SOIL CARBON AND CLIMATE CHANGE NEWS

From Kansas State University's:

Consortium for Agricultural Soils Mitigation of Greenhouse Gases (CASMGS)

http://www.oznet.ksu.edu/ctec

Charles W. Rice, K-State Soil Microbiology, National CASMGS Coordinator (785) 532-7217 cwrice@ksu.edu

Kent McMay, K-State Soil and Water Conservation Specialist (785) 532-5776 kmcvay@ksu.edu

Steve L. Watson, CASMGS Communications (785) 532-7105 swatson@oznet.ksu.edu

October 31, 2003

No. 26

This week's issue:

Research:

* Papers From CASMGS Carbon Measurement and Monitoring Forum Now Available On Web

Kansas:

* Kansas Coalition For Carbon Management Explores Carbon Trading Opportunities

International:

* 45 Tender Bids For Carbon Credit Projects In New Zealand

**********

PAPERS FROM CASMGS CARBON MEASUREMENT

AND MONITORING FORUM NOW AVAILABLE ON WEB

http://www.oznet.ksu.edu/ctec/Fall_Forum.htm

The international Carbon Measurement and Monitoring Forum, held October 15-17 and hosted by Kansas State University, was a great success. There were more than 125 attendees from 25 states and 3 foreign countries. Those attending included scientists, policymakers and top government officials, Kansas Coalition for Carbon Management members, environmental organization representatives, agricultural producers and producer organization representatives, energy industry representatives, private companies, and others.

Among the noted government officials speaking at the conference were Toral Patel-Weynand from the U.S. State Department; James Moseley, USDA Deputy Secretary; and Ron Birk, NASA. Kevin Hurst, of the White House Office of Science and Technology Policy, attended the conference.

The Forum was sponsored by the Consortium for Agricultural Soils Mitigation of Greenhouse Gases (CASMGS), and was coordinated by Chuck Rice, Scott Staggenborg, Steve Watson, and Terry Jo Litchfield, in the Department of Agronomy, in cooperation with the Division of Continuing Education. CASMGS is a consortium of nine universities, including K-State, and a private government lab funded by a grant from USDA-CREES to study ways that agricultural soils can be managed to mitigate greenhouse gases. Sen. Pat Roberts (R-Kan.) was instrumental in securing the funding for CASMGS, and the research projects have received valuable support from the entire Kansas congressional delegation.

Chuck Rice and Jeff Williams, professor, Department of Agricultural Economics, made formal presentations at the conference. Agronomy faculty Scott Staggenborg, Mickey Ransom, Jay Ham, and Kent McVay, along with John Blair, Division of Biology, made talks at the field stops.

Conference speakers discussed the current state of technology in measuring soil carbon levels, an important issue within the overall subject of carbon sequestration and climate change programs. Other topics addressed at the conference were: carbon measurement programs in Australia, Canada, and New Zealand; economics of carbon credits and the carbon credit trading market; environmental aspects of carbon sequestration practices; remote sensing as a method of estimating changes in soil carbon levels; modeling soil carbon levels on the local, regional, and national scales; and government policies related to carbon sequestration and overall global climate change.

Field stops were made at the North Agronomy Farm on Kimball Ave., the Rannells Flint Hills Prairie Preserve, and the Konza Prairie Biological Station. At these stops, participants saw how soil carbon is sampled in real-world situations and the challenges involved in measuring soil carbon levels across a diverse landscape. State-of-the-art CO2 and water vapor eddy flux towers at the Rannells site were discussed in the field by Jay Ham. New soil carbon measuring devices were demonstrated by representatives from the Los Alamos National Laboratory, Los Alamos, New Mexico; and Veris Technologies, Salina.

All the papers and presentations made at the conference can be viewed on

the web at:

http://www.oznet.ksu.edu/ctec/Fall_Forum.htm

-- Steve Watson swatson@oznet.ksu.edu

**********

Kansas Coalition For Carbon Management

Explores Carbon Trading Opportunities

The Kansas Coalition for Carbon Management (KCCM) met October 23, 2003, in Manhattan. The group spoke by phone to Karl Kupers, of the Pacific Northwest Direct Seed Association (PNDSA), and Zach Willey, of Environmental Defense.

The general topic of discussion was carbon credit trading, and the specific agreement by which Entergy, an energy company based in New Orleans, paid cooperating producers in the Oregon-Washington-Idaho region to lease carbon offset credits. Environmental Defense, a large environmental organization based in New York City, brokered the deal and PNDSA served as the aggregator.

Kupers explained that PNDSA decided it wanted to try to market the environmental benefits of direct seeding (which is essentially the same thing as no-till) for the benefit of producers. PNDSA formed an alliance with Environmental Defense to develop a one-page offer sheet for carbon credits. Environmental Defense presented the offer sheet to several energy companies. Entergy responded first with a counteroffer. At that point, Environmental Defense stepped out and the negotiation was strictly between PNDSA and Entergy. They entered into a contract in the fall of 2002.

The contract is for a 10-year lease of CO2 credits derived from direct seeding (no-till) in Washington, Oregon, and Idaho. PNDSA and Entergy contracted for 3,000 tons of CO2 per year each year for the next 10 years, for a total of 30,000 tons of CO2. Entergy paid PNDSA $75,000 to provide 30,000 tons of CO2 over the 10-year period. PNDSA, acting as an aggregator, contracted with 77 producers representing 6,470 acres to deliver the carbon credits. Producers could enter up to 100 acres each in the program. The contract assumes an average carbon credit of 0.55 tons of CO2 per acre per year from the direct seeding. The acreage under direct seeding is being monitored and verified by local NRCS Conservation Districts.

The contract meets the Kyoto protocol provisions for additionality, permanence, and leakage so that the contract would be verifiable under the Kyoto protocol if and when it becomes ratified. Additionality means that the carbon credits generated must be additional to any changes in carbon storage that would have occurred under a “business as usual” scenario. Permanence relates to the longevity of the carbon stored in the soils. Leakage refers to any possible increases in GHG emissions as a direct result of the practices being used to sequester carbon.

The contract between PNDSA and Entergy is a lease rather than a sale of carbon credits. At the end of 10 years, the contract is complete, and at that time, no further restrictions on soil management will be imposed. By leasing, the producers retain ownership of the carbon credits at the end of the contract.

The contract between PNDSA and producers includes a definition of direct seeding. This definition is used to verify the practice under the agreement. PNDSA is developing a verification agreement with those local Conservation Districts that have participating producers in their districts. Verification is by visual observation. If a producer defaults on the agreement, PNDSA has the ability to solicit additional acres. PNDSA takes 20 percent of the total money involved for administrative costs of being the aggregator.

Zach Willey, with Environmental Defense, said that if producers in Kansas had an aggregator and could develop a one-page offer sheet for carbon offset credits, his organization would shop it around to energy companies. One of the biggest hurdles at the present time in Kansas is that no organization has agreed to be an aggregator. Examples of aggregators include PNDSA and the Iowa Farm Bureau, which is working with the Chicago Climate Exchange in a separate carbon offset trading arrangement.

The aggregator would be the middleman between the buyer (the energy company) and the sellers (agricultural producers). Aggregators would have to contract with enough producers to accumulate the required acreage in no-till or grass plantings, arrange for the actual transfer of money, deal with problems of non-performance if they arise, deal with the potential of liability, provide verification that producers are doing what they agreed to do every year of the contract, and other assorted details. Depending on the type of contract and the trading system being used, aggregators may also have to meet certain net worth minimum requirements. In short, becoming an aggregator is not something an organization would take on lightly. The KCCM is discussing with several organizations in Kansas the possibility of becoming an aggregator.

Willey also noted that the carbon offset trading market is in its infancy in the U.S. It is currently a buyer’s market. Energy companies and other industrial concerns have a lot of carbon offset options, most of them internal, he said. The dollar value of carbon credits may be increased if the soil carbon levels in the land under contract are physically measured and actual increases in soil carbon are verified, as opposed to simply verifying that the practice called for in the contract (such as no-till) has occurred.

In a separate pilot project, USDA-NRCS has provided a $100,000 grant to the Chicago Climate Exchange to develop a four-year contract with producers in Nebraska and Kansas for CO2 credits. This would pay producers $1 per ton of CO2 credits, figuring a sequestration rate in no-till of 0.5 tons CO2 per acre per year, or $0.50 per acre per year. An aggregator is still needed for this project.

The Chicago Climate Exchange has also begun a four-year pilot program to aggregate and trade carbon credits from producers in Iowa, with the Iowa Farm Bureau Federation as the aggregator. Credits from carbon sequestered in no-till and minimum-till cropland and permanent pasture will be aggregated and traded on the Chicago Climate Exchange. The Iowa Farm Bureau hopes to enroll at least 100,000 acres in Iowa in the program. How much the carbon credits will be worth is unknown.

-- Steve Watson <swatson@oznet.ksu.edu>

**********

45 tender bids for carbon credit

projects in New Zealand

A total of 45 project proponents have submitted bids for the four million emission units, or carbon credits, being offered in the first New Zealand Government tender round for Projects to Reduce Emissions.

The tender, aiming to bring New Zealand a total of 4 million tonnes of carbon dioxide equivalents (MtCO2e) closer to its Kyoto target through domestic projects, has attracted projects including wind farms, hydro and geothermal electricity projects, proposals for generating electricity from landfill gas, a range of bio-fuel and bio-energy projects, and schemes for waste treatment. Most of the tender bids are for projects that will generate or reduce the demand for electricity, announced the New Zealand Ministerial Group on Climate Change.

If the pool of four million emission units is oversubscribed, priority will be given to projects that will contribute most to electricity security in the near future. Successful projects will be decided by early December, and the first project agreements between project owners and the Government are expected to be finalized before Christmas. Others will be completed early in the new year.

-- PointCarbon Oct. 30, 2003

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MEETINGS OF INTEREST

January 20-22, 2004

CASMGS Forum: Can Agriculture and Energy Partner Using Soil Carbon Sequestration to Offset Greenhouse Gases?

College Station, Texas

For more information, contact: tanveer@tamu.edu (979-845-3153) or see:

http://agecon.tamu.edu/faculty/mccarl/acs/casmgs_conf_send.htm

Send comments or items for the newsletter to Steve Watson at:

<swatson@oznet.ksu.edu>

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