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
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
NRDC Stabilization Wedges
14
12
10
Electricity Efficiency
Renewable Electricity
Geologic Disposal
Vehicle Efficiency
8
Low Carbon Fuels
GtCO2e
Smart Growth
Other Efficiency
Other Renewables
6
Non-CO2 Abatement
Forest and Soil Carbon
Other
Target
4
2
-
2000 2010 2020 2030 2040 2050
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
Sanders-Boxer with Limited Offsets
66 Gt total reduction
Carbon
Carbon Sinks &
Offsets
Non-CO2 Reductions
18%18%
Carbon End-use
Sequestration Efficiency
0% 29%
Demand
Elasticity and
Fuel
Switching
27% Renewable
Energy
Nuclear 20%
Power
6%
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
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
Offsets v. Allocations
Offsets for Allocation of
sequestration sequestration
allowances
Verifiable, certified Share of total
GHG reductions allowance value
Sold through market Distributed based on
to covered sources climate benefits
Alternative to Included in the cap
emissions reductions
Offsets v. Allocations
Offsets: Allocation:
Total GHG
Sequestration
Emissions benefits
Emissions Offsets Emissions Total GHG
Cap Cap Emissions
Allocation
Offsets v. Allocations
Offsets: Allocation:
Advantages Advantages
Market-driven value Quick launch with direct
Program size not limited by appropriations
allocation Use existing USDA channels
Integrate multiple criteria
Lower transaction costs
Greater environmental
benefits
Disadvantages Disadvantages
Potential to weaken Program size limited by
emissions reduction steps allocation
taken elsewhere Not market-driven
Verification challenges
Higher transaction costs
than allocation
Challenges for Either Policy
Setting the Baseline/Ensuring Additionality
Who gets benefits?
Measurement, Monitoring, and Verification
Accounting for non-permanence
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
Additionality Based on Comparison
Lands
40
35
30
Tons per Period
25
Baseline Sequestration
20 Project Sequestration
Mitigation
15
10
5
0
1 2 3 4 5 6 7 8 9 10 11 12
Accounting Period
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
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
Illustrative Aggregate Value to Farmers
Approach Carbon Tons Aggregate
Price: Carbon value
$/ton
Allocation 20 300 million $6 billion
(5% of
allocation)
Offset 10 430 million $4.3 billion
Allocation has higher carbon price because total
emissions are lower
Illustrative Individual Value to
Farmers
Approach Carbon Qualifying Sequestratio Total
Price: acres n benefit Income:
$/ton price x
tons –
costs
Allocation $20 1000, 10% .9 ton/acre, $20 x 900
(supply of discount, 900 tons =
credits practice based total, after $18,000
restricted) discount
Offset $10 1000, 40% .6 ton/acre $10 x 600
(unlimited discount, 600 tons total = $6,000
supply) measurement
based
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
Individual Farm Income with a
Carbon Cap
Farm Income and GHG Payments
Potential for Co-benefits
Improved air and water quality
Reduced soil erosion and improved soil
fertility and productivity
Improved wildlife habitat
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