Climate Change: An Overview


Background

According to the Environmental Protection Agency (EPA), over the past 250 years natural processes such as decay, forest fires and volcanoes as well as man-made changes like deforestation, urbanization, emissions from burning fossil fuels, and the production of agricultural commodities such as rice and livestock, have caused significant changes in Earth’s atmosphere.  Atmospheric concentrations of carbon dioxide and other greenhouses gases, such as methane and nitrous oxide, have risen significantly.  Greenhouse gases absorb energy radiated from Earth to space and warm the atmosphere.  According to the Intergovernmental Panel on Climate Change (IPCC), since the late 19th century increases in greenhouse gas emissions have been associated with an increase in the mean global temperature of 0.3 to 0.6 degrees Celsius.  By the end of the 21st century, according to the IPCC, greenhouse gas emissions could cause the mean global temperature to rise by another 1.4 to 5.8 degrees Celsius.

Because greenhouse gas emissions are linked to almost every industry, including agriculture, manufacturing, and transportation, they must be considered when looking at the future of all these industries.  Agriculture and forestry are somewhat unique in their ability to both produce and reduce greenhouse gasses. According to the EPA, agriculture in the United States accounts for 9% of the nation’s total greenhouse gas emissions.  The biological processes inherent in agriculture production, however, have the potential to allow agriculture to offset vastly more emissions than it produces.

There are two ways in which the amount of carbon in the atmosphere can be minimized.  It can either be removed by a process called “carbon sequestration,” or its emission can be prevented in the first place through “emissions reduction.”  An emissions reduction is a specific set of practices that reduces the amount of greenhouse gas that is emitted.  Examples of emissions reductions include clean forms of energy production, such as wind, solar, hydro and biofuels.  On the other hand, terrestrial carbon sequestration, as defined by the Department of Energy, “is the net removal of CO2 from the atmosphere by plants and microorganisms in the soil and the prevention of CO2 net emissions from terrestrial ecosystems into the atmosphere.”  Carbon sequestration projects can include reforestation, forestation, ocean and soil collections, and storage efforts.

United States Regulatory Structure

While there is not yet a formal regulatory structure in place in the United States to address greenhouse gas emissions, businesses, organizations, agriculture, and legislatures across the country are examining solutions to this problem.

While the United States was signatory to the United Nations Framework Convention on Climate Change (UNFCCC) in 1992, it has been much slower to consider national legislation addressing the issue of climate change.  Over the past fifteen years, a variety of voluntary and regulatory actions have been proposed or undertaken in the United States, including monitoring of electric utility carbon dioxide emissions, improved appliance efficiency, and incentives for development of renewable energy sources.  However, the focus of these actions has been to institute change through strictly voluntary means, rather than compelled through a regulatory structure.  Recently, this voluntary structure has changed.  On April 17, 2009, the EPA announced proposed findings that greenhouse gases “contribute to air pollution that may endanger public health or welfare.”  This finding gave the EPA authority to regulate greenhouse gas emissions under the Clean Air Act; however, no actions have been taken in which it has done so at this time.

On June 26, 2009, legislation specifically addressing climate change was passed through the U.S. House of Representatives.  H.R. 2454, titled “The American Clean Energy and Security Act,” was submitted by Energy and Commerce Chairman Henry A. Waxman and Subcommittee Chairman Edward J. Markey.  However, this legislation never made it to the floor of the Senate to be voted on,

In emissions trading, a central authority, usually a governmental body, sets a limit, or cap, on the amount of a pollutant that can be emitted.  Companies are issued emission permits, or allowances, permitting them to release a specific amount of pollutants.  If the company needs to increase its emission allowance, it must buy credits from those who pollute less than their permitted amount.  The transfer of allowances is referred to as a trade.  In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed.  The total amount of allowances and credits cannot exceed the set cap, thus limiting total emissions to that level.  The cap itself is usually lowered over time, thus aiming toward a national emissions reduction target.

In 2015, Congress enacted a multi-year phase-out of the renewable energy tax credit program. The program allowed for investment tax credits for investors who invested in renewable energy sources, which helped make the renewable energy industry cost-competitive and furthered research into renewable energy. The investment tax credit will be fully phased out by 2021.

On June 1, 2017, President Trump announced that the United States will withdraw from the Paris Climate Agreement. The Trump administration sent its official withdrawal to the United Nations, and the withdrawal will be official in November of 2020 after the one year waiting period.

On March 28, 2017, President Trump signed the Executive Order directing the EPA to consider formally repealing the Clean Power Plan. In June, 2019 the EPA issued the final Affordable Clean Energy Rule and repealed the Clean Power Plan.

Carbon Credits

Carbon credits are the extra credit in this benefit/penalty scheme, and they are also the reason that a cap-and-trade system could become so important for agriculture.  These credits are earned through carbon sequestration, which is the capture and secure storage of carbon dioxide that would otherwise be emitted to or remain in the atmosphere.  The ability of plants to sequester carbon through photosynthesis plays an important role in removal of carbon dioxide from the atmosphere.  Carbon is sequestered (and thus credit is earned) by conservation farming (typically no-till or strip-till practices), grass plantings, the installation and use of anaerobic methane digesters, or tree plantings and reforestation.  The amount of carbon sequestered is verified by an approved verifier, either in person or on paper, depending on the amount claimed.

The first step in determining carbon credits is to develop carbon baselines.  These baselines, established through scientific modeling, determine the measure of carbon sequestered as of a certain date.  In other words, the baseline measures the amount of greenhouse gas emissions that would have resulted without any additional carbon-sequestering practices.  The term for the consequential net effect of the carbon-sequestering practices is additionality.  It requires measurement of the difference between the baseline and the final greenhouse gas reduction benefit.

Determining additionality can be difficult because the equation involves several other variables.  One such variable is leakage.  Leakage considers how events outside the protected boundary will reduce a project’s carbon sequestration benefit.  For example, by avoiding deforestation in one place, trees might be removed more quickly somewhere else.  Another variable that should be accounted for is permanence.  While emissions reductions are permanent, sequestered emissions such as carbon stored in soil or trees are temporal in nature; they are only captured for a certain amount of time.  Once the ground cover is destroyed or the trees are removed, the carbon is again released into the atmosphere.

Currently, there is a strictly voluntary system in place to sell or trade carbon credits.   The Chicago Climate Exchange (CCX) was originally the only place to trade carbon credits in the United States, but closed in 2010 due to inactivity of United States carbon markets. However, carbon credits can still be earned and traded  in large bundles to other carbon exchanges such as the European Climate Exchange (ECX) and the Carbon Trade Exchange (CTX).  In order to sell credits on the an exchange, participants must work through an aggregator.  An aggregator combines credits from several participants to create a bundle of credits large enough to trade on the exchange.  When a participant enters into a contract with an aggregator, the participant has given the aggregator the rights to the carbon sequestered in exchange for payment.  The aggregator chooses when to sell the credits in the market established by the exchange, and within 24 hours of the sale will receive payment from the exchange into the aggregator’s account.  Then, at varying times throughout the year, depending on the aggregator, sales are totaled and payments are made to program enrollees.

International Action on Climate Change

Obviously, climate change is of global concern and is not a topic that can be remedied through the actions of one country.  The first treaty to address climate change, the United Nations Framework Convention on Climate Change (UNFCCC), was completed and opened for signature in 1992. This treaty included commitments to establish national action plans for voluntary measures that could reduce greenhouse gas emissions to 1990 levels by the year 2000.  The United States was one of the first nations to sign and ratify this treaty, and it entered into force in 1994.  However, it was soon concluded by the parties that mandatory, rather than voluntary, reductions in emissions of the six major greenhouse gases would be necessary. The resulting Kyoto Protocol, which was completed in 1997 and entered into force in February 2005, committed industrialized nations that ratify it to specified, legally binding reductions in emissions of the six major greenhouse gases. As of May 2009, the UNFCCC Secretariat reported that 183 nations have ratified or accepted the Kyoto Protocol.  On December 8, 2012 the Doha Amendment to the Kyoto Protocol was adopted. While the United States signed the protocol, it has not been ratified by the Senate and the United States is not bound by the provisions.  However, the United States will participated in the United Nations Climate Change Conference in Copenhagen to on December,2009.

For more information and related issues, visit the Environmental Law and Renewable Energy Reading Rooms.