Climate Change Farm Impacts and Farm Solutions North American-European Union Conference North American Perspective Don McCabe October 21, 2009

Presentation Outline Farm Gate Impact Farm Gate Impact Canadian Farm Solutions Canadian Farm Solutions Canada’s Federal Approach Canada’s Federal Approach Canada’s Provincial Approach Canada’s Provincial Approach U.S. Politics U.S. Politics Global Work Global Work

The Canadian Biosphere

Ag Sector Impacts (Why care?) l Increased costs for electricity, chemicals, fuel, fertilizer, lime (largest increases any sector will face) l Voluntary opportunity for ag to establish a new revenue stream l Global competition and eventual harmonization l Same analysis in United States

Presentation Outline Farm Gate Impact Farm Gate Impact Canadian Farm Solutions Canadian Farm Solutions Canada’s Federal Approach Canada’s Federal Approach Canada’s Provincial Approach Canada’s Provincial Approach U.S. Politics U.S. Politics Global Work Global Work

Management Tools For Government l Cap & Trade with Offsets lNew revenue stream to offset costs for farmers l Carbon Tax lAdded cost with no deferral for a primary sector

Canadian Agriculture 10% the Problem, 20% the solution! Two Solutions Emission Reductions Emission Reductions l Adoption of technology and management that reduce GHG emissions l Permanent in nature Emission Removals Emission Removals l Carbon Sinks l Created and maintained by management l Not permanent, but reversible (handled in current protocols)

C sequestration as a Commodity Sell Credits Maintenance Liability Repurchase Credits

Tillage Protocol Variables required based on farm location / dominant soil zone: Variables required based on farm location / dominant soil zone: Reduction Factor / Sequestration Factor For Relevant Till Practice in Relevant Area and Geographic ZoneReduction Factor / Sequestration Factor For Relevant Till Practice in Relevant Area and Geographic Zone Map of Soil ZonesRegion Tillage Change 10 year CO2E (t CO2E / ha) Energy East FT to NT FT to RT RT to NT NT to FT RT to FT NT to RT EastCentral FT to NT FT to RT RT to NT NT to FT RT to FT NT to RT

Ag Policy Needs l Ownership of credits l Credit value retention l Protocol development (research needed or available) l Communication to farmers and society l Added voice to policy development

Eligible Project Types Agricultural Agricultural Beef Feeding – Edible Oils Beef Feeding – Edible Oils Beef – Days on Feed Beef – Days on Feed Beef – Age at Slaughter Beef – Age at Slaughter Anaerobic Digestors Anaerobic Digestors Pork – Manure and Feeding Pork – Manure and Feeding Tillage Tillage Energy Efficiency Energy Efficiency Waste Heat Recovery Waste Heat Recovery Buildings (Residential and Industrial/Commercial) Buildings (Residential and Industrial/Commercial) Forestry Forestry Afforestation Afforestation Forest Management (CCAR) Forest Management (CCAR) Fossil Fuel Based Energy Fossil Fuel Based Energy Fuel Switching Fuel Switching Geological Sequestration Geological Sequestration Acid Gas Injection Acid Gas Injection Enhanced Oil Recovery Enhanced Oil Recovery Methane Management Methane Management Landfill Gas Landfill Gas Coal Bed/Mine/Ventilation Methane Coal Bed/Mine/Ventilation Methane Composting Composting Aerobic Landfill Bioreactor Aerobic Landfill Bioreactor Wastewater Treatment Wastewater Treatment Renewable Energy Renewable Energy Wind, Solar, Small Hydro Wind, Solar, Small Hydro Biomass to Energy Biomass to Energy District Heating District Heating Transportation Transportation Road Rehabilitation Road Rehabilitation Modal Shifting Modal Shifting Waste Management Waste Management Reusing flared well gas Reusing flared well gas Non-incineration thermal waste management Non-incineration thermal waste management Other Other N 2 O abatement N 2 O abatement Biofuels Biofuels Prioritization Needed

Eligible Project Types Agricultural Agricultural Beef Feeding – Edible Oils Beef Feeding – Edible Oils Beef – Days on Feed Beef – Days on Feed Beef – Age at Slaughter Beef – Age at Slaughter Anaerobic Digestors Anaerobic Digestors Pork – Manure and Feeding Pork – Manure and Feeding Tillage Tillage Energy Efficiency Energy Efficiency Waste Heat Recovery Waste Heat Recovery Buildings (Residential and Industrial/Commercial) Buildings (Residential and Industrial/Commercial) Forestry Forestry Afforestation Afforestation Forest Management (CCAR) Forest Management (CCAR) Fossil Fuel Based Energy Fossil Fuel Based Energy Fuel Switching Fuel Switching Geological Sequestration Geological Sequestration Acid Gas Injection Acid Gas Injection Enhanced Oil Recovery Enhanced Oil Recovery Methane Management Methane Management Landfill Gas Landfill Gas Coal Bed/Mine/Ventilation Methane Coal Bed/Mine/Ventilation Methane Composting Composting Aerobic Landfill Bioreactor Aerobic Landfill Bioreactor Wastewater Treatment Wastewater Treatment Renewable Energy Renewable Energy Wind, Solar, Small Hydro Wind, Solar, Small Hydro Biomass to Energy Biomass to Energy District Heating District Heating Transportation Transportation Road Rehabilitation Road Rehabilitation Modal Shifting Modal Shifting Waste Management Waste Management Reusing flared well gas Reusing flared well gas Non-incineration thermal waste management Non-incineration thermal waste management Other Other N 2 O abatement N 2 O abatement Biofuels Biofuels Prioritization Needed

Presentation Outline Farm Gate Impact Farm Gate Impact Canadian Farm Solutions Canadian Farm Solutions Canada’s Federal Approach Canada’s Federal Approach Canada’s Provincial Approach Canada’s Provincial Approach U.S. Politics U.S. Politics Global Work Global Work

Federal Position (Oct 6, 2009; Cdn Council of Chief Executives) 20% reduction from 2006 levels by % reduction from 2006 levels by 2020 North American economy integration requires harmonization North American economy integration requires harmonization “We will set up our own cap and trade market……..easily integrated into North American Market.” “We will set up our own cap and trade market……..easily integrated into North American Market.” “….we’ll phase in measures…in alignment with the development of the proposed U.S. system.” “….we’ll phase in measures…in alignment with the development of the proposed U.S. system.” Fruitful global discussions at Copenhagen Fruitful global discussions at Copenhagen

Eligible Project Types Agricultural Agricultural Beef Feeding – Edible Oils Beef Feeding – Edible Oils Beef – Days on Feed Beef – Days on Feed Beef – Age at Slaughter Beef – Age at Slaughter Anaerobic Digestors Anaerobic Digestors Pork – Manure and Feeding Pork – Manure and Feeding Tillage Tillage Energy Efficiency Energy Efficiency Waste Heat Recovery Waste Heat Recovery Buildings (Residential and Industrial/Commercial) Buildings (Residential and Industrial/Commercial) Forestry Forestry Afforestation Afforestation Forest Management (CCAR) Forest Management (CCAR) Fossil Fuel Based Energy Fossil Fuel Based Energy Fuel Switching Fuel Switching Geological Sequestration Geological Sequestration Acid Gas Injection Acid Gas Injection Enhanced Oil Recovery Enhanced Oil Recovery Methane Management Methane Management Landfill Gas Landfill Gas Coal Bed/Mine/Ventilation Methane Coal Bed/Mine/Ventilation Methane Composting Composting Aerobic Landfill Bioreactor Aerobic Landfill Bioreactor Wastewater Treatment Wastewater Treatment Renewable Energy Renewable Energy Wind, Solar, Small Hydro Wind, Solar, Small Hydro Biomass to Energy Biomass to Energy District Heating District Heating Transportation Transportation Road Rehabilitation Road Rehabilitation Modal Shifting Modal Shifting Waste Management Waste Management Reusing flared well gas Reusing flared well gas Non-incineration thermal waste management Non-incineration thermal waste management Other Other N 2 O abatement N 2 O abatement Biofuels Biofuels

Presentation Outline Farm Gate Impact Farm Gate Impact Canadian Farm Solutions Canadian Farm Solutions Canada’s Federal Approach Canada’s Federal Approach Canada’s Provincial Approach Canada’s Provincial Approach U.S. Politics U.S. Politics Global Work Global Work

Provincial Responses British Columbia British Columbia l Carbon tax effective July 1, 2008 lIncrease from 2.4 to 3.6cents/l of gas 07/01/09 l currently requesting offsets l member of Western Climate Initiative (WCI) l WCI participants include 7 western U.S. States and some Canadian provinces

Provincial Responses Alberta Alberta l legislation in effect requiring an intensity based reduction of 12% starting July 1, 2007 by firms emitting more than 100,000 tonnes of GHG’s/yr l compliance by internal reductions, $15/MT to tech fund, and offsets

Provincial Responses Alberta Alberta l Recent update workshop on progress of system held June 22 l 5 million tonnes of offsets created mid 2007 to end of 2008 (1.5 million from soil tillage) l Alberta government will look at raising tech fund cost, more protocols, and lower limit of emissions for compliance in the future

Provincial Responses Ontario Ontario l Newest member of WCI l Consultation on a cap and trade system for Ontario recently held l Offsets recognized l Coal fired electricity plants gone by 2014 l Green Energy Act (credits?) l Currently exploring ag credits with pilots

Presentation Outline Farm Gate Impact Farm Gate Impact Canadian Farm Solutions Canadian Farm Solutions Canada’s Federal Approach Canada’s Federal Approach Canada’s Provincial Approach Canada’s Provincial Approach U.S. Politics U.S. Politics Global Work Global Work

Canada U.S. Policy Groups Western Climate Initiative (WCI) Western Climate Initiative (WCI) Midwest Greenhouse Gas Regional Accord (MGGRA) Midwest Greenhouse Gas Regional Accord (MGGRA) Regional Greenhouse Gas Initiative (RGGI) Regional Greenhouse Gas Initiative (RGGI)

Comparison with Other Systems Waxman Markey – US EPA Analysis 24 EPA Analysis of H.R. 2454, Total GHG Emissions & Sources of Abatement June

Comparison with Other Systems Waxman Markey US Coverage & Offsets 25 Offset Potential

U.S. Politics A north of the border perspective! A north of the border perspective! Obama wants a cap and trade system Obama wants a cap and trade system Waxman Markey is through Congress Waxman Markey is through Congress Senate needs its bill and is usually farm friendly Senate needs its bill and is usually farm friendly Final say in the Senate is 60 for domestic, 66 for international Final say in the Senate is 60 for domestic, 66 for international

Presentation Outline Farm Gate Impact Farm Gate Impact Canadian Farm Solutions Canadian Farm Solutions Canada’s Federal Approach Canada’s Federal Approach Canada’s Provincial Approach Canada’s Provincial Approach U.S. Politics U.S. Politics Global Work Global Work

Soil Carbon Offsets Soil carbon as an offset is recognized across compliance systems (Alberta, Canada ?, WCI (7 states, 4 provinces)) Soil carbon as an offset is recognized across compliance systems (Alberta, Canada ?, WCI (7 states, 4 provinces)) Further expansion across the global market is necessary (Daniel Martino Winnipeg March 16) Further expansion across the global market is necessary (Daniel Martino Winnipeg March 16) Bonn, Germany Ag workshop April 4 Bonn, Germany Ag workshop April 4 Copenhagen IFAP Workshop May 27 Copenhagen IFAP Workshop May 27 Copenhagen Talks December Copenhagen Talks December

IPCC 2007: Agricultural production falls UNDP, 2007

Capturing Canada’s Green Advantage: Biosphere Solutions CO 2 Fossil Fuels Biomass (N 2 O, CH 4 ) SEQUESTER Atmospheric C & solar energy into biomass. REDUCE CH 4 & N 2 O associated with biosphere management ADAPT biosphere to changing climate & atmosphere … … the improved management and use of our biological cycles to provide environmental values, energy, chemicals and materials (the Bioeconomy) in addition to food, feed and fibre. COMPLEMENT fossil energy (& chemicals, materials) with biomass

Capturing “The World’s” Green Advantage: Biosphere Solutions CO 2 Fossil Fuels Biomass (N 2 O, CH 4 ) SEQUESTER Atmospheric C & solar energy into biomass. REDUCE CH 4 & N 2 O associated with biosphere management ADAPT biosphere to changing climate & atmosphere … … the improved management and use of our biological cycles to provide environmental values, energy, chemicals and materials (the Bioeconomy) in addition to food, feed and fibre. COMPLEMENT fossil energy (& chemicals, materials) with biomass

Thank you Questions? Don McCabe