Carbon Sequestration in U.S. Agriculture: The Policy Context Linda M. Young Montana State University

Are there incentives? Agricultural soils: a potential sink for carbon Changing management practices (no-till) Incentives for agricultural sequestration of carbon Through the market? Through government programs?

International Policies Concern over carbon dioxide levels Atmosphere: public good GHG emissions cause a global externality Countries/businesses lack incentives to act alone 1988 Inter governmental Panel established

United Nations FCCC 175 countries signed Nations committed to: GHG mitigation and adaptation programs inventory GHG emissions Annex 1 parties:  emissions to 1990 levels by 2000 (non-binding)

Kyoto Protocol Negotiations concluded 1997 Close to ratification 101 countries, 43.9% emissions -Russia? U.S. and Australia UNFCCC Key: Annex 1 parties reduce emissions to 95% of 1990 levels Policies to reduce emissions Kyoto Protocol

Verification of carbon sequestered difficult Guidelines: agreed 2001 Marrakesh accords Revegetation, management of crop and grazing lands Credit for carbon sequestered over 1990 levels Forestry and Agriculture Problematic

Flexibility Provisions Joint implementation Clean development mechanism Not agricultural sequestration Credit trading Only between ratified parties U.S., Australia cannot participate Market fractured: ratified and not Demand weak for non-ratified credits

U.S. Response to Climate Change, Kyoto Bush: disagrees with science and responsibilities Bush Climate Action Plan: Reduce GHG intensity 18%, 10 years From 183 MTCE ($ million) to 151 MTCE by 2012 Voluntary actions Incentive based measures

Criticism of U.S. Plan Total emissions increase In 2012 emissions 130% 1990 levels If KP ratified, 93% of 1990 Pew Center: intensity decrease on trend Changing technology 93% 100% 130% Bush Plan 1990 Level Kyoto Protocol

Administration’s Plan Some firms may act voluntarily Others: incentives not strong enough Example:failure of UNFCCC goal Bush plan: Climate change not a serious problem Not requiring international cooperation

Current U.S. Policy Departure from past approaches Acid rain program: Emissions limits and trading Successful, least cost program Senators McCain and Leiberman Bill in Congress

U.S. State Policies Many state actions Their role? State programs as prototypes National involvement/international agreement Businesses facing patchwork of registries and incentives

The Market for Carbon Credits Example: energy company emit GHG Purchase offset from renewable energy company Why trade? Binding limits Not emissions caps: expectations Environmental ‘good citizen’ “Learn by doing”

Market for Carbon Sequestration Carbon market determine demand for agricultural sequestration Limited information, pilot purchases EPA registry (not trades): of 369 sequestration projects, 2 involved agriculture Transactions costs high Poorly defined terms, detailed contracts Industry wants regulatory body

U.S. Government Agricultural Programs Bush administration-receptive Directed Secretary of Agriculture 2002 Farm bill- increased funding Congressional support high 25 bills introduced carbon sequestration Programs are voluntary Ag. Seq. produces environmental benefits Programs likely compatible with URAA Cont. pressure to support farm income

How much can agriculture sequester? (in mmtce) Management changes (4.5) CRP 13.2 mm hectraces Possible47 No till all cropped farmland Possible20 Summer fallow eliminated Total potential83 All practices Source: Sperow, Eve, Paustian

Conclusions Market development hindered by non-ratification Demand for U.S. carbon credits weak with implementation of KP Little impetus overcome verification, monitoring challenges Government ag programs likely source of demand