Keith Paustian - Colorado State University soil scientist - The science of soil carbon measurement & modeling

Sara Hessenflow Harper - The Clark Group - The market potential of agriculture offsets

Mark Gaede - National Association of Wheat Growers - The stakes for agriculture in climate legislation

Questions & Answers

Ag Carbon Market Working Group Website

2008-04-21T15:19:00.000-04:00

Climate Legislation Could Benefit Agricultural Community

New Website Serves As Resource For Farmers

For more information contact:

Laura Sands, Ag Carbon Markets Working Group Coordinator, (307) 683- 2730 or

(307) 751- 0501

Jennifer Dickson, Environmental Defense Fund, (202) 572-3401 or (202) 520-1221

(Washington - April 20, 2008) This week the Ag Carbon Markets Working Group (ACMWG) launched www.agcarbonmarkets.com as a resource tool for the agriculture community. The website is geared towards helping farmers understand the potential financial benefits of climate legislation pending before Congress.

“Our website will help farmers better understand the value of agriculture offsets like methane capture and soil carbon sequestration,” said Laura Sands, coordinator of the Ag Carbon Markets Working Group. “This is an opportunity for the ag community to find new revenue streams that help their pocket books while protecting the environment.”

The website also introduces a radio ad that features famers calling on Congress to take action to reduce greenhouse gas emissions through carbon offsets. The ad will be airing in markets across the U.S. over the coming weeks.

Current estimates of U.S. greenhouse gas markets indicate that U.S. farms have the potential to mitigate as much as 40% of our nation's total climate impact with practices such as soil carbon sequestration or methane capture.

Under the Lieberman Warner Climate Security Act, which is now before the Senate, U.S. agricultural producers could receive billions of dollars annually from offset markets or choose to participate in a USDA carbon conservation program funded by the climate market. However, these new markets are not assured as the final bill has not passed the Senate floor, and the House has yet to announce their own version of a climate bill.

“Congress has some pretty important decisions ahead of them and farmers can play a crucial role,” said Sands. “ACMWG wants to ensure farmers have a seat at the table when the final bill is negotiated. Our website is a resource driven site that hopes to pull all of the material about ag offsets into one location to make it as easy as possible for interested parties to learn more.”

The Ag Carbon Markets Working Group (ACMWG) was developed through a process of collaboration between Environmental Defense Fund, concerned farmers and industry experts. ACMWG has spent two years studying and addressing potential carbon offset markets for agriculture that could result from national policy and works cooperatively with other entities interested in seeing carbon markets for agriculture.

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Terrific New Ag-Climate Website Launches

2008-04-18T13:43:00.000-04:00

Great News! A new easy-to-use resource tool has just been launched to help provide the latest information, research and policy ideas to the agricultural community and to policymakers o ag carbon offset markets.

The website: www.agcarbonmarkets.com

What makes this resource unique is that it is a product of the Ag Carbon Market Working group -- which is comprised of several farmers who have been past presidents and board members of various commodity groups -- and have been studying the ag-carbon issue for almost 3 years now.

This group has been working in cooperation with the Environmental Defense Fund -- one of the few environmental groups that has a long track record of supporting agriculture offsets within climate policy legislation.

I urge you to check it out -- and report back on your thoughts about it -- and what more it may need?

Sara

Climate battle continues in Kansas

2008-03-24T10:55:00.000-04:00

Kansas' governor vetoes power plant permit (03/24/2008)

Debra Kahn, ClimateWire reporter

Kansas' fight over two coal-fired power plants is intensifying, raising the possibility of multi-state battles over such plants unless the federal government steps in with greenhouse gas emission regulations.

Gov. Kathleen Sebelius (D) vetoed a bill Friday that would have reversed the denial of two coal-fired power plants. In addition to vetoing the bill, she created a state Energy and Environmental Policy Advisory Group to examine ways Kansas can reduce its greenhouse gas emissions.

The Kansas Department of Health and Environment denied the plants' air quality permits in October, citing the potential damage caused by global warming. The two 700-megawatt plants proposed by Sunflower Electric Power Corp. would be located in Holcomb, next to an existing plant.

In response, state legislators filed and speed-tracked bills in both the House and Senate to overturn the state's decision. The bills argue that the state agency went outside its scope in taking CO2 emissions into account in denying the permits. Sunflower says it followed existing state rules. It also argued appeals before two state courts in November, one of which is now pending before the state Supreme Court.

Kyle Nelson, Sunflower's vice president of power production and engineering, said his interpretation of the law was the same as U.S. EPA's. A provision in the Clean Air Act allows EPA to act to prevent imminent health threats from pollution sources, but that provision is meant only for existing emissions sources for which sudden, new information is revealed, Nelson said. What Kansas did "had the effect of creating new law outside the legislative effort," he asserted.

The bill "acknowledges greenhouse emissions are a global problem and a patchwork of individual state rules are likely only to lead to inconsistency in application, and a more holistic approach is appropriate," Nelson said.

Kansas says it is following the Supreme Court's decision

Kansas is citing last April's Massachusetts v. EPA decision as a precedent for its opposition. In testimony to the House Select Committee for Energy Independence and Global Warming earlier this month, Rod Bremby, who heads the Kansas health agency, said the decision that greenhouse gases are an air pollutant subject to the Clean Air Act was "highly influential."

Furthermore, Bremby testified, EPA's failure to decide whether CO2 contributes to air pollution is limiting Kansas' ability to address emissions. "It would make sense from both a human health and business perspective for EPA to issue its regulations as quickly as possible," he said.

Federal politicians, in turn, are using Kansas' decision as fodder against EPA; committee Chairman Ed Markey (D-Mass.) hailed Bremby and Kansas state Rep. Joshua Svaty (D) as "climate heroes."

"Unlike the EPA administrator, who still can't seem to accept the scientific consensus and declare that greenhouse gas emissions are dangerous, Kansas used its own state authority to deny a permit for a new coal-fired power plant on just those grounds," Markey said.

In her veto, Sebelius offered Sunflower a compromise: one power plant of about 660 MW, equipped with carbon capture and sequestration technology, for which Kansas' baseload power needs would receive top priority. Sunflower officials did not respond to a request for comment but said in a statement that "this veto will unnecessarily raise electric rates for Kansas families and punish our Kansas workers and industries."

The supply's side

"Lots of people have attacked us based on, 'You want to build a coal plant because you're greedy and you want to make a profit,'" Nelson said. "That's a great story, but we're a co-op and don't operate for profit. There is no shareholder that we're answering to that has a profit motive. We have no fuel bias, we don't want to build coal forever."

"Just because we want to build a coal plant doesn't mean we don't like windmills or natural gas," he said. "They see it like a beauty contest -- they want to pick the one prettiest girl. I say it's like drafting a sports team: If you already have a point guard, you need a center."

Sunflower said its opposition was mainly in the form of 501(c)(4) groups funded by generators of other forms of energy, like Know Your Power, a coalition organized by natural gas company Chesapeake Energy Corp.

A spokesman for Know Your Power's ad agency, Corporate Communications Group, said the group has run a few print, television and Internet commercials aimed at the Holcomb plants.

"It's been an interesting dogfight," said spokesman Michael Grimaldi. "There are a lot of organizations that have a dog in this fight and are contributing to it in different ways."

Another group, Great Plains Alliance for Clean Energy, is funded by wind power interests. Its primary target is the Holcomb project, but it also features articles maligning biomass and other alternative energies.

Grimaldi said Know Your Power was pleased with Sebelius' decision but that the compromise proposal was "not something we've talked about in our team meetings."

What's next?

While Kansas' legislative session ends April 5, a session where lawmakers can try to override Sebelius' vetoes begins April 30. In the state House, the votes have fallen short of a two-thirds majority.

But another bill to allow Sunflower to build its plants may be in the works. According to a report by Harris News Service, the bill might include mandates for Sunflower to report its emissions and pledge to reduce them. Sunflower spokesman Miller pledged to continue the fight as well. "We'll be here till this place closes down," he said.

New EPA Analysis Released on Climate Bills

2008-03-18T19:05:00.000-04:00

March 14, 2008

Lieberman, Warner Welcome EPA Finding that Climate Bill Achieves Strong Results With Manageable Costs

WASHINGTON – Senators Joseph Lieberman (ID-CT) and John Warner (R-VA) today thanked the U.S. Environmental Protection Agency for completing the analysis that they had requested of their Climate Security Act (S. 2191) last November. (The slides presenting the results of EPA’s analysis are available at www.epa.gov/climatechange/economics/economicanalyses.html) The Senate Environment and Public Works Committee favorably reported the bill on December 5, 2007. The full Senate is expected to consider the measure this June.

“EPA’s detailed analysis indicates that the US can curb global warming without sacrificing economic prosperity,” Lieberman said. “We will examine the results closely for improvements that they might suggest for the bill.”

Warner said, “I am satisfied that EPA’s analysis demonstrates what we have long known: You can control greenhouse gas emissions in a manner that leaves the economy whole and is not burdensome on consumers.”

The ADAGE (Applied Dynamic Analysis of the Global Economy) computer model used by EPA projects the economic impacts of government policies that are designed to speed advanced energy technologies to market. The Climate Security Act is such a policy. ADAGE contains detailed treatment of new technology deployment in the power sector and explicitly models the global economy.

EPA has not yet updated the ADAGE model to reflect the provisions of the energy bill enacted last year. In order to approximate the underlying impact of those provisions, however, EPA selected a “high technology reference scenario” when running the Climate Security Act through the ADAGE model. That modeling run found:

Ø The Climate Security Act’s cut in cumulative US greenhouse-gas emissions is deeper than one found earlier by EPA to be consistent with keeping global CO₂ concentrations below 500 parts per million in 2100. [Slide 141] The finding assumes that other developed countries reduce their emissions by less than the US, and that the developing countries do not start making similar reductions until 2025. According to the Intergovernmental Panel on Climate Change, keeping the global concentration below 500 ppm greatly decreases the risk of severe global warming impacts in the US and elsewhere.

Ø Under the conservative assumptions described above concerning action by other nations, the Climate Security Act does not shift US greenhouse-gas emissions abroad. In EPA’s words, “no international emissions leakage occurs.” [Slide 5]

Ø Under the same conservative assumptions, the Climate Security Act causes US exports of energy-intensive products (e.g., steel, cement) to developing nations to increase and causes US imports of energy-intensive products from developing nations to decrease. [Slide 83]

Ø Under the Climate Security Act, US gross domestic product grows by 80% from 2010 to 2030. That is just one percentage point less than the growth in the absence of the bill. [Slide 61]

Ø Under the Climate Security Act, average annual per-household consumption in the US grows by 81% from 2010 to 2030. That is just two percentage points less than the growth in the absence of the bill. [Slide 65]

Ø EPA notes, “The economic benefits of reducing emissions were not determined for this analysis,” [Slide 3] and “While the models do not represent benefits, it can be said that as the abatement of GHG emissions increases over time, so do the benefits of the abatement.” [Slide 108]

Ø The Climate Security Act’s allowance price and financial support for carbon capture and sequestration (CCS) make that technology a commercial reality in the US by 2015 – several years earlier than in the absence of the bill. [Slide 4]

Ø One of the effects of the accelerated CCS deployment is to drive natural gas out of the electricity sector, to the benefit of manufacturers who use natural gas. [Slide 57]

Ø Under the Climate Security Act, the price of an emission allowance is $22 in 2015 and $46 in 2030. [Slide 24] That is significantly lower than allowance price predictions made by models that ignore the recent energy bill, artificially limit technology deployment, and ignore technology incentives and cost-saving provisions of the bill.

Ø Under the Climate Security Act, increases in average US electricity prices materialize slowly and gradually. Even forty years after enactment, those prices reach a level only 18% higher than the 2005 level. [Slide 55] Over that period, the bill directs more than $1 trillion to lowering and offsetting US consumers’ actual energy costs.

The analysis also includes, at the request of critics of climate legislation, other modeled scenarios that make highly pessimistic assumptions about constraints on technology deployment, the formation of natural gas cartels, and the like. In responding to the same request last October, the Energy Information Administration concluded that an analysis would be realistic without those pessimistic assumptions.

– 30 –

EEI Members Call for More Accurate Climate Cost Projections in CRA study

2008-03-14T09:37:00.000-04:00

As I discussed here before, the Charles River Associate (CRA) study that is being used by the Chamber of Commerce and others claiming that the Lieberman-Warner bill will generate "catastrophic" economic costs is incredibly flawed.

Now -- it appears, that many of the members of EEI (Edison Electric Institute), the energy association that paid for the study, agree that the study is flawed and should be more responsible. The story below discusses the efforts many of the power generation sector is taking to try to make sure that the flawed study is re-done -- an interesting development to say the least!
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The Energy Daily

Nuclear Utilities Press For Changes In EEI Climate Costs Study

March 5, 2008

Under pressure from a coalition of member companies with abundant nuclear generation, the Edison Electric Institute has agreed to direct economic consultant CRA International to make modest changes in assumptions underlying a controversial CRA analysis that projects sharply higher cost impacts from Senate climate change legislation than predicted by other analyses.

A draft presentation of the CRA analysis, obtained last month by The Energy Daily, examined legislation (S. 2181) by Sens. Joseph Lieberman (I-Conn.) and John Warner (R- Va.) to establish a greenhouse gas cap-and-trade program on most of the U.S. economy beginning in 2012.

The analysis concluded the legislation would sharply increase electricity prices, force many power companies to switch from coal-fired generation to natural gas and impose an average cost of $1,500 on every U.S. household by 2015.

The CRA analysis drew immediate criticism from a variety of stakeholders in the national climate change debate, who charged that unrealistic assumptions in the CRA model led the consultant to conclude, for example, that carbon dioxide (CO2) allowance prices in 2015 would reach $64--a price projection far higher than what other studies have predicted.

CRA assumed, for example, that no utilities would take advantage of provisions in the bill that allow the banking of emission allowances and the use of international emissions offsets to reduce compliance costs. CRA said the emission caps in the early years of proposed mandate are so severe that utilities will need all their allowances, and that European Union countries will scoop up all the available overseas offsets.

The analysis also assumed that a Carbon Market Efficiency Board (CMEB) the bill would establish would take no action to limit sharp allowance price increases, as the bill would authorize.

The CRA study prompted behind-the-scenes moves by several members of EEI who also belong to the Clean Energy Group (CEG), a coalition of utilities whose generation portfolios include robust percentages of nuclear, natural gas and renewable resources. The CEG companies for weeks have pressured EEI to change some of the underlying assumptions in advance of a new CRA modeling run on the Lieberman-Warner bill.

EEI has agreed to include in the new CRA analysis provisions of the Energy Independence and Security Act of 2007 (EISA)--approved in December--that tighten federal fuel economy requirements for motor vehicles, boost alternative fuel use and strengthen efficiency standards for appliances and buildings.

In addition, CRA will also incorporate results of the Energy Information Administration's analysis of S.2181--including an expected change in EIA's baseline "reference case" used to model future U.S. energy use--as well as the findings of a separate Environmental Protection Agency analysis of the bill. Both the EPA and EIA analyses are expected later this month.

In a March 4 letter to EEI President Thomas Kuhn obtained by The Energy Daily, the chief executive officers of seven CEG utilities urged EEI to change other assumptions in the CRA analysis, including those concerning the use of allowance banking and international offsets; actions the CMEB might be expected to take to reduce the costs of the cap- and-trade program; and provisions to reduce the impacts of higher energy prices on low-income households.

"We think this is a positive and important development, and we believe the CRA analysis will be both more robust and received as more reliable with the additions you have indicated," the CEG letter said, referring to the changes EEI has agreed to make. "In our view, it is critical that EEI be viewed as a credible voice in the climate change debate. It is our hope that EEI's work will allow members, Congress, the administration and other interested parties to make informed decisions about various policies and proposals before them in terms of impacts on our industry and our customers."

The letter was signed by the CEOs of Avista Corp., Constellation Energy Group, Entergy Corp., Exelon Corp., FPL Group Inc., National Grid and PG&E Corp. and Public Service Enterprise Group Inc.

A CEG representative said the CEOs "are planning to be very much involved and on top of the whole EEI process" as the CRA analysis proceeds.

"The message between the lines is that these companies are going to be insisting that EEI have a more balanced approach throughout the climate change debate and represent the collective views of all EEI members and not just the views of the coal generators," the CEG representative said.

An EEI official told The Energy Daily Tuesday, however, that--aside from including the EISA provisions and the expected EIA reference case changes--EEI has not decided if it will direct CRA to make other changes, such as accounting for banking and the use of international offsets.

"We're still considering what we are going to do," said Bill Fang, EEI deputy general counsel and climate issue director. "We'll have to consider all that. CEG has raised some good issues, but other member companies have raised other issues. We have to get the views of other companies."

The national advocacy group Environmental Defense, in a February critique of the CRA study, called the analysis "a dramatic outlier when compared to a range of economic models maintained by researchers in academia and government. For example, CRA's estimates for the impact of the bill in 2015 on greenhouse gas emission prices, GDP figures and electricity prices are 75 percent to 300 percent higher than those found by a study done by researchers at Duke University and Research Triangle Institute."

The CRA cost projections also are sharply higher than those found in an analysis of the bill by the Cambridge, Mass.-based Clean Air Task Force, which concluded CO2 emission allowances would cost about $17 in 2015, nearly 75 percent less than what CRA projected.

Fang countered, however, that CRA's assumptions for the likely penetration of new nuclear generation are less optimistic than in other studies and more optimistic for the deployment of new renewable generation.

Be Wary of the Agenda Behind Flawed Cost Projections

2008-03-11T22:15:00.000-04:00

We've all seen the damage that can come from "studies" that are designed to achieve a given result rather than truly examining the potential cost, impacts or benefits of a given issue. It is often hard to judge the veracity of studies -- which is why it is absolutely critical that the assumptions used are transparent and reasonable -- so as to prove there is no hidden agenda being served.

The latest round of fliers and "fact sheets" being pushed by the Chamber of Commerce is unfortunately relying on a very flawed and secretive analysis done by Charles River Associates (CRA) and paid for by the electric industry group, Edison Electric Institute. The study was so flawed that many of the EEI members have called for it to be re-done using more plausible assumptions. Below is a great analysis of the many flaws of the CRA economic projections -- and why folks need to be careful before believing the cost projections of Lieberman-Warner from groups that clearly have an agenda that is not good for agriculture (i.e favoring a carbon tax instead of a carbon market).
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Environmental Defense Fund

The CRA Climate Analysis: Extreme Again

Americas Climate Security Act of 2007 [S. 2191) is a bipartisan bill that would create a cap and trade program to cut greenhouse gas emissions in the U.S. The Edison Electric Institute, a trade organization representing electric utilities, recently paid consulting firm Charles River Associates International (CRA) to assess the possible economic impacts of the legislation. An assessment of CRAs analysis using accepted academic modeling reaches the following conclusions:

· CRA has a history of presenting extreme views for its industry clients. For example, CRAs
analysis in 2003 of the McCain-Lieberman Climate Stewardship Act projected household costs that were three to four times higher than the upper range of results in an MIT study, and 10 to 14 times higher than MITs lower range.

· CRAs results are dramatically different than economic assessments by researchers in
academia and government. For example, CRAs estimates for the impact of the bill in 2015 on
greenhouse gas emission allowance prices, economic output (GDP), and electricity prices are 75%
300% higher than those found by a study performed by researchers at Duke University and Research Triangle Institute.

· Determining exactly why CRAs numbers are so high is difficult, both because of how CRA
reports their results and because the CRA model remains a black box to outsiders. Although
CRA released some information in a response to a request from Senator Lieberman, they have never fully opened up their model to outside peer review, so key assumptions remain hidden. Moreover, CRA lumps together results from various scenarios without specifying which scenarios lead to which results. One reason for the divergence from other models, however, appears to be that CRA ignores the role of international credits, which under the Lieberman-Warner bill could meet up to 15% of compliance obligations. In addition, their analysis assumes high costs for new coal-fired power plants with carbon capture and sequestration technology, and imposes artificial constraints on how widely that technology is used.

· Like most economic forecasting models, CRAs analysis considers only one side of the ledger:
it considers the costs of reducing emissions, but fails to examine the costs of inaction.

· No single model should be relied upon for policy making. Instead, policy makers should look to
the full range of economic models for guidance on the possible impacts of climate policy. And when confronted with a range of numbers, a common rule of thumb is to throw out the lowest and highest numbers, and concentrate on the middle of the range. Former Federal Reserve Chairman Paul Volcker summarized the economic situation best: If you don't
take action on climate change, you can be sure that our economies will go down the drain in the
next 30 years. What may happen to the dollar, and what may happen to growth in China or
whatever, will pale into insignificance compared with the question of what happens to this planet
over the next 30 or 40 years if no action is taken."

Our analysis is based on testimony by CRA, documentation supporting that testimony, CRAs recent update to their analysis, and economic models by researchers at MIT, Research Triangle Institute, and the Department of Energy.

The Attacks on Offsets Continue - Stanford Univ

2008-03-10T22:21:00.000-04:00

Below is a story from an environmental trade press publication talking about a "study" that will be coming out from Stanford University soon trashing the domestic offset option within mandatory climate legislation.

This "study" takes the entirely flawed proposition that the domestic ag offsets program would be at all similar to Kyoto's Clean Development Mechanism (a program that allows companies and/or industrialized countries to conduct GHG reduction projects in developing countries in order to create GHG reduction credits). The domestic ag offsets program, as outlined in the Lieberman-Warner bill has nothing to do with Kyoto's CDM -- but that hasn't stopped an academic or two from positing that this is how the program would be run . . . and "finding" as a result that the offsets program would not generate the predicted reductions.

The result, this "study" finds, is that mandatory climate policy should instead use a carbon price cap or carbon tax to control costs rather than a market approach provided by the offset program.

This study WILL be circulated all over the U.S. Congress by both environmentalists who oppose offsets and some industries who don't want a cap-trade bill.

There is significant potential that this type of damaging thinking will sway key members of Congress -- especially since there is not a coordinated defense of the ag offset option being conducted by the agriculture industry at large.

When I say "If you are not at the table, you are on the menu;" this is what I mean.
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Carbon Control News

Stanford Study May Stir Debate On Limiting Costs In Climate Bills

Posted March 7, 2008

A soon-to-be-released Stanford University study may spark new skepticism of proposals for using emission offsets as a cost-control mechanism under federal cap-and-trade legislation or in emerging state climate change programs, according to sources familiar with the study.

The study will suggest that a so-called economic “safety valve” approach that limits the price of carbon credits is preferable, and that the use of emission offsets by industrialized nations would have serious shortcomings as a way to encourage emission reductions by emerging economies such as China and India.

The analysis is likely to influence debate on initial drafting of cap and trade legislation by House lawmakers, as well as the debate on pending Senate climate change legislation by Sens. Joseph Lieberman (I-CT) and John Warner (R-VA), which allows some use of offsets to meet compliance obligations. In addition, sources say the analysis also has implications for efforts by states including California to develop rules for crediting offsets in their own emissions control programs.

Furthermore, the study may serve as a counterpoint to an upcoming EPA analysis of Senate climate legislation—a cost analysis that many observers expect to play up the role of emission offsets as a means to lower compliance costs.

At a March 3-4 conference in Washington DC on carbon sequestration, hosted by the Edison Foundation, Stanford University Energy and Sustainable Development Program Director David Victor said the upcoming study will question the effectiveness of using offsets as a substitute for a safety valve approach to limit the cost of carbon credits. In addition, Victor said it will show that “between a third and two thirds” of emission offsets under the Clean Development Mechanism (CDM)—set up under the Kyoto treaty to encourage emissions reductions in developing nations—do not represent actual emission cuts. Victor is developing the analysis with Stanford University’s Michael Wara.

Domestic ‘Offsets’

In the Senate, the Lieberman-Warner measure would allow domestic “offsets”—emission reductions that occur at sources not subject to an emissions limit—to be used for up to 15 percent of a source’s compliance with emission controls. The legislation also would allow similar use of international emission credits, up to 15 percent of a source’s compliance needs, from countries that have emissions trading systems. One source tracking the issue says the legislation amounts to indirect recognition of CDM credits in the European emissions market, since CDM credits are used to lower costs in that market.

The Stanford report builds on previous work analyzing the CDM and will provide a “general critique” of offsets as a cost-control mechanism as well as an in depth look at the CDM’s shortcomings as a means for reducing emissions in developing countries, according to a source familiar with the study. The source adds that while the analysis focuses significantly on international offsets, many of the same problems can also affect domestic markets. “We don’t see these problems going away,” the source says.

The extent to which the report will serve as a counterpoint to other analyses of the Lieberman-Warner bill may become clearer when EPA releases its cost analysis, expected in the next week or two. Many observers expect that report to highlight offsets as a potential strategy for limiting the costs of the legislation.

The source familiar with the study says the Stanford paper will highlight the slowness of the offset market, using CDM as an example, in responding to any sudden demand for emission credits – a lack of liquidity that makes offsets a poor mechanism for cost containment. From a cost-control standpoint, the source says issuance of CDM credits would have to significantly increase to be effective, creating an inherent tension between expanding efforts to verify projects and weakening environmental standards. “The alternative is having an explicit discussion about a price cap and safety valve,” in emerging climate programs, the source says

From the standpoint of developing country actions, the source says the study will identify problems in ensuring that the emission-reduction projects that receive CDM credits go beyond what developing countries would do anyway. One example of the challenge is a major ongoing effort to seek CDM credit for natural gas fired power plant construction in China, despite indications that Chinese energy officials are already pursuing such construction for other reasons.

Sector-Based Approach

The source says a better alternative than the CDM for encouraging emission reductions from developing nations would be a sector-based approach or a climate trust fund that could back clean-energy projects that are truly additional to existing efforts. The source says that the current, narrow focus on crediting project-specific CDM efforts under a cap and trade program makes it hard to devote adequate resources to verifying the real benefits of the projects, according to the source.

The source says offsets can still play a “niche” role in advancing climate change efforts but says that the current Lieberman-Warner bill’s approach to offsets may be overly generous. From the standpoint of international credits, the source says that an argument can be made that the measure gives too much power to other governments to monitor the quality of those emissions reductions.—Doug Obey

Responding to fertilizer fears

2008-03-10T22:05:00.000-04:00

Below is a response I received from Sen. Lieberman's office regarding charges that the fertilizer industry has made about potential increased costs to fertilizer coming from the Lieberman-Warner climate bill. The bottom line is that the bill has a provision to minimize any potential cost increase.
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The bill directs EPA to hand back to the fertilizer manufacturers any allowances that were submitted upstream for natural gas or petroleum products, to the extent natural gas or petroleum products in question are used as feedstock for fertilizer manufacture, and to the extent that the feedstock use locks the carbon in the fertilizer rather than releasing it to the atmosphere at the fertilizer manufacturing plant.

My understanding is that such a crediting-back provision will end up erasing at least 65% of the cost that the bill otherwise would impose on fertilizer manufacturers.

Last Friday I met with members of the Fertilizer Institute and explained this to them. I told them that we were likely make this clarifying change to the existing feedstock credit provision in the bill (section 1202(e)): Delete "such that no group I greenhouse gas associated with that feedstock will be emitted," and replace with "to the extent that no group I greenhouse gasses are emitted from the use of feedstock.”

And that we intend to include this language about section 1202(e) in the committee report:

This subsection provides that the Administrator of the EPA shall distribute to any entity that uses petroleum- or coal-based product, natural gas, or natural gas liquid as a feedstock during the life of the program a quantity of emission allowances equal to the quantity of allowances, offsets, or international offsets submitted under section 1202(a) for that feedstock. Feedstock is a substance used as a raw material in an industrial process to make an intermediate or final product, such as the use of natural gas to manufacture plastics. For the portion of the fuel that is used as feedstock that does not result in GHG emissions, the Administrator shall establish and distribute to downstream entities a quantity of emission allowances equivalent to the allowances submitted by covered entities under section 1202(a). The requirement to submit allowances under section 1202(a) is calculated based on the assumption that all fossil fuels are combusted resulting in the release of the greenhouse gases generated during combustion. This provision is intended to compensate for that assumption by establishing allowances equal to the quantity of greenhouse gas emissions that do not occur due to the feedstock use of some fuel.

Climate Change Legislation Is Coming - possible in 2009!

2008-02-29T14:24:00.000-05:00

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.

"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."

Lieberman-Warner bill WILL NOT cause Fuel Switching

2008-02-22T16:19:00.000-05:00

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

2008-02-22T14:42:00.000-05:00

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

Global warming inspires enterprising solutions

2008-02-21T11:16:00.000-05:00

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.

CHART: How carbon offsets and allowances work

"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 GetThere.com, 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."

CLEARING A FINANCIAL PATH TO CLEANER AIR | Story

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:

Offsets

Allowances

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

Measure to Kill Offsets Market Rising!!

2008-02-20T15:28:00.000-05:00

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.
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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.

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!!

2008-02-20T13:20:00.000-05:00

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

Changing the Slope

2008-02-18T14:16:00.000-05:00

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.

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

2008-02-18T12:50:00.000-05:00

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.
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[Kansas] Legislature refuses to tackle carbon issue

The Wichita Eagle

02.17.08

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.

http://www.kansas.com/611/story/313670.html

Sierra Club & Politics As Usual

2008-02-15T17:15:00.000-05:00

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.

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Environment & Energy Daily

CLIMATE: 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.

"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.

Farmer Testimony on Lieberman-Warner Bill

2008-02-12T12:35:00.000-05:00

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!
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TESTIMONY OF WILL ROEHM, VICE PRESIDENT, MONTANA
GRAIN GROWERS ASSOCIATION
Before the
SUBCOMMITTEE ON PRIVATE SECTOR AND CONSUMER
SOLUTIONS TO GLOBAL WARMING AND WILDLIFE
PROTECTION
SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

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.

Industry & Lieberman-Warner

2008-02-11T09:55:00.000-05:00

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

Climate Bill, Energy Costs & Farmers

2008-02-08T18:18:00.000-05:00

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:

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 ??
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.
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.
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

2008-02-08T17:51:00.000-05:00

Newsday.com / 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

2008-02-08T15:39:00.000-05:00

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.

Sara
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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

The Next President WILL support climate legislation

2008-02-07T17:52:00.000-05:00

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!!
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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.

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.

Confronting the "Polluter Giveaway" MYTH

2008-02-07T11:15:00.000-05:00

Yesterday, I laid forth my disgust at what Friends of the Earth and Greenpreach -- oh I mean Greenpeace are doing to shut down the only bi-partisan climate bill with both environmental integrity and a real political shot of passing any time soon. I received a comment from Friends of the Earth - which I encourage you to read. One of their responses was the same old tired refrain I've heard from a lot of groups: the bill "gives away trillions of dollars to polluters."

As a criticism, this is worth discussing -- so lets look at what the bill actually calls for (a refreshing change from the Exxon-FOE-Greenpeace mantra on this issue).

One man’s “giveaway to polluters” is another man’s “transition assistance.” The Lieberman-Warner bill (S.2191) devotes 8% of the cumulative value of allowances from enactment though 2050 to transition assistance (“giveaways to polluters”). The remaining 92% goes to state governments, energy consumers, wildlife adaptation, farmers and foresters, etc. The attached chart (also posted here: http://lieberman.senate.gov/documents/acsaemission.pdf) shows three snapshots of the allocation system over time (2012, 2022, and 2031).

By 2031, polluters are not receiving any free allowances. The economic modeling shows that if you do not provide regulated entities with a substantial amount of free allowances in the early years of the program, before the advanced energy technologies have had a chance to deploy widely, then the program will be substantially more expensive for energy consumers and others.

Another good perspective can be found from a blog comment left by Anthony Kriendler of Environmental Defense (below). You can Click Here to see the whole string of discussion.

As passed by committee, the bill only allocates 49 percent of allowances to regulated entities, and we get to full auction by 2031. There are a lot of good arguments for increasing the rate at which CSA moves to 100 percent auction, and there are a lot of good arguments for why that might not be achievable politically. In the end though, without a cap on emissions, there are no allocations to make, no auctions to have, and no greenhouse gas reductions. And that's what we're all working for here: reducing emissions. -- Environmental Defense

Environmentalists Against Actually Solving Climate Change!

2008-02-06T14:54:00.000-05:00

Ok - so the title should be Some environmentalists -- but that isn't as eye-catching.

There is a story out today in some of the environmental trade press talking about Friends of the Earth (FOE) and Greenpeace now opposing the Lieberman-Warner bill because its too moderate. It has enough environmental rigor for Sen. Barbara Boxer (D-CA), but that's not enough for these guys -- who have actually gone after Boxer for not being green enough -- if you can imagine that?

I did a whole big firey post about all this -- including the trade article on my other blog that talks about bringing pragmatism into environmental and energy policy. I urge you to read all about it at: http://ecopragmatism.blogspot.com/

This ties into the ag offsets issue because part of what these groups want to "fix" about the Lieberman-Warner bill is getting rid of the offsets program.

Just more reason to get into this issue and define it from a pro-ag point of view!

Sara

A Cautionary Tale from Kansas

2008-02-06T10:54:00.000-05:00

Right now the Kansas State Legislature is moving a bill that would, among many other things, result in a price cap on soil carbon sequestration offsets of $3/ton. This is part of a compromise that has emerged to allow a new coal-fired utility to be built in the state while trying to address the GHG emissions that led to the plants permit originally being denied by the Governor.

The good news is that ag carbon offsets would be allowed as a means for the utility to reduce its carbon burden.

But the bad news FAR outweighs the good -- the KS state bill sets the price of carbon offsets at a mere $3/ton of carbon. This is NOT a market price since there is no outright cap-and-trade plan in the bill -- it is essentially a carbon tax. By capping the price of sequestration offsets so low, there is no way they will be measured in a way that justifies the actual offset of emissions. So, this will become just another example used against offsets as not being "real" or "measured" by those enviro groups who oppose ag offsets in national climate legislation.

On top of that, any KS farmer that sells their carbon to the state now IS MISSING OUT on a likely three-fold expansion of the carbon commodity price coming within the next few years when national climate legislation is enacted.

In my mind - this is a case of some good intentions gone bad. The desire to include agriculture in the solution to reduce emissions is terrific, but agriculture needs to be paid FAIR MARKET VALUE for the carbon commodity it will provide -- not accept some randomly picked number as the value of carbon.

Again - this is an example of why it is so crucial to be involved with the process of writing the offset language and how it connects with the underlying bill.

Sara

Questions & Answers

2008-02-03T10:38:00.000-05:00

There are still a number of folks with questions about how the whole ag offset market would work. So, I am putting up a link to a fact sheet I prepared while I worked at Environmental Defense that answers a number of the questions I've heard posed about ag offsets. To access the document, click here.

Please leave your comments on the board and let me know other specific questions you have.

Sara

Ag Needs to Weigh in on "Offsets vs Allowances" Issue

2008-01-31T06:50:00.000-05:00

One of the big brewing issues of an ag offset market within climate legislation is whether to set up the program as an offset market as we have discussed here briefly (a free market where emitters of GHG emissions can buy reductions of those emissions from the agriculture industry and others) OR to get a portion of the overall emission allowances (or rights to pollute) to sell on the market and use as funding for a USDA carbon program.

Both of these options have pros and cons -- agriculture should have the ability to CHOOSE EITHER OPTION which is what the Lieberman-Warner bill allows. But be wary of the allowances only option -- which is what most of the environmental groups want for agriculture!!

For example -- take a look at an excerpt from a fact sheet that is being circulated by the Natural Resources Defense Council and World Resources Institute.

"The Chairman’s Mark directs the U.S.D.A. to allocate 5 percent of allowances to achieve the maximum amount of permanent and additional emission reductions and sequestration possible. If biological sequestration and emission reductions from programs supported by the U.S.D.A. are less expensive than the market price of allowances, the U.S.D.A. could be expected to require more than one ton of emission benefits for every allowance allocated. Modeling by the Nicholas Institute of Duke University and the U.S. EPA indicates that such a situation could arise after 2025.4 While this scenario would be contingent on several other factors including the demand for biofuels, the value of agricultural land for other purposes and in what way states include terrestrial sequestration in their own climate change programs, additional reductions beyond those reported here could be achieved. For example, if set aside recipients were able to sell allowances in 2050 for $100/ton and obtained reductions for $35/ton then 160 MMTCO2e of additional net emission reductions would be achieved, bringing the 2050 reduction to as much as 69% from 2005 levels."
-- Natural Resources Defense Council& World Resources Institute fact sheet

I know this is rather confusing -- but the bottom line is that these organizations want you farmers to do the work and not get the full market value for it because it will be a government program RATHER THAN A MARKET.

See the full NRDC/WRI fact sheet by clicking here

To help make sense of this -- and offer some talking points for those of you who want to engage on this topic, I and some friends have come up with a response fact sheet below.

Offsets Versus Allowances:

What do these provisions mean for the Agricultural Sector?

OFFSETS

Allows free-market participation for agriculture
Income opportunities for agriculture are only limited by the amount of offsets allowed by the policy: a cap on offsets limits income potential for agriculture
Agriculture receives market value for each ton of carbon sequestered or reduced: buyers will pay whatever price the market will bear

ALLOWANCES

Not a free market opportunity for agriculture
This is a government-administered (USDA) program
The value and payment for tons sequestered or reduced by agriculture will not be determined by market value, but will be determined by the government (USDA)
Consider this language from NRDC and WRI[1], regarding what they consider the function of the allowances provision to be:

“If biological sequestration and emissions reductions from programs supported by the USDA are less expensive than the market price of allowances, the USDA could be expected to require more than one ton of emissions benefits for every allowance allocated.”

In other words, if it costs a producer $25 to sequester a ton of carbon, but the market price for carbon is $100, the producer will have to sequester 4 tons of C to receive an allowance from USDA that is equivalent to one ton.

· This would prevent agricultural producers from getting market price for their emissions reductions.

· This treatment is not being considered for any other sector.

A comparison of payments received by agricultural producers under the offset system, and under the allowances system, as proposed by the NRDC/WRI analysis:

Assumptions:

Costs to agricultural producer to sequester 1 ton C = $25.00

Market price of carbon allowances per ton of C = $100.00

Offsets Provision: Allowance Provision

Ag payment received for 1 ton C = $100[2] Ag payment received for 1 ton C = $25.00

[1] Greenhouse Gas Emission Reductions under the Lieberman-Warner Bill (S.2191): Full Committee Chairman’s Mark with Boxer 1^st Degree Amendment, by Daniel Lashof, Climate Center Science Director, NRDC, John Larson, Associate (WRI), and Robert Heilmayr, Research Assistant, Climate and Energy Program, World Resources Institute. December 4, 2007.

[2] Note that this does not include discounts that may be applied for measurement uncertainty or leakage, which are being considered as part of both offsets and allowance provisions in cap-and-trade policies.

Measurement, Monitoring & Verification overview

2008-01-29T14:38:00.000-05:00

I have received a lot of questions/interest in more information on measurement, monitoring and verification (MMV) of ag offsets. So, I've uploaded a brief powerpoint presentation I use to talk about the research being done in this field and overall project design for potential carbon aggregators using the "Duke Standard" of measurement.

To see the presentation, simply scroll all the way to the bottom of this blog, and click on the forward arrows in the bottom left hand corner.

Cheers,
Sara


By David M. Sanders, for USA TODAY
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