Offset programs make cap and trade programs “more attractive and palatable” to covered entities, as offset programs provide more flexibility to determine the lowest-cost method of reducing greenhouse gas emissions.As long as an offset project will be cheaper than internally reducing emissions, capped entities will likely seek out credit for emission reductions through offset programs. Offset programs are beneficial for governments implementing cap and trade programs because it shows that they are trying to work with industry to find lower cost means of reducing emissions to the mandated level. Additionally, now that offset programs are widely implemented, it would likely be more difficult to gain support for a cap and trade program that did not include offset programs. Offset programs are also beneficial for sectors that are target hosts for offset projects because offset projects are a source of improvements and an income opportunity for the host.Typically, the project host receives financial incentives or some sort of technology, facilities, or practice upgrade that they could not afford or would not have undertaken otherwise. Thus, the benefits of offset programs not only affect the capped entities, but also sectors that are otherwise unaffected by the cap and trade program.In the United States, the U.S. Environmental Protection Agency estimates that agriculture accounts for 8% of the country’s greenhouse gas emissions.The EPA estimates that half of these agricultural emissions come from management practices of agricultural soils, including fertilizer application, irrigation, and tillage methods,hydroponic nft and that livestock manure management accounts for 15% of the agricultural emissions.The livestock digestion process accounts for about one third of the agricultural emissions and the remainder comes from smaller sources, such as rice cultivation and burning crop residues.

These estimates do not include carbon dioxide emissions from on-farm energy use.CARB’s Scoping Plan estimates that the agricultural sector contributes to about 6% of the total greenhouse gas emissions in California.CARB also includes estimates of emissions based on the end use rather than the actual source of emissions.When calculated in this manner, 9% of California’s greenhouse gas emissions can be attributed to agriculture and food processing industries.In general, the agricultural sector provides at least two strong avenues for reducing greenhouse gases through offset programs: decreasing emissions from raising livestock and sequestering carbon in agricultural soil.California has already incorporated an offset program that takes advantage of the opportunity to decrease livestock emissions by installing biogas control systems , which capture and destroy methane, on dairies and swine farms.An offset program that takes advantage of the second opportunity to decrease carbon concentrations in the agricultural sector by sequestering carbon in agricultural soil has been used in conjunction with other cap and trade programs and may provide an opportunity for an expansion of California’s offset programs in the future.Many livestock operations manage livestock waste by using anaerobic liquid-based systems in lagoons, ponds, tanks, or pits.61 Manure that is stored in this fashion emits methane,a powerful greenhouse gas that is estimated to have a radiative forcing power, or global warming potential, twenty-five times that of carbon dioxide.Manure management accounts for 15% of the agricultural greenhouse gas emissions in the United States, and CARB’s most recent estimates indicate that manure management accounts for 1% of California’s total greenhouse gas emissions.Even though manure management is not the largest source of agricultural emissions, California’s cap and trade program includes the Livestock Projects Compliance Offset Protocol , an offset program that issues offset credits in exchange for installing biogas control systems , a type of manure digester, on dairies and swine farms.BCSs capture methane from the livestock operation’s manure storage facility before it is released into the atmosphere.The Livestock Protocol permits the captured methane to be destroyed on-site, transferred offsite, or used to power vehicles, but “the ultimate fate of the methane must be destruction.”

The dairies and swine farms may then sell the offset credits that they produce through this offset program on AB 32’s carbon market.The Livestock Protocol is considered a standards-based offset protocol, as it “creates additionality thresholds for particular categories of projects instead of determining additionality individually for each project.”CARB’s standards-based approach for its current offset protocols came under attack in Citizens Climate Lobby et al. v. California Air Resources Board.70 Citizens Climate Lobby argued that CARB’s standards based approach results in non-additionality by issuing offset credits for greenhouse gas reducing projects that would have been completed anyway, which impermissibly enlarges the scope of AB 32, and that CARB should have adopted a project-byproject approach instead in order to perfectly determine whether each offset project is indeed additional to business-as-usual.In addition to determining that using a standards-based approach for offset protocols was within CARB’s authority, the court in Citizens Climate Lobby determined “that the Livestock Protocol is reasonably necessary to effectuate the purpose of [AB 32] and [CARB] was neither arbitrary nor capricious in its promulgation.”The court made this determination by reviewing evidence presented by CARB that less than 1% of dairies and swine farms in the United States install BCSs to dispose of manure, installing BCSs is not a standard or common practice, and that the cost of installing a BCS is the primary barrier to installation.Because farms were not installing BCSs despite other favorable conditions for installation, the court stated that it is not arbitrary for CARB to use installation as the standard to determine additionality.Thus, CARB maintains a standards-based approach, rather than a project-by-project approach, for its Livestock Protocol. The court reached a similar decision regarding CARB’s three other offset protocols.Agricultural soil carbon sequestration offset programs function like other offset programs, but the projects can include switching to conservation practices including no till, conservation tillage, planting cover crops, utilizing high-diversity crop rotation, and other agricultural practice changes in order to increase the amount of carbon sequestered in the agricultural soil and reduce the amount of emissions from farm machinery.

All of these practice changes increase carbon sequestration by differing amounts. The U.S. Environmental Protection Agency estimated that conservation tillage can sequester between .6 and 1.1 metric tons of carbon dioxide per acre per year.The U.S. Department of Agriculture estimated that planting cover crops and improving crop rotations and fallowing practices can sequester between .2 and .4 metric tons of carbon dioxide per acre per year.78 One assessment of the effects of conservation practices on cropland in the Missouri River Basin estimated that the studied area sequesters 9.9 million tons of carbon dioxide per year.Estimates of the global potential of soil sequestration vary greatly, but one estimate says .9 petagrams of carbon per year may be sequestered globally, which is enough to offset one-fourth to one-third of the annual global increase in carbon dioxide concentrations.Soil’s sequestration properties occur naturally when organic compounds produced by plants cycle through plants, animals, and microorganisms to create soil organic matter,hydroponic channel which is where carbon is stored in the soil.Carbon is released from the soil into the atmosphere when it is disturbed due to changes in water, air, and temperature conditions.Thus, reducing tillage increases the carbon sequestered in the soil, and the level of sequestration depends on many variables including soil type, weather, precipitation, temperature, and other factors. Aside from decreasing atmospheric carbon levels, the practices that encourage carbon sequestration boast local benefits such as reducing soil erosion and nutrient depletion while increasing water retention rates.A USDA project that ran from 2003-2006 assessed the effects of cropland conservation practices, including tillage management along with a host of other conservation practices that also sequester carbon, in the Missouri River Basin.84 The assessment determined that conservation practices decreased loads delivered from cropland to rivers and streams by 76% for sediment, 54% for nitrogen, and 60% for phosphorous.85 These dramatic reductions cannot all be attributed to changes in tillage management or other carbon sequestering practices, as those were only some of the measures among many diverse strategies for decreasing sediment and nutrient loss from agricultural soil. Additionally, the assessment noted that carbon that is sequestered in agricultural soil “improves the soil’s ability to function with respect to nutrient cycling, improves water holding capacity, and reduces erodibility through enhanced soil aggregate stability.”So, in addition to sequestering carbon, the conservation practices that are typically implemented in agricultural soil carbon sequestration offset projects provide many important benefits incidental to sequestering carbon.The EU ETS, the Kyoto Protocol, and RGGI, some of the most major carbon markets in the world, currently do not recognize offset credits that are generated from soil carbon sequestration projects.This is most likely “because soil carbon is viewed as difficult to measure, verify, and track.”88 However, some smaller markets recognize this opportunity for carbon sequestration and income for farmers, so some offset programs that generate credits for agricultural soil carbon sequestration are already in existence. In 2010, the World Bank implemented the Kenya Agricultural Carbon Project, which encourages “covering crops, crop rotation, compost management, and agro-forestry.”This method of farming generates credits that are sold to the World Bank’s BioCarbon Fund.Additionally, in 2012, the World Bank created a new farming methodology, approved by the Verified Carbon Standard,that encourages less plowing.Before the Chicago Climate Exchange’s closure in 2010, it verified and traded soil carbon offset credits generated by farmers in the United States using no-till practices.

The Oklahoma Carbon Program currently operates a voluntary program that verifies and issues credits for farmers who use conservation tillage.Canada’s guidance for its future offset programs indicates that it would include an agricultural soil carbon sequestration offset program to address the intensity of tillage operations, adopting crop rotations, and increasing cover crops.If the American Clean Energy and Security Act of 2009, better known as the Waxman-Markey bill, had been approved by both houses of the United States Congress, it is likely that agricultural soil carbon sequestration offset programs would have played a role through that legislation’s proposed nationwide cap and trade program.The agricultural industry was concerned that other industries’ products used by agriculture—fertilizer, diesel, electricity, etc.—would increase in price if the proposed legislation passed, in turn affecting the agricultural sector’s expenses.The National Corn Growers Association devised nine principles relating to cap and trade that had to be met before it would support any climate legislation bill.The first principle is that “[t]he agricultural sector must not be subject to an emissions cap.”The second principle asks cap and trade to “fully recognize the wide range of carbon mitigation or sequestration benefits that agriculture can provide.”The fourth principle expects the USDA to create the regulations and oversee an agricultural offset program.The fifth principle provides that “[t]he use of domestic offsets” is not “artificially limited.”This principle is directly at odds with current caps on offset credits that can be used to meet compliance obligations as in RGGI and AB 32’s cap and trade program. Additionally, the Illinois and Iowa Corn Growers Associations owned Novecta, a group that was working on standardizing a program to reward farmers for no-till practices.Agricultural soil carbon sequestration offset programs were also proposed and discussed in relation to the Lieberman-Warner bill, the cap and trade climate change bill that was introduced in the 110th Congress, just before the Waxman-Markey bill was introduced in the 111th Congress.Considering this significant support for agriculture offset programs, it is likely that an agricultural soil carbon sequestration offset program could have been implemented on a nationwide scale if Waxman-Markey Bill had passed. Overall, agricultural soil carbon sequestration offset programs prove to be attractive because the farmers implementing the change are paid to change their practices.This can be a welcome source of income, especially at a time when farmers, especially small-scale and those most affected by droughts and the changing climate, are having a difficult time maintaining productivity and income.Considering all the factors discussed above, it seems that a future natural step may be to adopt an agricultural soil carbon sequestration program to link to AB 32’s cap and trade program. The possibility has already been recognized in a bill that was proposed to the California State Assembly. The proposed bill stated that new offset programs will be needed in order to supply the highest number of useable offset credits allowed under AB 32.An early version of the proposed bill listed possible offset programs, including offset programs that maintain agricultural productivity while emitting less greenhouse gases—the idea behind soil carbon sequestration offset programs.