Beyond the Farm Bill
Beyond the Farm Bill
Emissions Trading. Emissions trading has the potential to bring income into the agricultural sector from external sources. Electricity generators and other industries with relatively high marginal GHG emission reduction costs are already experimenting with purchasing GHG reductions from farmers who increase soil carbon or reduce animal waste emissions. Emissions trading could increase total income flowing into agriculture and decrease the need for government subsidies.
Emissions trading can be a cost-effective way to meet a national emission goal. The key to keeping costs low is to include in the market all potential sources of emission reductions, particularly those that can achieve reductions at low costs. Most evidence points to agriculture as being a low-cost provider of GHG reductions. The costs of sequestering soil carbon and reducing agricultural CH4 and N2O emissions are likely low relative to the costs of emission reductions from fossil fuel combustion.
Emissions trading would increase the need for more elaborate baseline information and measurement, monitoring, and verification systems because buyers of GHG reductions need to document, and be confident, that the reductions have taken place. Although there is substantial U.S. experience in point source emissions trading, there is very limited experience with trading programs that allow trades to take place between point and non-point source emitters, and most agricultural emission reduction options are non-point. In addition, in an emissions trading program that includes the agricultural sector, contracts would have to be designed: (a) to address possible post-contract losses in the case of stored carbon; and (b) to prevent current users of climate-friendly practices from abandoning these practices in a quest for reductions to sell. Trading arrangements limited to GHG reductions may be less effective than trading approaches that also include other environmental benefits such as water quality improvements.
Biofuels and Bioenergy Legislation. Policies that encourage biofuel and bioenergy research and use could improve their competitive position, provide environmental co-benefits, and enable these fuels to play a significant role in GHG mitigation. For example, to improve the net GHG benefits of ethanol, technological advances are needed in feedstock production and conversion processes. Biofuel use can be encouraged by equalizing the price of biofuels and fossil fuels. The current market for ethanol exists only because a gallon of ethanol is taxed at a lower rate than a gallon of gasoline at the federal level and in some states.
Increased use of fuels and energy from biomass could also be accomplished through new laws. For example, Minnesota mandates that only ethanol blends be sold instead of pure gasoline and is considering a similar mandate for biodiesel. In the Midwest, Environmental Protection Agency summer air pollution reduction mandates are achieved through use of ethanol. Vermont has explicitly included farming operations in its net metering rules, thus removing a key barrier to the use of biomass for generation of electricity. A number of states have established renewable portfolio standards, under which a set fraction of electricity must be generated using renewable resources, including biomass.
Water Quality Initiatives. Initiatives designed to meet water quality goals can induce changes in agricultural practices that also contribute to GHG reduction goals. For example, water quality can be improved by practices that increase carbon storage and reduce CH4 and N2O emissions. Such practices include conservation tillage, use of buffer strips, conversion of cropland into grass or forestland, efficient use of fertilizers, and improved management of animal wastes.
NEXT: Benefits and Costs to U.S. Agriculture