An excerpt from the executive summary:
Agriculture is beginning to play an important role in reducing greenhouse gas (GHG) emissions, and in doing so is generating new sources of income for producers. However, U.S. agriculture faces its own challenges in today’s economy. Among the challenges facing agricultural producers are profitability, high energy costs, soil erosion and soil quality, water quality, and water use efficiency. It is possible for agricultural producers to earn money as they reduce emissions of greenhouse gases and sequester carbon from the atmosphere; however, the most effective policy to allow U.S. farmers to provide maximum GHG mitigation and earn the greatest value is through a mandatory nationwide cap on greenhouse gas emissions. A mandatory nationwide cap creates a larger and more profitable market for agricultural carbon credits by creating demand and value for emission reductions. The U.S. policy should be designed to ensure that soil and crop management systems that can mitigate greenhouse gas emissions simultaneously enhance agricultural sustainability and increase profits.
Policies have recently been enacted that are proving beneficial to agricultural producers by increasing the demand for ethanol and other renewable fuels. Enactment of the Renewable Fuels Standard in the 2005 Energy Policy Act has boosted the demand for renewable fuels from biomass, such as ethanol from corn and other agricultural crops. In much the same way that these policies or incentives can help drive production of renewable fuels, and thus the demand for agricultural crops, a national policy or regulation that establishes a mandatory limit on greenhouse gas emissions can further drive demand for agricultural products. A nationwide cap on U.S. GHG emissions will provide certainty and predictability to businesses, including agriculture, of the value of carbon well into the future. This market certainty will encourage investments by producers in biofuel feedstocks, methane digesters, and no-till equipment, since such practices will be rewarded by the new carbon credit market.
Markets for soil carbon credits are in the very early stages of development in the U.S., hampered mostly by the lack of a market signal or a mandatory nationwide cap on GHG emissions. In the absence of such a signal, various instruments for reducing GHG emissions have emerged, including voluntary markets, regional and state mandatory reduction programs, and voluntary, private agreements between buyers and sellers of carbon reduction credits. The uncertainty regarding future federal legislative approaches to deal with the problem of climate change has created multiple and diverse approaches. The patchwork of approaches has many businesses worried about the need to comply with varied regulations in different states or regions, and about whether emissions reduction activities undertaken now will be recognized or rewarded in future federal policies. A nationwide mandatory cap should build on the successes of these efforts, and help establish a single, consistent approach to reducing greenhouse gas emissions.
Specific policies to reward agriculture for emissions reductions must be included in any federal legislation or regulations to address global climate change. The European Union, in setting up its rules for crediting emissions reductions activities under its mandatory climate change program, excluded agricultural and forestry emissions reductions from receiving credit. The U.S. should not repeat this mistake, and should instead award top value for agriculture’s highly-beneficial “charismatic carbon credits.”