Carbon Credits and Bureaucracy

 A number of articles on the issue of carbon credits--Politico, Civil Eats Modern Farmer, and others.  Apparently the Biden administration is moving towards a system of establishing credits for farmers to capture carbon in the soil as part of the effort to minimize climate change.  There's questions about definitions, about recognizing existing practices which capture carbon, etc. etc.

What strikes me is the likely impact on the USDA bureaucracy.  I assume NRCS will be the lead agency in determining whether a given practice captures carbon, etc. and that data relating to credits will be tied into the GIS system.

I've not studied the issue, but I'm assuming the credits will have monetary value, small at first but increasing.  I assume there might be a tie to existing farm programs.  Consider the sod/swamp provisions which initiated in the 1985 farm bill with some programs over the years requiring compliance with the provisions as a condition of eligibility for payments.  It's easy enough to imagine a requirement for some minimum of carbon capture being added to sod/swamp. I'm not sure these days how the FSA-NRCS collaboration on sod/swamp is working, but carbon capture might put new strains on the relationship, as well as the joint management of GIS data.

During my time NRCS had programs with their responsibilities under sod/swamp because they weren't used to being the "bad guy", making decisions which hurt farmers.  The agency's culture was always being the good guy, teaching and helping farmers to do better.  Will NRCS be up for carbon capture decisions?

A final concern is fraud.  We like to believe producers are honest, and most are.  But some aren't, and it's easy enough to imagine a fraudulent collaboration between a farmer and a USDA employee.

[Updated to add a link.]

CCC and Climate Change--Carbon?

 No sooner had I written yesterday's post on CCC's past Politico issued this piece on the corporation's possible future--Vilsack might have his lawyers come up with a theory to justify using CCC funds for climate change work, specifically a carbon bank.

😉

Organic Farming Has a Weakness

 Give credit to Grist for publishing this piece on regenerative grazing (a version of organic farming which reduces carbon emissions from beef cattle by capturing carbon in the soil).

A new analysis says there is indeed a big reduction in emissions, but the problem is the regenerative system requires more land, 2.5 times more land.

I may have blogged on this before--I think this applies to row crops as well.  Doing a rotation among row crops, small grains, and legumes requires more land for the legumes, as well as a market for the hay.

Drum on Carbon Tax

Kevin Drum has a long post on the carbon tax. 

Better Than We Used To Be

Kottke has a post with an aerial photograph of Edinburgh in 1920.  We don't know the time of year or day; we don't know whether the conditions were normal or abnormal.  But what it suggests to me is a memory, a memory of the great London smog of  1952 (most recently dramatized in BBC's The Crown and of reading about the PA smog of 1948.

Using coal to heat houses, as we did our house when I was growing up, produced smoke which killed, most dramatically in the right (wrong) geographic and climactic conditions.  That problem has been solved, at least for home heating.
 

Berkshire Hathaway and the Pay of Bigshots

From vox, in a piece on "pay ratios" the comparison of the pay of the CEO and the pay of the median employee in the company.  Some ratios are over 1,000.

Not all of the pay ratios released so far are so gaudy. Warren Buffett, the CEO of conglomerate Berkshire Hathaway, makes less than twice his company’s typical employee. 

[Updated:  Jeff Bezos earns 59 times the median Amazon employee according to this article.]

I'm Scientifically Illiterate

This Extension post says college students lack scientific literacy. When I dig into it, I discover I don't answer a key question on the carbon cycle correctly: From whence do plants obtain their mass? 

The answer seems to be from the carbon dioxide in the air.  (Although I'd suspect many plants obtain much of their mass from the water in the ground, being constituted mostly of water, but the question, and my initial answer, ignores the issue of water.)

Chicago Climate Exchange

A long while ago I blogged about a Northeast farmer who was selling carbon offsets. At the time I was leery of his claims, but it was the first time I'd run into the idea that farmers were currently selling offsets.  It now seems, according to this post on the sale of the Chicago Climate Exchange, that such offsets are selling for $.10 a ton. No need to comment further, I think--the market has spoken.

John Phipps, Competition, and Cap and Trade

John Phipps operates 2100 acres with his wife and son.  He posts about the competition he sees rising from the whippersnappers who have taken over the world (the President could be my son, for crying out loud):

I suddenly noticed these younger colleagues, and when conversing with them, I reinforced my belief the biggest challenge facing me and our our farm was leaping up with the competition arising all around us.

In fact, I think it is safe to say one of our worst fears has been realized: the best and brightest have returned to the farm.  And they are quietly accruing by sheer ability and economic advantage the bulk of the market share for farmers.

A couple points:

• one is the obvious one--the conventional wisdom is that farming is dominated by the old. Not so from John's view.
• the second is more subtle--the balance of cooperation and competition.

There's the old joke about the two guys in the woods who see a bear, who starts chasing them.  One guy says: "we've got to outrun the bear", the other guy says: "all I have to do is outrace you".  I remember that joke when I see the Farm Bureau and other ag associations talking about how "[pick your proposal, starting with "cap and trade] will be bad for farmers." Over the years the farm and crop groups have persuaded their members they share common interests.  And they do--if they can unite and lobby Congress to pass programs benefiting corn farmers, or dairy farmers, then everyone gains.

But while cooperation, viewing oneself as part of a community of corn farmers, or dairy farmers, works sometimes, it doesn't always. That's what John is reminding us of.  In the case of a changing environment for farmers, some farmers will suffer and some will profit.  I'd typically expect the younger, more technologically-oriented farmers to adapt better to change, to outrun their older, more change-averse colleagues. So, if you're a farmer and you know you're above average in smarts and capability, then you should welcome changes in your economic environment, you should want some bears around because you can outrun your fellow farmers.

But then, one night you listen to Garrison Keillor and remember maybe your self-confidence isn't so well grounded.

Wrong Again, on Carbon Sequestration

House Ag has the text of the agricultural amendments to the carbon bill. (There's also a summary.) I was wrong in my assumptions on how it might work--I was figuring a direct NRCS to farmer linkage. Not so, instead there's provision for "offset project developers" and "independent offset verifiers" which sound like private entities. So the NRCS would be working through these third parties. (This is based on a fast skim and I don't claim any expertise in the area.)

Seems to me this is partially political. (I know you're surprised.) By using third parties you increase the chance of getting influential supporters and contributors on board. Use a government agency, you only get the agency's employees. [Updated: Did I ever link to the National Farmer's Union testimony? They're currently acting, I think, as an offset project developer. They've got an interesting website application show in the testimony as well.]

Because I'm on the weak government kick recently, I'll go on to say this is an example of how and why we end up with weak government (otherwise known as protecting our liberties); the process of getting legislation enacted requires logrolling and obeisance to local power centers.

Offsets and FSA?

I've been assuming NRCS would be the lead agency within USDA if and when the Waxman-Markey bill passes with USDA involvement in handling carbon offsets within agriculture. But this article indicates it might be FSA (of course, I'm surprised when any mainstream media person knows the difference between the two agencies so this is meaningless). But just to stir the pot:

"The deal also could appease Farm Belt lawmakers by giving the U.S. Agriculture Department's Farm Service Agency greater involvement in oversight of the market for "offsets," credits for projects that cut greenhouse gases. Many of the projects would likely come from the agriculture sector, such as planting trees that absorb carbon dioxide.

Carbon Offsets

Vilsack's testimony before House Ag is here:

"The systems we establish will need to recognize the scale of the changes needed, the capabilities of farmers and land owners involved, and the infrastructure that will be required to deliver information, manage data and resources, and maintain records and registries. In addition to bringing offsets to scale, we must also ensure that the offsets markets have high standards of environmental integrity to ensure that offsets result in real and measurable greenhouse gas reductions while bolstering efforts to conserve soil, water, and fish and wildlife resources."

The NYTimes has a post describing the concerns and back and forth between ag and EPA. One proposal, not something NRCS would like:

"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."

I'm skeptical, but maybe there is a compromise possible, at least for policing it: Record the offsets on a GIS layer and make it publically available. Farmers get the offset payments but have to give up the secrecy now applied to their acreage uses. Because, as Professor Richards observes, NRCS isn't (at least wasn't) comfortable being a regulatory agency (witness sod/swampbuster), give FSA a role. (Cynics among you knew that was where I was headed.)

Workload for NRCS?

That's what I get from this item from the letter sent to Speaker Pelosi by a set of farm organizations about the carbon cap and trade proposals:

Eligibility and offset compensation should be based upon whether a project, technique or practice sequesters carbon or otherwise reduces GHG emissions. USDA should establish an activity baseline for each offset project type in effect on January 1, 2001 with standardized methodology. We support the establishment of a static baseline of activity to measure against when determining additionality. The fixed baseline should establish which practices were in effect on a specific piece of land on a specific date; any activity that results in GHG reductions measured against that baseline should be deemed eligible/additional.

I'm not sure why they used Jan 1, 2001 as the magic date. Nor do I know if they consulted with anyone from NRCS (or FSA) as to the feasibility of doing this. I know the acreage reports submitted to FSA provide some information on the activity on the land, but I don't know whether it's sufficient to be used for this purpose.

If and when it comes to writing legislation, there are lots of issues to be addressed. For example, there's a maintenance question--if farmer Jones was doing no-till on her acreage in 2000, does she have to have continued no-till in the years since? How about shifts in practices among the fields on the farm? And how do the bureaucrats encapsulate the requirement? (See my earlier mention of "conserving base".) Might it be another layer(s) added to the GIS?

But I'm sure this proposal is causing some bureaucratic hearts in NRCS to beat much faster.

Cap and Trade

I read some discussion that cap and trade had the advantage of enabling the politicians to make more deals than would a carbon tax. I thought of that when I read Farm policy this morning, quoting Chris Clayton:

“People familiar with the situation who spoke to DTN said that [not mentioning agriculture much in the cap and trade bill] doesn’t necessarily mean Waxman sees no role for agriculture, but that Waxman may leave agriculture’s role in the bill to the House Agriculture Committee to add to the legislation. An amendment for agricultural offsets also could come up in Waxman’s full committee debate next week.”

Since Peterson is threatening to kill cap and trade unless ethanol is protected and promoted, that sounds as if there's a deal in the works.

Carbon Offsets from a Bureaucrat's Viewpoint

Okay, I was a bureaucrat so when there's talk of paying farmers for carbon offsets, I immediately think of how it might be handled by USDA/FSA. And, because I'm stuck in a rut, I'm likely to think of structures FSA has used in the past.

Back in the 1970's there was something which strikes me as a parallel. Under the program then, ASCS (FSA's predecessor) established a "conserving base" for each farm. This was the acreage in "conserving uses" (think of it as hay fields, pastures, grassland). Under the program,as a condition of receiving benefits farmers might be required to increase the acreage in conserving uses for the year (and not break out any new cropland). That seems to me to be a valid model for any future payments for carbon offsets. FSA/NRCS looks at the farming operation, documents what's being done already which impacts carbon sequestration. Call it a "carbon offset base". Then you could pay taxpayer dollars for changes to the operation which increases sequestration. But you'd also have to assess charges if and when a farmer changes her operation and reduces the carbon offset base. Or, assess the operation yearly and make yearly payments.

No doubt I'll have more to say as the subject continues to heat up.

Carbon Credits, A Pipedream?

Sec. Vilsack may be overpromising (I know, he's a politician so that's totally surprising) when he says farmers can replace direct payments with payments for carbon credits. That's the message of this Marcia Zarley Taylor post at DTN:

The number one challenge facing pro-carbon trading farm groups at the moment is proving that agriculture's contribution to carbon reduction can be real, "additional" and permanent, others Ag Carbon Market Group members say.

Here are two GAO products which are relevant