Defining Offsets

Below is a story about the National Farmers Union's recent efforts to gin up visibility and support on Capitol Hill for offsets in the next climate bill. While I applaud their efforts for bringing needed focus to the offsets issue, it is dangerous to tie all of agriculture -- and the fate of offsets, to the Chicago Climate Exchange (CCX) model. That model does not contain the rigor in either project design or measurement that will be required under a mandatory climate market.

The danger of being too closely associated with the CCX is that all those groups who campaign against offsets -- saying they are not real, not measured, and just another subsidy for agriculture, have a much easier time of making their case if offsets are confused with CCX pilot program credits. They are NOT the same thing and it is HIGHLY unlikely that the CCX model of generating offsets will be recognized in the new law.

How can I say this? To my knowledge, there is not one major environmental group that supports the way CCX defines ag ghg reductions/offsets. Not even groups that are very supportive of the concept of ag offsets in a carbon market -- and have put a lot of their own political capital on the line, would be supportive of a system like this.

It will be extremely difficult for any member of Congress to push an offsets title that has zero environmental support.

But beyond the politics -- lets remember, CCX was designed to be a voluntary market -- and it has worked well for what it was designed to be. Once you move into mandatory reductions -- and a program that provides credits to pollute -- which is what an offset will be, we are in a whole new world with new challenges that must be addressed.

If lawmakers get the idea that offsets = CCX, the battle to get the maximum market for agriculture will be made that much harder.

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Environment & Energy Daily

CLIMATE: Farmers try to raise visibility of offsets for next warming debate
Allison Winter, E&E Daily reporter0 - 7/30/2008

Farmers are already trying to plant seeds on Capitol Hill for the next climate debate, in an attempt to grow their share of any future cap-and-trade legislation.

The National Farmers Union and key farm state senators met on Capitol Hill yesterday to tout the farm group's partnership with the Chicago Climate Exchange. NFU is sending out checks this weeks to more than 2,300 farmers and ranchers that participate in its carbon credit program, capturing carbon dioxide in their soil in exchange for payments from the carbon market.

The farm lobby wants to highlight its program to lawmakers, in the hopes that agriculture might get more consideration the next time a climate bill comes around. "We want to say, 'Here's something that is working," said National Farmers Union President Tom Buis after a briefing with reporters.

The group was largely preoccupied with the farm bill prior to this year's climate debate, but they are ramping up their presence for the next round on climate legislation. They want to make sure U.S. farmers have a major role in any cap and trade system. And they want a bigger piece of the pie for offsets than the Lieberman-Warner bill would have given them.

Lieberman-Warner put a 15 percent limit on offsets -- the amount of carbon reductions industry can buy from landowners who plant trees, erect methane digesters or practice no-till farming. Lawmakers with a heavy interest in agriculture, such as Sen. Debbie Stabenow (D-Mich.), had an amendment that would have greatly increased the share available for domestic offsets.

Stabenow and Sens. Dick Lugar (R-Ind.) and Ken Salazar (D-Colo.) all praised farmers' participation in carbon markets yesterday. Lugar is a carbon-trader himself. He planted black walnut trees on his Indiana farm to sequester an estimated 3,400 tons of carbon.

But Stabenow said agriculture continues to face a hurdle of proving that it can really reduce carbon. "The big debate is whether or not these are real offsets and can be measured," Stabenow said.

Some environmental groups, like the Natural Resources Defense Council, are skeptical of agricultural offsets. They say the long-term benefits of the offsets are dubious -- if a farmer decides later to till his 'no-till' plot, for instance, he can release much of the carbon he was previously paid to store.

The other major criticism is that offsets might not reduce the carbon in the atmosphere, especially if they are going to farmers who were already doing some of these practices on their land. NFU's program with the Chicago Climate Exchange does not pay farmers for any practice started prior to 1999, in an effort to address that criticism.

"I think there was this assumption, 'Well they're going to do it anyway,'" said Buis. "But if there isn't anything to encourage good behavior, they are going to have to incentivize it."

In addition to the farm lobby, Environmental Defense and other groups are big proponents of offsets as a way to promote conservation, reward private stewardship and reduce carbon. GOP presidential hopeful John McCain supports the use of unlimited domestic and international offset projects for industry compliance (E&ENews PM, May 12).

Offsets are also less expensive than forcing industry to cut its emissions on its own. U.S. EPA and Energy Information Administration studies have shown unlimited offsets could lower the climate program's costs by as much as 71 percent.

The National Farmers Union started its program two years ago. The group is an aggregator for carbon contracts to allow small landowners who would not qualify on their own for the climate exchange's 5,000 ton minimum. NFU identifies farmers who want to participate, enrolls them in the climate exchange and sells their offsets as a group.

Since it began in late 2006, the program has traded more than 86 million tons of carbon offsets and generated $8 million for producers. More than 2,000 farmers participate -- almost half of them in North Dakota, the first state where NFU started the program. Buis said interest continues to grow, mostly by word of mouth.

"What we find is after the checks go out the first year, people go to the coffee shop and tell their neighbors and it grows," Buis said. "We haven't put on a wild marketing program. This is mostly word of mouth."

Geologic vs Biological Sequestration of GHG

The article below is talking about geologic sequestration, not to be confused with soil carbon sequestration. The difference? Geologic seq (often referred to as Carbon Capture and Storage or CCS) refers to capturing CO2 and pumping it underground into geologic formations (underground caves, caverns, mines, etc) and permanently trapping it there. Soil carbon seq, or biological seq - refers to using plants and roots to convert CO2 into carbon, and storing the carbon in the soil as part of the soil.

A key point to note: If geologic sequestration is found too have too many complicating factors -- or is too expensive to become commercialized, than there may be even more demand for biological sequestration and agriculture offsets in the carbon market.
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Environment & Energy Daily

Long-term effects of carbon [geologic] sequestration concern lawmakers
(07/25/2008)Katherine Boyle, E&E Daily reporter

Capturing large amounts of carbon dioxide emissions from power plants in order to fight global warming may be feasible in the future, but members of the House Energy and Commerce Committee are nervous about unintended consequences.

At an Environment and Hazardous Materials Subcommittee hearing yesterday, Democrats and Republicans alike said they were concerned burying carbon dioxide (CO2) beneath the ground could be risky and cause new environmental problems.

Rep. Hilda Solis (D-Calif.), for instance, is worried about the effects earthquakes could have on buried carbon stores, particularly in California along the San Andreas Fault. "We're preparing for a big California earthquake," Solis said. She questioned the corrosive properties of CO2 as well and asked what might happen when it is combined with lead or arsenic.

Subcommittee ranking member John Shadegg (R-Ariz.) reminded the panel of the gasoline additive methyl tert-butyl ether (MTBE), which was used to reduce tailpipe emissions but later found to contaminate large quantities of groundwater. "It would be a grave error to move forward with technology that would replace one environmental problem with another environmental problem," Shadegg said.

"That is the framework in which the American people will view whatever we do at this point," he added.

Shadegg also questioned how well the United States has examined environmental damage from carbon injection used to force oil and natural gas out of the ground.

Rep. Joe Barton (R-Texas) suggested EPA should focus more attention on CO2 conversion. "It yields more baking soda than we'll probably need, but it's dramatically easier to store" than gas or liquid, he said.

'Ace in the hole'

Newly appointed subcommittee Chairman Gene Green (D-Texas) questioned how carbon sequestration could affect groundwater reclamation from saline aquifers, if the water in those aquifers could be purified.

This week, U.S. EPA released its proposal to regulate the underground injection of carbon dioxide by power plants and other industrial pollution sources.

EPA's proposed rule is aimed at protecting drinking water sources during and after the geologic sequestration process. In carbon capture and sequestration, CO2 is captured from fossil-fuel power plants, industrial facilities or other sources and then compressed. At the sequestration site, CO2 is injected into deep subsurface rock formations via one or more wells.

Proposed EPA permitting requirements address well location, construction, testing, monitoring and closure. The goal is to prevent CO2 from migrating into underground water supplies. If the gas infiltrates drinking water, it could push other substances that occur underground naturally, like salt, into the drinking water source. It could also create a corrosive carbonic acid that could lead to CO2 leaks (E&E Daily, July 21).

Benjamin Grumbles, EPA's assistant administrator for water, emphasized that the EPA proposal is only meant to address drinking water concerns.

He predicted carbon capture and sequestration could reduce greenhouse gases by 15 percent to 55 percent over the next century. "Geologic sequestration may not be a silver bullet, but it may be our ace in the hole," he said.

Scott Klara, director of the Energy Department's Strategic Center for Coal, said DOE is working with universities, private partners, regions and states to ensure geologic sequestration will be a safe and viable way to reduce greenhouse gas emissions. DOE is working with regional partners on pilot projects to learn more about the technology needed.

"The ultimate success of sequestration will hinge, in part, on our ability to measure the amount of carbon dioxide stored on a site, prevent environmental impacts and mitigate" any harmful effects, Klara said. Another essential aspect is determining whether adequate storage space exists throughout the United States and Canada, he added.

Broad Support Emerges for Offsets

Apologies for my long absence on this blog. During early June, there was a vote on the climate bill and my energies were diverted into working on that. For any of you that follow politics, you know that sometimes in order to maintain the trust of those you are working with -- you just can't share everything publicly in real time.

But, now I'm back to providing as much good info as I can on the ag offsets issue - so please check back often.

Below is a letter with some very impressive signers in support of good offsets policy within a climate bill. This letter came about after the strong efforts of Senators Stabenow, Brownback, Crapo and others who pulled together an amendment that would have created strong offsets policy within a climate change bill.

As you can see by those signing the letter, a strong coalition has finally formed to champion good offsets policy within mandatory climate change legislation. Bravo to the groups who rolled up their sleeves and jumped in to shape what could be agriculture's third or fourth largest market: carbon.

Now it is important that the coalition remain together and continue to work with staff in the Senate and the House so that when a bill comes up and passes in the next Congress, agriculture's interest will have been fully accounted for.
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June 12, 2008

The Honorable Debbie Stabenow
United States Senate
Washington D.C. 20510

Dear Senator Stabenow:

We are writing to thank you for your leadership
in promoting the key benefits thatoffsets, particularly
agriculture and forestry offsets, can provide in
addressing greenhouse gas emissions reductions. Offsets
projects are critical to ensuring that any legislation to
address global climate change can achieve meaningful
environmental results in a cost-effective manner. In
addition to these economic benefits of emissions offsets
projects, they can help drive new technologies and
services, and provide extensive environmental benefits.

Your amendment to the Climate Security Act (S. 3036)
provides a useful framework for developing offsets policy
that will engage agriculture and forestry interests,
utilities and industry seeking to reduce their emissions,
entities that finance and develop offset projects, and
environmental groups. We look forward to continuing to
work with you and your staff to craft a robust,
sustainable, offsets policy that efficiently reduces costs
and maintains environmental integrity.

Sincerely,

Agricultural Carbon Market Working Group
American Farm Bureau Federation
American Farmland Trust
American Soybean Association
Business Council for Sustainable Energy
Carbon Offset Providers Coalition
--Blue Source
--Camco
--The Carbon Neutral Company
--CommonWealth
--CO2-Solutions.com
--Greenhouse Gas Services, a GE AES venture
--Kolibri Group
--MGM International
--N.serve Environmental Services
Coalition for Emission Reduction Projects
--American Electric Power
--Blue Source
--Deutsche Bank
--Dominion
--Duke Energy
--EcoSecurities
--Econergy
--El Paso Corporation
--Environmental Credit Corp
--Equator Environmental
--First Climate
--Leaf Clean Energy Company
--MGM International
--Natsource
--Stark Investments
Deere & Company
The Dow Chemical Company
DTE
Duke Energy
DuPont
Environmental Defense Fund
FPL Group
General Electric
National Association of Conservation Districts
National Barley Growers Association
National Association of Wheat Growers
National Cattlemen’s Beef Association
National Corn Growers Association
National Farmers Union
National Milk Producers Federation
The Nature Conservancy
NRG Energy
PG&E

New U.S. National Intelligence Report Warns of Security Threats from Climate Change

ClimateWire
SECURITY: Intel report warns of climate threats to U.S.

(06/25/2008) Lisa Friedman, ClimateWire reporter

A new U.S. national intelligence report out today warns that climate change has serious implications for U.S. national security.

The National Intelligence Council will warn Congress that climate change poses major challenges, from regional instability to water scarcity to new and growing immigration pressures, for America's military as well as its diplomatic and trade missions, according to several experts who have reviewed the first-ever U.S. government report linking climate and security.

"There's a lot at stake," said Kent Butts, a professor of political-military strategy at the U.S. Army War College.

Butts, who will testify today before a joint session of the House Select Committee on Energy Independence and Global Warming and a House Intelligence subcommittee, called the intelligence assessment "broad."

But, he said, "It did what it needed to do. It signaled that climate change is indeed a serious issue, and it's affecting U.S. security interests globally."

The report, "National Intelligence Assessment on the National Security Implications of Global Climate Change to 2030," comes on the heels of several international studies, mostly from Germany and the United Kingdom, warning that a failure to address climate change could destabilize nations and provoke serious threats.

Water scarcity, sea level rises, migration mean increasing instability

Indeed, members of Congress including Rep. Ed Markey (D-Mass.), Sen. Richard Durbin (D-Ill.) and Sen. Chuck Hagel (R-Neb.) called for the intelligence report after a group of retired U.S. military leaders with the Center for Naval Analyses (CNA) last year found climate change to be a serious threat to the country.

Sherri Goodman, former deputy undersecretary of defense and now general counsel of the Center for Naval Analyses, also reviwed the new intelligence report and called it consistent with the think tank's findings.

"It reflects many of the concerns that we found in terms of increased water scarcity, sea level rises, storm surges," Goodman said.

Security experts said the report details destabilizing threats in different regions of the world, focusing in particular on sub-Saharan Africa. The region is considered extraordinarily vulnerable both because of dire poverty and disease and because it will suffer higher temperatures and longer droughts, leading to water scarcity and decreased crop production.

It also points to a rise in immigration pressures, particularly from the Caribbean, as a challenge headed America's way as sea levels rise and storm surges increase. It describes the United States as largely well-equipped to deal with domestic challenges, but does note that wildfires will increase and several coastal military installations could be at risk of storm surges.

Butts said members of Congress specifically asked him to speak to security implications with China. He said he plans to tell the panels that climate change will lead to the United States and China competing for the same resources, particularly in Africa, a major source of oil for both countries. The answer, he argued, is for the countries to start working together now.

U.S. and China should cooperate in Africa

"To the degree we have destabilizing climate change in Africa, it makes sense to see the U.S. and China cooperate and help build the capacities of governments to adapt," he said, adding that the United States would be "well-served to be more proactive."

Monmouth University President and retired Adm. Paul Gaffney, a top contributor to the CNA report who reviewed an early version of the intelligence estimate, said he believes it underscores a need for detailed climate data.

In order for the U.S. government and military to respond to possible threats or step in before problems start to loom, Gaffney said scientists need to provide more localized information about weather disasters.

"When you're talking about security, you need to be more specific. Are we dealing with drought and famine? Are we dealing with floods and storms?" he said. "It makes a difference, because you might need more helicopters in one place, and in other places you might need more food drops."

Agreed Goodman, "Now we're getting a better handle on what are the right questions to ask."

Political risks heightened by food production risks

Mark Levy, deputy director of Columbia University's Center for International Earth Science Information Network, said the intelligence assessment uses a country risk-assessment the organization did recently as one basis for its findings. CEISIN ranked countries based on sea-level rise, increased water scarcity and an aggregate measure of vulnerability to higher temperatures compared to the country's ability to adapt.

"We can pinpoint areas of high projected climate change that are also in historically unstable regions. This suggests that climate change is likely to heighten political risks," Levy said.

Butts also noted that the United States will have to pay special attention to climate disasters that could destroy food production in parts of the Middle East to prevent new regions from becoming terrorist training grounds.

The intelligence assessment does not question the science of climate change, and relies on the fourth assessment of the Intergovernmental Panel on Climate Change, those who reviewed it said.

Butts said he hopes the study helps move Congress toward addressing the problems.

"I hope they will come together and move beyond the cause of climate change to focus on the security dimensions and look for common ground on a U.S. approach to dealing with this," he said.

House Agricultural Policy Climate Change Briefing

Thursday, June 12^th

1300 Longworth

11am - noon

Designing Offsets Policy: Implications for U.S. Agriculture

Dear Colleague:

As you know, legislation on climate change will be coming to Congress soon. One of the most important aspects of this complex issue is creating a robust and real “offsets” market whereby regulated entities can pay farmers and foresters to reduce greenhouse gas emissions through a number of conservation practices. Getting this mechanism right is extremely important to ensure both a minimal cost to the economy and environmental integrity. Additionally, this issue is of vital importance to America’s agriculture community with the offset and allowance opportunities for agriculture estimated to bring $24 billion annually to the sector.

I would like to invite your staff to a briefing with representatives from Duke University’s Nicholas Institute for Environmental Policy Solutions, as well as experts working with the agriculture sector, to discuss offsets infrastructure issues and recommendations from both the offset buyer and seller positions.

If you have any questions, please contact Ashley Martin in my office at 5-2801.

Date: Thursday, June 12, 2008

Time: 11am - 12pm

Place: 1300 Longworth

Speakers:

• Dr. Lydia Olander, author of Nicholas Institute’s Offsets Architecture working group paper
• Tim Profeta, director of Duke University’s Nicholas Institute for Environmental Policy Solutions
• Sara Hessenflow Harper - The Clark Group - The market potential of agriculture offsets

• Mark Gaede - National Association of Wheat Growers - The stakes for agriculture in climate legislation
  

Sincerely,

/s Stephanie Herseth Sandlin
Member of Congress

Tougher climate bill being proposed by Rep Markey

Below is a story about a new climate bill coming out from the House of Representatives. This bill is much more stringent than the Lieberman-Warner bill and provides little transition assistance for industry and consumers.

Although this story says the bill will have an offset market, I am very dubious that the architecture of that program will be workable at all since it has the praise of groups like Environment America (formerly known as US-PIRG) and they are notorious in their opposition to agriculture offsets.

Just another thing to keep your eye on -- and another reason why it is so critical for agriculture to be championing its own interest. If the ag industry can not bring something positive to the table, they will get something negative. That's just the way the process works.

CLIMATE: Markey unveils bill for slashing emissions 85 percent (05/28/2008)

Darren Samuelsohn, Greenwire senior reporter

A close ally of House Speaker Nancy Pelosi (D-Calif.) detailed a new global warming bill today that presses for cuts in U.S. heat-trapping emissions that far exceed those in other proposals being debated in Congress, including a Senate measure scheduled for floor debate early next week.

Massachusetts Democrat Ed Markey's climate bill -- to be formally introduced Tuesday -- seeks to curb midcentury carbon dioxide and other greenhouse gas emissions by 85 percent through a cap-and-trade system that would start operating in 2012. (Click here to read the executive summary of the bill.)

Speaking at the Center for American Progress in Washington, Markey said his bill was the byproduct of lessons learned during his 17 months as chairman of the Pelosi-created House Select Committee on Energy Independence and Global Warming. Since January 2007, Markey has held more than 40 hearings on climate and energy issues and led lawmaker delegations to India, Greenland and the Amazon rainforest.

Markey calls his bill the "Investing in Climate Action and Protection Act." For the tech-savvy, he also dubbed it "iCap."

The climate legislation takes a more aggressive stance on emission limits compared with the Senate bill due on the floor next week from Sens. Joe Lieberman (I-Conn.), John Warner (R-Va.) and Barbara Boxer (D-Calif.). That bill would reduce emissions by 71 percent in 2050.

Markey's plan also reaches further than the Lieberman-Warner-Boxer bill in heeding environmentalists' calls for the distribution of hundreds of billions of dollars in emission credits.

At its start, the Markey bill would auction 94 percent of the program's allowances. The auction proceeds would be used for a cross-section of items Markey sees as helping to make the U.S. economy more climate-proof, including tax cuts for low- and middle-income Americans, energy technology research, energy efficiency and adaptation.

The remaining 6 percent of the allowances would be given away to U.S. manufacturers most vulnerable to trade competition, including the steel, aluminum, paper, iron and cement sectors. By 2020, those industries would no longer get any allowances for free as the cap-and-trade program transitions to a complete, 100 percent auction.

Overall, Markey said his bill covers heat-trapping emissions from 94 percent of the economy. That means mandatory limits for some 10,000 major industrial facilities, such as power plants, petroleum refineries and natural gas distributors.

'Breath of fresh air'

Prospects for Markey's bill are far from clear. The lawmaker said he had briefed Pelosi on the new legislation but offered no other assurances it would see action this year.

Markey, a 17-term congressman, holds a senior position on the House Energy and Commerce Committee, which holds jurisdiction over climate legislation. But to date, that panel's chairman, Rep. John Dingell (D-Mich.), has taken a far more methodical approach to dealing with global warming.

"It's intended to be another important part of the debate as we move forward with the House and in the negotiations with the House and Senate and with the administration," Markey said. "It's going to be ultimately many different ideas that are competing. I think it's important for us to put together the legislation that reflects the best ideas of what's been heard."

Environmentalists welcomed the legislation for pushing further than the Senate plan and also for going into greater detail on many of the more complicated and contentious items required of a cap-and-trade policy.

"It's a breath of fresh air," said Emily Figdor, a top federal climate analyst at Environment America (formerly known as US-PIRG)

A Dingell spokesman said Markey’s office hasn’t yet provided the committee with a copy of the new climate bill.

Mirrors Senate bill

On many of the bill's more technical details, Markey's plan follows the Senate bill by Lieberman, Warner and Boxer.

It would give industry a break from high compliance costs by meeting up to 15 percent of the program's requirements through the use of domestic offsets, such as methane capture or soil sequestration. Companies also could turn to international climate activities for up to 15 percent of the compliance requirements.

The Markey bill also does not have any "safety valve" provisions, such as an absolute ceiling on the price of an emission allowance. Instead, Markey's ideas for cost containment revolve around letting companies bank away an unlimited amount of their emission credits for future use.

To engage China, India and other developing countries, Markey calls on the president to study other climate plans to determine which have taken comparable actions to the United States. If they meet the president's criteria, Markey would give the countries access to tens of billions of dollars in new technology and deforestation funding.

But Markey's bill also mirrors the Lieberman-Warner-Boxer plan by providing a trade stick. Countries that do not take comparable action by 2020 would need to purchase emission allowances if they want to import their carbon-intensive goods into the United States.

Markey's bill includes several other notable points. It would override the Bush administration's controversial decision last December to deny California's request for a waiver while following that state's lead in setting up a nationwide low carbon fuel standard.

If Markey's proposal became law, all new coal-fired power plants with construction that started after January 2009 would need to capture and store 85 percent of their greenhouse gas emissions. U.S. EPA would need to set up a legal framework for the underground storage of greenhouse gases.

And EPA would be ordered to set mandatory standards for greenhouse gas emitters not covered by the cap, including coal mines, landfills, wastewater treatment systems and large animal feeding operations.

Dr. Keith Paustian - Colorado State University

At the Senate briefing I put together last week, Dr. Keith Paustian of Colorado State University presented information on measurement and modeling for soil carbon sequestration. The bottom line is that soil carbon sequestration can be measured accurately and with minimal cost at a national level.

You can view Dr. Paustian's presentation by clicking here.