Some of you may have seen the op-ed that Dr. Jones and I wrote for the Des Moines Register regarding the Gov. Reynolds’ carbon task force.
You may have also seen that the U.S. Senate passed the "Growing Climate Solutions Act," which will use public funds to create certification programs for agriculture and forestry “markets." I am writing to clarify what these programs do, why it is not appropriate to call them markets, and the potential challenges they signal for a real economy-wide climate change mitigation policy.
Markets exist because people want to obtain scarce resources. In the case of greenhouse gas (GHG) emissions, for a market to function, the government has to impose a maximum emission amount (the cap in cap and trade). This creates an artificial scarcity that serves to jumpstart the market. Without a cap, there is no reason to trade pollution credits, because pollution is not restricted.
Let’s say that the original level of pollution is 100, and the cap is set at 80. Everyone who was polluting is allocated 80 percent of their current pollutant level, so if I was emitting 1.0 unit, I’m now restricted to 0.8. The trade part comes in because I can opt to pollute at level 1.0 as long as someone sells me 0.2 permits. Let’s assume farmer Edna was also polluting at 1.0, and has permits for 0.8 emissions. She can choose to pollute 0.6 and sell me 0.2 credits. After we trade, the total amount of pollution between the two of us is 1.6 overall, but I am still pollution 1.0 and Edna is doing all the pollution reduction work. This situation arises in the real world when it is cheaper for Edna to reduce her polluting than it is for me to do the same. For example, it might be more practical (and cheaper) for Edna to plant trees than it is for me to install solar panels.
The carbon credits bruhaha is really just an air sandwich, because in all these policy discussions and proposals there is absolutely nothing about a cap. That means there’s no way to tell if all this money and effort will actually reduce emissions from the pre-policy condition.
So why is this happening?
In part, because USDA Secretary Vilsack is really good at bringing home the bacon.
These kind of carbon payments are one more incarnation of conservation subsidies, which, you may have noticed, have not exactly done a bang-up job of cleaning up the corn belt’s polluted water.
The carbon payments look to be similarly feckless as a solution to the climate crisis.
There are several reasons for this: they may not be additional – farmers or foresters were already implementing them, so there is no extra carbon being sequestered, and no real reduction in GHGs in the atmosphere; the practices may not actually sequester much carbon at all – this is particularly the case for no till; and their sequestration may not last – again a real concern for annual practices like no till and cover crops.
So USDA is going to throw away a bunch of taxpayers’ money to appease the ag lobby, for little more than a grudging industry acknowledgement that climate change isn’t a hoax.
But the real risk here is that the Growing Climate Solutions Act is going to create much bigger private sales of these carbon “credits."
We call these voluntary markets because, as I said above, there is no cap or no regulation limiting emission amounts that would drive Microsoft or Shopify to buy these “credits."
Why would they engage if they don’t have to?
In the past, companies that participated in these schemes were expecting a future limit on emissions, so they wanted to do a trial run before it became official (and buy cheap credits in the meantime). This was the rationale for the Chicago Climate Exchange. When the cap did not materialize, the exchange went belly up.
It is clear that Biden will not be imposing a GHG emission cap this time around. So what is the reason for all this interest from the private sector this time?
These companies know that no matter what the administration proposes to reduce GHG emissions for the U.S. economy in general, their “offsets” will be grandfathered in and count towards their activities to reduce emissions. To them, it does not matter whether they are buying more real carbon sequestration or just making the farm lobby happy.
Even though there is not much taxpayer money involved in codifying and setting up these private markets, the cost to all of us will be a less effective US-wide policy if it ever comes, while in the meantime we create a “doing something” mirage that is really nothing more than a cash oasis for farmers. Meanwhile, the ice caps keep melting and the West keeps burning.
Be aware that the farmers who benefit the most from these “credits” are large conventional farmers who use a lot of fossil fuels.
A person farming a couple thousand acres of continuous corn in Iowa will make much more money off these “credits” than a small diversified operation, even though their overall GHG emissions are much higher and could be reduced pretty easily, saving us some money, if we stopped subsidizing them to grow more corn which also pollutes more water.
Nobody is looking at the total energy consumption of farmers here, or making meaningful changes to a sector that generates 10 percent of U.S. GHG emissions while contributing 0.6 percent of GDP and 1.3 percent of employment.
Nobody is looking at whether more effective alternatives exist.
As I noted above, taxpayers subsidize corn production, which uses a lot of fossil fuels, and then subsidize the cleaning up of the pollution that corn production generates. We could save ourselves some money and do well by the planet if we stopped the crop insurance subsidy program or asked farmers who want those subsidies to plant trees or buffers, use less nitrogen (which would help with natural gas use) and diversify their crop rotations.
If we are serious about global warming, we need to give these schemes the cold shoulder. The real purpose of these “credits” is to give farmers an excuse to not do their homework and forestall the hard decisions that agriculture and the rest of the U.S. economy have to make to reduce GHG emissions.
We’ve let agriculture slow-walk water quality for decades now; we seem poised to let them do the same on climate change.
As a final note – I hear from some that people in the environmental movement “want a win," or see omens of bipartisanship and action in the passing of the climate solution bill.
If you feel the burning urge to support these greenwashing efforts, remember that we subsidize agriculture to the tune of billions of dollars a year. A real win and good omen for things to come would be to stop throwing good money away after bad.
Chris Jones, IIHR Research Engineer, Posted June 19, 2021
Water Quality Monitoring & Research
IIHR — Hydroscience & EngineeringCollege of Engineering
You can sign up for Chris' blog on water quality and agriculture at: https://www.iihr.uiowa.edu/cjones/welcome/
