As Agricultural Carbon Offsets Move Forward, Serious Questions Remain

Posted on Monday, July 14th, 2014 by

The Environmental Protection Agency’s proposed carbon pollution regulations, announced in June, could greatly accelerate efforts to bring agriculture into the carbon market.

The new rules are expected to spur many states to create cap-and-trade systems similar to the one being pioneered by California under its landmark climate change law, AB 32.

A blossoming of state-based cap-and-trade systems could mean greater interest in agricultural carbon offsets, which allow farmers to receive monetary compensation for implementing practices that reduce greenhouse gas (GHG) emissions.

However, monetizing the climate benefits of certain agricultural practices can bring significant and challenging questions, as evidenced in California’s current efforts to bring a rice protocol online.

Rice Protocol Approval Imminent

This September December, the Air Resources Board (ARB) is slated to review—and likely approve—California’s first-ever agricultural carbon offset protocol. The proposed ‘Rice Cultivation Projects’ protocol, which would go into effect in 2015, was developed over the course of seven years by the Environmental Defense Fund (EDF) and the California Rice Commission.

The protocol outlines the changes in rice farming practices that would enable farmers to sell credits for methane emissions from rice fields. Under current common practice in California, rice production emits a significant amount of methane—a highly potent greenhouse gas—when rice straw residue decomposes anaerobically under flooded fields. The protocol would require California farmers to dry seed or drain their fields early to reduce methane emissions.

“Not Incredibly Motivating”

Even as the protocol nears adoption by ARB, there are still doubts in the industry that farmers will be interested. California Rice Commission Manager of Environmental Affairs Paul Buttner, who has played a major role in the protocol’s development, expressed some skepticism at a recent Board meeting of the California Department of Food and Agriculture (CDFA) that rice growers will elect to participate in the voluntary program.

“I really thought there was a lot of there there,” he said, referring to the initial protocol planning that began in 2007, “What we’re finding is that the economic benefit from these projects is modest—on a good day. It’s not incredibly motivating.”

Buttner explained that while it costs an average of $1000-$1200 to cultivate an acre of rice in California, the estimated potential revenue under the proposed protocol looks to be around five dollars per acre per year.

He suggested that, even for farmers interested in combatting climate change, this level of compensation might not justify the effort to implement and verify the approved methane-reducing practices.

Environmental Trade-Offs

As originally drafted, the rice protocol could have achieved far greater emissions reduction opportunities by spurring farmers to remove biomass before flooding their fields, eliminating the source of most methane emissions.

But it soon became apparent that flooded rice fields are a crucial habitat and feeding grounds for certain waterfowl in the state—a “surrogate wetlands”, as Buttner put it. So reducing methane emissions through this practice would have had the unfortunate side effect of displacing as many as 2.5 million ducks each year. ARB rightly decided that this trade-off was undesirable. The two remaining eligible practices, ‘Dry Seeding’ and ‘Early Drain’, simply reduce the number of days fields are flooded without impacting yields or wildlife habitat.

The challenges experienced in developing the rice protocol demonstrate that we must account for more than one kind of environmental benefit, like reduced GHG emissions, and instead seek activities that produce multiple benefits.

Rangeland Compost Protocol in the Works

CalCAN is also tracking another protocol currently under development, this one focused on the application of compost to rangelands.

The Marin Carbon Project (MCP), working with Dr. Whendee Silver at UC Berkeley, has demonstrated that, through a one-time application of compost to grazed grasslands, ranchers can sequester an average of one ton of soil carbon per hectare over a three-year period. MCP and EDF are now attempting to turn this practice into an eligible offset protocol for consideration by ARB.

CalCAN has long advocated for the increased use of compost in agricultural systems to reduce overall emissions and, in some cases, sequester carbon as well. We are very interested in the promise of compost application on rangelands when integrated with other sustainable practices such as grazing management.

A recently-released Public Comment Draft of the protocol raises some questions that will impact the likelihood of rancher adoption. For example, the current protocol requires a minimum project period of 40 years to allow for accurate accounting of the carbon sequestered in soils. Will ranchers be willing and able to commit to such a long timeframe?

In order to maintain a steady impact of grazing on the designated soils, ranchers must fix their stocking rate at +/- 3% of a baseline for each 10-year period. But in well-managed ranching systems that are adaptive to ecological conditions and availability of forage, stocking rates can be quite variable—certainly far exceeding a 3% change over a multi-year span. Will ranchers want to give up this flexibility in their stocking practices in exchange for carbon offset credits? 

The MCP protocol is still under development and, like the rice protocol, will likely undergo revisions on its way to adoption.

No Silver Bullet Approach

In January 2012, CalCAN released a policy brief, A Sustainable Agriculture Perspective on the Carbon Market. In it, we express optimism that bringing agriculture into California’s carbon market can achieve GHG reductions, so long as it is designed and administered with the following principles in mind:

  1. Take a whole farm approach
  2. Consider economic and agronomic benefits in addition to GHG emissions
  3. Prioritize health and environmental co-benefits to California
  4. Create a transparent and accountable marketplace
  5. Practitioners should be the beneficiaries of offset credits
  6. Level the playing field for early adopters and small and mid-scale producers

The ARB has been exceedingly cautious and thoughtful in its approach to agricultural carbon offsets thus far, and has tried to follow these principles as it moves toward adopting the rice protocol starting next year.

But as we have seen, some fundamental questions remain. Meanwhile, California farmers are achieving GHG reductions in the absence of an agricultural carbon market, often driven by economic benefits and resources constraints. This point was highlighted by CDFA Board Member and Fresno County cotton grower Don Cameron:

“Agriculture is not a passive industry — it’s extremely dynamic,” he said, citing recent irrigation and fertilization advances in the row crop industry. “There’s a lot happening and a lot of improvement in reducing those emissions, despite the fact that [ARB] is trying to establish these protocols.”

In CalCAN’s 2012 policy brief, we urged that non-market-based mechanisms should also be used to incentivize agricultural GHG reductions. By developing a state-funded agriculture conservation program, funded by the cap-and-trade auction revenues, we argued that the state could help farmers achieve meaningful emissions reductions that provide multiple benefits to farmers and our environment.

This year’s cap-and-trade budget investments in agricultural solutions to climate change are a step in the right direction. We will keep working to ensure that, as the state’s carbon market moves forward to include agriculture, it continues to co-evolve alongside a healthy, robust conservation program of agricultural research, technical assistance, and financial incentives.

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