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Workshop looks at low-carbon economyBy Larry Dreiling The Environmental Protection Agency estimates the U.S. emits some 6 billion metric tons of CO2 each year, as well as the equivalent of another 1 billion metric tons of CO2 in the form of other greenhouse gases, including methane, nitrous oxide, and chlorofluorocarbons. Because of this, a new low-carbon economy is emerging, one in which greenhouse gas emission allowances and offsets will be a commodity that is bought and sold on the open market. Landowners and farmers, the people who work the land, will have a competitive advantage in this new economy because land, if properly managed, can be made to store carbon. Likewise, industries that emit carbon dioxide will pay landowners and farmers who store carbon to offset industrial emissions. Providing information to potential sellers of carbon credits was the focus of "Terrestrial (Agriculture and Forestry) Carbon Sequestration Opportunities in Colorado; the Science, the Policy and the Market," a workshop sponsored by the Colorado State Conservation Board, the U.S. Department of Agriculture's Natural Resources Conservation Service and the Colorado Governor's Energy Office. The workshop was held recently at Brighton, Colo. A 30,000-foot view The final presentation of the workshop was titled "Turning Farm Practices into Verifiable Greenhouse Gas Offsets for Carbon Market," delivered by Dr. Gordon Smith, technical author of Harnessing Farms and Forests in the Low-Carbon Economy-How to Create, Measure, and Verify Greenhouse Gas Offsets. Zach Willey and Bill Chameides were the primary editors of this book, published last year by Duke University Press. Sponsored by Duke's Nicolas Institute for Environmental Policy Solutions, Smith's appearance dovetailed with the content of the book he co-authored, which offers guidelines for quantifying terrestrial greenhouse gas emission offsets. Smith also is the principal of Ecofor LLC, a firm that works with project developers, greenhouse gas emission offset buyers, and landowners to analyze proposed emission mitigation projects, implement projects, and trade resulting greenhouse gas emission offsets. Taking a "30,000-foot" view of the issue of carbon offsets, Smith said two different approaches to their use in agriculture is taking shape-a voluntary market in the U.S. and a compliance-driven system in Europe. "They are two different critters," Smith said. The prices are different. Your obligations are different. Their attributes are different. How they created and how they verify data are different, what people want out of each one is different." Market-driven History has shown, Smith said, that markets, rather than mandatory controls, may be the most cost-effective way to cut pollutant emissions. "The voluntary market approach allows emitters to find the cheapest way to meet their individual caps, as emitters that would incur relatively high costs can acquire allowances and offsets from those that can generate them at lower costs," Smith said. In this approach, CO2 and other emissions becomes a commodity that is bought and sold, and the marketplace determines the price of carbon allowances and offsets. These allowances and offsets can be relatively cheap or costly, depending on supply and demand. Businesses and individuals also have an incentive to develop cost-effective methods of reducing CO2 emissions and creating carbon offsets. "By allowing the marketplace to control the price, the system guarantees that emitters will choose the most inexpensive and effective methods for reducing or offsetting emissions," Smith said. Market growth A U.S. market for carbon offsets is seeing explosive growth. Numerous companies have formed to buy and sell offsets, while other companies, such as Smith's, have emerged to verify and register those offsets. What Smith and other workshop participants emphasized was that many current land-management practices could play a significant role in slowing the buildup of greenhouse gases, as farm ground may act as a natural carbon storehouses, or sinks, offering major opportunities to reduce global warming. Familiar farm practices such as no-till or low-till, grassland restoration, and the use of cover crops also sequester carbon in soils. By replanting grasslands and improving cropland-management practices, producers can help reduce greenhouse gases. "Basically, there's two different kinds of offsets, carbon sequestration and emissions reductions," Smith said. "With carbon sequestration, you do things like grow a tree and put organic matter in the soil. You can reverse by cutting down that tree. Those things-you got to monitor. "The other kind of offset is emissions reduction, where you have an ongoing stream of emissions and you reduce them. You are driving a tractor and pulling a plow. It takes a lot of fuel because the soil is heavy. With no-till you can use fewer gallons per acre than conventional tillage. That could be a tradable offset. Even if you go back to plowing, that fuel reduction you had the year before is there forever. You never have to monitor it." Using aggregators Even tricks like smart use of global positioning systems through precision farming can act as a carbon sink, Smith added. "If you fertilize smarter, you can save money on fertilizer and save on CO2 emissions," he said, because more precise fertilizer application can reduce nitrous oxide emissions from the soil. There are plenty of carbon offset projects under way. Smith's book describes projects such as an aggregation of offsets created by Everest, Kan.-based AgraMarke, Inc. This cooperative bases offsets on the land-management practices of several hundred farmers in Kansas, Missouri, Nebraska, and Iowa through the use of no-till to store more carbon in soil. Use of aggregators by producers looks like a good way to get started in developing a carbon credit sales plan, Smith said. "There are huge economies of scale in field measurement sampling. That's where aggregators come in," he said. Carbon credit trades could come in the opposite direction for producers, too. Smith said, although these types of trades might be more complicated to determine. "Those things could include actually measuring gas emitted from cattle rather than just counting the number of cattle in the field and estimating their gas emissions," he said. Shop around Smith suggested producers should shop around to find a place to sell offsets. "There are bunch of different places you can sell these offsets," Smith said. "There are substantial costs in being part of the trading platform. An individual farmer wants to share those costs with other people. An aggregator can provide pooling benefits." The only complication is that every entity that buys carbon credits from producers has its own standards. "At last count, there were 13 different sets of accounting values for trading standards," Smith said. "Be aware there's a bunch. Some allow some offsets that others don't; some are pretty general, some are more specific. Prices on the offsets vary by a factor of 10. There will have to be a coming together on what everyone agrees on." While there is plenty of evidence that this "cap-and-trade" system for carbon offsets has benefits in reducing greenhouse gases, Smith said there needs to be action to help more producers see the benefit of offset sales. "I've been hammering away to get somebody to study what's happening to land coming out of CRP. I think every acre you keep in grass after you leave CRP is six tons of carbon credit because you didn't plow," Smith said. "We need to measure lands with similar starting conditions, because we want to be certain enough what we are predicting in terms of carbon offsets is realistic. We need site specific data." That is the purpose of the book Smith edited. "The book came out after nearly five years of scientific peer-review research," Smith said. "I got the job of telling step by step how you turn your practices into offsets. It looks at the whole process, from scoping out a potential project to determining baselines, quantifying outcomes and getting results verified." Harnessing Farms and Forests in the Low-Carbon Economy-How to Create, Measure, and Verify Greenhouse Gas Offsets is available for purchase at dukeupress.edu. Larry Dreiling can be reached by phone at 785-628-1117 or by e-mail at ldreiling@aol.com. 6/16/08 Date: 6/11/08
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