How Farmers Could Be the New Climate Warriors: Agricultural Carbon Credits
Environmental advocates have all but given up on their long-cherished goal of a federally-mandated cap-and-trade program to rein in carbon emissions, given the present state of gridlock on Capitol Hill. But amid protracted hemming and hawingover how such a system would stack up against carbon taxes or other broad incentives to reduce emissions, the state of California has stepped in where Washington policymakers fear to tread.
California formed its own state-mandated carbon market in 2012, restricting the emissions of 600 of the state’s biggest polluters, who produce 85 percent of greenhouse gas emissions statewide. Lowering the “cap” will slash emissions in the state 16 percent by 2020. More recently, the California Air Resources Board, which oversees the state’s carbon market, linked arms with allies north of the border—Quebec, Ontario, and Manitoba—to ink an agreement that will integrate the three Canadian provinces’ carbon markets with California’s in the coming years. Struck at December’s United Nations climate change summit in Paris, the deal makes environmentalists’ dream of an ad-hoc North American carbon market seem actually plausible. It’s precisely the sort of regional cooperation that President Barack Obama encouraged in the Clean Power Plan he released last summer.
Yet this bit of good news in the ongoing fight to regulate carbon emissions has gone largely unnoticed amid all the partisan bickering over such incendiary issues as fracking and the future of the coal industry. Typically, carbon offsets have been tied to things like wind farms and tree planting projects. But in California, the Air Resources Board’s new rules have opened the carbon market to farmers. Not only is this an important tool to encourage more responsible agricultural practices—farms are responsible for about 13 percent of greenhouse gas emissions globally—but it seizes on the untapped opportunity offered by crop systems as a means to sequester carbon. In the same way that forests and grasslands act as a carbon dioxide sink, crop plants also pull carbon dioxide from the air, storing it in their tissues and converting it to substances that feed microbial life in the soil. The catch-phrase “carbon farming” has emerged to describe methods which maximize agricultural carbon sequestration, including such soil-building activities as cover cropping and no-till cultivation techniques.
One of the leading proponents of using farmland to combat greenhouse gases is Robert Parkhurst, director of the Agricultural Greenhouse Gas Markets program at the Environmental Defense Fund. Parkhurst recently sat down with The American Prospect to describe how this nascent movement can reduce atmospheric carbon, while improving yields. Parkhurst has spent the last decade helping to overcome both scientific and regulatory hurdles to usher in the first agricultural carbon credits, which a handful of pioneering rice farmers will soon earn for crops they planted this spring. These are the first crop-based carbon credits ever to be traded in California's cap-and-trade system. Below is an edited transcript of that interview:
American Prospect: You’ve spent much of your career trying to convince farmers, politicians, and consumers that agriculture can play a greater role in meeting carbon emission targets. Why all the hubbub at the Environmental Defense Fund about agricultural carbon credits lately, versus, say, coal-fired power plants?
Robert Parkhurst: In California, and increasingly in other places, there is a huge amount of attention that is being focused on clean energy and transportation. There’s huge reasons to focus in that space, but there hasn’t been the same amount of concerted work done on the environmental solutions that agriculture can provide.
AP: What’s the opportunity that you see?
RP: It’s really important, because 77 percent of all nitrous oxide [one of the three main greenhouse gases] emitted in the U.S. comes from agriculture. Twenty-six percent of all methane emissions, which have 25 times more of an impact on climate change than CO2, comes from enteric fermentation—essentially, burping—in cows. So we have this incredible opportunity to provide farmers and ranchers with a new revenue stream tied to the environmental benefits that they can produce.
AP: How many rice farmers are working toward carbon credits?
RP: Right now we have 21 farmers on more than 22,000 acres who have said that they want to participate in the carbon market. That’s .8 percent of all rice farmers across the U.S. And we field calls every week from others who want to learn how to get involved, so we’re really excited.
AP: These farmers have to make only slight variations in conventional rice cropping methods to reduce the methane that naturally arises from flooded paddies, right? So it sounds like the main burden for them will be the monitoring and paperwork?
RP: You’re right: They do have to invest their time and their effort in that aspect. There are regulations that you have to follow, monitoring and measuring that is required, records that you have to collect. And everything has to be audited and verified.
AP: Does EDF or anyone else assist farmers with that process to help encourage them to participate?
RP: We do that through aggregating individual farmers into larger group projects. The volume per acre of these credits is relatively small, so this is a way to make it more attractive for buyers by lowering the overhead costs of verification, project documentation, monitoring, and all that.
AP: And now for the million-dollar question: How much can a farmer get paid for reducing emissions?
RP: This where I get really excited [laughs]. Offsets are trading right now around $10.85 per metric ton of carbon. And the average reduction we’re seeing is around a half ton to a ton and a half per acre. So we’re saying between seven and 10 bucks an acre is really what we think the farmers can get.
AP: That doesn’t sound like much, though income per acre on a commodity crop like rice is apt to be pretty low.
RP: It’s true, many people say that 10 bucks an acre doesn’t get them really excited; but I say just wait, it’s going to get better. Our goal is to have the volume and the network in place, and make sure the farmers are prepared so that when the price goes up they are ready to take advantage. But I think the fact that we’ve got almost 1 percent of all rice growers to step forward and participate means there is a real interest there already that we are tapping into.
AP: What guarantee is there that the price will go up?
RP: It is built into the California regulations that the price will increase at a minimum of 5 percent plus inflation each year. So you automatically get a 6 or 7 percent increase on your price every year—that’s a return that I kind of like! On top of that, as the cap decreases, we expect the prices to further increase.
AP: There have been some notable failures of past carbon markets, so perhaps it’s best to avoid a gold rush?
RP: We learned a lot from the Chicago Climate Exchange (CCX), which came in and was huge and then died. Everywhere I go people know about CCX and they go: “Yeah, we tried that and it didn’t work.” I don’t want that to be the message going forward with the California market. I wanted it to be: “Yeah, you know it started out slow, but it’s really grown and gained credibility and momentum.”
AP: You’ve helped to establish the protocols, the rules essentially, for a number of carbon offsets. What does it take to make that happen?
RP: First of all, the science is very complex. The models that we develop are very site-specific, so we’re not looking at general averages, we’re digging down into the soil, if you will. We consider the weather, the soil type, planting date, harvest date—there is a lot that goes into it.
AP: And that’s just the science end of the process. The work of bringing that into a regulatory environment must also be quite complex.
RP: It is. And it’s important to recognize that there are two main markets out there: the voluntary market and the compliance market. Everything that ends up in the compliance market starts in the voluntary market, which has been trading around $4.80 per ton over the last decade. It’s kind of the testing ground, the sandbox, if you will, to get the ideas right, to get all the parties together, to work out all the kinks.
AP: I understand that now that the rice protocols are established in the compliance market, you’re working on standards for nitrous oxide emissions from fertilizer. How does that work?
RP: The idea is to have as much of the nutrients that are applied as possible to go into the plant or into the soil for use in future crops, and as little as possible to go up into the atmosphere or out into the water. There are a lot of ways that you can do that through timing and nitrification inhibitors and smart applications of rate.
AP: And what is the potential impact compared to rice?
RP: With rice we were focused on 2.5 million acres of credits out there. With fertilizer, it’s more like 400 million acres, because almost every plant requires fertilizer. This will open up the majority of U.S. agriculture to the carbon markets. We have established protocols for nitrous oxide in the voluntary market and we hope to bring those into the California cap-and-trade system in the near future.