Carbon trading is not likely to help farmers’ bottom lines significantly, according to Michael Farmer, Texas Tech associate professor, but agriculture may benefit indirectly from carbon regulation through value added from biofuels.
Farmer, speaking at a Texas Alliance for Water Conservation field day in Muncy, Texas, said large corporations such as Wal-Mart and General Electric could take advantage of cap and trade policies “to improve their carbon footprints.”
He said many farmers may have carbon credits for sale, some based on current production practices such as reduced tillage. “But green energy may be our best option to take advantage of those potential credits.”
Farmer said producers can “only play in one market. If you sell biofuels, you can’t sell carbon credits. If a product is sold as a commodity, the product is eligible for the offset market.”
He said producers would do “life cycle accounting and look for each set of practices to judge the effect on carbon sequestration.”
Some practices could hamper yield, he said, “but reduced tillage may be a good bet.”
Farmer said a market will exist for direct sale of carbon credits, but the value may be limited.
“Bioenergy is a more reasonable option, especially without an indirect land-use that could affect production practices. Indirect land use, for example, accounts for things such as forests in South America cleared to replace corn for feed diverted to ethanol production in the United States. That makes carbon accounting difficult and unstable for the producer.”
Farmer said cotton growers or cotton gins could use gin trash as a bioenergy fuel. “There are several ways to do it. For instance, we can burn gin trash to produce electricity and sell at peak contract prices. It’s reasonable to use half the gin trash biomass for fuel and the rest for feed etc. There would be no indirect land use effects and the carbon accounts could be quite attractive."
The process could employ a 15 megawatt gasification plant that would offer a significant return on investment. “A power company then could sell carbon credits from the renewable energy produced, or use the energy to meet a renewable energy target. The producer would not have to enter a new and unfamiliar market directly, or decide from year to year which market is best. The producer would benefit indirectly and let the larger player already in the market do the market analysis.”
Farmer said biofuel production currently gets substantial support from huge subsidies for BTUs. He envisions farmer co-operatives developing biofuel plants and supplying much of the raw material necessary. “Plants could run more than one fuel at a time — gin trash, crop waste, forest products, etc. Regional co-ops would collect the fuels. Co-ops are something we’re familiar with."
“Little research and development would be necessary but we do need more dryland production research with the modest restrictions (at least) on irrigation that are likely to come. We need to improve dryland production efficiency.”
Farmer said drought resistance work is lagging behind other agricultural research efforts and that much of the improvements lately have come “as a compliment to irrigation efficiency work. We don’t have much yet from genetic engineering for drought tolerance in the public domain.”
Farmer said carbon trading “is real with enormous potential for the region to create markets for energy from biofuels. We need to be proactive in new commodity marketing agreements.”