| | International, federal and provincial policies on greenhouse gas emissions all play a part in the regulations and opportunities that affect industries—including agricultural production and processing—in Alberta. Karen Haugen-Kozyra of Alberta Agriculture, Food and Rural Development gives us an overview of some of these policy considerations relevant to agriculture in this question-and-answer session.
When will the Kyoto Protocol come into effect?
There’s a “double 55” trigger that brings Kyoto into force. That’s when 55% of the nations who are signatory to the protocol have ratified their commitment and the nations who have ratified represent 55% of developed nations’ emissions. The only country that can bring those emissions up to 55% is Russia. With Russia recently ratifying Kyoto, the protocol will come into effect in early 2005.
What is the Alberta Government’s position on Kyoto?
The Alberta Government believes Kyoto is too stringent too soon. The targets and timelines in Alberta’s strategy, Albertans and Climate Change: Taking Action, reflect what we think we can realistically achieve. Alberta is the province that has done the most work on developing actions to address climate change. It is investing in technology now so we can be better prepared to achieve the more stringent targets expected in Kyoto’s second phase, from 2013 to 2018.
What lies ahead for Alberta’s agricultural producers?
They need to be positioned to take advantage of the opportunities from these policy developments. Our department and other government agencies are talking to producers about the offset market and developing quantification protocols [methods to calculate how much soil carbon is stored or greenhouse gases are reduced by changing from one agricultural practice to another]. We’re also working on strategies to help the industry adapt to climate change and to take advantage of bio-energy opportunities.
What is the current situation on trading offset credits?
Two kinds of credits will be available: credits for reducing emissions from a source (like a manure lagoon), and credits for removing carbon dioxide from the atmosphere, through practices like reduced tillage. Industries regulated under Kyoto may be interested in buying credits from unregulated sectors, like agricultural production, to meet their GHG emission targets.
The federal government is currently developing the legislative framework for Canada’s emissions trading system, but the Kyoto criteria are dictating some of the rules. For example, emissions reductions must be:
- additional – your emissions are lower than before you changed your practice.
- real – they result from a demonstrable action.
- measurable – they can be measured with accepted methods and verified by a third party.
- clearly owned – the seller must have clear ownership rights.
- permanent – they will not be re-emitted later, or if they are there’s a contingency plan in place.
Permanency is an issue for farmers because soil carbon storage is reversible due to either natural conditions or human actions. One issue is whether the farmer is liable if reversal occurs. The federal system might include temporary and permanent credits. A temporary credit would be like leasing —expiring after a short term, like a year, and costing less, but with no long-term liability if the carbon is released later due to a change in management practice.
In the federal system, the crediting period is 2008 to 2012 for this phase of Kyoto, with no credit for early action. However, the federal government is considering a pooling approach in which early and later adopters of practices that store soil carbon would share the risks and the costs, and the pool would market the offset credits.
What is the market like today for carbon offset contracts?
Although the rules for the offset market are not in place yet, speculators are buying now. The prices we’re seeing are about $1.50 per tonne of carbon dioxide equivalent in 2003-05, going to about $7 in 2009-12, in forward stream contracts. AgCert Canada is an aggregator [an agency that buys credits from many farmers and then sells the credits] with about 150 Alberta farms currently under contract for hog lagoon management. For example, $65,000 was paid to one producer for two years of management change. Other aggregators buying from Alberta producers are AgCheck Canada and GEM Co. Recently, TransAlta Utilities bought over 1 million tonnes of carbon credits from a Chilean hog production company—the largest agricultural deal of its kind in the world.
Any farmer signing a contract to sell carbon credits should have a clear understanding of the contract details especially such things as liability for reversal, risk, contract period, price and payment schedule. |
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