Dave Miller, an Iowa farmer who also works for the Iowa Farm Bureau Federation as IFBF's director of research and commodity services, testified last week before the U.S. Senate Committee on Agriculture, concerning proposed Global Warming legislation and a Cap-and-Trade System.
As chief science officer for AgraGate Climate Credits Corporation, an affiliated company of IFBF, Miller gave the senate panel his ideas on ways to structure and streamline the carbon credit program so that it would be an incentive to farmers to participate in it and so that the program would benefit the soil.
Farm Bureau supports a practical, voluntary, market-based carbon credit trading system rather than a cap-and-trade system. Currently 4,000 Iowa farmers are participating in the AgraGate carbon program which trades carbon credits on the Chicago Climate Exchange.
Better incentives needed to encourage more participation
Miller said that nationally more than 16 million acres have been compensated for providing environmental services through the CCX enrollment, verification and carbon credit sales process. "Market transparency is critical to the smooth operation of a carbon market, so that prices are publicly reported and readily available. The only offset market that currently offers that transparency is the Chicago Climate Exchange. Additional efforts to streamline the process would no doubt make it easier to expand the program," said Miller.
He also indicated that right now offsets are valued differently for soil, forestry, or methane and value can even vary according to geographic location. "All these variances increase the transaction of costs associated with marketing carbon offsets. The end brings fewer returns to the farmer or rancher hoping to enroll. That's no incentive," said Miller.
"Term credits are another hurdle for people who hope to enroll working farmlands in carbon offset markets. Our analysis shows term credits will be highly discounted by the marketplace, especially if the expectation is that credit prices in the future will be higher."
Complex rules, longer contracts hamper enrollment
Miller called for clear, simple protocols or rules which assist in the record keeping of all offset sources. Since it is the active growing of crops, grass and trees which take carbon from the atmosphere in the first place, it is essential to protect income from these production activities to sustain any carbon-sequestering activity while ensuring the continuation of affordable food, fiber and fuel for a growing world population.
Lengthy contracts for carbon enrollment are another factor in hampering enrollment, said Miller. "In Iowa, more than 60% of the farmland is rented by the operator with the vast majority on one-year renewable leases. Requiring contracts to be longer than the typical five-year carbon contract is too long and will significantly reduce participation."
And finally, Miller called for USDA-developed offset standards and protocols for biological sequestration regarding methane. "The USDA already oversees standards for grains, livestock and other agricultural markets and should remain the agency in charge of setting standards for carbon market offsets," he says.