Agricultural soil carbon sequestration offset programs: strengths, difficulties, and suggestions for their potential use in AB 32's cap and trade program.

• Author: Bernadett, Lauren
• Position: California

1. INTRODUCTION II. THE BASICS OF AB 32 AND ITS CAP AND TRADE PROGRAM III. THE BASICS OF OFFSET PROGRAMS IV. AGRICULTURAL OPPORTUNITIES FOR OFFSET PROGRAMS A. Decreasing Livestock Emissions Through Manure Management B. Decreasing Cropland Emissions Through Agricultural Soil Carbon Sequestration 1. Agricultural Soil's Ability to Sequester Carbon 2. Existing and Proposed Agricultural Soil Carbon Sequestration Offset Programs 3. A Future Agricultural Soil Carbon Sequestration Offset Program for California?... V. THE DIFFICULTIES WITH SOIL CARBON SEQUESTRATION OFFSET PROGRAMS A. Difficulties in Quantifiability, Permanency, and Additionality B. Increased Herbicide Use Replaces Tilling When Sequestering Carbon VI. REDUCING UNCERTAINTY AND HARM IN AGRICULTURAL SOIL CARBON SEQUESTRATION OFFSET PROGRAMS THROUGH AN ECOSYSTEM APPROACH A. Quantifying Carbon Sequestered in Agricultural Soil B. Additionality of the Offset Project C. Understanding and Decreasing Herbicide Use VII. WEAKNESSES WITH CASE-BY-CASE ANALYSES WITHIN THE ECOSYSTEM APPROACH VIII. CONCLUSION I. INTRODUCTION

   In 2006, California signed the Global Warming Solutions Act of 2006, or Assembly Bill 32 (AB 32), into law. (1) AB 32 aims to reduce California's greenhouse gas emissions to 1990 levels by 2020 through a variety of regulations promulgated by the California Air Resources Board (CARB) including a cap and trade program. (2) The cap and trade program already includes four offset programs that give capped entities the opportunity to meet their emissions limitations in the most economically efficient way available. Whereas the level of emissions in a compliance obligation that may be accounted for through an offset program is capped at 8%, the number of existing offset programs that may be used to reach this 8% can be increased to include additional offset programs. (3) Adding offset programs may be attractive to covered industries and government alike because offset programs allow covered entities to determine what the most economically efficient way to comply with emission limitations is for that specific entity while still complying with the overall program emissions cap.

   CARB's implementing regulations for AB 32 do not address California's large agriculture sector as directly as other sectors, as its dominant strategy to reduce agricultural emissions is to encourage dairies to voluntarily install manure digesters. (4) However, California's agricultural sector, primarily manure and cropland management, provides ample opportunity for offset programs. It is a sector with significant greenhouse gas emissions and sinks that is not otherwise regulated by the cap and trade program. one offset program already takes advantage of this opportunity by issuing offset credits for capturing and destroying methane from dairies and swine farms using particular manure management systems. (5) Another opportunity for an agricultural-related offset program arises from the ability of agricultural soil to sequester carbon. Soil is an important sink for carbon, and the United Nations Food and Agriculture Organization estimates that soils can sequester over 10% of the anthropogenic carbon emissions in twenty-five years. (6) Whereas some cap and trade programs, such as the European Union's European Trading System and the first compliance period of the Kyoto Protocol, do not recognize offset credits from most carbon sequestration offset programs because the emission reductions are difficult to measure, verify, and track, future sequestration programs under AB 32's cap and trade program are possible. (7) AB 32's cap and trade program already includes two carbon sequestration offset programs, both stemming from the power of trees to sequester carbon, and other types of sequestration programs are not prohibited in the regulations. (8)

   Consequently, adopting an agricultural soil carbon sequestration offset program seems like a possible option for a future offset program under AB 32. In fact, the possibility has already been mentioned in a proposed bill that went before the California Assembly. (9) Additionally, agricultural soil carbon sequestration offset programs have been implemented around the world and likely would have played a role in the Waxman-Markey bill or Lieberman-Warner bill if either had passed both Congressional houses. (10)

   Agricultural soil carbon sequestration offset programs have many benefits in that they take advantage of soil's effectiveness as a carbon sink to provide flexibility for covered entities in cap and trade programs. However, aside from problems with quantifiability, permanency, and additionality, which are typical considerations in carbon sequestration offset programs, agricultural soil carbon sequestration offset programs can be accompanied by detrimental incidental effects, particularly increased herbicide use. Increased herbicide use increases nitrous oxide emissions, which could jeopardize the cap and trade program's goal of reducing greenhouse gas emissions and negatively affect populations and the environment beyond the scope of the cap and trade program.

   This Comment proposes that if CARB considers adopting an agricultural soil carbon sequestration offset program, as it might in the future, it should use an ecosystem approach to guide the offset program creation process and a project-by-project ecosystem approach for individual project measurements and approval, as opposed to the standards-based approach that CARB utilizes in its existing offset protocols. An ecosystem approach ensures that the complete scope of a program's environmental effects are measured, rather than only accounting for carbon sequestration. Using this approach, CARB can ensure that the complex incidental effects of agricultural soil carbon sequestration offset programs are completely accounted for in determining whether the program should be adopted, calculating projects' offset credits, and appropriately constructing the program's regulations to prevent undesirable effects. Additionally, this project-by-project ecosystem approach will help CARB to quantify the actual emissions and sinks of an offset project, determine whether an offset project is actually additional to business-as-usual, and determine the best pesticide management program to decrease emissions from herbicide use. A case-by-case ecosystem approach will help CARB to know to reject the program or an individual project if it cannot ultimately benefit AB 32's goal of reducing greenhouse gas emissions in California.

   Part II of this Comment provides an overview of AB 32 and its cap and trade program. Part III describes the role that offset programs play in a cap and trade scheme and introduces a sampling of offset programs that currently exist in various cap and trade programs. Part IV details the agricultural sector's contribution to the United States' and California's greenhouse gas emissions and identifies two opportunities for decreasing agricultural greenhouse gas emissions through offset programs. These opportunities include improved manure management, which is already being taken advantage of by AB 32's Livestock Project Compliance Offset Protocol, and improved agricultural soil management, which provides a possible opportunity for an additional offset program under AB 32. Part V discusses the problems with agricultural soil carbon sequestration offset projects, including difficulties in accurate measurement, permanency, additionality, and increased herbicide use which results in increased nitrous oxide emissions. Part VI argues that an ecosystem approach, which would implicate an analysis of the complete environmental effects of the offset program and a case-by-case analysis of the offset projects, would reduce the uncertainty and harm associated with agricultural soil carbon sequestration offset programs. For these types of offset programs, the ecosystem approach would be a more preferable approach than CARB's typical standards-based approach, which would likely not account for the complete effects of encouraging new agricultural practices through an offset protocol and may not properly account for whether a project is actually additional to business-as-usual. Part VII discusses some of the weaknesses of a case-by-case ecosystem approach and argues that despite these weaknesses, this approach is still preferable for agricultural soil carbon sequestration offset programs due to the extreme and varied nature of the issues associated with this type of program.

2. THE BASICS OF AB 32 AND ITS CAP AND TRADE PROGRAM

   California's Assembly Bill 32 (AB 32), (11) the Global Warming Solutions Act of 2006, is the first greenhouse gas reduction bill of its kind in the United States. (12) Passed by the California Legislature and signed by former-Governor Schwarzenegger, AB 32 has been implemented to include direct regulations, incentives, voluntary actions, and market mechanisms, including reporting and verification requirements, early actions, and a cap and trade program. (13) The bill empowers the California Air Resources Board (CARB) to both set the emissions cap for the cap and trade program and conduct rulemakings to establish greenhouse gas regulations and rules governing the market mechanisms. (14) The ultimate goal of AB 32 is to have California emission levels return to 1990 emission levels by 2020. (15)

   A prominent and controversial portion of AB 32 is the cap and trade program. (16) The program functions as a typical cap and trade. The regulator (here, CARB) sets an emissions cap and particular sectors or entities are chosen to be covered under the cap. Each entity covered by the cap has its own compliance obligation, or maximum emission levels. The regulator allocates or auctions allowances to entities regulated under the cap, and entities can buy allowances amongst themselves or fund a project in exchange for offset credits if they cannot meet their allotted compliance obligation by...