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6.01.2008
By CAROL KINSLEY
AFP Correspondent
GEORGETOWN, Del. — Opportunities are looming and, indeed, already present, for farmers and woodland owners to earn money for capturing and securing carbon.
Extension agents, soil and water conservation district staff, USDA staff and nonprofit agricultural educators gathered at the University of Delaware Cooperative Extension office in Georgetown and at three other sites in the Northeast — in Voorheesville, N.Y., Greensburg, Pa., and Boscawen, N.H. — on May 20 for a day-long workshop on such market opportunities.
The workshop and remote broadcast from Cornell Cooperative Extension in Voorheesville, N.Y., was funded by Northeast Sustainable Agriculture Research and Education. Its goal was to provide a basic understanding of the complexities of carbon trading and a set of tools for disseminating accurate information about carbon trading.
Farmers and educators can learn more by logging onto www.agcarbontrading.org. A listserv (discussion group) subscription is available at that site.
First stipulating that one does not have to believe in climate change in order to participate in carbon trading, biologist Jeni Wightman, a consultant from Cornell University, offered a basic lesson on carbon trading.
Carbon trading allows market mechanisms to find the most cost-effective way to reduce carbon emissions from a variety of sources.
Consider, for example, two power plants that must reduce carbon dioxide emissions by 100 tons each. Plant A finds it can reduce its emissions by 200 tons, while Plant B finds the 100-ton reduction too expensive. So Plant B purchases an “allowance” of 100 tons from Plant A instead of changing its own activities. The total reduction is 200 tons and Plant A has some money to help pay for the necessary changes.
Plant B could also purchase “offsets” or gas reductions achieved by other non-regulated parties such as agriculture or forestry.
These allowances and offsets may be needed by power companies because of caps imposed by the Regional Greenhouse Gas Initiative (RGGI), which regulates power plants in the northeastern United States.
Electricity is being regulated first, Wightman said, because it contributes about 23 percent of state emissions (in New York, at least) and, for the quantity to be regulated there are relatively few power plants, whereas for other emission sources there are many contributors. With easy records to follow, the industry is also relatively easy to regulate.
Wightman emphasized that at present, anything farms or other sectors do at this time to reduce greenhouse gases is voluntary.
There are three “greenhouse” gases of concern: Carbon dioxide, methane and nitrous oxide.
• Carbon dioxide is released from fossil fuel combustion. That carbon dioxide was taken out of the atmosphere by plants eons ago and deposited in “sinks” that are now being tapped for oil.
• Methane, which is 23 times as “potent” as carbon dioxide, comes from cow rumen and manure.
• Nitrous oxide comes from nitrogen fertilizer. One unit of nitrous oxide is the equivalent of 298 units of carbon dioxide.
Wightman cited these statistics: Methane and nitrous oxide contribute 75 percent of total farm “Global Warming Potential.” Globally, agriculture contributes 20 percent of the total greenhouse gas emissions.
Certain forms of no-till farming and some forestry practices can trap carbon dioxide. Credit for these activities can be sold, but buyers need larger quantities than most individuals can provide. Enter the “aggregator.” Aggregation is a way of collecting the individual farm credits through a broker and selling them to a large buyer. Credits sell in 100-ton units. Current aggregators, according to Wightman, include Environmental Credit Corp, AgCert, AgRefresh, Native Energy, National Carbon Offset Coalition and Central New York Resource Conservation and Development. A group of farmers could form its own aggregation.
The process of selling credits is not easy and should involve a lawyer. Farm/land activities are first evaluated to make sure they are eligible. The practices are documented to create a baseline. The aggregator draws up a contract. If the participant agrees, the contract is sent to a third part verifier who visits the site for an inspection to ensure the activities are real and society will benefit from them. If the activities are acceptable, the credits are registered. At some point, a buyer purchases the registered credits. Once thus “used,” the credits are retired and can no longer be traded. Until then, the credits are a commodity and can fluctuate in value. Carbon trading is a futures market. Wightman stressed that farmers should “do your homework before you sign any contract.”
John Duxbury, professor of soil science at Cornell, briefly explained the science of carbon sequestration. There are two choices for carbon sequestration on land: Trees and forest products or soils.
Woodland owners can participate in sequestering carbon when their wood products are used for lumber, which presumably would be tied up in a building of some sort for the next 100 years or so, or furniture, which also is expected to have a long life.
When wood is substituted for fossil fuels, yes, it does release carbon dioxide, but the practice recycles present day carbon dioxide rather than pulling from those carbon sinks.
Carbon also can be sequestered in soil by switching to permanent no-tillage. Duxbury noted that no-tillers must manage the physical structure of the soil surface. Successful no-till requires surface cover to protect soil from dispersion and sealing by rain as well as controlled traffic to restrict soil compaction.
The workshop also included a presentation by Connie Patterson of Patterson Farms Inc., a $5 million dairy operation between Sycracuse and Rochester, N.Y., that dates back to 1830. Patterson, whose 7-year-old son is first of the seventh generation on the farm, explained that carbon credits were not part of the original plan.
The farm wanted to use its methane to generate electricity in order to reduce odor. Under New York rules, unneeded electricity can be sold to the grid. The farm’s 200-kilowatt generator now runs on biogas, resulting in an almost net zero electric bill.
The carbon credits came later. Patterson Farms was the first in New York to sign up for carbon credits. The Pattersons decided to sign up for 10 years, thinking they’d learn as the carbon trading industry matured. “And we have,” Patterson said. Carbon credits now selling at $2 per 100 tons haven’t paid for the odor control project, but in the future the effort could be worthwhile, she said. In Europe, carbon credits trade in the $7 to $50 range.
For current carbon credit values, visit www.chicagoclimateexchange.com.
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(Editor’s Note: While not part of the workshop, National Farmers Union also presently provides carbon trading opportunities. Visit www.nfu.org.)