Capture and combustion

1. Minnesota’s agriculture in a carbon constrained economy Capture and combustion Bjorn Gangeness November 27, 2007

2. Climate Change in Context • Nearly inarguable evidence showing human influence in raising average global temps • The challenge of what to do and how • Solutions coming from different levels of government and citizen participation • Different sectors play different roles - energy generation to consumption to agricultural production

3. Minnesota’s emissions reduction goals • 80% reduced carbon emissions below 2005 levels in 2050, 30% in 2025 (eq. to 45.3MMT) • Reductions could come from • efficiencies, • reduced energy use, • carbon offsets, • geologic capture and storage, • or terrestrial capture and storage

4. Carbon and Agriculture Source: bp.com

5. Carbon and Agriculture • Large agricultural industry in Minnesota overwhelmingly focused on corn and soy • New initiatives that will make perennial biofuel crops more attractive • Governor’s NextGen Energy Initiative • Reinvest in Minnesota – Clean Energy

6. New Crop Initiatives and Carbon • The problem is the extent in considering carbon sequestration in development • No mention of carbon stock goals • No anticipation of carbon cap and trade system • If addressed, perennial biofuels may develop more securely in an unsure marketplace

7. Reinvest in MN – Clean Energy • $46 million requested appropriation for 2008 • $40 M for bioenergy crop easements • $6 M for administration • 13,000 acres expected easements for a maximum 20 year payment of $3077/acre • Recognition of potential to work with other initiatives within the Federal Farm Bill • Tiered system of payments depending on type of practice implemented

8. Example of Tiered System

9. Relevant Criteria

10. Alternatives • No action – simply allow biofuels incentives to move forward on the current path • Integrate carbon credit system into the tiered payment structure based on BMPs • Set carbon stock increase goals for each tier Full Appropriation Assumed ($46M in 2008)

11. No Action Alternative • Economic Efficiency • 13000 acre goal but likely higher • 1.6 MTCO2e/acre/yr 21,000 MT/yr or ~ 420,000 MT over 20 yrs ($95/MT) • Ecological Integrity • Monoculture • Perennial is good for WQ • Habitat is better than row-crop • Simplicity • Monoculture is easier to harvest, plant, manage

12. Carbon Credit Integration

13. Carbon Credit Integration • Addresses benefits of credit trading in each tier • No control over the carbon credit market so no price guarantees • Carbon markets are still voluntary, though a national system could change that

14. Carbon Credit Integration • Economic Efficiency • Minimal administrative fees to integrate and promote seeking of carbon credits for practices • Stacked payments make incentives more attractive • Ecological integrity • Grass species are not distinguished for in CCX • Simplicity • More complicated than No action, but stacked payments outweigh administrative consequences

15. Goal of Increased Carbon Stocks

16. Goals of Increased Carbon Stocks • Higher sequestration goals per tier with mixed practices • Economic Efficiency • More diversified fuelstocks, less market sensitivity • Higher payments for higher sequestration rates • Ecological Integrity • Wetlands and SRWCs create more diverse habitat than simple grass species • Simplicity • The most complicated option

17. Recommendations • Train technical assistance providers in carbon markets • Follow the progress of the development of Midwest GHG Reduction Accord • Incorporate data from NextGen cellulosic pilot projects • Create flexibility within the RIM-CE structure that allows for more fluid transitions to alternative crops (among/between species)