GEMCo Members Agree to Buy Emission Reduction Credits From Iowa Farmers (Announced at the Emissions Marketing Association meeting in Washington, DC)
Washington, DC – October 19, 1999 – The Greenhouse Emissions Management Consortium (GEMCo), a consortium of Canadian energy companies focusing on market-based ways of reducing greenhouse gas emissions, today announced an agreement with IGF Insurance Company, the fourth largest crop insurer in the US, to buy up to 2.8 million metric tons of carbon dioxide-equivalent emission reduction credits. Seven consortium members will participate in the agreement which will run through 2012.
The announcement was made during the third annual fall conference of the Emission Marketing Association, a trade association of companies involved in emissions trading.
The agreement is a first of its kind in that it applies to a broad spectrum of agricultural sources for carbon dioxide emission reduction credits, or CERCs. IGF intends to solicit the CERCs from eligible farmer/landowner participants through its network of crop insurance agents, initially from Iowa, and ultimately nationwide. IGF Insurance will work with CQuest Ltd., a network of service providers that define, measure, verify, audit, transfer, deposit, register, and assure the creation and transfer of CERCs.
A CERC is defined as the equivalent of one metric ton of atmospheric carbon dioxide (CO2) or other greenhouse gas measured in CO2-equivalents, reduced or avoided from an agreed baseline. CERCs are generated by documenting activities that cause measurable incremental increases in soil carbon and/or the actual reduction of carbon dioxide, methane or other greenhouse gas emissions. CERCs may eventually be surrendered by title holders to environmental regulators, in partial compliance with possible future legislated obligations to reduce greenhouse gas emissions. Alternatively, CERCs could be packaged with a wide range of energy or food products to achieve an emissions-neutral market offering.
"The tough work that had to be done to get this deal in place sets the stage for many similar agreements to proceed in the near future,” according to Aldyen Donnelly, the president of GEMCo.
“Most of the talk about carbon credits has been pretty much pie-in-the-sky until now,” agrees Steve Griffin, IGF vice president for strategic development. “With this agreement, however, carbon emission reduction credits are a here-and-now environmental coupon for farmers and landowners to ‘harvest’ and sell. Agricultural CERCs are a simple low-cost approach for industry and consumers to mitigate their greenhouse gas emissions exposure.”
“The fact that Canadians are willing to invest in U.S. agricultural CERCs demonstrates that reducing greenhouse gas emissions is a global issue that knows no international boundary. CERCs can be originated anywhere in the world to offset emission anywhere in the world. The atmosphere is one big bowl of soup to which everyone can add or subtract greenhouse gases (GHG),” says Greg Lewis, president of CQuest.
"It all started in the early 1990s with pioneering Canadian research, initiated by TransAlta Corporation in partnership with the Saskatchewan Soils Conservation Association," says Donnelly. "In 1996, TransAlta joined six other Canadian energy companies to form GEMCo to develop a wide range of climate change issue solutions. One of GEMCo's early objectives was to expand on the existing soil carbon research efforts and to convert the knowledge gained into a commercial emission reduction market development strategy."
In 1996, GEMCo's members launched the Canadian Prairie Soils Carbon Balance (PSCB) Project, a significant new research partnership with Agriculture & Agri-Food Canada (AAFC), Alberta Agriculture, Food and Rural Development (AAFRD), Saskatchewan Soils Conservation Association (SSCA), Ducks Unlimited, and the Canadian Cattlemen’s Association.
The PSCB Project focuses on the measurement of the uptake of carbon. The project continues to collect soil carbon data through the year 2000 at about 200 locations across the Canadian prairies where farmers have recently adopted more sustainable land management practices such as continuous cropping and direct seeding. The research program involves analysis of new data as well as the large existing pool of historic soil carbon information, and includes the development of a practical model and sampling protocol that will allow the verification of carbon change resulting from a variety of best management practices for annual cropping and for grassland production. The model will also allow for scaling of carbon change estimates for regional forecasts.
By mid-1998, with two years of research and modeling to go, GEMCo's members felt that they understood the carbon impacts of the adoption of more sustainable farm land management practices well enough to move the concept into the marketplace. "Iowa turned out to be the place to start," says Carlton Bartels, director of emissions trading for Cantor Fitzgerald, the trading organization that brokered the deal.
"Iowa was ready to host the first CERC market,” Lewis says, “largely due to the complementary leading work in soil and agricultural science at Iowa State University and the Iowa offices of U.S. Department of Agriculture’s Natural Resources Conservation Service (NRCS). Iowa’s deep productive soils and cool climate are also highly conducive for large amounts of carbon sequestration."
“This agreement is a bit of a trailblazer for North America. We believe similar trades will total 100 million CERCs as early as next year.” says Bartels. The CERCs for the Consortium will originate from agricultural practices such as minimum-till and no-till farming practices, cropland retirement, buffer strip development, afforestation, reforestation, improved timber management, on-farm power generation from biomass and methane abatement from livestock waste.
International concern for the escalating level of greenhouse gases, linkages between the level of GHGs and global warming, and dire predictions of the implications of climatic change have led to several international accords. In December 1997, the Kyoto Protocol bound its signatories to a goal of reducing projected GHG emissions. The Canadian government committed to a reduction leading to emissions 6% below those of 1990 in the period 2008-2012. The Clinton Administration committed the U.S. to a reduction of 7%.
In the US, the Kyoto Protocol has not been submitted to the Congress for ratification. However, legislation has been introduced to legitimize “early action” credits.
In Canada, the federal government has initiated a wide-ranging discussion process toward implementing Kyoto commitments, but has not committed to “credit for early action”. The intent of the GEMCo participants is to move forward with “real world” reduction projects that reduce emissions sooner rather than later.
For More Information, contact:
| Aldyen
Donnelly, President Vancouver
and Victoria, Canada Phone 604-731-4666 |