Carbon Corner: American Power Act, The Opportunity for US Agriculture

By Biofuels Digest correspondent Rick Gilmore

US carbon regulation, as proposed in the American Power Act , offers an opportunity for producers as well as other operators in the American agricultural value chain, to appreciate a significant net revenue gain.

• Reduce GHGs by 17 % below 2005 levels by 2020, 80 % by 2050
• US farmers are exempt from carbon caps and will be able to participate in a domestic carbon offset market, which would create a “multi-billion dollar revenue stream”.
• Allows for 2 billion offsets;  1.5 billion credits from domestically sourced projects
• Domestic agricultural and forestry carbon credits are expected to make up the bulk of the US offset program
• Supply side deficit: US offsets in 2009 were only 29 million = huge opportunity for US ag
• USDA would take the lead on implementing and creating the market – not the EPA. Eligible offset project types: Fugitive methane capture from coal mines, landfills and oil and gas distribution facilities
• Agricultural, grassland and rangeland sequestration and management practices
• Changes in carbon stocks attributed to land use change and forestry activities

There is an emerging consensus that APA will offer a large potential revenue stream for US agriculture as illustrated in the breakout provided by the Agriculture and Applied Economics Association.

GIC has developed an agricultural carbon index that it is now applying to measure the value of alternative production technologies in terms of their relative contributions to the reduction of carbon emissions.  Although a lower emitter than other producer countries, our ag sector representing input, production, and value added agriculture, is also a significant source of emissions.

According to GIC calculations, US agriculture alone emits 656 million metric tons of GHG measured in CO2 equivalent.  On a per hectare of farm land basis, production ag emits 1.4 tons of GHG emissions per hectare of farm land.  Under the right incentive policies, however, what is now a cost to US agriculture can be converted into a net gain.

With the prospect of offset/ credit opportunities, American agriculture carbon efficient production and manufacturing technologies will translate into greater competitiveness for US agricultural commodities and products in global markets.

Rick Gilmore, President/CEO of GIC Group, www.gicgroup.com .  GIC is a 30 year old agribusiness company with offices overseas, offering consulting, financial and carbon services. Gilmore is a recognized authority, media commentator, and currently, private sector advisor to US government for global food security:  rickgilmore@gicgroup.com;  703-684-1366

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