Energy and Climate- Solutions from the Land

Nuffield Australian Farmers ConferenceMarch 8, 2010

Ernie Shea25x’25 Project Coordinator

Formed through a grant from the Energy Future Coalition

Organized to explore agriculture and forestry’s role in energy production

Evolved to now include a diverse collection of agricultural, forestry, conservation, environment and business organizations and leaders

25x’25: a National Alliance

New Energy Future

Fossil fuel resources are finite and diminishing

Global energy consumption is increasing (nearly 60% by 2030)

The world population is growing (9.1 billion by 2050)

Fast-developing economies like India and China are demanding more resources

Greenhouse gas emissions are increasing (World carbon dioxide emissions expected to increase by 1.9% annually between 2001 and 2025)

By the year 2025, America’s farms, ranches and forests will provide 25 percent of the total energy consumed in the U.S. while continuing to produce safe, abundant and affordable food, feed and fiber.

Our Vision:

25x’25

This is a food, feed, fiber and fuel vision, that is economically viable for our society.

With emerging technology we can produce multiple commodities.

2004 2025

5.74 QuadsRenewable Energy

99.7 QuadsTotal EnergyConsumed

31.7 QuadsRenewable Energy

127.0 QuadsTotal EnergyConsumed

25x’25 is a BIG goal:

We will meet this goal by:Producing transportation fuels

Harnessing wind energy

Converting biogas emissions

Capturing solar, hydro, and geothermal energy

Providing biomass for generating heat and power

25x’25 Future

A 25x’25 Energy Future Means:

$700 billion in annual economic growth

4-5 million new jobs

100 billion gallons of domestic biofuels

15.45 quads of renewable electricity

1 billion ton reduction in GHG emissions

Governors’ Endorsements

State Legislature Resolutions

Passed by Congress as part of HR6

Signed into law by President Bush on December 19, 2007

25x’25 is now a national renewable energy goal!

Critical Challenges & Opportunities• Biofuel pushback

• Sustainability issues

• Woody biomass contributions

• Role of agriculture and forestry in a reduced carbon economy

Copenhagen Statement

“Forestry and agriculture are where poverty reduction, food security and climate change come together and must be addressed in an integrated fashion”……

(key message to negotiators from the ag and forestry communities, COP 15, Dec. 14, 2009)

25x’25 Carbon Work Group

Charge: analyze agriculture and forestry’s role in a reduced-carbon economy and develop recommendations for how each sector can capitalize on efforts to reduce and capture carbon and greenhouse gas emissions.

Areas of Focus

Ag and forestry impacts and opportunities;

Mechanisms to manage GHG emissions;

How ag and forestry could best participate in emerging carbon markets; and

Guiding principles and policy imperatives

Carbon Work Group Key Findings

• Agriculture and forestry are uniquely positioned to deliver low-cost, near term and valuable solutions from the land:

–Energy and national security–Economic development–Environmental services–Energy efficiency

• Under the right policy platform agriculture and forestry have much to gain from this opportunity.

Ag and forestry- responsible for 7 percent of total U.S. GHG emissions

Electric Power Industry

34%

Transportation28%

Industry19%

Agriculture7%

Commercial6%

Residential5%

U.S. Territories1%

Source of U.S. GHG Emissions by Sector

Electric Power Industry

Transportation

Industry

Agriculture

Commercial

Residential

U.S. Territories

Source: EPA 2007

Have the potential to offset 10 - 25 percent of total annual U.S. GHG emissions

Ag Reduction OpportunitiesSequestration

Conservation tillage and crop rotations Cover crops Grazing practices Biochar

Avoided emissions Biofuel production Thermal bio-power and bio-heat Renewable electrical power

Emission reductions Manure management Fertilizer practices

Carbon Policy Imperatives

Economically viable

Include emission reductions, biological sequestration and avoided emissions

Be outcome oriented and technology neutral

Must be enforceable and allow ag and forestry to deliver reductions

Recognize early actors

Primary Challenges• Costs

– Changes in operating practices– Tracking and selling offsets– Increased input cost (esp. fuel and fertilizer)

• Getting the correct enabling policy in place• Development of viable markets• Informing ag and forest sectors of opportunities,

challenges, alternatives and consequences• Shaping our own destiny

America is on a path to a low-carbon energy future that aims to:

improve national security

strengthen the economy

contribute positively to the quality of life

provide a cleaner environment

What is taking us there?

Administration’s Energy Goals

Congressional Actions

EPA Actions

Supreme Court and Federal Appeals Court Actions

Congressional Action

• Waxman-Markey (June ’09)

• Kerry- Boxer (Sept. ’09)

• Stabenow “CEPA”

• Kerry-Lieberman-Graham bill

• Collins-Cantwell Cap and Dividend bill

• Energy- only approach

Unresolved Policy Issues

Carbon price mechanism

Renewable Energy Incentives (RES)

Transmission Upgrades

Definition of eligible biomass

Indirect land use issues

Costs and impacts to economy

Nukes and Clean Coal

Where are we?

• Renewable energy now 10.5 percent of total U.S. energy production

• Sheen on “bioenergy” solutions is fading;• Policy makers focusing on “ultra cleans”• Ag is a divided house; defensive strategies• Food, feed, fiber, energy and climate challenges

not being managed in an integrated fashion.• Lack a comprehensive national energy plan

What’s coming?

• Pressure to deliver sustainable energy solutions will increase

• Climate change challenges will escalate

• $2 trillion global clean energy market

• China is rushing to capture this market

• Emerging opportunity to be compensated for environmental services

Potential Gross Revenue

$24.69

$61.72

$3.53$8.82

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

1% 3% 5% 7% 9% 11% 13% 15% 17% 19% 21% 23% 25% 27% 29%

Total Potential Revenue from Emission Reductions

(US $ Billion)

Percent of Total U.S. Emission Reductions from Agriculture and Forestry

Potential Gross Revenue for Agriculture and Forestry Sectors

Total Revenue @$35 a Ton (US $ Billion)

Total Revenue @ $25 a Ton (US $ Billion)

Total Revenue @ $15 a Ton (US $ Billion)

Total Revenue @ $5 a Ton (US $ Billion)

Source: EPA 2007

Carbon as a Revenue Crop

0

10

20

30

40

50

60

70

Rice Wheat Swine Soybeans Carbon* Milk and Dairy

Corn (grain) Cattle

Val

ue (b

illio

ns o

f Dol

lers

)

Data source: 2007 Census of Agriculture, USDA NASS Febuary 2009; *Carbon estimate based on 25x25 derivation of 20% x 7 billion tons/yr x $20 ton

Value of Agricultural Products

UT-25x’25 StudyUT-25x’25 StudyCrop Net Returns by Selected Scenario: Crop Net Returns by Selected Scenario:

2010 – 20252010 – 2025

Total Net Returns*, 2025Total Net Returns*, 2025Multiple Offsets / RCN Multiple Offsets / RCN Forage ReplacementForage Replacement

changes from baselinechanges from baseline

* Includes agriculture, livestock, forest residues, methane

Regional impacts of Cap-and-Trade Regional impacts of Cap-and-Trade predominantly positivepredominantly positive

Total Net Returns*, 2025Total Net Returns*, 2025Multiple Offsets / RCN Multiple Offsets / RCN Herd ReductionHerd Reduction

changes from baselinechanges from baseline

* Includes agriculture, livestock, forest residues, methane

However, regional impacts vary by However, regional impacts vary by livestock treatmentlivestock treatment

Points to Ponder

We are on a path to a low carbon energy future

Multiple drivers for change

Regulatory solution looming if Congress fails to act

Global Climate Change talks continuing

Ag and forestry are well positioned to deliver solutions to climate change

America wants and needs a new energy future that is:

cleaner

improves national security

strengthens the economy

contributes positively to the quality of life

Agriculture can contribute to these outcomes!

www.25x25.org