When carbon practices pay cash

GOOD STEWARDS AND SECRETARIES WILL WIN

carbon is sold by farmers worldwide in the form of food, fuel and fibre. But in some places, farmers are also marketing the environmental benefits their carbon conscious practices provide and policy developers are working to bring this opportunity to Ontario farmers.

The Western Climate Initiative   Climate change fails to acknowledge political boundaries so drafting effective greenhouse gas emissions legislation relies on collaborative political partnerships such as the Western Climate Initiative (WCI).   The creation of the WCI began in 2007 when five US state governors from Arizona, California, New Mexico, Oregon, and Washington signed an agreement to develop a regional emissions target. They also agreed to develop a market-based program that would assist them in meeting their target, called a cap and trade system. British Columbia, Utah, and Manitoba joined the organization as partners later that year, followed by Montana, Quebec, and Ontario in 2008. By May 2010, the organization grew to include 11 partners in Canada and the US as well as 15 observers in both countries and Mexico.   Last year, the WCI partners released a collaborative document called the Design for the WCI Regional Program which outlines a cap-and-trade program to be initiated by most US partner jurisdictions on January 1, 2012. To help facilitate emissions trading programs and offer technical services to these partners, the Western Climate Initiative became a non-profit corporation this past November. WCI Inc. will also continue to assist the remaining Canadian partners and the state of California with further program policy development.

As part of its green energy initiative, the provincial government has been exploring the feasibility of introducing a carbon market to Ontario to help reduce greenhouse gas emissions. With input from the Ontario Federation of Agriculture (OFA) and contributions from the Ontario Ministry of Agriculture, Food, and Rural Affairs (OMAFRA) researchers, policymakers are working to include farmers as potential offset providers in a proposed cap and trade system. Don McCabe, vice president of the OFA and president of the Soil Conservation Council of Canada, has been an active participant in policy discussions. He believes the inclusion of farmers in these early stages of policy development, both here and on the world stage, is critical to the success of any future systems.

“All farmers, doesn’t matter where they are from, manage the carbon cycle,” says McCabe. “Agriculture is 10 percent of the problem but, we could be 20 percent of the solution.”

the cap and trade system
McCabe says that in a cap and trade system, companies will be told that they need to cut emissions and farmers with good carbon management practices would be free to voluntarily undertake offset projects to create carbon credits. This voluntary component offers a degree of flexibility within the cap and trade model, which differs greatly from the lack of flexibility within carbon tax models. Both systems have been successfully adopted in Canada, though the cap and trade system came first in Alberta and the carbon tax system followed later in  British Columbia.

Karen Haugen-Kozyra of KHK Consulting was part of the team that made the Alberta carbon marketing system a reality. She says that it’s possible for both systems to work together and essentially, they achieve the same basic result.

“The government response to this issue of climate change is to put a price on carbon,” said Haugen-Kozyra. “It’s one of these intangible things we’re trying to make more tangible.”

Haugen-Kozyra says that one of the most difficult parts of establishing carbon as a commodity is developing the initial policy framework. The government must begin by issuing measurable industry emission standards. On the agriculture side, a sector that won’t have caps on its emissions, practice protocols are used to define the supply of carbon credits from a practice change. Building protocols requires considerable review of the scientific data available. In Canada, Haugen-Kozyra says we rely on the national inventory developed by researchers at Agriculture and Agri-Food Canada. But Ontario is also a member of the Western Climate Initiative, a partnership of like-minded districts which are working on regional policies together. So distilling these additional resources into a manageable framework won’t just happen overnight.
 
“The interface between science and the environment is very complex,” says Haugen-Kozyra. “I think this will start small and cautiously.”

But Haugen-Kozyra says some standards are slowly becoming generally accepted worldwide, such as the value of one carbon credit which is the equivalent of one tonne of carbon dioxide emissions. As the Ontario government continues to move forward, she expects to see aspects of the Alberta model transferred, which she anticipates might include modified versions of current agricultural practice protocols.

Currently these include protocols related to afforestation, feeding beef, the beef life cycle, energy efficiency, tillage management, pork, biofuel, biogas and biomass production. Adam Hayes, Field Crop Soil Management Specialist for OMAFRA, agrees that Ontario farmers who are interested in participating in a future carbon market would be smart to familiarize themselves with the Albertan system.

starting on-farm preparations
Hayes says a number of pilot projects have already been undertaken to test certain protocols in Ontario’s climate including draft tillage and nitrogen protocols. This has already led to the discovery that some protocols may be better suited to Ontario than others, though more research is still required. But it’s important for Ontario farmers to be conscious of some significant differences warns Hayes, to ensure their financial expectations are realistic.

The adoption of conservation tillage in Ontario, for example, has been significant and this will result in an even smaller carbon credit being applied per acre than the one that is offered in Alberta. Hayes also cautions that carbon cycles a lot faster in Ontario, which makes carbon sequestering much more challenging than in Alberta. Farmers looking to get rich selling carbon credits will find these environmental hurdles tough to overcome. But Hayes says adopting conservation tillage methods is a good first step in preparing for carbon trading, and farmers who have already gone to no-till should consider expanding their crop rotations.

“Crops that add organic matter to the soil, such as perennial crops, cereals or cover crops, will sequester carbon in the soil better than tillage,” said Hayes. “Adding manure or composts will also help.”
 
Both Hayes and Haugen-Kozyra agree that the most important thing a farmer can start doing to prepare for carbon trading is to start keeping very detailed records. Hayes says good records of tillage and nitrogen application will go a long way in the future, particularly where nitrogen emissions are concerned. Both experts agree that for Ontario producers, the greatest potential opportunity will be reducing nitrogen emissions. Haugen-Kozyra says most regulators are looking for three years of auditable data and, while it can be as simple as taking pictures of equipment odometers on a regular basis, it does take some getting used to.

“You basically need a digital footprint of the farm,” said Haugen-Kozyra. “It’s really important that farmers start tracking what they’re doing. In Alberta, the platform for data collection is being built with the carbon offset system, allowing farmers to be ready for more environmental markets that come along.  For example, water quality trading and conservation credits are under development.” •