POLICY:

Agriculture offsets -- a savior or a boondoggle?

A dispute is heating up over the role of farms and forests in climate legislation.

Supporters of agricultural offsets, which fund projects that do things like install methane capture systems over animal-waste lagoons, say they are critical in helping the United States meet mandatory cuts in greenhouse gas output.

But others raise questions about whether a global warming bill under consideration in the House could fall apart because of uncertainties about how to measure, verify and enforce these offsets.

At a hearing yesterday on Capitol Hill, Agriculture Secretary Tom Vilsack strongly endorsed an expanded role for farms and forests as part of a comprehensive climate plan. Legislation sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.) that passed through the House Energy and Commerce Committee last month carves out a major role for offsets generally, but does not specify a role for the agriculture sector.

"A viable carbon offsets market -- one that rewards farmers, ranchers and forest landowners for stewardship activities -- has the potential to play a very important role in helping America address climate change while also providing a possible new source of revenue for landowners," said Vilsack before the House Agriculture Committee.

One by one, a series of witnesses following Vilsack sang the praises of the carbon sequestration abilities of farm and plant life. By landowners engaging in things such as reforestation of grassland or alteration of cow diets to produce less heat-trapping methane, the agriculture industry could sequester up to 20 percent of total U.S. emissions, they asserted.

The groups are pouring money out to lobbyists and sending a bevy of letters to Congress demanding that agriculture have a more robust role in a climate bill.

If a cow burps, how do you measure it?

Yet some analysts fear that the Waxman-Markey bill risks failure because of unknowns about things like how much carbon really rests in a given farm plot or in an animal burp. Droughts, flood and temperature can further muddy attempts to verify the level of carbon being sequestered in agriculture, they say.

The risks are heightened because sponsors of the bill are counting on projects to work overseas, where the price for offsets is cheaper, but monitoring them is doubly difficult, according to the analysts.

"I'm worried that these offsets will bust the cap," said Michael Wara, a law professor at Stanford University who has studied offsets. He said that only 15 percent of offsets globally would need to be bogus for the environmental integrity of the Waxman-Markey bill to fail. That is because the bill relies heavily on offsets in the early years of implementation, with as much as 43 percent of emission reductions likely coming from them, he said.

The hitch is that the bill puts most of the U.S. economy under direct regulation, so the main sector left for businesses to find offsets is in forests and farms, according to Wara and others. The bulk of those offset reductions would have to come from projects at scale -- like mass reforestation on acres of grassland -- that often are the most difficult to monitor, they say.

Furthermore, a low carbon price, which many are predicting with the Waxman-Markey plan, will lead to even greater reliance on agricultural offsets, since they tend to be cheaper than some other types of projects, said Lydia Olander, a senior associate director at the Nicholas School of the Environment at Duke University.

A 2008 report about the voluntary offset market from the Government Accountability Office, a congressional watchdog, ranked forestation and "agriculture soil carbon" near the bottom of a list of "very credible projects" after the agency interviewed people familiar with the issue.

A list of "high quality" offset projects issued last year by the Environmental Defense Fund did not include any agriculture or forestry efforts, except those involving methane capture.

Methane grabbers at dairy farms appear to work

Methane digesters at dairy farms tend to be more reliable than some other types of projects because they involve equipment with measurable controls capturing gases in a confined area, noted Olander. The issue is that those methane grabbers are a relatively small part of the offset market in the agriculture space, she said.

It also can be problematic to ensure that farmers are not getting credited for activities they were doing anyway, Olander said. For an offset to truly be an offset, it needs to be a new project that would not have occurred without offset funding.

That issue sprang to the forefront in March, when the House canceled a plan to make its offices carbon-neutral by purchasing offsets at the Chicago Climate Exchange. Part of the controversy revolved around Washington Post reports that the offsets purchased were going to projects that already had been operational.

There are other worries about offsets from forests and farmland, including a push to count reduced emissions from fertilizer.

"There's no real methodology in place for that," said Olander.

The E.U. backed away from farm offsets

Wara added that much U.S. ranchland is leased, which makes it tough to keep verify how long an offset project has been in place. Many projects based on plant sequestration are subject to reversal, as well, meaning that they lose their carbon-storing benefits if they become subject to a fire or other natural disaster.

Some are pushing for tweaks in the bill to address potential problems.

Kenneth Richards, an associate professor at Indiana University, said the current bill needs language ensuring that the same project can be verified by three separate investigators. That concept, which made it into a climate bill considered briefly in the Senate last year, would cut down on inaccuracy and fraudulence surrounding measurements of carbon, he said.

He noted that the House plan is relying much more heavily on offsets than the European Union's cap-and-trade system, which he said has de-emphasized emission cuts from agriculture because of questions about the sector's reliability.

Others are pushing hard to make sure U.S. EPA maintains a role as the sole enforcer of offset projects. These advocates argue that the Department of Agriculture is not a regulatory agency and is unlikely to crack down on questionable offset projects.

"EPA would be more likely to stand up against fraud," said Richards.

Farm groups are fighting back with the charge that USDA is helping farmers with offsets already and holds deep scientific knowledge on the topic. In their view, EPA essentially would have to start from scratch in designing a program in a process that would waste time and money.

The department already is operating initiatives with carbon-cutting benefits such as the Conservation Reserve Program, which helps farmers replant land vulnerable to erosion.

The EPA vs. USDA regulatory issue

"As climate legislation is developed, it is important to consider the current benefits of these programs and that carbon credits they generate qualify under any cap-and-trade system," said Earl Garber, second vice president at the National Association of Conservation Districts, at yesterday's hearing.

Those Agriculture Department programs have compliance rules, so the enforcement worries are unfounded, added Bob Stallman, president of the American Farm Bureau Federation, in an interview.

Furthermore, he said, the agriculture sector is going to get hit under a cap-and-trade plan because of price jumps in things like fertilizer. That makes it all the more important that farmers have the opportunity to earn revenue from offsets to counter adverse effects, he said.

Yesterday, Vilsack hedged the EPA vs. USDA issue by saying he didn't want EPA eliminated from its overseer role, even as he sought a greater role for his own department. Others argue that both agencies could benefit from a consultation process on offsets, since both are potentially facing staff shortages.

The politics of the issue remain murky. Even if the concerns of farming groups are worked out in the House, a climate bill faces a steep vote climb in the Senate, said Chelsea Maxwell, chief climate adviser to former Sen. John Warner (R-Va.), who sponsored a cap-and-trade bill that stalled in Congress before his retirement.

Because of the influence of senators from America's bread basket in the Senate, the infighting could get even hotter if the bill makes it there, she said.

"Farm groups have a lot of clout in the Senate," she said.

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