Reports
U.S. Climate Bill Would Pay Farmers to Store Carbon in Soil
By: Jim Efstathiou
Jr.
Bloomberg
Nov 1,
2007
Nov. 1 (Bloomberg) -- U.S. farmers
can turn their dirt into cash under climate
change legislation that pays them to bury
pollution blamed for global warming.
The bill would create a potential $24
billion-a-year market for credits representing
carbon dioxide stored in soil. Senators Joseph
Lieberman, an Independent from Connecticut, and
John Warner, a Virginia Republican, are
co-sponsoring the measure.
``There is a
political calculation here to try to increase
support for climate change legislation by
providing these offset subsidies, in effect, to
agricultural concerns,'' said Tyson Slocum,
director of the energy program at consumer
advocacy group Public Citizen.
Like
other climate change proposals in Congress, the
bill allows utilities, refiners and
manufacturers to trade credits to help meet new
pollution requirements. The legislation,
approved in a 4-3 vote today by a Senate
subcommittee, gives farmers a stake in the
potential market for emission credits.
Carbon dioxide enters soil through
plant waste left behind after the harvest. Soil
management methods such as no-till or low-till
farming reduce the decay of organic matter in
soils, increasing carbon stocks.
Additional carbon stored in soil by
such methods is counted toward credits. In
2005, farmers in Iowa, Nebraska and Kansas
generated $380,000 selling carbon credits to
companies and universities seeking to offset
their greenhouse gas emissions.
Under
mandatory emission limits, potential sales of
credits from carbon buried in cropland could be
between $2.6 billion and $24.3 billion
annually, depending on credit prices, according
to a report from the 21st Century Agricultural
Policy Project, a group led by former Senators
Bob Dole and Tom Daschle.
`Huge Market'
``If structured properly, it could
create a huge market and bring in a large
source of emissions reductions,'' said Gia
Schneider, vice president of energy trading and
environmental markets for Credit Suisse.
The bill, introduced Oct. 18, would cut
emissions by 63 percent over the next four
decades by capping pollution from power plants,
refineries and certain manufacturers. With its
nine co-sponsors, the measure is competing with
at least seven Senate proposals to cap
greenhouse gases.
The legislation was
approved by a subcommittee of the Senate
Environment and Public Works Committee. Senator
Barbara Boxer, the California Democrat who is
chairwoman of the full committee, supports the
measure.
``If you're looking to
establish a broad consensus on any legislation
in the U.S. Senate, one of the things you look
at is agriculture,'' said Paul Bledsoe,
spokesman for the bipartisan National
Commission on Energy Policy.
Under
cap-and-trade programs, polluters must obtain a
credit for every ton of carbon dioxide they
release into the air. Offset credits from U.S.
farms and forests can be used to meet 15
percent of a polluter's cap, and overseas
credits can be used for another 15 percent
under the Lieberman-Warner bill.
Potential Storage
The U.S.
could store 40 billion to 60 billion metric
tons of carbon over 50 years using methods that
boost sequestration in cropland and forests,
according to a report from the nonpartisan
Congressional Budget Office. The report
cautions that biological sequestration is
``easily reversible'' and that stored carbon
can be released through fires, pest outbreaks
or global warming.
``Were not a big fan
of offsets,'' Slocum said. ``Financial
incentives for energy efficiency are the best
return on any sort of climate change investment
rather than these land use or agricultural
offsets.''
Opposition to offset credits
ignores recent improvements in methods to
measure and monitor actual emissions
reductions, said Sara Hessenflow Harper, a
senior associate with The Clark Group, a
Washington-based consulting firm.
``I've been on the ground,'' said
Harper, a former legislative aide to Senator
Sam Brownback, a Republican from Kansas. ``I've
seen the soil samples. I've seen the
instruments that measure carbon. You're doing
it because it's real.''
Lowering Costs
Offsets can lower the cost to utilities
of meeting new pollution requirements, said
Elizabeth Thompson, legislative director for
Environmental Defense, an advocacy group. It
will be years before power plants can use
technology to capture and store carbon from
power plants that burn coal.
Allowing
polluters to use some domestic and
international offsets would lead to carbon
credit prices of about $14 per ton in 2015 and
about $77 per ton in 2050, according to a U.S.
Environmental Protection Agency analysis. If
offsets are not allowed, prices jump to $40 in
2015 and $219 in 2050.
``We view
offsets as a very useful bridge,'' Thompson
said.
Farm bureaus in Iowa and North
Dakota already serve as brokers, aggregating
carbon credits and selling them on the Chicago
Climate Exchange. The Montana Grain Growers
Association says there should be no limit on
U.S. offsets.
Active Pursuit
Recent studies ``provide answers to
those critics that claim agricultural offsets
are unreliable,'' Will Roehm, association vice
president, told a Senate panel last week.
``Agriculture should support, and actively
pursue, as open and unrestricted a greenhouse
gas cap-and-trade market as possible.''
The criteria for offsets from
agriculture and forestry projects are included
in the text of the bill giving those sectors
``more detail to rely on,'' said David
McIntosh, Lieberman's environmental counsel.
Credits from other projects such as wind farms
may be permitted after a regulatory review.
``We are political calibrators here,
calibrating between those who are skeptical of
offsets and those who demand them,'' McIntosh
said. ``By limiting offsets, establishing
criteria for eligibility, we believe we have
calibrated the bill between those who are
skeptical and those who want them.''
To
contact the reporter on this story: Jim
Efstathiou Jr. in New York at
jefstathiou@bloomberg.net .