Agricultural Solutions for GHG Mitigation & Sustainability: The US Experience Ontario Federation of Agriculture Delta Hotel, Guelph ON April 1, 2016 Debbie Reed, Executive Director Coalition on Agricultural Greenhouse Gases

Ag Solutions for GHG Mitigation & Sustainability US Climate Change Policy: Hx, Current Realities Some Key Climate & Ag Initiatives in the U.S. Agricultural Offset Protocols in U.S. Carbon Markets Agriculture’s Role in Sustainable Supply Chains

Ag Solutions for GHG Mitigation & Sustainability US Climate Change Policy: Hx, Current Realities Some Key Climate & Ag Initiatives in the U.S. Agricultural Offset Protocols in U.S. Carbon Markets Agriculture’s Role in Sustainability & Carbon Markets

Two Decades of US Climate Change Policy

US Climate Change Policy: The Legislature

US Climate Change Policy: The Administrative Branch Regulations - The Clean Power Plan *Executive Orders - Federal agency GHG and environmental footprints **UNFCCC: CAA Section 115 USDA Climate Hubs; Impact Assessment Reports; Mitigation & Adaptation Plans *USDA GHG & Environmental Market Demonstration Funds *Climate Smart Ag Building Blocks

US Climate Change Policy: January 2017? 

Ag Solutions for GHG Mitigation & Sustainability US Climate Change Policy: Hx, Current Realities Some Key Climate & Ag Initiatives in the U.S. Agricultural Offset Protocols in U.S. Carbon Markets Agriculture’s Role in Sustainability & Carbon Markets

GHG Emission Reduction Policies: Key Ag Initiatives in the U.S. USDA NRCS GHG CIG GRANTS: $7.4M in May, 2010 C-AGG – Matching Grants to convene projects, support collaboration, shared Learning 1. Cattle Emission Reductions 2. Dairy Farm Stewardship 3. Soil Carbon in the Palouse Region 4. Smart Nitrogen Application Program (4R’s) 5. Avoided Grassland Conversion 6. Methane Reductions in California & MidSouth Rice 7. Nutrient Management for N2O Reductions 8. N2O Reductions in Chesapeake Watershed

GHG Emission Reduction Policies: Key Ag Initiatives in the U.S. USDA NRCS GHG CIG GRANTS: $10M, Sept ($4M GHG); additional $20M traunche now being offered (May 10 deadline) C-AGG –Supporting Collaboration, Shared Learning 1. Chesapeake Bay Rotational Grazing 2. (3) Avoided Grassland Conversion Projects 3. Small Forest Projects 4. Wetland Restoration & Preservation 5. Nutrient Management for N2O Reductions 6. Tribal Land Engagement in GHG Markets 7. Farmer Rice Cooperative: C Offsets and C Friendly Rice Brand

Ag Solutions for GHG Mitigation & Sustainability US Climate Change Policy: Hx, Current Realities Some Key Climate & Ag Initiatives in the U.S. Agricultural Offset Protocols in U.S. Carbon Markets Agriculture’s Role in Sustainability & Carbon Markets

Protocol Status N2O Emissions Reductions through Changes in Fertilizer ManagementApproved N2O Emissions Reductions through Reduced Use of Fertilizer on Agricultural Crops Approved Emission Reductions in Rice Management SystemsApproved Avoided Conversion of Grasslands and Shrublands to Crop ProductionApproved Grazing Land and Livestock ManagementApproved Compost Additions to Grazed GrasslandsApproved Agricultural Offset Protocols in U.S. Carbon Markets: Voluntary Registries Note: ACR is an approved Offset Project Registry (OPR) for the CA Cap-and-Trade Program. As an OPR, ACR will work with ARB to register and issue California-eligible Registry Offset Credits (ROCs) developed using ARB’s protocols. ROCs are eligible to be transitioned into ARB compliance offset credits that may be used in the CA Program.

Agricultural Offset Protocols in U.S. Carbon Markets: Voluntary Registries Climate Action Reserve (CAR) Protocol Status Nitrogen Management in Crop ProductionApproved Rice CultivationApproved U.S. LivestockApproved Avoided Conversion of Grasslands and Conversion of Croplands to Grasslands (Soil Carbon Management) Approved Organic Waste DiversionApproved Note: CAR is an approved Offset Project Registry (OPR) for the CA Cap-and-Trade Program. As an OPR, CAR will work with ARB to register and issue California-eligible Registry Offset Credits (ROCs) developed using ARB’s protocols. ROCs are eligible to be transitioned into ARB compliance offset credits that may be used in the CA Program.

Agricultural Offset Protocols in U.S. Carbon Markets: Voluntary Registries Protocol Status Adoption of Sustainable Agricultural Land ManagementApproved Soil Carbon Quantification MethodologyApproved Quantifying N2O Emissions Reductions in Agricultural Crops through Nitrogen Fertilizer Rate Reduction Approved Livestock and Manure Management MethodologiesApproved Sustainable Grassland ManagementApproved Adoption of Sustainable Grasslands through Adjustment of Fire and Grazing Approved Avoided Ecosystem ConversionApproved Note: VCS is an approved Offset Project Registry (OPR) for the CA Cap-and-Trade Program. As an OPR, VCS will work with ARB to register and issue California-eligible Registry Offset Credits (ROCs) developed using ARB’s protocols. ROCs are eligible to be transitioned into ARB compliance offset credits that may be used in the CA Program.

Ag Offset Protocols in US: CA Cap-and-Trade Market CA Cap-and-Trade Compliance Program Implementation began January, 2013 Enforceable GHG cap that declines over time Offsets, including agricultural offsets (8% per entity) 2 agricultural protocols currently approved: Livestock projects/anaerobic digesters Rice cultivation (CA and mid-south) More Ag Protocols? Not a high priority; Governor Brown’s office, ARB non-committal Voluntary C Market as Incubator for CA Offset Protocols

Ag Solutions for GHG Mitigation & Sustainability US Climate Change Policy: Current Realities Some Key Climate Initiatives in the U.S. Agricultural Offset Protocols in U.S. Carbon Markets Agriculture’s Role in Sustainability & Carbon Markets

Agricultural Solutions in Sustainable Supply Chain Initiatives (SSCI) Agriculture & food sector play CENTRAL role in sustainable supply chain initiatives (SSCI) Multinational corporations (retailers, food & beverage co’s, agribusiness) setting public sustainability commitments Consumer desire for sustainable products, processes Corporate social responsibility and investor demand SIGNIFICANT risk to sourcing: natural resource demand, scarcity Complete disconnect between industrial approaches and agricultural approaches for measuring sustainability Point sources v biological ecosystems Factory approach v individual farm-based management approaches Daily, weekly, monthly, seasonal variations in agriculture Value proposition to ag sector needs to be improved Collaboration, dialogue between SSCI and ag sector essential to make these work! Currently, very limited….

Spectrum of Ag Ecosystem Service Programs with Opportunities and Related Requirements Conservation Programs Supply Chain Certification Payment for Ecosystem Services Voluntary (Carbon) Markets Mandatory (Carbon) Markets Description of Program or Opportunity Incentives provided to landowners to reduce soil erosion, enhance water supplies, improve water quality, increase wildlife habitat, and reduce damages caused by floods and other natural disasters Official label used to certify product meets prescribed list of criteria – typically linked to sustainability metrics Payments to landowners for activities or management systems focused on preserving or restoring natural ecosystem service potential The exchange of credits that represent a reduction in GHG emissions or increase in sequestration to an entity that is not officially regulated The exchange of credits that represent a reduction in GHG emissions or increase in sequestration to an entity that is regulated under a cap-and-trade system Data Requirement s Landscape & nutrient management plans Others? High level data to verify enrolled projects IPCC Tier 1 emission factors Management practice implemented Others? Field data for model cal/val Land specifications Others? Field data for model cal/val Land specifications Others? Acceptable Uncertainty HighHigh-MediumMedium-LowLow Verification/ Audit Level Low-NoneLow-MediumMedium-High High Spectrum of Programs & Opportunities

Spectrum of Ag Ecosystem Service Programs with Opportunities and Related Requirements (cont’d) Conservatio n Programs Supply Chain Certification Payment for Ecosystem Services Voluntary Carbon Markets Mandatory Carbon Markets Current Opportunities for Ag Sector Status of Metrics Development Status of Methods Development Stakeholders at risk 4 Public Federal agencies CPG Companies Land owners Project developers Investors/buyer s Project developers Investors/buyer s Level of risk LowMediumMedium-High High Highest Priority Needs for Success Financing Appropriate producer incentives Consumer demand Establishment of a floor price to increase financing potential Demand for the services Recognition of benefit of services Accessibility & delivery of value to producers to scale engagement Spectrums of Programs & Opportunities 1 Scale – 1 = minimal availability, primarily local; 5 = widespread/global opportunity 2 Scale – 1 = nominal level of development, with many diverse standards; 5 = fully developed, standardized harmonized 3 Scale – 1 = nominal level of development, with many diverse tool standards; 5 = fully developed, standardized harmonized 3 Risk – includes financial liability, loss of credibility, and loss of promised benefits

Take-Aways Significant market-based, voluntary opportunities for agriculture in carbon and ecosystem markets developing – but still in early stages of development, in many cases Confluence of looming regulatory pressures, sustainable supply chain initiatives, competition for natural resources provides increased impetus for agricultural engagement and participation in market-based opportunities Carbon markets, SSCI = spectrum of opportunities with significant solutions for climate policies, sustainability, agricultural impacts, AND for ag sector DEVELOP programs, systems to accommodate spectrum