Carbon Sequestration in Agriculture

1. Carbon Sequestration in Agriculture Institutional Responses to the Kyoto Protocol in Australia, Canada, the European Union and the United States

2. Collaboration • Linda M. Young – Montana State • Alfons Weersink – University of Guelph • Murray Fulton – U of Saskatchewan • B. James Deaton – University of Guelph

3. Institutional response • Why economic institutions emerged the way they did… • One question: the EU has a carbon market but does not support carbon sequestration in agriculture, while US lacks a viable carbon market but has limited support for carbon sequestration in agriculture

4. Inclusion of LULUFC in KP Ratification of the KP Policies Supporting Agricultural Sequestration

5. Possible Explanations Include: • Carbon sequestration opportunities • - perfect information? • 2. Interest Group Pressure: Industry, Agricultural, Environmental • 3. Institutional Inertia

6. Inclusion of Sinks- LULUCF • Hotly debated: whether or not to include sinks in the KP • Rate of sequestration one problem • Another with potential release • Fear: granting credits not achieving real reductions • EU: emissions reductions – not sequestration • Baselines: in calculation of baselines? • Not in all countries inventories • Credits but not in baselines also problematic

7. EU: advocate for “real” reductions • Environmental groups strong • Climate Action Network “continues to have fundamental concerns about the use of sinks under the KP…” and want a variety of guarantees, about biodiversity, no monoculture, social assessments and etc. • Agricultural interests not advocates • Eventual compromise – internal disagreement

8. US, Canada and Australia all favored sinks • US: undaunted by concerns about measuring and monitoring; unbalanced to ignore activities that remove carbon; comprehensive accounting to protect existing reservoirs • Could account for ½ US reduction commitments!

9. Australia’s position contradictory • Favored the inclusion of sinks • But actually, a net emitter in the land change category • Rate of land clearing 40%> revegetation • Forestry provided an emission offset of 5% national emissions • Comparative advantage not the only factor here

10. KP - put off the issue • In 2001 Marrakesh Accords – guidelines for LULUFC • Parties can receive credit for carbon sequestered through revegetation and cropland management in excess of 1990 levels. • If land use included in their inventory, must account for both emission and sink activity during the commitment period

11. Negotiation of KP • Conducted with a belief that they might be bound • Australian government never supportive • Use of sinks: reductions at least cost • Information may not have been perfect • Industry groups – support as least cost • Agriculture – support as service provider

12. Ratification of the KP • EU and Canada have ratified it • Clinton administration negotiated • Bush won’t ratify • Voluntary limits • Australia: never supportive; not ratified

13. EU Carbon Market • Began operation in 2005 • Limits emissions from 12,000 plants in six industries • Can trade with other EU firms • Linked to CDM and Joint Implementation • Restrict use of imported credits • Will not trade LULUFC activities

14. Canada • GOC consultations domestic trading scheme – operational 2006 • LFEs have emission targets • Can purchase offsets • Also (unlike EU) from carbon sinks ag and forestry • GOC limited the price of carbon credits –CA$15/t

15. United States • Some companies have purchased credits • Idaho example • Chicago Climate Exchange • Industry/municipal members↓emissions • Limited trades • Iowa Farm Bureau

16. Australia • No domestic trading program • Reviewing new federal program to replace uncoordinated state programs • NSW Electricity Benchmark Scheme • Sydney Futures Exchange

17. Registries/Inventories • Discussed in the paper • Important to establish baselines, for reductions to count against however, • A morass of details – • Effectiveness determined by how well they • meeting international standards • US case – credit towards future limits

18. Why Governments Might Support Carbon Sequestration • Achieve commitments at least cost • Favored by industry and agricultural interest groups • Environmental groups – US , EU • Support producer income • Achieve other environmental goals

19. Perhaps not least cost for EU & CA • KP: rules, protocols still being devised • EU: busy with new institutions • NAPS, connection of JI and CDM • Ag seq. – lots of additional infrastructure • Canada: same, but more thought into role of agricultural sequestration • Have to meet unfinished int. standards

20. US Carbon Sequestration Programs • While KP rejected, • agricultural sequestration not completely • Embraced on a low level • EQUIP and CRP • Multitude of bills in Congress • Not developing/meeting international standards

21. EU • No market demand • CAP also limited demand • Treaty of Amsterdam • CAP 2000 • Still little in way of sequestration activities

22. Comparative Advantage and Stance • New studies revise estimates • First hypotheses – EU lacked comparative advantage

23. Canada • Environmental objectives not income support policy • GHG Mitigation program – cut emissions • Identify and encourage sequestration • Development of computer simulation models

24. Australia • Only sequestration through trees • Little potential for sequestration through crops – and salinity more pressing