By Mary Holz-Clause, content specialist, AgMRC, Iowa State University.
Revised January 2008.
Overview
Carbon sequestration is defined by the U.S. Environmental Protection Agency (EPA) as the process through which carbon dioxide (CO2) from the atmosphere is absorbed by trees, plants and crops through photosynthesis, and stored as carbon in biomass (tree trunks, branches, foliage and roots) and soils. The term “sinks” is also used to refer to forests, croplands and grazing lands, and their ability to sequester carbon. Agriculture and forestry activities can also release CO2 to the atmosphere. Therefore, a carbon sink occurs when carbon sequestration is greater than carbon releases over some time period.
Under the 1997 Kyoto Protocol, many countries (including the United States at the time) agreed to limit their greenhouse gas (GHG) emissions to a level below 1990 emissions by the period 2008-2012. The particular target for the United States was to achieve emissions levels seven percent below 1990 levels.
Being the largest total and per-capita emitter, the United States has a fairly large role in the GHG mitigation arena. Emissions in the United States come largely from coal-fired power plants and petroleum-based energy use. If emissions were limited, entities in these industries (including transportation) would either need to cut back production (that is, electricity generation, miles driven), alter technology or shift fuel sources to reduce emissions per unit of output or (depending on whether a GHG trading program is implemented) buy emissions permits from others.
Many U.S. emitters are consequently already concerned about how they would operate under emission reductions, and as a result, they have started the quest to discover ways to reduce GHG emissions in an economically sound manner. Sequestration is one option some are actualizing. In 2007, U.S. consumers and businesses spent more than $54 million on carbon offset credits. http://www.choicesmagazine.org/2004-3/climate/2004-3-11.htm
Farmer Opportunities
Businesses that cannot reduce their own emissions can purchase credits from those who make extra carbon through verified Offset Projects. A few farm organizations and not-for-profit groups have initiated collective efforts to aggregate sequestration called "carbon credits.” Types of carbon sequestration used by farmers include:
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Afforestation: Planting trees in an area that has not recently been forested. Afforestation projects are commonly known as GHG offset projects.
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Conservation Tillage: Farm owners that adopt conservation tillage methods such as reduced till or no-till increase carbon storage on cropland compared to conventional tillage methods. Conservation tillage projects are commonly known as GHG offset projects.
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Biogas Recovery: Projects that capture biogas for use an energy or to be flared such as GHG emissions reductions from anaerobic manure digesters (methane digesters). Biogas recovery projects are commonly known as GHG emissions reduction projects.
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Grass Planting: Grass planning projects converting current land-use, crop-land or range-land to grasses that are capable of sequestering significantly greater amounts of carbon. Grass planning projects are commonly known as GHG offset projects.
Farm groups and not-for-profit groups have been offering farmers and/or landowners an opportunity to participate in this developing market for by assisting farmers in aggregating carbon credits.
To provide a market mechanism for the buying and selling of carbon credits, the Chicago Climate Exchange (CCX) was formed. The CCX is a voluntary GHG emissions trading program targeting emissions and offsets in North America (United States, Canada and Mexico) as well as limited offset projects in Brazil. Organizations called offset aggregators, such as some of the farm groups and not-for-profit groups, serve as an administrative and trading representative on behalf of multiple participants. The offset aggregators currently have participants in 13 U.S. states.
The CCX has set up guidelines for participation. For example, in the case of soil sequestration, an entering group has to represent at least 10,000 metric tons of carbon, has to commit to four years of continuous conservation tillage and must not plant soybeans for more than two years. No requirements are imposed on how that land was used in the past. Participating farms must have at least 250 acres. Farmers will be paid at the rate of 0.14 ton of carbon per acre. Carbon offsets generated from grassland also get credits at the rate of 0.2 ton of carbon per acre, provided grasses were planted after January 1, 1999. For forestry, the CCX carbon allowance is based on a combination of age of the trees, planting densities and tree species. A forester entering into contract with CCX must offer at least 3,400 tons of carbon for trees planted after January 1, 1990 on sites not forested before then. On average, an acre of trees provides approximately a ton of carbon (http://www.choicesmagazine.org/2004-3/climate/2004-3-11.htm).
In addition to the marketing trading, some energy companies have directly approached producers to generate carbon offsets. For example, Reliant Energy, a Houston-based energy company, is funding planting of over 150,000 trees in an effort to capture an estimated 215,000 tons of CO2, generating “carbon credits” that will be retained by Reliant.
Prices Paid
Prices for Agriculture Methane Emission Offsets or Biogas offsets have generally ranged from $1 to $3.25 per metric ton. For requirements of agricultural methane emissions, see http://www.chicagoclimatex.com/.
Prices paid for agricultural soil carbon offsets have ranged from $1 to $2 per ton. Requirements for soil offsets can be found at http://www.chicagoclimatex.com/.
Policies Encouraging Trading Carbon Credits
The international climate change and global warming debate has spawned numerous legislative initiatives and statues with multi-national, national, state and community level political institutions (Pew Center on Global Change 2006, Yacobucci and Parker 2005). These initiatives typically have either inventory or create mechanisms to trade carbon credits for the greenhouse gases (GHGs).
The most well-known of these initiatives is the Kyoto Protocol. This agreement is an international global warming treaty that was ratified in February 2005 by the majority of the developed countries. The United States has not ratified the Kyoto Protocol, but a federal voluntary GHG registry has been developed by the U.S. Department of Energy (USDOE). A national goal to decrease GHG intensity by 18 percent from 2002 to 2201 has been initiated.
Multiple state governments in the United States have also created GHG emissions registries and statues. Oregon and Washington State have created GHG emissions technology requirements for electricity facilities; Maine, Massachusetts and Rhode Island have developed state climate action plans (Pew Center on Global Climate Change 2006). California has developed a voluntary program called the California Climate Action Plan (CCAP). The Regional Greenhouse Gas Initiative (RGGI or “ReGGIe”) is a cooperative effort by nine Northeastern and Mid-Atlantic states to discuss the design of a regional cap-and-trade program initially covering CO2 emissions from power plants in the region. In the future, RGGI may be extended to include other sources of GHG emissions and GHGs other than CO2.
Organizations Providing Carbon Sequestration in the United States
To date, several farm organizations and not-for-profit groups are providing farmers aggregation contracts. They include the Delta Institute, Iowa Farm Bureau Federation and the North Dakota Farmers Union. The Iowa Farm Bureau has enrolled more than 905,000 acres for growers in 13 states. The Chicago Climate Exchange has 10 million acres of land enrolled.
Links
Organizations Offering Carbon Credits
Prices Paid
State Laws Affecting Carbon Credits
Links checked February 2008.