laura sands the clark group, llc. what is the marketplace doing? what is washington doing? why...
TRANSCRIPT
Laura SandsThe Clark Group, LLC
What is the marketplace doing?
What is Washington doing?
Why should we care and what can we do about it?
Source: http://walmartstores.com/Sustainability/9292.aspx
“Step 1: Supplier Assessment
We will provide our more than 100,000 global suppliers with a brief survey to evaluate their own companies’ sustainability. The questions will focus on four areas: energy and climate; material efficiency; natural resources; and people and community . . .
We asked our top-tier suppliers in the U.S. to complete the survey by October 1, 2009, and are working with our other suppliers to determine an appropriate timeline for them to complete the survey. “
“Step 2: Lifecycle Analysis DatabaseWe’re helping create a consortium of universities to collaborate with suppliers, retailers, non-governmental organizations and government officials. The consortium will help develop a global database of information on products’ lifecycles – from raw materials to disposal . . .
Step 3: A Simple Tool for CustomersThe final step of the index is to provide
customers with product information in a simple, convenient, easy to understand manner so they can make choices and consume in a more sustainable way . . .”
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Retailers are beginning to evaluate the environmental and social performance of vendors and products
Kroger has prioritized expanding its green living and sustainable offerings to consumers
Costco has begun surveying its current and potential dairy vendors to assess animal welfare practices and outcomes
Walmart has developed its Sustainability Index which will be released in July, it is inviting other national retailers to participate
Safeway has developed initiatives on food safety, nutrition, and sustainability. In addition, its Animal Welfare Council periodically audits vendors
PHASE 1 PROJECTSPHASE 1 PROJECTS
U.S. Dairy Footprint: Sources of GHGs and Phase 1 Projects
Total Emissions: 28 Million Metric Tons CO2e
Dairy Feed Systems
Crop Production
64% soil NO2
24% fertilizer
12% fuel use
5.8 million21%
Milk Production
16.5 million59%
59% entericmethane
35% manuremethane
6% electricity
Farm Energy Audit ProgramCow of the FutureDairy PowerDairy Underground
Processing
2.0 million7%
75% electricity
2% refrigerant23% fuel
D-CREENon-Thermal (UV)PrototypeNext Generation CIP
Fo
otp
rin
t m
easu
red
in m
etri
c to
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of
CO
2e*
Packaging
1.9 million7%
65% raw material
formation35% container
Dairy Delivery LCA
Transport/Distribution
0.8 million3%
100% Diesel
E-SMART
Retail
1.0 million3%
72% energy
28% refrigerant
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2020: 25% 2020: 25%
2020: 20% 2020: 30%
2020: 17%
2020: 27%
Yikes, it’s going to be costly and close down the farm!
emissions cap
carbon storage or
sequestration
offsets allowances
methane capture
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All studies from 2009 and based on analyses of economic implications of HR2454 for agriculture.
Study Significant Findings
USDA An offset market will create opportunities for the agricultural sector. Annual net returns to farmers range from about $1 billion per year in 2015-20 to almost $15-20 billion in 2040-50.
University of Tennessee
Net returns for virtually all major crops are positive under a properly constructed cap-and-trade program. However, if carbon emissions are regulated by EPA, net farm income is projected to fall below baseline projections.
Nicholas Institute of Duke University
The agricultural sector as a whole benefits from cap-and-trade policy, with net gains of about $1.2 billion to $18.8 billion depending on the price of carbon.
Texas A&M University Farm level results differ by farm type and location. For cash reserves, 27 farms had higher and 71 had lower ending cash reserves. For net worth, 63 farms had higher and 35 farms had lower real net worth as a result of cap-and-trade.
Production costs rise minimally until fertilizer allowances are phased out in 2025
1.2% rise in cost impacts for Corn and Soybean and a 1.9% rise for Wheat until 2025.
GHG offsets mitigate the increased production costs and create additional revenue
Net Revenue Increases for all three commodities studied – Corn, Soybeans, and Wheat – for:a) No-Till Adoptersb) All Producers (Net Overall)
Source: Informa Economics (2009).
Net returns for virtually all major crops are positive under a properly constructed cap-and-trade program.• $1.9 billion growth in
annual returns over baseline projections from corn
• $600 million annually for soybeans
Source: 25x’25.org
We can make it go away!
In 2007, the Supreme Court ruled that EPA has the authority and potential obligation to regulate greenhouse gases (GHGs) under the Clean Air Act.
April 2009• EPA issues endangerment finding, declares GHGs pose
significant harm to human health and welfare September 2009
• EPA issues final mandatory GHG reporting rule December 2009
• EPA finalizes endangerment finding starting the rulemaking process for greenhouse gas regulation
April 2010• EPA and NHTSA finalize rule to control GHG emissions and
fuel efficiency for light-duty vehicles May 2010
• EPA finalizes permitting for GHG emissions from large facilities
• EPA and NHTSA to begin work on additional GHG and fuel efficiency standards for heavy-duty and light-duty vehicles
Framework for agreement known as the “Copenhagen Accord”
On February 1, the UN posted countries that have signed up with emission reduction commitments
• 92 countries (40 developed and 52 developing) accounting for 83 percent of global emissions and 75 percent of global population
• Includes the United States as well as China, India and Brazil
Source: Peterson Institute for International Economics (2010).
EPA regulates GHG emissions under the Clean Air Act
Energy “only” bill moves through Congress this year with possibility for some climate amendments
A revised cap-trade or other GHG bill emerges (power-plant only, cap-and-dividend)
Kerry-Lieberman or similar comprehensive climate-energy legislation emerges/passes by 2013
Cap and Trade with
Offsets
Cap and Trade with
No Ag Offsets
Cap and Dividend
Carbon Tax
Supporters KerryLieberman
Boxer CantwellCollins
Corker
Ag Offsets? Yes No No No
Mechanisms for Offsetting Costs to Consumers
Allowances and Offsets
Allowances Dividend No
Mechanisms for Offsetting Costs to Farmers
Allowances and Offsets
Allowances Annual Approps
No
“ . . . the issue of cleaning up the air and energy independence should not die — and you will never have energy independence without pricing carbon,” Graham argues.
Senator Lindsey GrahamNew York Times, Feb 27, 2010
“We are more dependent on foreign oil today than after 9/11. That is political malpractice, and every member of Congress is responsible.”
“The future economy of America and the jobs of the future are going to be tied to cleaning up the air, and in the process of cleaning up the air this country becomes energy independent and our national security is greatly enhanced.”
-- Senator Lindsey GrahamNew York Times, Feb 27, 2010
Maybe the marketplace will forget….Can we make it go away?
Regional Initiatives:• California (AB32 law
– cap by 2012)• Regional
Greenhouse Gas Initiative
• Western Climate Initiative
• Midwestern GHG Reduction Accord
Recent court decisions have allowed suits against major GHG emitters to go forward:
Connecticut v. AEP Kivalina v. ExxonMobil
Bottomline: In the absence of federal action, companies have full liability for GHGs and courts are allowing cases suing for both $$ and injunctions to enforce control technology to move forward.
Corporate America is on board to pass climate policy that ensures a market approach. This paired with energy needs will drive climate policy alongside traditional environmental concerns.
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Run!(Just kidding)
USDA analysis projecting high levels of afforestation on cropland used EPA’s model and assumptions
Legislative language analyzed reflected long-term desire by environmental groups to severely limit offsets by type and volume
Projected scenarios are only as good as the assumptions made. Change the assumptions by changing the legislative language – not by boycotting the whole process
Leaving the playing field ensures that others will decide the policy
The difference between a good deal for ag and a bad one lies in who writes
the bill or regulation
Clean Energy Partnerships Act (CEPA)
Introduced November 2009
Sponsors: Senator Stabenow (MI); Senator Baucus (MT); Senator Klobuchar (MN); Senator Brown (OH); Senator Harkin (IA); Senator Casey, Jr. (PN); Senator Begich (AK); Senator Shaheen (NH)
Voluntary offsets program for agriculture and forestry
USDA (not EPA) as the lead agency on all agriculture and forestry projects
List of eligible ag and forestry offsets
Flexible policies for sequestration using means like short-term contracts
Stackability of credits from other conservation or stewardship program payments
Avoided conversion of conservation practices
Generous crediting for holders of early action offsets
Interim rules to fast-track offsets
Carbon Conservation Program to incentivize carbon practices including early adopters or new offset types
Contains most of Stabenow/CEPA language on offsets
Sunsets exemption for performance standards (indirect regulation) on offsets – like methane capture from manure – after 2020
Creates a more restricted international offsets program
Kerry-Lieberman Projections
“. . . We are writing to request your assistance in ensuring that future assessments of an offset market accurately represent the policies being proposed, particularly for modeling of the energy and climate legislation recently proposed by Senators Kerry and Lieberman.”
Oh, come on, what’s the worst that can happen.
According to USDA, climate variability could mean:• An increase in extreme weather events, such as heavy downpours• Less frequent but more intense precipitation• Increased drought frequency and severity• Changes in season length, timing and conditions
Implications for agricultural production:• Changes in crop yield• Variations in plant tolerance• Changes in the water requirements of crops• Prevalence of crop disease, weeds, and pests• Loss of effectiveness of herbicides and pesticides• Shifts in areas where food is produced
How to deal with risk?
Ag Carbon Market Working Group
www.agcarbonmarkets.com