Agriculture Offset Credits: Where Do They Fit?

Agriculture is not a sector that is targeted for emissions capping. Agriculture can, however, play an important role as a provider of offsets. Saskatchewan farms have considerable potential to sequester carbon in soils by adopting measures such as reduced tillage, continuous cropping, conversion of annual cropland to perennial grasses, and tree planting. Janzen et al (2005) provide carbon sequestration estimates for various farm land practices. Relative to estimates reported by Janzen et for continuous cropping and reduced tillage, 0.5 t/ac/yr of carbon sequestration would be a conservative estimate of sequestration potential for these two practices alone. On Saskatchewan's 42 million acres of farmland used for annual crops, this could mean sequestration potential of over 20 million tonnes/yr of CO2-e, which would offset about 30 percent of Saskatchewan's total annual emissions of 70 million tonnes CO2-e. Not all of this carbon would necessarily earn offset credits. However, if it did, and carbon prices similar to EU Emission Trading System prices were achieved, it would mean an additional $400-800 million in gross revenue for Saskatchewan's agricultural sector annually. Perennial grasses, afforestation, agroforestry and other GHG removal/reduction activities add to the overall potential.

The offset potential for agricultural producers is one reason for Saskatchewan to be interested in a cap and trade system. However, there are also concerns. Nationally imposed emission caps on certain sectors that are relatively important in Saskatchewan will have negative economic impacts. Also, there is a risk of "non-permanence" of the predominant offset agricultural producers are able to provide - i.e., soil carbon sinks. Sinks last as long as the land use or farm practice that created the sink, or as long as an effective replacement practice, continues. If these sink maintenance practices end, carbon is released back to the atmosphere, resulting in little or no net climate benefit. The concern about "non-permanence" is that farmers may at some point want to alter the sink maintenance practices in response to changes in production and market conditions.

Given the concerns just described, policy-makers may be tempted toward approaches other than cap and trade. Instead of large-scale emitters paying farmers for offsets that may in the end not benefit climate change goals, the monies could instead be used to develop technology that will produce direct reductions in the emissions of large scale emitters - e.g., carbon capture and geological sequestration that is being tested in south-east Saskatchewan oil fields. An important policy question, however, is how quickly large scale emitters will actually come up with such emission reducing technologies if emission caps are not now imposed to signal the clear intent of governments to achieve emission reduction goals. There is a strong argument that caps can significantly hasten technology development and innovation.

Undoubtedly, new technology will play a major part in a Saskatchewan emission reduction strategy. However, a singular focus on new technology can easily lead to a search for that ever-elusive magic bullet that will solve all the problems. Solutions are more likely to come from a whole range of technologies, existing and new, and from a variety of public policy instruments. The very hope of a magic bullet can create complacency and a false sense of security, with the unfortunate result that measures to solve the problems at hand are not taken. Agricultural sink technology that is capable of making substantive and immediate offsets to Saskatchewan's overall emissions exists today. It seems a mistake not to get the most benefit possible from that technology.

If agricultural carbon sinks are to be used effectively to contribute to climate change mitigation, the sinks will have to be maintained long term. It is possible to speculate regarding circumstances where this would not need be the case, such as, if at some time in the future, we expect climate change to be so successfully resolved that the sequestered carbon can be put back into the atmosphere without adverse effect. That, however, from today's vantage point, seems like an unlikely circumstance. Hence, we can expect cap and trade policy to be designed such that someone is held responsible for replacing credits that are lost when sinks are not maintained. Capped emitters will be extremely reluctant to buy offset credits if they run the risk of having to replace them if farmers discontinue sink maintenance practices. Thus, if farmers are going to receive a significant offset credit price under a cap and trade system, there are two basic choices: (1) farmers commit to long term sink maintenance ( alternatively to replacing offsets lost if they decide not to maintain the sink): or (2) governments backstop the soil sink offsets provided by farmers under a cap and trade system on the basis that soil carbon sinks are urgently needed to being dealing with the pressing climate change problem.

For further reading, see:

"GHG Offset Credit Policy for Agriculture in Saskatchewan: Capturing Opportunities Available Through GHG Emissions Trading", https://wiki.usask.ca/kis/index.php/Carbon_Credit_Policy_Wiki

Janzen, H.H., Desjardins, R.L., Angers, D.A., Boehm, M.M., Campbell, C.A., Carter, M., Gibb, D., Gregorich, E.G., Kaharabata, S., Lemke, R., Masse, D., McAllister, T., McConkey, B., Rochette, P., and Smith, W. 2005. Mitigation practices for agricultural land in Canada: A summary of "expert opinion". Agriculture and Agri-Food Canada Internal Report, Lethbridge Alberta.