Rice growers on the front lines of U.S. carbon markets

By Niina Heikkinen | 01/20/2016 08:40 AM EST

Dan Hooks isn’t one to take chances with his rice crop, but that hasn’t stopped him from being a pioneer of sorts. The Arkansas native is one of a small group of rice farmers in the United States who are changing the way they grow their crops to cut back on methane emissions from their fields. In exchange, they will be eligible for the first-ever carbon credits for crops through California’s cap-and-trade program.

Dan Hooks isn’t one to take chances with his rice crop, but that hasn’t stopped him from being a pioneer of sorts.

The Arkansas native is one of a small group of rice farmers in the United States who are changing the way they grow their crops to cut back on methane emissions from their fields. In exchange, they will be eligible for the first-ever carbon credits for crops through California’s cap-and-trade program.

"We’re looking for whatever dollar improvement we can make," Hooks said. "We farmers tend to be hard to convince to change things unless there is a reward."

Rice farms
Rice farms like the one shown above in California as well as in Arkansas and Mississippi are getting involved in carbon offset projects, which could become a trend for U.S. farmers. | Photo courtesy of California Water Service.

So far, the American Carbon Registry has listed three rice cultivation offset projects involving 21 rice growers in California, Arkansas and Mississippi. Their collective 22,000 acres of farmland make up just shy of 1 percent of the total 2.5 million acres devoted to rice in the United States.

That is a small fraction of growers. But supporters of the carbon credits like Robert Parkhurst, director of agriculture greenhouse gas markets for the nonprofit group Environmental Defense Fund (EDF), say rice is just the beginning. In the coming years, a rising number of U.S. growers will likely become eligible for adopting practices that both cut emissions and help farmers use resources like water and fertilizer more efficiently, he said.

"We figured out how to execute on renewable energy; agriculture is the next frontier. That’s what makes it so cool and exciting," Parkhurst said. "I think we are seeing a real convergence of opportunities for the agricultural sector to take their sustainability up another level."

‘Like taking a few steps into a pool’

Starting last November, the California Air Resources Board (ARB) began accepting projects under the new rice protocol. Credits will likely become available for purchase in the next few months, Parkhurst said.

Rice farmers who are able to document methane emissions reductions from their paddies will be eligible to receive carbon credits. They can make those reductions by implementing one of three management approaches: planting seeds into dry soil, a process known as dry seeding; draining water from fields early; or using an alternate wetting and drying planting method. Farmers must also have at least two years of baseline data on soil types, crops and fallow time to show the practice has been in place.

"This protocol provides rice growers an opportunity to do something good for the environment as well as save water, and benefit financially from those efforts," ARB Chairwoman Mary Nichols said in a statement when ARB approved it in June.

"The protocol is designed to be used not only in California but all rice-growing states, sharing the benefits with growers there while providing another cost-effective way for companies in the program to comply with cap-and-trade," she added.

The farming approach that farmers adopt depends on where they are in the country. Midsouth growers in the Mississippi River Delta and the Gulf Coast area of Louisiana are using the alternate wetting and drying method, which reduces the amount of methane-producing microbes in the soil. The approach also reduces fossil fuel use and saves about 30 percent of water consumption, according to Parkhurst.

Rice growers in California can adopt a dry seeding method more typically used in the Midsouth. Instead of spreading seeds across a flooded field, producers plant the seeds on dry land and wait to flood the fields until the rice plants begin to sprout. Both regions can also be eligible for credits if they drain water from their fields about a week to 10 days early.

The Department of Agriculture is providing technical and financial support to farmers to help mitigate the risk of altering farming practices.

Growers don’t have to change how they grow rice in all of their fields at once to start to earn credits, Parkhurst said.

"It’s like taking a few steps into a pool. We’re not asking them to take a cannonball off the deep end. At some point they will go all the way in," he said.

Rice only a slice of methane emissions

But EPA data show that even universal rice farmer participation wouldn’t make much of dent in overall methane emissions.

Altogether, the methane from U.S. rice farms accounted for 8.3 million metric tons of CO2 equivalent in 2013. That is a small fraction of the 630 million metric tons of CO2 equivalent produced by the country as a whole, according to U.S. EPA’s "Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2013."

Compliance-grade offsets in California’s program have recently been fetching $11-$11.50 per ton, said Jackie Ferlita, an emissions credit broker with Air Quality Consultants Inc. They’re worth about a dollar more if they come with insurance against invalidation, which can happen if a project is found to violate state or federal environmental laws.

The broader benefit of rice farmer credits will be that they will pave the way for two new protocols under development: one that focuses on nitrogen fertilizer and a second on reducing grassland conversion to farmland.

While the new rice protocol will cover just a fraction of American agriculture, every crop on the country’s 400 million acres of farmland requires some amount of nitrogen fertilizer. Managing land conversion on the 700 million acres of pastures and grasslands would also have a significant impact on preventing agricultural greenhouse gas emissions, Parkhurst said.

He and his colleagues are focusing on creating a protocol that would reduce nitrogen fertilizer use on just two crops — corn and almonds. According to EPA, the application of nitrogen fertilizers on agricultural soils is responsible for 74 percent of the country’s nitrous oxide emissions.

"We are designing the protocol to be modular so then when the research on nitrous oxide emissions is completed, it can be added into the protocol without completely having to rewrite it," Parkhurst said. "It took more than two years for the ARB to adopt the rice protocol, and if it takes that long for every crop, it would be a long time before we have the entire agriculture sector covered."

Is the science there?

Experts say the development of carbon markets in Ontario could also expand the market for agricultural offsets. Meanwhile, the United Nations is exploring how to include agricultural protocols, including rice cultivation, in the European Union’s cap-and-trade program.

Parkhurst said EDF focused on gaining offsets for rice before other agricultural crops because the farmers were among the most progressive in their thinking on environmental issues. Scientists also have a good sense of how different farming practices affect methane emissions, which helped in the development of standards for evaluating emissions reductions.

But for Bruce Linquist, an assistant cooperative extension specialist at the University of California, Davis, the move to gain credits for methane reductions from rice is a bit ahead of the science.

To date, much soil methane research has been on small plots of half an acre to an acre where scientists have been able to measure how a certain level of soil moisture correlates to emissions. The picture gets much more complicated as the field size increases because different parts of the same field could release different amounts of methane, he said.

"Fields are also very different from each other, some are flat and some are sloped so water can saturate one part, and the [other] part is dry. How do you measure and quantify that? It’s a big challenge," Linquist said.

Because researchers don’t yet have a reliable way to quantify methane emissions at a field level, Linquist said he has been critical of the efforts to generate carbon credits for methane, at least right now.

"To be honest, I don’t know how they will be able to accurately predict it," he said. "I would suggest it’s gone a bit fast."

‘We saw the savings’

Some of the seeding approaches also are raising questions.

Draining fields early, for example, might not have much of an impact on methane emissions. The approach is designed to reduce the amount of time that the rice field is in an oxygenless or anaerobic state so that methane-producing microbes will produce less of the gas. While that may help somewhat, overall emissions at the end of the growing cycle tend to be low at that point, Linquist said.

Even if other approaches like dry seeding or alternate wetting and drying do reduce methane, they can also cause additional risks for farmers. Rice plants are very sensitive to dry conditions that can make the plants more susceptible to weeds, disease and destroyed crops. Advocates, though, point out that the rice protocols are based on nearly a century of data from fields in multiple states using modeling that has been tested around the world.

For Hooks, the experience so far has gone smoothly. He is currently growing two fields, one 26 acres and the other 28 acres, using the alternate wetting and drying method.

"We actually had good success with it," he said. "We saw the savings from the water, it made sense to keep going."

Hooks noted that when he first heard about carbon credits, they were worth half of what they are today.

"Looking forward four to five years, that value could change and get a little more enticing later on," he said.