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US carbon regulation, as proposed in the American Power Act
(http://kerry.senate.gov/americanpoweract/pdf/APAbill.pdf), offers an opportunity for producers as
well as other operators in the American agricultural value chain, to appreciate a significant net
revenue gain.
- Reduce GHGs by 17% below 2005 levels by 2020, 80% by 2050
- US farmers are exempt
from carbon caps and will be able to participate in a domestic carbon
offset market, which
would create a “multi-billion dollar revenue stream.”
- Allows for 2 billion offsets; 1.5 billion credits from domestically sourced projects
- Domestic agricultural and forestry carbon credits are expected to make up the bulk of
the US offset program
- Supply side deficit: US offsets in 2009 were only 29 million = huge opportunity for
US ag
- USDA would take the lead on implementing and creating the market – not the EPA. Eligible
offset project types:
- Fugitive methane capture from coal mines, landfills and oil and gas distribution
facilities
- Agricultural, grassland and rangeland sequestration and management practices
- Changes in carbon stocks attributed to land use change and forestry activities
- There is an emerging consensus that APA will offer a large potential revenue stream for US
agriculture as illustrated in the breakout provided by the Agriculture and Applied Economics
Association.
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GIC has developed an agricultural carbon index that it is now applying to measure the value of
alternative production technologies in terms of their relative contributions to the reduction of carbon
emissions. Although a lower emitter than other producer countries, our ag sector representing input,
production, and value added agriculture, is also a significant source of emissions. According to GIC
calculations, US agriculture alone emits 656 million metric tons of GHG measured in CO2 equivalent.
On a per hectare of farm land basis, production ag emits 1.4 tons of GHG emissions per hectare of
farm land.
Under the right incentive policies, however, what is now a cost to US agriculture can be converted
into a net gain.
With the prospect of offset/ credit opportunities, American agriculture carbon efficient production and
manufacturing technologies will translate into greater competitiveness for US agricultural
commodities and products in global markets.
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