California’s Global Warming Solutions Act (AB 32) creates an emissions trading market in California beginning in 2012 that allows regulated entities to use offsets for up to 8 percent of their compliance obligation, 220 million metric tons (MMT) from 2012-2020. Approval of a rice protocol, either as an additional early action crediting protocol or as a California Air Resources Board (CARB) compliance offset protocol, would enable GHG emission offsets created by rice producers in California, Arkansas, or any other U.S. state to be purchased by regulated entities with a compliance obligation under AB 32.

Current prices for offsets on the purely voluntary market range from $3-7/metric ton (MT) of carbon dioxide emissions (CO2e), while pre-compliance offsets approved by the California Air Resources Board are trading on the voluntary market at $7-10/MT CO2e, and are likely to rise further, tracking expected allowance prices.

"The California Rice Commission looks forward to pilot-testing a set of practices in the field that will help reduce greenhouse gas emissions and generate a limited amount of emissions offsets that can be used by other regulated industries in California," said Paul Buttner, manager of environmental affairs at the California Rice Commission. "In doing so, we hope to collect useful information about how to make such programs as user-friendly as possible for our growers and to other agricultural groups interested in providing carbon offsets."

One objective of this landmark demonstration project with rice producers in Arkansas and California is to analyze the project’s replication potential in other rice producing states, including Louisiana, Mississippi, Missouri and Texas.

"This Conservation Innovation Grant allows EDF and our partners to work with growers in Arkansas and California to pilot carbon offset projects using an approved rigorous scientific protocol," said Belinda Morris, California regional director of EDF's Center for Conservation Incentives. "It holds great promise for U.S. rice farmers to make money on the California carbon market and to reduce methane gas emissions from rice production both in the United States and around the globe."

USDA’s Natural Resource Conservation Service (NRCS) uses CIG to stimulate development and adoption of innovative conservation approaches and technologies.

“We want to help farmers and ranchers make important and innovative contributions to reducing greenhouse gas emissions,” Agriculture Secretary Tom Vilsack said during the grant announcement. “These grants are designed to test and verify exciting new approaches to greenhouse gas reduction that other conservation-minded producers will want to put to work on their operations.”