Growing Crops in a Changing Climate (2008)

How new state global warming policies may affect California farms
March 2009

If left unchecked, global warming will pose serious challenges for agriculture. Rising temperatures, decreased snowpack, and potential changes in rainfall patterns are expected to influence the selection of California crops and how these crops are grown. To help avert the detrimental effects if global warming on California’s largest industries, including agriculture, the state legislature passed and Governor Schwarzenegger signed into law the Global Warming Solutions Act (AB 32) in 2006. The law requires the state to reduce its global warming pollution to 1990 levels by 2020—a reduction of approximately 29 percent (see box).

Benefits for Farmers

By the end of 2008, the California Air Resources Board (CARB) will identify a package of policies and regulations to meet the 2020 emissions reduction requirement. California farmers have many opportunities to benefit while helping the state reach the 2020 requirement:

  • Incentives—Farmers may receive financial incentives to help implement climate-friendly agricultural practices such as more efficient use of water and fertilizer, and improved (i.e., lower impact) pest management. A potential source of incentive funding is a staterun auction of global warming emission allowances in a cap-and-trade system.
  • Offsets—The global warming emissions reduced through certain agricultural projects, such as methane digesters for livestock waste¹, may be able to be sold as “offsets” to other entities that emit global warming pollution, and count toward emissions reduction targets. For offset projects to qualify, the emissions reduced through the project must be permanent, verifiable, and quantifiable with a high level of confidence.
  • Bioenergy—Some farmers may be able to use crop waste, or grow new crops, to produce low-carbon fuels for the electricity or transportation sector. These “biofuels” can help the state meet regulatory requirements for cleaner electricity and fuels.

How AB 32 Could Affect Agricultural Projects

Regulations: Many agricultural activities are not easily subject to regulation and will likely be exempt from initial mandatory reductions, but the sector could benefit indirectly from regulations developed for the industrial, electricity, and transportation sectors. For example, regulations that create financial incentives for bioenergy use will likely increase the value of crop and forest residues used for low-carbon bioenergy, providing California farmers with the opportunity to capitalize on these increased prices.

Two existing regulations already offer potential benefits for farmers. Under the state’s existing renewable electricity standard, methane captured from manure is considered a renewable energy resource and can be used directly by farmers to power onsite operations or sold to electric utilities. Capturing methane provides dual benefits of generating electricity while cutting agricultural global warming emissions. In addition, CARB is in the process of developing a Low Carbon Fuel Standard that requires at least a 10 percent reduction in the average global warming pollution from transportation fuels by 2020. The sustainable development and use of biofuels, such as ethanol and biodiesel, will likely be a key compliance strategy.

Incentives and Offsets

Many anticipate that CARB will adopt a “cap-and-trade” program as part of AB 32. In this program, regulators establish a “cap” that limits the emissions from major California polluters to a level lower than their current emissions. The emissions required under the new cap are divided into individual permits (also called allowances”) that represent the right to emit that amount.

Some or possibly all of the emissions allowances will likely be distributed on the basis of a state auction. Auction revenues could be used to provide incentives for a number of different agriculture related emissions reduction initiatives that benefit both the farmer and the environment, such as improved pest management, carbon sequestration in soil, crop switching, water use efficiency, and energy efficiency.

A CARB-regulated cap-and-trade program may also include a provision for allowing capped entities to achieve a portion of their emissions reductions through the purchase of “offsets” instead of making direct emission reductions. Some agricultural mitigation options such as the use of methane digesters registered with the Climate Action Registry, or nitrogen management (no protocol yet established), may be good offset candidates and could be a source of additional revenue in the agricultural sector, as the emissions reduced  through these projects take on financial value. However, if unlimited amounts of offsets from around the world are allowed to flood the California market, this could depress the price of offsets and inhibit the development and value of offset projects in California.

Research Needs

The ways in which agriculture contributes to global warming, in terms of the emissions it produces, are still not precisely understood. For example, the expansion of bioenergy could help significantly reduce emissions from the transportation and electricity sectors, but this expansion has implications for agricultural emissions if large amounts of fossil fuels are used to produce those fuels. Effects on biodiversity, water and soil quality, and food production must be carefully evaluated. Further research on the complexities of the nitrogen cycle, particularly regarding fertilizer use and soil management practices, is also needed.

Several practices may benefit farmland and farmers while reducing harmful global warming emissions such as carbon dioxide, methane, and nitrous oxide. More scientific research is needed in order to accurately quantify emissions reductions associated with these practices and prioritize their implementation.

Endnotes

¹California Climate Action Registry. 2007. Livestock project reporting protocol: Capturing and combusting methane from manure management systems. June.

 

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