What's your carbon sink worth? That is the big question. There exists a great deal of uncertainty about this issue. What I hope to give you in this article is some possible scenarios as to its value and to wave a few cautionary flags.
When Canada's International Negotiators got on the plane last November at the Hague to return to Canada, they thought they had reached an agreement to ratify Kyoto and that the agreement included soil sinks. Unfortunately, this agreement unraveled at the last moment. What it does mean, however, is that agreement is close and that the ag community should take ag soil sinks seriously.
Farmers need to be aware of the contribution they can make to the National Plan to reduce greenhouse gases. Instead of using big numbers let's use an average sized 10 quarter Saskatchewan direct seeded farm and show the relationship between the CO2 removal potential of soil and litres of fuel burned that releases CO2 into the atmosphere.
The Prairie Soil Carbon Balance Project in which 137 Saskatchewan farmers participated, and many of these being SSCA members, has shown that the average direct seeded farm sequesters 0.5 tonnes of carbon per acre over three years. If we multiply this by 3.7 this converts to removing and storing 1.85 tonnes or 1850 kg of CO2 removal. Tickle your calculator and this translates into 770 litres per acre over 3 years or 256 litres per acre per year. This means a single acre farmed under Best Management Practices, such as direct seeding, can remove the CO2 released from burning 256 litres of gasoline. Tickle your calculator again and you'll find that a quarter section can absorb the CO2 released by burning 40,000 litres of gasoline per year. On the 10 quarter section of land from our example, this means offsets for 400,000 litres of gasoline burned. Stated a slightly different way, the 10 quarter direct seeded farm removes the CO2 emissions released by burning 400 thousand litres of fuel and sequesters or stores it in the soil.
What's it worth? The Federal Government has spent millions of dollars in formulating a national strategy. The results are summarized in a report entitled Implications for Canada of the Kyoto Protocol ( Page 30). This is a very comprehensive study that outlines 5 paths or groups of options needed to reach emission reduction targets. In Paths One and Three, they suggest " a motive fuel tax of 12 cents per litre ( CIMS ) and 16 cents to 19 cents (Markal). To put this in perspective, the combined Federal and Provincial level of taxes is on average 32 cents per litre". Presumably the higher cost of fuel would encourage more efficient use of fuel. (Note: CIMS and Markal are modelling systems).
If farmers were bold enough to suggest that the incentive for the removal of CO2 with sinks should equal the penalty for emission, the results would be interesting. Our 10 quarter direct seeded farm would see a range of $48,000-$76,000 or $30.00 to 47.50 per acre as value added income.
However, before farmers breathe a sigh of relief thinking that they can finally make a living, we need to look at Canada's First National Business Plan Page 97:
"Carbon sinks offer a unique opportunity for Canada to offset its rising GHG emissions with a low cost ( possible range: < $1-2 /tonne CO2 equivalent), high quantity (10-40 megatonnes) abatement mechanism. Therefore, sinks have considerable strategic value for Canada in context of both its national and international climate change discussions. To realize this opportunity, clear and favourable rules are required internationally, while at the national level, governments must develop a sound scientific underpinning coupled with actions that encourage sinks investments."
Again if you go back to your calculator and the 10 quarter direct seeded farm you get $266.00 0r 16 cents per seeded acre incentive. As a grumpy farmer, I suspect this figure was inserted by the sector that wants to buy cheap offsets. These two scenarios should illustrate the uncertainties surrounding the value of soil sinks.
Let's take a look at it from a different perspective and consider the cost of emission reduction and its effects on the farm input side. Consider the dramatic recent increase in the cost of natural gas. Many people share the opinion that the price rise is a result of the U.S. electrical companies switching from coal to natural gas to generate power with reduced emissions. This could change the price of a pound of nitrogen from 20 cents to 40 cents. If you use 100 lb. of N per acre, your fertilizer costs go up $20.00 per acre or $32,000 on our 10 quarter direct seeded farm.
Will sequestering carbon reward soil stewardship or only add risk and cost to our farms? The verdict is still out and will remain unclear until public opinion and the policy makers decide on a course of action.
The "take home" message to the prudent farm manager is be cautious! Think very carefully. A deal signed on the hood of a half-ton could come back to haunt you. As farmers we should take pride in the contribution we can make in addressing Canada's emission problems, but let's be sure our contribution is recognized and rewarded.