Tuesday, January 13, 2009

CCX wrestles with additionality

This is Dale Enerson, director of the National Farmers Union carbon offset program. He controls the largest number of farmers and ranchers enrolled in the Chicago Climate Exchange's (CCX) agricultural abatements trading scheme. He works for the North Dakota Farmers Union which provides services to the NFU. The Carbon Coalition met with Dale to discuss the unrest with the CCX scheme in LaFayette, indiana in October and in Santa Fe, New Mexico in December, 2008. We also attended a meeting in Boezman, Montana. We also met Dave Miller of the Iowa Farm Bureau's AgraGate operation and Ted Dodge of the National Carbon Offset Coalition, from Montana. These represent the Big 3 aggregators supplying the CCX.
As a result of the concerns expressed at meetings like these, the Chicago Climate Exchange is overhauling it system of rewarding farmers and ranchers who store carbon. "After Jan. 30, ranchers won’t be able to market their past efforts to store carbon dioxide in the soil dating back to 2003. Going forward, the Chicago Climate Exchange will accept only efforts to limit greenhouse gases related to the current year and future years," reports AGWEEK.
Selling carbon credits for action in the past is not leading to "additional" reductions in greenhouse gas emissions.
Dale Enerson, director of the National Farmers Union program, thinks this will take the heat off the scheme which has been heavily criticised by activists and customers. “From here forward, we think it will be more bulletproof in terms of criticism if you just offer current year and forward credits,” he said.
There have been changes for rangeland credits as well. They bring the rangeland program into line with the rules for carbon credits that farmers can sell for using no-till farming practices or growing grasses on cropland. Ranchers qualify for credits by using certain rotational grazing practices or by planting grasses and trees. Farmers are included for using no-till farming practices or by converting cropland into pasture or forest. Livestock producers can join in by installing systems to capture methane from manure.
Random checks are conducted to make sure farmers and ranchers are doing what they promised.
The big problem with the CCX model is the method for measurement of the soil carbon captured and held. CCX uses a 100% indicator or proxy system, governed by visual audits. Landholders get only a fraction of ton in credit for every acre enrolled in the program, and that rate per acre varies based on what measures are being taken and the land’s location. price the market has been giving farmers and consequently the number of farmers getting involved. While carbon credits sold on the CCX are fetching about $1.50 a metric ton now, last year, the Farmer’s Union averaged about $4.40 per ton with all the credits it sold. About 4,000 farmers and ranchers in about 40 states are enrolled in the Farmer’s Union program. That’s up from about 2,300 participants in 20 states roughly six months ago.
Currently, the Chicago Climate Exchange system is voluntary. It is expected that within the next five years, there will be some sort of federal requirement to reduce emissions or buy credits to offset emissions, which would increase the market for credits.
"The whole carbon market, it’s in its infancy,” Dale Enerson says.

PICTURED: The Carey's Cattle Ranch near Three Forks, Montana. We visited with Tom and Helen on their 10,000 acre ranch, thanks to our new friends Chuck Widemans (a geophysicist) and his wife Debbie Hanneman (also a geophysicist)

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