USDA Official Promotes Federal Purchases of Carbon Credits
(Bloomberg) -- The U.S. government should be prepared to support prices farmers receive for carbon credits but avoid setting up a federally run carbon market that would compete with nascent private markets, a senior Agriculture Department official said Tuesday.
Robert Bonnie, the department’s main climate adviser, said a key way the agency can work to reduce greenhouse gas emissions would be making purchases to bolster prices of the credits, which farmers can sell for switching to practices that reduce emissions or sequester carbon.
Combating climate change is one of Joe Biden’s top priorities, and the department is in the midst of developing plans to meet the president’s goal of reducing American agriculture’s net greenhouse gas emissions to zero by 2050. Agriculture is responsible for about a 10th of U.S. emissions.
Agriculture Secretary Tom Vilsack and others in the administration have said the USDA is intensively exploring carbon markets as a piece of its strategy to address climate change.
But Bonnie brushed aside the possibility of a federally run carbon market in remarks to Agri-Pulse Communications’s Ag and Food Policy Summit.
“I don’t think we want to go there yet,” Bonnie said.
Instead, he said, the focus should remain on carbon markets set up by private operators, such as Seattle-based Nori Inc. and Boston-based Indigo Ag Inc. Non-profit group Ecosystem Services Market Consortium, supported by companies including Cargill Inc., General Mills Inc. and McDonald’s Corp., also plans to develop a national carbon market by 2022.
One potential role for the USDA would be to make investments by “in essence purchasing credits and essentially retiring them,” Bonnie said. “You could also think about price supports.”
“Doing this in a way that is not competitive with the market and actually invites more investment in is going to be critical,” he added. “And that’s where the biggest opportunity is.”
Bonnie said carbon credits “aren’t going to work for all farmers” and the department would need to develop a climate strategy that provides a “full set of tools” to bring down greenhouse gas emissions in agriculture.
©2021 Bloomberg L.P.