Intent Versus Reality in Conservation Strategies

Last month, the Chicago Climate Exchange announced that at the end of this year it will shut down its voluntary program for trading greenhouse gas emissions. The closing of the CCX comes on the tails of a shift in congressional power in the mid-term elections that most believe indicates the end of President Obama’s efforts to pass “cap and trade” regulation for carbon emissions. Investors, evidently seeing the writing on the wall, began bailing out of the CCX in droves earlier this year.

The CCX was initiated in 2000, in anticipation of mandatory emissions reductions targets. Using an artificial market-based approach, companies that joined the CCX signed legally binding contracts to reduce their emissions—either directly, or through buying “credits” from other entities that had reduced emissions beyond their target.

The demise of the CCX with a change in the political balance is an indicator that what was being traded was not something with actual value—instead, it had only speculative political value. Thus, with a change in the political winds, the value disappeared, one of many problems with the CCX. For example, a portion of the trading activity was based on the premise of carbon offsets.

Many carbon offset strategies use agricultural or forestry projects to sequester carbon. But a major problem is verifying the impact of this “biospheric” sequestration is nearly impossible, governed as it is by soil and vegetation conditions as well as climate and weather. Further, all of these factors are highly variable, and some are difficult to specify with any degree of certainty. Even Greenpeace, hardly a skeptic of out-there environmental conservation strategies, has pointed out that many carbon offset projects such as reforestation programs are problematic and uncertain at best, and bogus—or even environmentally damaging—at worst.

Agricultural interests such as the Iowa Farm Bureau were among the CCX participants, enrolling farmers to get payments for agricultural practices that add and preserve soil carbon. While this did provide a source of income for those farmers, a more sustainable strategy is to focus on the real value that carbon-sequestering management practices can provide a producer. Indeed, adding carbon to the soil is good for the soil. Research into the ancient concept of biochar, for instance, illustrates the potential for actual value that also has the potential to sequester carbon.

Biochar, a product of processing organic waste through a procedure known as pyrolysis, is considered by many scientists to be “black gold” for agricultural soils. Its high carbon content and porous nature make it an advantageous soil additive—it can help the soil retain water and nutrients, and doesn’t break down or wash away the way that common fertilizers can. At the same time, it is a carbon sink, and increases agricultural carbon sequestration.

In order to be sustainable, environmental conservation strategies have to be valuable in reality—not just in intent. The crumbling of the Chicago Climate Exchange provides an instructive example of an unsustainable approach. Instead, cultivate investment in research and development of practices that add real value to a business, while also benefiting the environment. That strategy is more likely to achieve long-term success, regardless of the political balance.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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