With the adoption of a cap-and-trade market that includes agricultural offsets, it has been estimated that 30% of greenhouse gas (GHG) offsets could be met with agricultural offsets annually over the next 50 years.(i) Currently, agriculture emits about 6% of the annual total of US greenhouse gases.(ii) Reductions could come from the use of methane capture, precision fertilizer application, and other agricultural practices such as carbon sequestration.
Q. What are offset markets and how do they work?
Since greenhouse gases accumulate in the atmosphere from emissions worldwide, greenhouse gas reductions can come from anywhere with equal impact on climate change. Offset markets are a way for companies to meet their GHG reduction obligations through reductions outside their facilities and operations. A company might do this for a period of time to avoid replacing equipment before the end of its useful life or because it is the most cost effective way to meet their reduction obligations.
For example, if a utility is required to reduce their emissions by 100 tons over the next year, an offset market allows them maximum flexibility to meet that goal while keep prices stable for consumers. The utility could reduce its direct emissions to reach part of the goal, increase its efficiency to meet part, and it could choose to purchase GHG reductions from farmers for part – or its entire target depending on which choices make the most economic sense. In this way, offset markets make it possible to take action to reduce greenhouse gases without significantly affecting the economy.
In order to create these markets Congress must adopt a policy that caps greenhouse gas emissions and allows agricultural offsets to be purchased in place of allowances (cap and trade). So far, the American Clean Energy and Security Act of 2009 (ACES) has passed the House of Representatives, which contains multiple opportunities for American agriculture to partake in a robust offset market. The Senate is involved in ongoing discussion of climate legislation, but Senator Stabenow and six key co-sponsors have introduced the Clean Energy Partnerships Act of 2009 (CEPA) which makes America’s agriculture and manufacturing part of the solution in the debate over climate and clean energy. CEPA includes a domestic emission-reductions program to earn carbon credits and a list of initial eligible projects.