Carbon Sequestration in U.S. Agriculture: The Policy Context

1
Carbon Sequestration in U.S. Agriculture The
Policy Context

• Linda M. Young
• Montana State University

2
Are there incentives?

• Agricultural soils a potential sink for carbon
• Changing management practices (no-till)
• Incentives for agricultural sequestration of
  carbon
• Through the market?
• Through government programs?

3
International Policies

• Concern over carbon dioxide levels
• Atmosphere public good
• GHG emissions cause a global externality
• Countries/businesses lack incentives to act alone
  
• 1988 Inter governmental Panel established

4
United Nations FCCC

• 175 countries signed
• Nations committed to
• GHG mitigation and adaptation programs
• inventory GHG emissions
• Annex 1 parties ? emissions to 1990 levels by
  2000 (non-binding)

5
Kyoto Protocol
Kyoto Protocol

• Negotiations concluded 1997
• Close to ratification
• 101 countries, 43.9 emissions
• -Russia?
• U.S. and Australia UNFCCC
• Key Annex 1 parties reduce emissions to 95 of
  1990 levels
• Policies to reduce emissions

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Forestry and Agriculture Problematic

• Verification of carbon sequestered difficult
• Guidelines agreed 2001 Marrakesh accords
• Revegetation, management of crop and grazing
  lands
• Credit for carbon sequestered over 1990 levels

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Flexibility Provisions

• Joint implementation
• Clean development mechanism
• Not agricultural sequestration
• Credit trading
• Only between ratified parties
• U.S., Australia cannot participate
• Market fractured ratified and not
• Demand weak for non-ratified credits

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U.S. Response to Climate Change, Kyoto

• Bush disagrees with science and responsibilities
• Bush Climate Action Plan
• Reduce GHG intensity 18, 10 years
• From 183 MTCE ( million) to 151 MTCE by 2012
• Voluntary actions
• Incentive based measures

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Criticism of U.S. Plan

• Total emissions increase
• In 2012 emissions 130 1990 levels
• If KP ratified, 93 of 1990
• Pew Center
• intensity decrease on trend
• Changing technology

Bush Plan
130
1990 Level
100
Kyoto Protocol
93
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Administrations Plan

• Some firms may act voluntarily
• Others incentives not strong enough
• Examplefailure of UNFCCC goal
• Bush plan
• Climate change not a serious problem
• Not requiring international cooperation

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Current U.S. Policy

• Departure from past approaches
• Acid rain program
• Emissions limits and trading
• Successful, least cost program
• Senators McCain and Leiberman
• Bill in Congress

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U.S. State Policies

• Many state actions
• Their role?
• State programs as prototypes
• National involvement/international agreement
• Businesses facing patchwork of registries and
  incentives

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The Market for Carbon Credits

• Example energy company emit GHG
• Purchase offset from renewable energy company
• Why trade?
• Binding limits
• Not emissions caps
• expectations
• Environmental good citizen
• Learn by doing

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Market for Carbon Sequestration

• Carbon market determine demand for agricultural
  sequestration
• Limited information, pilot purchases
• EPA registry (not trades) of 369 sequestration
  projects, 2 involved agriculture
• Transactions costs high
• Poorly defined terms, detailed contracts
• Industry wants regulatory body

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U.S. Government Agricultural Programs

• Bush administration-receptive
• Directed Secretary of Agriculture
• 2002 Farm bill- increased funding
• Congressional support high
• 25 bills introduced carbon sequestration
• Programs are voluntary
• Ag. Seq. produces environmental benefits
• Programs likely compatible with URAA Cont.
  pressure to support farm income

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How much can agriculture sequester? (in mmtce)
1982-97 17 Management changes
(4.5) CRP 13.2 mm hectraces
Possible 47 No till all cropped farmland
Possible 20 Summer fallow eliminated
Total potential 83 All practices
Source Sperow, Eve, Paustian
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Conclusions

• Market development hindered by non-ratification
• Demand for U.S. carbon credits weak with
  implementation of KP
• Little impetus overcome verification, monitoring
  challenges
• Government ag programs likely source of demand