Minnesota’s agriculture in a carbon constrained economy

Bjorn GangenessNovember 27, 2007

Climate Change in Context Nearly inarguable evidence showing

human influence in raising average global temps The challenge of what to do and how

Solutions coming from different levels of government and citizen participation

Different sectors play different roles - energy generation to consumption to agricultural production

Minnesota’s emissions reduction goals 80% reduced carbon emissions

below 2005 levels in 2050, 30% in 2025 (eq. to 45.3MMT)

Reductions could come from efficiencies, reduced energy use, carbon offsets, geologic capture and storage, or terrestrial capture and storage

Carbon and Agriculture

Source: bp.com

Carbon and Agriculture

Large agricultural industry in Minnesota overwhelmingly focused on corn and soy

New initiatives that will make perennial biofuel crops more attractive Governor’s NextGen Energy Initiative Reinvest in Minnesota – Clean Energy

New Crop Initiatives and Carbon

The problem is the extent in considering carbon sequestration in development No mention of carbon stock goals No anticipation of carbon cap and trade

system If addressed, perennial biofuels may

develop more securely in an unsure marketplace

Reinvest in MN – Clean Energy $46 million requested appropriation for

2008 $40 M for bioenergy crop easements $6 M for administration

13,000 acres expected easements for a maximum 20 year payment of $3077/acre

Recognition of potential to work with other initiatives within the Federal Farm Bill

Tiered system of payments depending on type of practice implemented

Example of Tiered System

Relevant Criteria

Alternatives

No action – simply allow biofuels incentives to move forward on the current path

Integrate carbon credit system into the tiered payment structure based on BMPs

Set carbon stock increase goals for each tier

Full Appropriation Assumed ($46M in 2008)

No Action Alternative

Economic Efficiency 13000 acre goal but likely higher 1.6 MTCO2e/acre/yr 21,000 MT/yr or ~

420,000 MT over 20 yrs ($95/MT) Ecological Integrity

Monoculture Perennial is good for WQ Habitat is better than row-crop

Simplicity Monoculture is easier to harvest, plant,

manage

Carbon Credit Integration

Carbon Credit Integration

Addresses benefits of credit trading in each tier

No control over the carbon credit market so no price guarantees

Carbon markets are still voluntary, though a national system could change that

Carbon Credit Integration Economic Efficiency

Minimal administrative fees to integrate and promote seeking of carbon credits for practices

Stacked payments make incentives more attractive

Ecological integrity Grass species are not distinguished for in CCX

Simplicity More complicated than No action, but stacked

payments outweigh administrative consequences

Goal of Increased Carbon Stocks

Goals of Increased Carbon Stocks Higher sequestration goals per tier with

mixed practices Economic Efficiency

More diversified fuelstocks, less market sensitivity

Higher payments for higher sequestration rates Ecological Integrity

Wetlands and SRWCs create more diverse habitat than simple grass species

Simplicity The most complicated option

Recommendations

Train technical assistance providers in carbon markets

Follow the progress of the development of Midwest GHG Reduction Accord

Incorporate data from NextGen cellulosic pilot projects

Create flexibility within the RIM-CE structure that allows for more fluid transitions to alternative crops (among/between species)