Waxman-Markey vote – soil credits and trade restrictions

As of Friday afternoon, it looks as if there will be a vote on the US cap-and-trade bill today in the US, though it still could carry over to next week.

The bill as it stands has been heavily modified to try to garner every last possible scrap of support in the House.

This includes some major sops to farmers – the inclusion of agricultural credits, based on the sequestration of carbon in soils.

Such credits are notoriously hard to do properly – it is extremely difficult to quantify how much carbon is being released from soils, to verify that farmers have followed the correct methods to conserve carbon dioxide in the soils, and to police the awarding of the credits.

Mitchell B. Feierstein, chief executive of Glacier Environmental Funds in London, which specialises in buying and selling carbon credits, explains: “Agricultural credits can have credibility, but it’s crucial to establish credible baselines and robust methodologies ensuring any credits generated
are quantifiable, real, permanent, verified and certified by an independent 3rd party, are given unique serial numbers and stored in a credible custodial registry maintained by a creditworthy counterparty. These criteria are imperative and not flexible.”

He continues: “You have to ensure any credits involved in the US program provide genuine
environmental benefits; otherwise you are just creating a way for people to
arbitrage the system and/or opening the door to green wash.”

But he is doubtful that current methodologies for awarding such credits are adequate for use in a mandatory federal cap-and-trade system. He says: “I do not know of a proven baseline or methodology currently in existence that quantifies and ensures permanence and performance in these categories. Many existing methodologies are not robust and lack credibility. An example
is certain “credits” based on current methodologies trading for 60 cents a tonne. Mostly all of these “credits” are business as usual and would have happened anyway and provide extremely questionable environmental benefits. This must be prevented.”

But it seems that awarding large numbers of agricultural credits was politically necessary to get Representatives from the big farming states on board.

There is also a nod to industries worried that, if they are covered by a cap-and-trade system, they would be undercut by a flood of cheap imports from countries without restrictions on carbon dioxide emissions.

The bill as it stands now makes it mucht easier for the US to impose import tariffs against countries that do not control their carbon emissions.
These “border tax adjustments” may be permitted under World Trade Organisation rules, according to a report published this week by the WTO and the United Nations Environment Programme.

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