It is a sector with significant greenhouse gas emissions and sinks that is not otherwise regulated by the cap and trade program. One offset program already takes advantage of this opportunity by issuing offset credits for capturing and destroying methane from dairies and swine farms using particular manure management systems.Another opportunity for an agricultural-related offset program arises from the ability of agricultural soil to sequester carbon. Soil is an important sink for carbon, and the United Nations Food and Agriculture Organization estimates that soils can sequester over 10% of the anthropogenic carbon emissions in twenty-five years. Whereas some cap and trade programs, such as the European Union’s European Trading System and the first compliance period of the Kyoto Protocol, do not recognize offset credits from most carbon sequestration offset programs because the emission reductions are difficult to measure, verify, and track, future sequestration programs under AB 32’s cap and trade program are possible.AB 32’s cap and trade program already includes two carbon sequestration offset programs, both stemming from the power of trees to sequester carbon, and other types of sequestration programs are not prohibited in the regulations.Consequently, adopting an agricultural soil carbon sequestration offset program seems like a possible option for a future offset program under AB 32. In fact, the possibility has already been mentioned in a proposed bill that went before the California Assembly.Additionally,hydroponic nft system agricultural soil carbon sequestration offset programs have been implemented around the world and likely would have played a role in the Waxman Markey bill or Lieberman-Warner bill if either had passed both Congressional houses.

Agricultural soil carbon sequestration offset programs have many benefits in that they take advantage of soil’s effectiveness as a carbon sink to provide flexibility for covered entities in cap and trade programs. However, aside from problems with quantifiability, permanency, and additionality, which are typical considerations in carbon sequestration offset programs, agricultural soil carbon sequestration offset programs can be accompanied by detrimental incidental effects, particularly increased herbicide use. Increased herbicide use increases nitrous oxide emissions, which could jeopardize the cap and trade program’s goal of reducing greenhouse gas emissions and negatively affect populations and the environment beyond the scope of the cap and trade program. This Comment proposes that if CARB considers adopting an agricultural soil carbon sequestration offset program, as it might in the future, it should use an ecosystem approach to guide the offset program creation process and a project-by-project ecosystem approach for individual project measurements and approval, as opposed to the standards-based approach that CARB utilizes in its existing offset protocols. An ecosystem approach ensures that the complete scope of a program’s environmental effects are measured, rather than only accounting for carbon sequestration. Using this approach, CARB can ensure that the complex incidental effects of agricultural soil carbon sequestration offset programs are completely accounted for in determining whether the program should be adopted, calculating projects’ offset credits, and appropriately constructing the program’s regulations to prevent undesirable effects. Additionally, this project-by-project ecosystem approach will help CARB to quantify the actual emissions and sinks of an offset project, determine whether an offset project is actually additional to business-as-usual, and determine the best pesticide management program to decrease emissions from herbicide use.

A case-by-case ecosystem approach will help CARB to know to reject the program or an individual project if it cannot ultimately benefit AB 32’s goal of reducing greenhouse gas emissions in California. Part II of this Comment provides an overview of AB 32 and its cap and trade program. Part III describes the role that offset programs play in a cap and trade scheme and introduces a sampling of offset programs that currently exist in various cap and trade programs. Part IV details the agricultural sector’s contribution to the United States’ and California’s greenhouse gas emissions and identifies two opportunities for decreasing agricultural greenhouse gas emissions through offset programs. These opportunities include improved manure management, which is already being taken advantage of by AB 32’s Livestock Project Compliance Offset Protocol, and improved agricultural soil management, which provides a possible opportunity for an additional offset program under AB 32. Part V discusses the problems with agricultural soil carbon sequestration offset projects, including difficulties in accurate measurement, permanency, additionality, and increased herbicide use which results in increased nitrous oxide emissions. Part VI argues that an ecosystem approach, which would implicate an analysis of the complete environmental effects of the offset program and a case by-case analysis of the offset projects, would reduce the uncertainty and harm associated with agricultural soil carbon sequestration offset programs. For these types of offset programs, the ecosystem approach would be a more preferable approach than CARB’s typical standards-based approach, which would likely not account for the complete effects of encouraging new agricultural practices through an offset protocol and may not properly account for whether a project is actually additional to business-as-usual. Part VII discusses some of the weaknesses of a case-by-case ecosystem approach and argues that despite these weaknesses, this approach is still preferable for agricultural soil carbon sequestration offset programs due to the extreme and varied nature of the issues associated with this type of program.California’s Assembly Bill 32, the Global Warming Solutions Act of 2006, is the first greenhouse gas reduction bill of its kind in the United States.Passed by the California Legislature and signed by former-Governor Schwarzenegger, AB 32 has been implemented to include direct regulations, incentives, voluntary actions, and market mechanisms, including reporting and verification requirements, early actions, and a cap and trade program. The bill empowers the California Air Resources Board to both set the emissions cap for the cap and trade program and conduct rule makings to establish greenhouse gas regulations and rules governing the market mechanisms.The ultimate goal of AB 32 is to have California emission levels return to 1990 emission levels by 2020.A prominent and controversial portion of AB 32 is the cap and trade program.The program functions as a typical cap and trade. The regulator sets an emissions cap and particular sectors or entities are chosen to be covered under the cap. Each entity covered by the cap has its own compliance obligation, or maximum emission levels. The regulator allocates or auctions allowances to entities regulated under the cap, and entities can buy allowances amongst themselves or fund a project in exchange for offset credits if they cannot meet their allotted compliance obligation by merely improving internal practices or technology. California’s cap and trade program was developed using input from stakeholders and was designed to incorporate input from the Environmental Justice Advisory Committee, a group built into AB 32 to represent environmental justice concerns.A variety of sources,nft channel which can be generally categorized as utilities or industrial entities, are covered under the cap and trade program.The cap and trade regulations took effect in January of 2012 but the start date of the program’s enforceable compliance obligations was January 1, 2013.Under the program, these entities are obligated to cover each ton of their greenhouse gas emissions with one allowance or credit.A number of allowances are distributed to capped entities for free and those entities have the opportunity to buy more allowances at auctions. Additionally, a capped entity can purchase offset credits for up to 8% of its cap and trade compliance obligations.Offset producers can generate offset credits through one of four protocols that have already been developed and approved by CARB:U.S. forest projects, livestock projects,ozone depleting substances projects,and urban forest projects.There is a possibility that California’s cap and trade scheme may eventually become part of a regional program under the Western Climate Initiative .The WCI is a non-profit corporation that was created to provide administrative support for participating jurisdictions’ emissions trading programs.The WCI was originally comprised of seven U.S. states and four Canadian provinces, but every U.S. state besides California has dropped out.

California is now working with the WCI in order to harmonize California’s cap and trade program policies with similar programs in British Columbia, Ontario, Quebec, and Manitoba, and in 2013, California’s Governor Brown signed off on linking with Quebec’s cap and trade program.Offset programs are common features of cap and trade programs. As mentioned above, AB 32’s cap and trade scheme already includes four offset programs and most other cap and trade programs include offset programs.Offset programs primarily exist for two reasons: for the benefit of entities covered by a cap and trade program and for voluntary markets.The more well-known purpose of offset programs is to provide capped entities with flexibility for how they meet emission reduction requirements under a cap and trade program. Many cap and trade programs, including California’s cap and trade program, the Kyoto Protocol, the European Emissions Trading System , and the Regional Greenhouse Gas Initiative , incorporate at least one offset program. Offset programs can also exist as part of a voluntary market that sells offset credits to entities that want to offset their emissions, for example, as part of a corporate social responsibility campaign or to advertise their company as carbon neutral.Offset programs facilitate voluntary transactions between capped entities, which fund and assist in the implementation of greenhouse gas reducing projects, and offset producers, which are hosts to the projects and can be any unit such as a farm, forest, building, or factory approved in the offset program.In exchange for funding the offset project, the capped entity will receive offset credits that count as units of emission reduction that can be used to help meet emission limitations or goals.Some are technology-based projects, such as renewable energy projects or energy efficiency projects, which decrease the offset producer’s carbon intensity or greenhouse gas emissions.Examples of these projects include installing wind farms or solar panels, making a building more energy efficient by upgrading appliances or machines, and installing devices that capture and destroy greenhouse gases.Other projects utilize biological sequestration, which sequester carbon in some resource.Examples of these projects include protecting or restoring forests, planting new trees, protecting or restoring wetlands, and changing cropland practices to increase carbon sequestration.Common criteria for a credible offset program are that the offsets generated under the program must be quantifiable, real, permanent, and additional.To be quantifiable, the greenhouse gas reductions from a project must be capable of being measured.“Real” typically means that an independent third party can verify the reductions.An offset is permanent when the emissions that are reduced by the project will not be released in the future.To be additional, a project must reduce emissions that would not have been reduced anyway in a business-as-usual scenario.Offset programs and the restrictions on using them vary in nature depending on the cap and trade program to which they are linked. One variation concerns whether the offset program project may take place outside of the region covered by the cap and trade program. For example, California’s program recognizes offset credits generated from projects outside of California, subject to certain restrictions, even though only entities in California are directly covered under the California cap and trade program.RGGI, on the other hand, only recognizes offset credits generated by projects within the states covered by RGGI.Another variation is on the type of projects allowed. Cap and trade programs detail the types of projects that are recognized under their offset programs and sometimes certain types of projects are prohibited. For example, the Clean Development Mechanism under the first commitment period of the Kyoto Protocol does not recognize offset credits generated from land use, land use changes, and forestry projects except for afforestation and reforestation projects.Cap and trade programs also differ in the maximum amount of offsets that may be used to meet compliance obligations. For example, California allows for no more than 8% of a compliance obligation to be met by offsets and RGGI allows for no more than 3.3% to be met by offsets.Listing all the ways in which offset programs differ is beyond the scope of this Comment, but the variations discussed above provide a few examples of the great extent to which offset programs may vary. Offset programs are attractive to entities covered by the cap and trade program, governments implementing the cap and trade program, and even certain entities outside of the cap and trade program.