Marten Law Group: Offsets For Greenhouse Gas Emissions: Clarifying the Role of Forestry and Agriculture

Marten Law Group: Offsets For Greenhouse Gas Emissions: Clarifying the Role of Forestry and Agriculture

In this Emerging Issues Analysis, Svend Brandt-Erichsen of the Marten Law Group reports that agriculture and forestry, like most sectors of the economy, would experience higher operating costs under a GHG cap-and-trade program like that contained in H.R. 2454, which was passed by the House earlier this summer and is now under consideration in the Senate. But backers of the legislation, including the Obama Administration, argue that farmers and timberland owners can make money off this program by changing their practices to sequester carbon and selling the resulting emission reductions to offset emissions from regulated sources. Secretary of Agriculture Tom Vilsack and EPA Administrator Lisa Jackson have testified that agriculture and forestry offsets could generate nearly $3 billion a year in 2020, increasing to as much as $20 billion annually by 2050, with revenues divided about evenly between the two sectors.
 
“This sounds promising for America's farmers and timberland owners, but will not be so easy to actually achieve,” writes Brandt-Erischsen. “One of the biggest challenges is striking a balance between the flexibility landowners need to succeed in their primary business venture farming or timber harvesting and the certainty GHG legislation seeks that carbon sequestered by offsets in soil and trees will remain in place indefinitely.”
 
“This tension was central to the negotiations that resulted in the House bill shifting oversight of agricultural and forestry offsets from the Environmental Protection Agency to the Department of Agriculture and creating a new category of term offset credits,” he explains. “It also will play out in the Senate, where the Agriculture Committee is expected to expand upon the agriculture and forestry provisions in the House-passed climate change bill. Despite the difficulties, the final bill is likely to include a robust role for offset credits from the agricultural and forestry sectors.”
 
In this article, Brandt-Erichsen examines the role of offsets within a cap-and-trade program, offsets in the agriculture and forestry sectors, the impact of reversal risk on forestry and agriculture emission offsets, term offset credits, and other implementation issues. He concludes with practice pointers relating to offsets for GHG emissions.