Agriculture Showdown to Shape Next-Gen Offsets, Biofuels

Biofuel-usdaDebates over two looming shifts for the role of agriculture in fighting climate change reached a fever pitch this week. The hot topics included key pieces of the Waxman-Markey climate and energy bill, and the U.S. EPA’s proposed changes to the renewable fuel standard, which will set minimum volume requirements for different types of biofuels used in U.S. transportation fuels each year, starting in 2010. The outcome of these debates will go a long way to determine how big a player the agriculture industry will be in upcoming carbon and alternative fuel markets — and offer a glimpse of how the government evaluates politically-charged climate solutions with big lobbying budgets behind them.

This week’s battles — in a U.S. EPA hearing, fuel standard workshops, negotiations among legislators and in the flurry of press releases that surrounded it all — represent some of the final showdowns in a high-stakes fight over how first-generation biofuels that use agricultural crops for feedstock and agriculture-based carbon offsets will figure into, and compete, in a rapidly changing market. Biofuels are moving toward cellulosic feedstocks, and the still-nascent carbon market is for the first time facing comprehensive regulation in the U.S. that’s placing new scrutiny on offset projects, such as methane capture from animal-waste lagoons and reforestation of pastureland, as Climatewire explains today.

Farm-state legislators threatened to block the Waxman-Markey bill this week unless the traditionally agro-friendly USDA is put in charge of managing offset programs and decides what kinds of projects will qualify, and thus be able to vie for a piece of the estimated $24 billion market in agriculture-based offsets. As the Wall Street Journal notes:

[R]ecent analyses by the EPA suggest the environmental agency will rein in what qualifies as an offset. That would mean less money for farmers.

Meanwhile, agriculture and ethanol lobbies have rallied their considerable political forces this week in opposition to the EPA plan to consider land-use changes — such as clearing a forest and turning it into cropland — when judging the greenhouse gas emissions associated with different biofuels under the renewable fuel standard.

The fuel standard itself is not new, having been created as part of the 2005 Energy Act. But the EPA is proposing to implement what it calls the “first ever mandatory GHG reduction thresholds for the various categories of fuels.” With land use changes taken into account, this, in short, would spell very tough times for much of the ethanol industry.


If California is leading the way on this one, the land-use accounting may stick. Efforts to hold companies accountable for the climate impact of land-use changes got a boost recently in the state, where a law dealing with the issue has survived its first legal challenge from a major oil company. As Greenwire reports, the Contra Costa County Superior Court rejected an environmental impact report for a planned refinery expansion last week because it did not analyze carbon emissions for the project.

At the end of the day, both the biofuels and offset markets are poised for transformation in coming years. Agro companies want to make sure they can snag a healthy share of the markets as they take off. Time will tell if horsetrading in Washington ends up delivering markets and regulations that can actually make a dent in emissions, and allow room for innovation.

Graphics credit USDA

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