IATP's Anne Laure Constantin is blogging from Bangkok at the global climate talks.
Although the two week climate talks session in Bangkok formally ends today, specific discussions on how to reduce emissions from agriculture were essentially over yesterday. The outcomes of this week's agriculture discussions are now reflected in "non paper #17." The whole text is bracketed, as Uruguay and New Zealand (the two countries chairing the drafting group this week) were unable to produce a consensus among members.
As the process of drafting accelerated, many developing countries felt like they did not have enough capacity to follow the discussions, and not enough understanding of what the possible implications of this new part of the climate agreement would be. It seemed hard to reconcile the widespread feeling that agriculture should feature in the final agreement with the little time available until Copenhagen. UNFCCC members will resume consideration of the agriculture sectoral approach at the next negotiations session in Barcelona (Nov. 2–6).
IATP President Jim Harkness just returned from Bangkok at the global climate talks. In this video, he reports on the state of the talks and what they could mean for agriculture.
IATP's Jim Harkness and Anne Laure Constantin are in Bangkok at the global climate talks. Below, Anne Laure blogs on what is at stake for agriculture.
Bangkok is humid (as it should be at this time), and much of South Asia is under heavy rain, with disastrous floods in South India and The Philippines hitting international headlines. Advocates for climate action are rushing around the UN Conference Center in Bangkok pointing to the floods as yet another example of the perils of climate change. The talks have been on for about 10 days and will end this week.
Further away from the conference center (a painful 40-minute ride in Bangkok’s busy traffic), the Asian Farmers Association is holding a series of meetings on agriculture and climate change, with some looking particularly at the role of women farmers. AFA also took an active part in the meeting we organized on Sunday with farmers' groups and climate activists.
And so, slowly, the new and growing call around international circles for the need to include agriculture in a new climate treaty is trickling down to those who really matter: farmers who grow most of the world’s food! As things move forward swiftly inside the climate negotiations, it is urgent that the voices of small farmers and Indigenous peoples be heard by negotiators working on agriculture. This is what we argue in our Benchmarks for Copenhagen and we will keep working to make it happen!
IATP's Jim Harkness and Anne Laure Constantin are in Bangkok at the global climate talks. Below, Jim blogs on what is at stake for agriculture.
“Fifty years: no Bangkok!
In the sea!
Hot, hot! Very hot!”
This was the very surprising, almost haiku-like declaration of my taxi driver earlier tonight. He then said, “Ice: TOOM!,” illustrating the second word by chopping downward with one hand, in a motion that to me looked a lot like a huge chunk of the Ross Ice Shelf splitting off and falling into the sea.
I am in Thailand’s capital with Anne-Laure Constantin for the penultimate preparatory talks before the Copenhagen climate summit in December. Earlier today, we had a workshop that brought representatives of grassroots farmers’ organizations from Asia, Africa and Latin America together with climate lobbyists from development and environment groups. One important conclusion, confirming what we had observed at earlier prep meetings from Poznan to Bonn, was that this kind of exchange is sorely needed, both to inform the national-level advocacy of farm groups and to deepen the international lobbyists’ understanding of what’s at stake for farmers in the developing world. For more background, see our new fact sheet, "Integrating agriculture in a global climate deal: Benchmarks for Copenhagen."
Now the connections among these groups are finally taking shape, and participants from our workshop met this evening with Climate Action Network, the largest and most influential non-governmental alliance pushing for a strong climate deal. The hope is that we can get wider backing for language about agriculture in the climate treaty that is informed by both strong science and the climate justice demands of developing country farmers. The drafts that we have seen to date have neither.
If the clearing of forests and grasslands to expand cultivation is included, then agriculture is far and away the biggest contributor to climate change worldwide. (Its climate footprint is considerably smaller in the U.S., not because our farming is climate-friendly, but because we wiped out all of the original vegetative cover by the end of the last century.) It’s also incredibly complex, and the science is so far behind the rest of what we know about climate change that basic questions—like how much carbon soils can sequester and for how long—remain unanswered. As a result, wild and speculative (in more ways than one) schemes are being promoted—including techno-fixes like industrial biochar that would take enormous areas of land in poor countries out of food production and put them into the hands of rich-country investors. Some of these schemes actually have a chance of getting into the official text.
Not long ago, we were concerned that the important role of agriculture might be ignored in a climate deal. Now it appears the danger is that agriculture will be included with such broad or vague language that the door will be open to schemes that could gobble up vast areas of land and displace food production without actually helping to solve the climate crisis.
It seems everyone is in a tizzy over agriculture and the climate change bill. Environmentalists are mad about concessions given to farm-state legislators to get the bill—known as "Waxman-Markey," after its two principal sponsors—through the House last July. The industrial farm lobby is mad about the climate bill generally, worried it will raise energy costs. And farmers are unsure how, if at all, they will benefit from the offset credits they could receive, and what they would need to do to get them.
It is high time we took steps as a nation to cut greenhouse gas emissions. Tackling climate change is perhaps one of the most important and difficult challenges we have faced as a society; but including agriculture in the Waxman-Markey bill is bad for farmers, eaters and the planet.
For the bulk of human history, we’ve grown food, fiber and energy without reconfiguring the atmosphere, but the industrial revolution made the bulk of agriculture highly dependent on fossil fuels. Today in the U.S., agriculture accounts for about 13 percent of our nation’s total greenhouse gas emissions, and it also contributes heavily to soil erosion, water contamination and the loss of biodiversity—but it doesn’t have to be this way.
Waxman-Markey has recognized agriculture’s enormous potential to not only mitigate the ills it has caused, but to also act as a carbon sink. This is the basis for the bill’s carbon offsets program for agriculture, where farmers would receive government credits for doing things like tilling their soil less and planting trees on cropland. Polluting industries and investors could buy these credits, in theory helping fund these on-farm carbon-sequestering activities.
This program is troubling for several reasons. Technically, carbon offset projects are notoriously difficult to measure and verify—making the incentive for change subject to the whims of a speculative market dominated by Wall Street banks. And making it awfully difficult to ensure that offsets will be a long-term, reliable solution to climate change. Falling carbon offset prices would be poor incentives for farmers to switch to climate-friendly agriculture practices. It is hard to envision this having much of a positive impact—for farmers or the planet.
Agriculture is among our greatest achievements and one of our most precious resources. It gives us season after season of food and fiber. Done right, it builds healthy soils, helps purify our drinking water, provides wildlife habitat, and yes, even helps mitigate climate change. With support, agriculture creates livelihoods for farmers, helps preserve the culture and knowledge of food production, and promotes an ethic of land stewardship and preservation. And let’s be clear, good farming has been the basis for a sustainable planet for centuries. Agriculture should in no way be given a free pass when it comes to climate change mitigation, but it is not the source of the climate change problem.
Making Waxman-Markey a primary vehicle for debating agricultural sustainability schemes distracts from making real progress toward more climate-friendly, sustainable agriculture, and takes away much needed resources.
We should not aim to define agriculture’s role in our society through a climate bill. Instead, we should begin a separate, equally urgent process to decide how best to promote agricultural systems that provide us with the kind of farms, rivers, livelihoods, and climate we value as a society. The USDA’s Conservation Stewardship Program, which pays farmers for sustainable practices on working, productive lands, provides one good place to start such conversations. Expanding such programs should be a clear priority for policymakers and the public, but ultimately, agriculture policy will have to reach much further, to a vision and scale that match the historic challenges we face.
Let’s push forward with strong climate policies, but let’s not use agriculture to circumvent the source of the problem. Our food system is too precious. We already know that agriculture can benefit us all; let’s find a way to make certain that it does.
The facts shared at last night's IATP event, "Climate Equity: Ensuring a Just Response to Climate Change," were at many points staggering—at others, supremely encouraging. Dr. Cecilia Martinez and Fellow-in-Residence Shalini Gupta, from IATP's Center for Earth, Energy and Democracy (CEED) hosted an event to discuss the inequity that exists within our highly inefficient energy infrastructure. As Dr. Matinez pointed out, our current energy system is often built on the backs of whole sets of populations, while those consuming the energy, and creating energy policy, see little consequence.
Both internationally and within the U.S., the inequity between those that produce carbon and those that pay for its impacts, is real and widening. Dr. Cecilia Martinez credits this gap, among other things, to a highly inefficient infrastructure built on outdated, short-sighted and sometimes discriminatory ideals. She cited Robert Moses, the twentieth century urban planning giant responsible for much of New York City's current suburb-oriented design. Moses's tendency to favor highways over public transit did more than influence urban planners around the country—it separated communities from the inner city (often low-income) from those who could afford cars and to live in the suburbs. This energy-intensive transportation system still exists today and as Dr. Martinez pointed out: if modern policies are to succeed and ensure justice, they will need both physical goals (reducing carbon emissions, etc.) as well as social and political goals (improving a broken community infrastructure and ensuing equal access to energy).
Shalini Gupta addressed the international issues surrounding climate change, including past and present proposals for cutting emissions. Who has rights to the atmosphere? Currently, in the U.S., we produce about 20 tons per capita annually of carbon emissions. India, on the other hand, a mere 2 tons per capita, annually. Gupta said, if the world was truly to be equal, carbon emissions would need to reduce to 3.3 tons per capita globally—quite a far off goal when you consider the currently proposed goals; the most aggressive of which comes from the Intergovernmental Panel on Climate Change which proposes reducing carbon emissions by 40 percent from the 1990 levels. Such a reduction would still only put the U.S. at around (conservatively) 11 tons of carbon emissions per capital annually.
Among the daunting figures and historical injustices discussed at last night's event, a thread of "Where do we go from here?" connected the problems with solutions. Efforts like Sustainable Energy Utilities (detailed in this article coauthored by Dr. Martinez) and the determination to push for diversified, small-scale energy solutions, can and will serve to not only reduce our dependence on a commodified, highly inefficient energy infrastructure, but will provide equity for those who have long been denied equal access to energy and energy independence. As Dr. Martinez put it last night, energy must be viewed not as a commodity, but as a commons.
As Congress debates a U.S. climate bill this fall, and governments around the world are focused on global climate negotiations in Copenhagen in December, a new community-based approach to addressing climate change is taking hold.
The Sustainable Energy Utility, or SEU, is turning the traditional role of an energy utility on its head in a growing number of states, cities and communities.
In a new article published in Delaware Lawyer, Dr. John Byrne of the Center for Energy and Environmental Policy and IATP's Dr. Cecilia Martinez write, "The energy utility of the 20th century was invented to rapidly and continuously increase the energy supply. . .The 21st-century energy utility must have a different focus: to help every citizen and every business conserve energy and, when energy is needed, to utilize the energy gifts of our planet—sunlight, vegetation, the winds and the constant temperature of the earth's mantle just three meters below the surface."
But aggregating government, private and philanthropic resources, the SEU differs from traditional utilities by focusing on: 1) a transition to carbon-free energy sources; 2) a reorientation from energy as commodity to energy as a service; 3) the transition to distributed energy infrastructure; and 4) the direct involvement of energy users in energy decisions.
The SEU directly tackles two of the most difficult challenges in shifting our energy system: high upfront capital costs to obtain long-term benefits in efficiency and renewable energy; and the shock of significant energy price increases. Acting as a nonprofit, the SEU coordinates innovative approaches like third-party financing, tax-exempt bonds, revolving funds, federal and state incentives and grants, and funding from other public and philanthropic resources to invest in sustainable energy infrastructure with long-term savings that are shared by the community.
The SEU concept has been catching on and it's remarkably scaleable. The April 2009 issue of the Bulletin of Science, Technology and Society reports on applications of the SEU in Europe, Africa, Latin America and Asia. In the U.S., Delaware has become the first state in the country to create a state-wide SEU.
In Minnesota, IATP is working with the small rural town of Milan in western Minnesota, and a community organization on the west side of St. Paul, to explore the SEU model.
The Center for Earth, Energy and Democracy at IATP is working with West Side Citizens Organization to put an SEU into action in their neighborhood. The west side of St. Paul is a densely populated community of 16,000 in a former industrial zone, with a large percentage of low-income households and people of color. This SEU will focus on energy efficiency and on-site renewable projects.
In Milan, IATP is working with community leaders to develop the first rural-based SEU in the Midwest. Milan, a town of about 350 people, with an average annual household income of about $30,000, will be a model for rural communities in promoting energy affordability, community focused sustainability and attracting energy service businesses to their town.
New policies at the national and international level will set the framework for our collective efforts to stop climate change, but it will take transformative models like the SEU, working on the ground, in communities around the world, to get us there. You can find out more at IATP's SEU page.
The Weather Vein Project is a collaboration led by Aniccha Arts that examines—and reflects upon—the ways in which humans impact the weather. A live, interactive sound sculpture created by Mark Fox called "The Weather Oracle" is now on display at the Weisman Art Museum in Minneapolis and runs through August 23. The exhibit was originally designed to be shown in the entry way of "Cloud Turn": an interactive dance presentation held in early June.
Cecilia Martinez and Shalini Gupta from IATP's Center for Earth, Energy and Democracy have been regular contributors to the We Can Change the Weather blog—an extension of the Aniccha Arts' Weather Vein Project that supplements the exhibit with news analysis, essays and general thoughts on the role of humans in changing the weather.
More information about the project and contributors is available here.
Steve Suppan, Senior Policy Analyst with IATP, has responded to New York Times columnist Paul Krugman regarding his recent blog post "Is the threat of speculation a reason to shun cap and trade?" (July 21, 2009) about the American Clean Energy and Security Act of 2009.
The entire commentary is reproduced below or available to view or download as a PDF here.
Krugman on Carbon Derivatives: A Rebuttal
By Steve Suppan
In his eagerness to support climate and energy legislation, Paul Krugman oversimplifies and thereby distorts the opposition to the carbon derivatives provisions in the American Clean Energy and Security Act of 2009 (ACES) as “[…] basically ‘Eek! Markets! Wall Street! Speculation! Bad!’” (“Is the threat of speculation a reason to shun cap and trade?” July 21, 2009). Granted it is only a blog post, and not yet a topic of his very influential and widely syndicated New York Times column; yet given his influence, even his blog merits a rebuttal.
Krugman would have us believe that trading carbon emissions permit derivatives is just like trading a wheat futures contract. Not so. Wheat futures contracts allow market participants to manage short-term (usually 90 days) price volatility, including “bets” that hope to drive down the price of wheat. How will a statutory purpose of ACES—“to reduce green house gas pollution”—be fulfilled if speculators are allowed to drive down the price of carbon below even the price of the emission permits Congress gives away to industry in ACES? The data reporting requirements for ACES indicate that “short only” bets to decrease carbon prices will be allowed.
Following what European traders have done, Wall Street will slice, dice and package the claimed dollar per ton value of carbon-reducing claims made in projects to offset increases in carbon emissions elsewhere. Offset-based carbon derivatives contracts could proliferate on nothing more than the expectation of regulatory approval of projects claiming to offset carbon emissions. As Friends of the Earth’s Michelle Chan testified to the House Ways and Means Committee in March, profits could be taken on offset-based derivatives far in advance of any proof that an offset project has resulted in verifiable greenhouse gas reductions.
Wall Street forecasts at least a $2 trillion market in carbon derivatives within five years. The current estimated value of all agricultural and non-agricultural commodity derivatives traded under Commodity Futures Trading Commission authority is $4–5 trillion. If the forecast is accurate, carbon derivatives could become a major component of commodity index fund formulas. The ACES trader data reporting requirements anticipate that carbon derivatives will be bundled into commodity index funds. Depending on how traders formulate the mix of commodities in the fund formula, it is likely that carbon emissions could become the dominant “commodity” in some fund formulas, displacing oil. Agricultural commodity prices, and to a lesser extent global food security, could be vulnerable to a swing in carbon derivatives prices, as carbon dominant index funds roll over to take profits.
Krugman still believes that speculation was not a major driver of commodity price volatility in 2008; and hence believes that excessive speculation can be easily regulated for carbon derivatives. He bases the former belief on a blog by Scott Irwin at the University of Illinois at Urbana-Champaign, who dismisses a just-published U.S. Senate report on wheat speculation because it incorporates the views of market participants—and benefits too little from Irwin’s own work and that of other U.S. agricultural economists. However, as Christopher Gilbert at the University of Trieste has shown on the basis of CFTC data, index funds controlled about a third of all corn futures contracts from 2006–2008. (The disparity in 2008 futures contracts held by index funds vs. commodity traders subject to CFTC contract holding limits is even more severe; e.g., 1.5 billion bushels in Chicago Board of Trade March 2008 corn contracts held by the Goldman Sachs and Morgan Stanley managed funds vs. 11 million bushels held by users and traders of that commodity.) After demonstrating how the funds could swing the price of corn, Gilbert concludes that the “fund formula is the fundamental.”
In February, the U.S. House of Representatives Committee on Agriculture, convinced that excessive speculation was a major factor in commodity price volatility in 2008, passed a bill to prevent the trading practices that lead to excessive speculation. However, Wall Street has set aside hundreds of millions of dollars to finance a sotto voce lobbying campaign against this and similar bills in the Senate. As a result of this campaign, a future House and Senate compromise to reform the Commodity Exchange Act (CEA) may result in some of the financial service industry practices that have triggered the destruction of much of the global economy.
As Satyajit Das wrote in the Financial Times (“How to design derivatives that dazzle and obfuscate,” July 8), “Financial products must be opaque and priced inefficiently to produce excessive profits.” Although Das writes about financial derivatives, he could just as well be writing about commodity derivatives, which provided the original model for financial derivatives. If the CEA, an underlying legislative authority for ACES, allows the opacity for over-the-counter derivatives that have contributed so much to the present depredations, we could soon live in the worst of all possible carbon-derived worlds. Huge institutional investors, such as pension funds, could be plowing money into carbon derivative offsets, while ACES enriches Wall Street but fails to reduce carbon emissions.
Traditional speculators provide liquidity needed to clear trades in commodity futures markets; but their role must be tightly regulated in order that excessive liquidity not result in the extreme price volatility that has disrupted agricultural and non-agricultural commodity markets. This need for tight regulation is all the greater when it concerns the reduction of green houses gasses. The purpose of ACES should not be to “get carbon prices right” but to achieve the long-term reduction of carbon emissions of which the legion of benefits is ultimately beyond pricing. The carbon derivatives subtitles of ACES do not provide the statutory basis to achieve that purpose. We would suggest that instead of caricaturing the opposition to carbon derivatives in ACES, Krugman dedicate more time to analyzing the bill itself.
Steve Suppan is a Senior Policy Analyst at the Institute for Agriculture and Trade Policy.
Earlier this week, the green machine known as McDonald’s (I say this with tongue in cheek, of course) announced they’re getting into the alternative energy biz. That’s right—the hamburger chain will soon open an electric vehicle charging station at a restaurant in Cary, NC, with other stations to follow.
Says the press release, “The new McDonald's will deliver yet another new facet of energy conservation by enabling EV drivers to have a place to recharge their vehicles, while enjoying their meal.”
Well, okay, I’m on board with expanding EV charging stations, something we’ll need if electric cars are to become widespread. But the irony here is simply too great to ignore.
This “green” McDonald’s, as they call it, is still a hamburger restaurant, and feedlot beef is the most greenhouse gas (GHG) intensive food we can eat. A 2006 FAO study estimated that 18 percent of GHG emissions come from livestock production, more than transportation. And beef production makes up a Whopper whopping 78 percent of those emissions, even though beef consumption only accounts for 30 percent of meat consumption in the developed world.
Driving a plug-in hybrid electric vehicle will save you on average about 100 grams of CO2 per mile compared to a conventional car, according to a Minnesota Pollution Control Agency study. Cutting out the quarter pounder will net you somewhere around 3,600 grams of CO2, according to low estimates. That’s 20 miles worth of savings, in just one cheeseburger. Puts things in perspective, doesn’t it?
Of course, this works out very well for McDonald’s, which gets to claim even more green-ness than they already do. But for the rest of us, it’s clearly better to skip the burger (or if you can’t give them entirely up, as I haven’t, choose 100 percent grass-fed beef from a rotationally grazed system and eat them sparingly). And, if you can, leave the car at home.