The role of the carbon market in transformation of agriculture towards organic and sustainability

Summary

1. The contribution of organic agriculture to emission reduction in a carbon con-strained world
Agriculture is among the five sectors which will have to substantially contribute to the stabiliza-tion of global greenhouse gas emissions in the next 10-15 years. This is one of the messages from the IPCC’s 4th Assessment Report to the Bali Conference and its roadmap adopted in De-cember 2007. Organic farming reduces embedded energy demand on the input side, stores more carbon in soils and creates a soil structure that retains water more effectively. Most proc-esses face strong site-specific variability so that cultivation practices are too complex to be certi-fied under the Kyoto Mechanism CDM. The voluntary carbon market as well as the increasing attention given to climate change adaptation offers opportunities for promoting best practices of organic farming in a carbon constrained world.
2. The future perspectives in trade with carbon offsets (CERs/VERs)
The Bali roadmap adopted in December 2007 and the recent plans by the European Commis-sion to cap greenhouse gas emissions through the European Union Greenhouse Gas Emission Trading Scheme (EU ETS) in the period 2013-2020 leave carbon markets and in particular the CDM with significant uncertainty on its post-Kyoto future, though there is confidence that there will be a CDM under the post-2012 climate change agreement to be adopted in Copenhagen. As the US, the largest buyer of voluntary carbon market offsets (VERs), is preparing for the in-troduction of cap and trade regimes, the increasing market prospects for VERs may change in the mid term. One key innovation of the Bali roadmap is the proposed scheme to halt deforesta-tion, which may or may not take the shape of trading with carbon certificates. There is signifi-cant uncertainty about the extent to which carbon trading could support the spread of organic agriculture on the output side (sale of certificates as co-products). Organic farming practices however will benefit from increasing prices of oil dependent inputs (fertilizer, agrochemicals), increasing commodity prices and scarce resources such as fertile land and water resources.
3. Sustainable development: Energy for the poor from Gold Standard CDM projects committed to sustainable use of biomass
Energy poverty (costly fossil fuel, short supply of electricity if any) is increasingly constraining rural development and contributing to unsustainable urbanization. Increased supply of biomass energy from sustainable sources is eligible under the CDM and can boost organic agriculture, if projects are certified under the Gold Standard.