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Agriculture’s Role in Climate Change Mitigation July 18, 2007 (revised)

Agriculture’s Role in Climate Change Mitigation July 18, 2007 (revised). Daniel A. Lashof, Ph.D. Science Director Climate Center Natural Resources Defense Council. Introduction. Agricultural solutions are one of many approaches (“wedges”) needed to reduce emissions of heat-trapping gases

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Agriculture’s Role in Climate Change Mitigation July 18, 2007 (revised)

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  1. Agriculture’s Role in Climate Change MitigationJuly 18, 2007 (revised) Daniel A. Lashof, Ph.D. Science Director Climate Center Natural Resources Defense Council

  2. Introduction • Agricultural solutions are one of many approaches (“wedges”) needed to reduce emissions of heat-trapping gases • Agriculture will play a key role in U.S. and global climate solutions • Bioenergy production • Increased soil carbon sequestration • Wind energy • A mandatory Greenhouse Gas (GHG) cap will bring long-term monetary value for carbon sequestration • Reliable methods are needed to measure, verify, and account for the climate benefits of agricultural practices • Potential for Co-benefits

  3. NRDC Stabilization Wedges

  4. Emission Reduction Shares Preliminary model results indicate that soil and forest carbon sequestration plus reductions in non-CO2 gases could supply ~20% of cumulative reductions Carbon Sinks & Non-CO2 Reductions 18%

  5. Criteria for Sound Policy • Does it solve the problem • Does it change investment patterns • Does it provide incentives for promising solutions • Does it protect consumers, displaced workers, and impacted communities

  6. Mandatory v. Voluntary Markets • Chicago Climate Exchange (CCX) voluntary market • Soil carbon credits • Methane credits • Forestry credits • 2007 CCX price of ~$4/ton CO2 • Equates to ~$2.25/acre for continuous no-till • Value under federal mandatory “cap and trade” legislation anticipated to be 3-6 times greater • Mandatory cap ensures long term value

  7. Verifiable, certified GHG reductions Sold through market to covered sources Alternative to emissions reductions Share of total allowance value Distributed based on climate benefits Included in the cap Offsets v. Allocations Offsets for sequestration Allocation of sequestration allowances

  8. Offsets v. Allocations Offsets: Allocation: Total GHGEmissions Sequestration benefits Emissions Cap EmissionsCap Offsets Total GHGEmissions Allocation

  9. Offsets: Advantages Market-driven value Program size not limited by allocation Disadvantages Potential to weaken emissions reduction steps taken elsewhere Verification challenges Higher transaction costs than allocation Allocation: Advantages Quick launch with direct appropriations Use existing USDA channels Integrate multiple criteria Lower transaction costs Greater environmental benefits Disadvantages Program size limited by allocation Not market-driven Offsets v. Allocations

  10. Challenges for Either Policy • Setting the Baseline/Ensuring Additionality • Who gets benefits? • Measurement, Monitoring, and Verification • Accounting for non-permanence

  11. Additionality • Will the practices adopted provide additional sequestration of carbon • Will incentives provided to farmers promote investment in practices that would not have happened without them

  12. 40 35 30 25 Baseline Sequestration 20 Tons per Period Project Sequestration Mitigation 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 Accounting Period Additionality Based on Comparison Lands

  13. Who Gets Benefits? • Current contributors or only new adopters? • Iowa No till- 5.17 million acres (23% of total Iowa farmland) in 2004, 2nd in nation • Solution: Proportional additionality

  14. Measurement and Monitoring • Carbon sequestration from no till farming and CRP programs would need to be monitored and verified • Field soil testing needed for offsets (Green-e Standard) • Practice-based accounting may be sufficient for allocation • Ongoing monitoring needed to ensure replacement of any reversals

  15. Allocation has higher carbon price because total emissions are lower Illustrative Aggregate Value to Farmers

  16. Illustrative Individual Value to Farmers

  17. CRP in Iowa Conservation Reserve Program- • 1.9 million acres currently enrolled in Iowa • 1.15 million could be removed by 2009 • CRP lands sequester 1-10 tons of CO2 per acre per year

  18. Individual Farm Income with a Carbon Cap

  19. Farm Income and GHG Payments

  20. Potential for Co-benefits • Improved air and water quality • Reduced soil erosion and improved soil fertility and productivity • Improved wildlife habitat

  21. Conclusions • Farmers will benefit from mandatory caps • Tighter caps mean higher carbon prices and higher net income • Allowance allocation may offer advantages over offsets approach • Quicker start • Lower transaction costs • Higher income • Continued dialogue key to win-win solutions

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