California Dream 2.0

Offset Market Alive and Well in California

Offset Issuance
Congratulations to the California Air Resources Board (CARB) as they announced plans to issue the first CARB Offset Credits or ARBOCs.  These 600,000 metric tons of offsets helps the state move closer towards our emissions reductions goals.  Compliance entities, such as utility and oil and gas companies, can use these offsets to meet up to 8% of their compliance obligation.

As I said before, this is the first of many offset milestones we expect this year.  The CARB has listed 62 Early Action offset projects and 66% of them are in the forest and agriculture sectors – 15 forest projects and 26 livestock manure management projects.  This is important because, as the largest uncapped sector under the cap-and-trade program, agriculture represents a major potential to reduce near-term greenhouse gas emissions. The U.S. has more than 442 million acres of cropland.  EDF is working to identify opportunities for producers to generate revenue from their environmental stewardship on these lands.  This is why we support the CARB’s development of protocols like the Rice Cultivation Protocol.

These Early Action projects have generated approximately 12 million metric tons of offsets, most of which is anticipated to be approved for use in the cap-and-trade market.  These Early Action projects are expected to generate Registry Offset Credits (ROCs) later this year and, as required in the regulations, these ROCs will then be reviewed by CARB and converted into ARBOCs within 45 days of issuance.

Anaerobic Digestion, Compost, and Rangeland Opportunities
In addition to issuing offsets, the CARB, in coordination with CalRecycle, held a public workshop this afternoon to discuss updates to the draft Waste Management Sector Plan.”  This plan is an integral part of the Scoping Plan update which will be completed by the end of this year.  Two opportunities of the Waste Sector Plan are of particular interest.  Both relate to further developing Composting and Anaerobic Digestion programs to reduce greenhouse gas (GHG) emissions from organic waste streams. The Plan estimates that 4.54 to 5.62 million metric tons (MMT) of GHG reductions can be generated by diversion of organic waste from landfills. About half of these reductions (2.06 MMT) can be handled by anaerobic digesters which can convert farm and food waste into both offsets and energy.  California is one of the few states in the country that have incentives in place to generate both these benefits.

The other half of the reductions are forecasted to come from the composting of organic waste.  The Plan states that composting infrastructure has not grown over the past ten years and one of the reasons is a lack of demand for compost.  As a part of a USDA grant, EDF is developing a protocol for the application of compost to rangeland.  Our research has shown that applying one-half inch of compost (made from diverted landfill waste) to grazed rangelands can generate GHG emission reductions of 1.3 to 3.2 MT CO2e per hectare per year.  With approximately 23 million hectares of rangeland in California, there is an enormous potential market to purchase the increase in compost generated.

California policymakers are continuing to create markets for farmers and ranchers to generate revenue from their environmental stewardship.  I look forward to seeing this market continue to develop and expand.

Also posted in Cap and trade, Climate, Ecosystem Services, Global Warming Solutions Act: AB 32, Sustainable Agriculture / Comments are closed

Agricultural Offsets are to 2013 as Energy Efficiency was to 1973

In 1973 Chase Manhattan Bank saw “virtually no scope for conservation” of electricity.  In 2011 the total market for energy efficiency in buildings was worth $68 billion and is expected to grow more than 50% by 2017.

The same thing is being said about greenhouse gas (GHG) protocols for agriculture today as energy efficiency 40 years ago.  When the California Air Resources Board (CARB) stated that they plan to consider a protocol for rice farmers in California and the Midsouth, some stated that the reductions from the protocol would be “very small” and not “widely used.”  These criticisms miss a key point.

The rice protocol is the jumping off point for a wide-range of agricultural offsets.  The rice protocol will demonstrate the benefits from the use of biogeochemical models, such as the DeNitrification DeComposition (DNDC) model, pioneered by the University of New Hampshire over the past two decades.  It will show how agricultural producers can aggregate their reductions with fellow farmers to create an offset project.  It will revolutionize ways to verify large amounts of data through risk-based sampling.  In short, this is the start of something significant.

Once the rice protocol is approved, CARB can turn its attention to other crops such as corn, wheat, or leafy greens.  They can look at grazing practices on land across the United States.  These practices, just like energy efficiency, add up fast.  It is entirely possible to achieve annual GHG reductions of one hundred million metric tons of CO2e reductions, equivalent to taking more than 20 million cars off the road, over the next ten years.

Because agriculture is the largest uncapped sector under California’s cap-and-trade program, it has a unique potential to help California meet its 2020 target.  To play a role in the program, the rice protocol needs to be adopted this spring and additional offset protocols from agriculture need to be considered in the upcoming years.

Also posted in Global Warming Solutions Act: AB 32, Sustainable Agriculture / Comments are closed

The Future of Offsets Just Got Brighter

Yesterday the California cap-and-trade program hit another milestone. The American Carbon Registry, an approved Offset Project Registry, issued the first compliance offset credits, a significant breakthrough because these offset credits are the first ones that can be used by California companies to comply with the requirements of AB 32, California’s greenhouse gas law. The credits were issued for a refrigerant destruction project which collected refrigerants from residential, commercial, and industrial sources. While these gases came from a variety of geographic areas, a significant amount came from California sources like kitchens, garages, basements, and attics.

This is the first of many goals we expect from the offset market in 2013.  Earlier this year, the California Air Resources Board (ARB) planted a seed when it launched a process to develop a carbon offset protocol for rice growers. California is the second-largest rice growing region in the U.S., and the ground that is being plowed here, both literally and figuratively, will set the stage for the development of future agricultural offset protocols across the country with practices such as fertilizer management for lettuce and corn.

As the largest uncapped sector under the cap-and-trade program, agriculture represents a major potential to reduce near-term greenhouse gas emissions.  Unlike refrigerants, offsets generated by agriculture are perennial and a grower can get a long-term income stream for their practices. Because the U.S. has more than 442 million acres of cropland, agriculture has many opportunities to reduce greenhouse gases.

EDF’s research and pilots have demonstrated that it is possible to reduce greenhouse gas emissions, decrease input costs, maintain yields, and generate revenue – all at the same time – creating a win-win for both farmers and the environment.

Consider this: If just 5% of U.S. agricultural land were able to reduce or sequester half a ton of CO2e per acre, more than 11 million tons could be reduced – equivalent to taking more than 2 million cars off the road for a year.  By approving the rice offset protocol this fall, the ARB will take the first step toward unleashing this potential.

Also posted in Cap and trade, Climate, Ecosystem Restoration, Ecosystem Services, Global Warming Solutions Act: AB 32, Sustainable Agriculture / Comments are closed

A Blueprint for Advancing California’s Strong Leadership on Global Climate Change

A key reason California has become a global leader on climate change is its ability to successfully adopt the Global Warming Solutions Act, the state’s climate law that uses market-based tools to significantly reduce the state’s greenhouse gas emission levels.

A group of tropical forest experts has now presented a blueprint for how California can secure significantly more reductions in global warming pollution than the law requires, while keeping pollution control costs down and helping stop the catastrophe of tropical deforestation.

California is widely recognized as the major first mover in the United States on climate change, but tropical states and countries are making strong progress in stopping climate change, too. Brazil and Amazon states have reduced emissions from cutting and burning the Amazon forest by about 2.2 billion tons of carbon since 2005, making Brazil the world leader in curbing climate change pollution.

Research has shown that government policies played a big role in this major achievement. But so far this success in reducing deforestation has been entirely from government “command-and-control;” promised economic incentives for reducing deforestation haven’t materialized.  Pushback from ranchers against environmental law enforcement and the officially recognized indigenous territories and protected areas that cover an area four times the size of California have weakened critical environmental legislation.

Brazil and the Amazon states will continue to reach their ambitious deforestation reduction targets, at least for the next few years, but deforestation rates recently appear to be edging upward.

California now has an opportunity to send a powerful signal that forests in the Amazon – and ultimately elsewhere – can be worth more alive than dead by partnering with sustainable development leaders outside the United States.

Since state-wide, or “jurisdictional,” reductions in deforestation and forest degradation are large in scale and relatively low-cost, it’s critical that well-governed and effective pollution control programs from early movers, like the state of Acre, Brazil, are recognized by California’s carbon market. Ultimately, this can help California control costs, while giving these environmental leaders the sign they need to keep deforestation under control.

 

REDD Offsets Working Group report

The REDD Offsets Working Group (ROW), along with observers from the governments of California, Acre and Chiapas, Mexico, calls for the Golden State to allow limited amounts of carbon credits from Reducing Deforestation and Forest Degradation (REDD+) into its carbon market, but only from states that can show that they have reduced deforestation state-wide and below historical levels.

The ROW report: Recommendations to Conserve Tropical Rainforests, Protect Local Communities, and Reduce State-Wide Greenhouse Gas Emissions recommends:

  • Partner states receive credit for a part of their demonstrated reductions only after showing they have succeeded in halting deforestation through their own efforts.
  • Free, prior and informed consent for local communities in REDD+ programs.
  • Adherence to internationally recognized standards for protection of indigenous and local peoples’ rights and participation in policy design in partner-state REDD+ programs.

REDD+ programs are especially important for indigenous and forest-based communities because these groups have historically protected forests, and typically want to continue doing so, but they have largely lacked access to markets, modern technology, quality health care and social services that REDD+ could help deliver. With California’s help, forest communities can achieve better economic opportunities and forest conservation.

Also posted in Ecosystem Restoration, Global Warming Solutions Act: AB 32 / Comments are closed

Rice Protocol – First Crop-Based Agriculture Offset in Landmark California Climate Program

Yesterday the California Air Resources Board (CARB) launched a rulemaking process to develop a rice carbon offset protocol.  EDF is excited about the development of this protocol – it is a market-ready solution which paves the way for the agriculture sector to participate in California’s landmark cap-and-trade program.  The agriculture sector represents a potential of more than 100 million metric tons by 2020.  At today’s prices that represents more than $1 billion in carbon offsets revenue for growers and landowners.

Rice farmers are leading the way on developing crop-based offsets.  This isn’t surprising.  The rice industry has long been at the forefront of agricultural-environmental innovation – whether it is conserving critical habitat for 230 species of wildlife to modernizing irrigation and pesticide management.  From research to modeling methane management practices to developing a protocol to pilot practices in the field, no other farming sector has done this amount of work to scientifically prove compliance-grade credits from the agriculture sector.

Through developing this protocol CARB sends a signal to rice farmers specifically and all farmers in general that growers can generate additional revenue by adopting practices that reduce greenhouse gas emissions without having an adverse impact on yield.  What is equally as important is to do this in a way that allows multiple landowners to aggregate their fields into a larger project that can reduce transaction costs.

EDF looks forward to continuing to work with CARB to develop protocols that generates high quality, environmentally sound offsets from U.S. agriculture.

Also posted in Climate, Ecosystem Services, Global Warming Solutions Act: AB 32, Sustainable Agriculture / Comments are closed

Auction results present golden opportunity for California landowners

Last Friday, results from California’s second cap-and-trade auction were released and by all accounts it was a huge success. More importantly, it sent a signal that this is a strong and viable carbon market and presents a golden opportunity for landowners.

Through agricultural offsets, landowners have the potential to provide companies a lower priced option for meeting California’s greenhouse gas targets than available through the auction. Companies that must meet the requirements of the cap-and-trade program are allowed to use offsets for up to 8 percent of their greenhouse gas obligation and the price of carbon is going up with each auction — there was a 27 percent increase in the price of allowances between the November and February auction, from $10.09 to $13.62 per metric ton.

The California Air Resources Board (CARB) has approved four types of offset projects for use under California’s cap-and-trade program: forestry (improved management, avoided conversion, and reforestation), livestock methane capture and destruction, refrigerant destruction (limited to specific ozone depleting substances), and urban tree planting. At the end of March, CARB will start a rulemaking process for the consideration of two new protocols – rice cultivation and coal mine methane destruction. EDF is working closely with stakeholders throughout the U.S. to help develop and implement a rice protocol.

A related and positive development for the offset market occurred on December 14, 2012 when the Climate Action Reserve and American Carbon Registry were named as official “Offset Project Registries.” The registries can now issue offset credits from protocols that have been approved by CARB. As additional agricultural offset protocols are approved, farmers throughout the United States can begin offering agricultural offset credits to companies to help them comply with California’s cap-and-trade program. We expect the first offsets to be issued by the registries and approved by CARB in the next three months.

While prices vary by year and type of offset, offsets were trading between $10 and $12 per metric ton prior to the second auction. This price will go up now that the results of the auction have been released. This means that agricultural producers will have an opportunity for a new and steady income stream for their conservation stewardship and for being part of the climate solution.

To learn more about agriculture’s ability to offset climate change please visit EDF’s web page here: http://www.edf.org/climate/agricultures-ability-offset-climate-change.

 

Also posted in Climate, Ecosystem Restoration, Ecosystem Services, Global Warming Solutions Act: AB 32, Sustainable Agriculture / Comments are closed