Carbon credit market assistance program now in the hands of USDA
Sometimes a legislative proposal stalls, appears dead, then emerges in another piece of legislation in a slightly different form. That’s exactly what happened with the Growing Climate Solutions Act and its plan to help farmers with carbon and environmental credit markets. First introduced in 2020, the bill gained some momentum and passed the U.S. Senate before coming to a standstill in the House. But Congress added the bill, with some negotiated changes, into the Consolidated Appropriations Act it passed in the final days of 2022. The USDA is now charged with implementing its provisions.
Purpose of the bill
The bill aims to reduce barriers for farmers, ranchers, and foresters who want to enter into voluntary markets that establish environmental credits for greenhouse gas emission reductions resulting from agricultural or forestry practices (also known as carbon credits). It allows the USDA to create the “Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Program” if it appears, after an initial assessment, that the program would accomplish these purposes for farmers, ranchers, and private forest landowners:
- Facilitate participation in environmental credit markets
- Ensure fair distribution of revenues
- Increase access to resources and information on environmental credit markets
If the USDA determines that the program would meet the above purposes, it must establish an Advisory Council to help guide the program. At least 51% of the Advisory Council must be farmers, ranchers, and private forest landowners, including beginning, socially disadvantaged, limited resource, and veteran members. Other members on the Advisory Council would include representatives from agencies, the agricultural and forestry industries, the scientific research community, non-governmental organizations, and professionals and private sector entities involved in credit markets.
A primary concern with the environmental credit market is uncertainty and variations in how to establish, quantify, and value environmental credits. An important component of the new program is for USDA to publish lists of widely accepted protocols that are designed to ensure consistency, reliability, effectiveness, efficiency, and transparency of the markets along with documents relating to the protocols. The act directs the USDA to include protocol documents and details on calculations; sampling methodologies; accounting principles; systems for verification, monitoring, measurement, and reporting; and methods to account for issues such as additionality, permanence, leakage, and double counting of credits.
Another concern for landowners who want to participate in environmental credit markets is knowing who to turn to for technical assistance. To address this issue, the program would require the USDA to create a registry of third-party vendors of environmental credits who can help farmers, ranchers, and forest landowners measure the carbon reduction benefits of different types of practices. Unlike an earlier version of the bill, the USDA would not establish a certification program for these vendors, although the agency must ensure that the vendors possess demonstrated expertise in practices that prevent, reduce, or mitigate greenhouse gas emissions.
The USDA, in concert with the Advisory Council, must submit an initial and ongoing assessments to the agricultural committees in the Senate and House. The initial assessment must examine ways to ensure certainly for farmers, ranchers and forest landowners in the marketplace. Ongoing assessments would examine the environmental credit market itself, including actors in the market, participation, credits generated and sold, barriers to entry, opportunities for other voluntary markets, and more.
The act provides an appropriation of at least $1 million per year to fund the program through 2027 and another $4.1 million of potential unobligated American Rescue Plan Act funds. It specifically prohibits the USDA from using funds from the Commodity Credit Corporation for the program, a demand of the House Agriculture Committee Chairman Glenn Thompson, who states that those funds are obligated for Farm Bill program payments.
Farm Bill negotiations this year and other climate initiatives recently undertaken by the Biden administration, such as the USDA’s Partnerships for Climate-Smart Commodities, could reduce the focus the Growing Climate Solutions Act would have received if it had passed when first introduced back in 2020. Even so, the timeclock has started for the USDA to make its initial determination of whether the program would meet the intended purposes. Secretary Vilsack must make that determination by late September, and the expectation is that the program will proceed. We should then see the Advisory Council established by fall and and can expect program outputs such as protocols and the third-party registry as early as 2024.
Read the provisions of the new law beginning on page 1,512 of the Consolidated Appropriations Act of 2023, H.R. 2617.