Work underway in New Zealand and Denmark could identify a pathway for Ireland to develop a system for pricing and trading greenhouse gas (GHG) emissions and sequestrations, according to Trinity College economist Alan Matthews.
Matthews told the annual conference of Agricultural Economics Society of Ireland that Irish farmers will have to be rewarded for sequestering GHG emissions.
This should be done by pricing the emissions into the value of Irish farm commodities such as meat, grains and dairy produce, and then devising a mechanism to pay farmers for any emissions reductions or carbon sequestrations, Matthews maintained.
The Trinity College academic claimed that Irish efforts to limit GHG emissions from agriculture had been “totally ineffective” to-date because of the “strong market incentives unleashed by the removal of milk quotas.”
Unless we can capture farm-level information, farmers’ mitigation actions will not be included in the national inventory, and thus no credit will be gained
Matthews accepted that devising a pricing mechanism for GHG emissions would be costly and complex, but he said a policy of monitoring, reporting and verifying (MRV) emissions and sequestrations would deliver benefits for farmers.
“Unless we can capture farm-level information, farmers’ mitigation actions will not be included in the national inventory, and thus no credit will be gained,” he told the conference.
“Farm-level carbon budgeting is a way to synchronise mitigation actions and inventory reporting,” he explained.
While Matthews welcomed moves by the EU Commission to pay farmers for carbon sequestration, he argued that such a policy did not make sense unless the emissions from individual farms were also measured and costed.
The Trinity College economist said any pricing mechanism for emissions could be done through a carbon levy/subsidy, or through a cap-and-trade system which included offsets for GHG sequestrations.
“A key principle is that any revenues raised are returned to the agricultural sector, preferably as a pure income payment per hectare,” Matthews said.
“It is critical that any option [for pricing GHG emissions and sequestrations] is a credible, robust and trusted MRV system,” he insisted.
A key principle is that any revenues raised are returned to the agricultural sector
Matthews predicted that any income from GHG sequestration would be governed by an emissions trading scheme (ETS), through which farmers could sell ‘removal certificates’.
However, he cautioned that controls would need to be put in place to prevent the purchase of large tracts of land for the purposes of ‘emissions farming’ by domestic or international concerns.
Matthews also maintained that Irish policy should be devised so that individual farmers secure the benefits of emissions reductions or increased carbon sequestrations on their holdings.
He pointed out that these benefits could possibly migrate to dairy or meat processors under some models being considered internationally.