Farm Industry News Blog

Emission Reductions Could be Big Business for Ag & Forestry Sectors

potential-revenue-graph.JPGLast year, the 25x25 Alliance formed a Carbon Work Group to analyze the roles of agriculture and forestry in a reduced carbon economy. One of the group’s goals was to recommend how each sector could capitalize on efforts to reduce and capture carbon and greenhouse gas emissions.

The group recently published a Discussion Guide: Agriculture and Forestry in a Reduced Carbon Economy—Solutions from the Land. You can read the report at www.25x25.org/storage/25x25/Carbon_Subcommittee/carbon_policy_discussion_guide_april_1_2009.pdf.

Agriculture and forestry have several “reduction” opportunities, according to the guide. This includes emissions reductions, biological sequestration and avoided fossil fuel emissions (through the use of cellulosic ethanol and biodiesel, for example). The accompanying chart shows just what kind of potential gross revenue could lay ahead for agriculture and forestry.

Ernie Shea, project coordinator, 25x25 Alliance, points out that this is gross revenue. There will, of course, also be costs for the ag and forestry sectors to participate.

The chart shows the potential gross revenue at various price points per MT Co2e. If the price is $5 per MT CO2e and the agriculture and forestry sectors offset the lower bound estimate of 10% (705 MMT CO2e) of total U.S. emissions, the annual gross revenue of these sectors is $3.5 billion.

A study by EPA in 2005 suggests that an estimated 2,100 MMT CO2e could be reduced annually over the next 100 years (2,100 MMT is about 30% of total current GHG emissions in this country).

“Using EPA’s high end estimate for the average price of carbon ($50 MT CO2e), agriculture and forestry could realize over $100 billion in additional annual gross revenue,” says the 25x25 report. The total value of U.S. agriculture in 2002 was $200 billion.

Biofuels have the potential to mitigate climate change in two ways: by avoiding emissions through improved production efficiencies (e.g., conservation tillage and irrigation system upgrades); and substituting fossil fuels with ethanol produced from biomass and biodiesel, the report states.

One of the points that I found striking is that, according to the EPA, agriculture and forestry is responsible for just 7% of total U.S. greenhouse gas (GHG) emissions today. This is small compared to the GHG emissions of electric power, transportation and industrial sectors, the report adds. Even more striking is that agriculture and forestry have the potential to reduce 10-25% of this country’s total annual GHG emissions because of their large carbon sequestration potential.

The Carbon Work Group says that the ag and forestry sectors “are well positioned to offer solutions to counter climate change and that farm, ranch and forestland owners have much to gain by helping reduce GHG emissions.”

The 25x25 Alliance recently provided responses to a House Ag Committee questionnaire on how a carbon reduction program should be designed, administrated and implemented. For details, please visit www.25x25.org/storage/25x25/documents/Carbon_Subcommittee/house_ag_cmte_carbon_questionnaire_25x25_4-10-2009.pdf.

Solutions (such as carbon sequestration using cover crops) and compensation (such as on a per ton basis by crop or soil type, for example) for emissions reduction could be handled in any number of ways, depending on how programs are structured, Shea says. This, however, is a complex policymaking process and that is why the House Ag Committee and other government agencies have requested input from organizations, such as the 25x25 Alliance.

The 25x25 Alliance is a group of agriculture, forestry, business, labor, conservation and religious organizations whose goal is to get 25 percent of the country’s energy from renewable resources (such as wind, solar, and biofuels) by the year 2025. The Alliance is supported financially by the Energy Future Coalition, a non-partisan public policy initiative funded by foundations.

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