dairy cowOffsets are the hot topic in the debate over the climate change and clean energy legislation being considered by the US Senate. Offsets—the option to pay others to reduce their greenhouse gas emissions or protect carbon-storing trees instead of making your own pollution cuts—are being wielded as a powerful tool to sweeten the carbon-cap deal, particularly for the Midwest.

The American ag industry is pushing lawmakers to include language in the bill, known as Waxman-Markey or the American Clean Energy and Security Act (ACES), that positions them to reap big  economic benefits from the offset market.

Already lawmakers shifted offset oversight from the EPA to the Department of Agriculture to appease farming interests. On Tuesday, the Senate Environment and Public Works Committee hosted an ag-centric hearing on the legislation (see Grist’s Kate Sheppard on this).

So what’s the skinny on US offets? 

  • GreenWire has a really great story on domestic offsets, looking at what’s happened with the voluntary market in the absence of a carbon cap, and what could happen if/when that cap is created.

    It also digs into the role that Northwest forests could play, noting that Oregon lawmakers formed a working group to help position the state to take advantage of the demand for offsets. A Portland company called EcoTrust Forest Management is working on boosting Northwest offsets by trying to get land managers to leave larger swaths of trees along streams on the Olympic Peninsula, a strategy that’s also salmon friendly. The GreenWire story also cites a paper from Oregon State University researchers suggesting:

    “Pacific Northwest forests could store more CO2 if land managers increase rotations and reduce harvest rates. If the region’s forests were allowed to increase in age by 50 years, for example, their potential to store CO2 would increase by 15 percent.”

    Again, another win for wildlife as well as the climate. 

    The bill that passed the House in June allows for the use of 1 billion tons of domestic offsets, and 1 billion of international offsets each year (keep in mind the annual US emissions potentially covered by Waxman-Markey are about 6 billion tons).

    What’s nice about domestic offsets compared to those from abroad is that they support investments and job creation domestically and they’re easier to verify. (It’s simpler to make sure Farmer Bob in Iowa installs a methane capture system to control cow-poop emissions; it’s harder to know if a Chinese power plant switches to cleaner burning coal—and doesn’t just shift to burning dirty coal in the next province over.) And if the forest that’s meant to lock up carbon burns down, it should be easier to track that and get new offsets to replace the loss.

    But it turns out there aren’t near enough US offset projects to meet the 1 billion tons allowed. The United States is expected to have only 15 million tons of offsets available by 2012, according to research by Point Carbon, an energy and environmental market-analysis firm.

    And Waxman-Markey excludes a large potential source of offset credits: methane controls from landfills, coal mines, and natural gas systems. The gas from these sources is instead regulated by the Clean Air Act’s New Source Performance Standards. Sorry guys, you can’t get offsets credits for meeting pollution limits required by law—though there’s certain to be heavy lobbying to get that changed. 

    What’s shaping up to be a likely source for lots of US offsets is “no-till farming,” an ag practice that helps the soil hold more carbon. Grist’s Tom Philpott has done some great reporting on the serious shortcomings of no-till farming, namely that for most non-organic farmers it means a shift to a heavy use of herbicides (the tilling, or plowing, is done to reduce weeds—which Monsanto is happy to remind you can be done by spraying fields with Roundup).

    So keep an eye on the offsets topic as the debate continues. There’s a lot of disagreement over offsets and whether they could make Waxman-Markey’s carbon cap meaningless, if they’ll have a neutral impact, or if they could actually cut greenhouse gas emissions by encouraging climate-friendly actions that would not have otherwise occurred. We at Sightline are hoping their use is as limited as possible with strong oversight from the EPA (see more on our recommendations for offsets beginning on page 13 of our Cap and Trade 101 primer).

    Cow photo courtesy of Flickr user *~Laura~*under the Creative Commons license.