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Can Florida Benefit from the Elusive Carbon Market?
The GHG Report estimates Florida could generate more $340 million through forest and agricultural carbon offsets under a mandatory cap-and-trade system. Allen Tyree's pine forest (one of two Florida farms that particpate in the voluntary market) will be paid for the first time this July.
Photo by Thomas Wright
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By Patrick Heck
"This is exciting news for farmers and foresters," former Florida Commissioner of Agriculture Bob Crawford noted in a recent guest column for the Naples News. He was referring to the encouraging results of a recently published report by SNRE Affiliate faculty researchers. The report suggested the state of Florida is well positioned to help structure and benefit from the emerging carbon market system.
Funded by a grant from the Environmental Defense Fund, the study titled, "Opportunities for Greenhouse Gas Reduction through Forestry and Agriculture in Florida," identified Florida's potential for mitigating the effects of greenhouse gas emissions (and ultimately climate change) and the economic contributions different industries might provide under a mandated cap-and-trade system. There is one problem; earlier this month the federal government failed to pass legislation that would create such a market.
S. 2191, also known as America's Climate Security Act (Senior Florida Senator Bill Nelson was a co-sponsor), sought to establish mandatory restrictions to decrease emissions of greenhouse gases (GHG) and create a national market to purchase and trade carbon credits. The concept is known as a cap-and-trade system which allows organizations unable to comply with government established caps on GHG emissions to purchase carbon credits from those working to mitigate the impact of the very same gases. The most notable and successful cap-and-trade system was established under the Clean Air Act of 1990, mandating emission caps for Sulfur Dioxide (SO2), the culprit for acid rain. While S. 2191 will not enjoy the same success, all is not lost.
Many believe this bill was a dry run for a future debate on climate change and ultimately hope its reincarnation will deliver more meaningful caps, include global partnerships, and establish a carbon market on ethical principles rather than corporate interests. "The atmosphere is truly a global commons," says Dr. Stephen Mulkey, co-author of the GHG report. "Our decision to engage in [its protection through] GHG mitigation is a reflection of our values as a society; it's an ethical decision we must make."
How Florida Could Benefit
Had such a market been created, the UF report demonstrated Florida would have been successful in creating new economic opportunities for foresters and farmers, while playing a significant role in bringing total emissions down from current levels.
Dr. Mulkey estimates the value of Florida's resources would generate $340 million annually under conservative market forecasts. As much as $121 million in additional income could also be generated as biogas becomes a replacement for fossil fuel; through the sale of crop and logging residues as fuel, and reduced fuel costs from conservation tillage. To be successful and competitive, Mulkey suggests, "[the U.S.] bite the bullet and establish meaningful caps that force [companies] to grapple with emissions."
To increase Florida's potential to sequester GHG, the report recommends the implementation of conservation tillage, where crops are grown with minimal cultivation of the soil, "improving the carbon and nutrient retention of soils." The trudy found that if 50% of agricultural lands in Florida were converted to no-till, the amoutn of carbon that could be sequestered would be valued at $34.4 million annually.
Photo by Eric Zamora
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Financial profits aren't the only gains this system will produce. Florida's forest and agriculture industries will significantly mitigate the worst greenhouse gases including: carbon dioxide (CO2), methane (CH4), and nitrous oxide(N2O). Although the agricultural industry is a net producer of GHG, various management techniques can help to sequester large amounts of carbon in both soils and waste, and eventually provide offsets through the creation of biogas. In the report, Dr. Mulkey notes that Florida forest and agricultural lands have yet to be managed for GHG offsets and reduction and "represent obvious targets for inclusion in a climate action plan for the state [of Florida]." Changing management practices in these industries will increase the possible amount of carbon sequestered and ultimately increase the value of Florida's industry on the carbon market.
Citizen's Take Action: Voluntary Carbon Market
While the Climate Security Act and a mandatory cap-and-trade system are placed on hold, a voluntary carbon market is currently underway and thriving, thanks to good environmental stewards. A year ago, IFAS Extension agent (Hamilton County) Allen Tyree converted his 81-acre farm and forest into carbon credits for sale on the Chicago Climate Exchange, the world's first active voluntary, legally binding integrated trading system. Tyree entered the carbon market after hearing about its potential to generate extra income. "Our farm's prerogative is to preserve land. We like it and don't want it developed and we figured as long as it paid the taxes, this was a smart and responsible thing to do," Tyree explains.
The UF study conservatively estimates the value of each carbon credit on the voluntary market at $4/ton. However, demand for carbon credits is already growing faster than the supply. The current value (as of June 1) was near $7.50/ton. In addition to the increased value, producers are paid retroactively for their land's involvement in sequestering GHG emissions. When Tyree is paid, it won't just be for the carbon sequestered over the last year, but for past years as the trees grew.
Tyree's forest consists mostly of slash pine and has been scientifically measured to determine the number of credits and sequestration potential. A firm, AgraGate, collects the credits and combines them into substantial pools with other properties. The carbon credits are then sold on the Chicago Climate Exchange, with the proceeds returned to the agricultural producers. Tyree will see his first check this July (it paid for his taxes six times over). "It sure does pay to be a good, environmental steward," Tyree joked.
Any future mandatory system would have to its kinks worked out and be actively managed to "keep the player honest," suggests Dr. Mulkey. To do this, greater restrictions and commitments are needed. When Tyree entered his forests into this system, he committed himself for at least 10 years. Current enrollees are required to commit to this system for 15 years. "For some, that's a long time and a long commitment," stressed Tyree responding to possible downsides to this process. However the rewards are worth it. The SO2 success story, realized lower costs (billions less than expected) and greater reductions in emissions (22% below mandated levels).
The Full Report: "Opportunities for Greenhouse Gas Reduction through Forestry and Agriculture in Florida"
Additional Resources on Florida's involvement in the Voluntary Carbon Market:
Bob Crawford, “A New role for Florida agriculture.”
http://www.naplesnews.com/news/2008/may/18/guest-commentary-new-role-florida-agriculture/
Florida Farm Bureau Press Release, “New carbon market opportunities for Florida agriculture.”
http://www.floridafarmbureau.org/news/press_releases/05022008_01
Chicago Climate Exchange Website
http://www.chicagoclimatex.com/
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