25X'25 shows ag could benefit from cap-and-trade, but …

Drovers
By Drovers news source Wednesday, November 11, 2009

Net returns for virtually all major crops are positive under a properly constructed cap-and-trade program, according to a University of Tennessee study released today by 25x”25. However, the study goes on to show that if carbon emissions are regulated by EPA as prescribed under a 2007 Supreme Court ruling, net farm income is projected to fall below baseline projections.

The Analysis of the Implications of Climate Change and Energy Legislation to the Agricultural Sector, the long-awaited and comprehensive assessment by the University of Tennessee’s Bio-Based Energy Analysis Group, says that an operationally efficient cap-and-trade program that allows multiple offsets, including those for bioenergy crop production, while restricting the removal of crop residues to acceptable, environmentally beneficial levels, offers positive net returns for eight of the nine major crops analyzed.

Furthermore, at a meaningful but moderate carbon price of up to $27 per metric ton of carbon dioxide (MtCO2e) – a price level projected by EPA – no cropland is expected to be converted to forests. In fact, no major shifts in commodity cropland use are expected under a properly constructed cap-and-trade system.

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