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Midwestern states should develop a low carbon fuel standard to reduce transportation emissions of that greenhouse gas, and a useful mechanism for doing so would be a regional carbon credit market, according to a policy paper released by the Midwestern Governors Association.

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Prices peaked at $7 per ton in 2008, but price and volume have plunged amid doubts about federal climate legislation.

On the obligation side would be any Midwestern refinery that produces gasoline or diesel, or any company that imports gasoline or diesel into the region.

"This low carbon fuel standard is one of the most appealing ways to reduce emissions and build local and specifically agricultural economies," said Nancy Jackson of The Land Institute in Salina, Kan.

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The Farmers Union created the national program in 2006 for farmers to generate carbon credits by using land management practices that keep carbon in the soil, such as no till and cover cropping. The credits were sold on the Chicago Climate Exchange, raising $7.4 million for farmers in four years, Carlson said.

Regulating and enforcing the market would fall to individual states. In South Dakota, this would be the Department of Natural Resources. But that discussion is a ways down the road, Roberts said.

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The proposals ranged from expanding biofuels infrastructure to decreasing the carbon intensity of existing fuels, but the overall framework is "based on a credit trading and banking system."

on the advisory group, did say that increasing ethanol production, creating incentives for flex fuel vehicles and expanding biofuels infrastructure would indeed help reduce carbon intensity in the Midwest.

Poet does not have a position on the feasibility of a carbon credit market, said Doug Berven, director of corporate affairs. But Berven, who was Adidas Neo Advantage Clean Women's

Carbon Credit Trading ends

have been trading at 10 cents or less for months, though these trades now represent only 5 percent of the carbon contracts, spokeswoman Brookly McLaughlin said. The remainder are over the counter trades with specific companies.

is not involved in any carbon trading markets, but farmers in the state have been enrolling conservation land to generate carbon credits on a Chicago exchange since 2006.

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"I'm not going to close the door on that," he said. "I'm saying it's not likely."The underlying goal is to reduce carbon intensity in the Midwest by 10 percent within a decade of enacting the policies. Carbon intensity is the amount of carbon emitted over a fuel's life cycle, from production to Adidas Los Angeles Granite consumption.

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´╗┐carbon fuel standard

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In this hypothetical market, any fuel producer whose product had a carbon intensity lower than gas or diesel would be eligible for credits. Fuel sold to a gasoline or diesel blender or used for any purpose besides transportation would be excluded.

"What we liked in the report was the desire to draw on the strengths of the Midwest things like wind power and ethanol to reduce our carbon intensity," Poet spokesman Nathan Schock said in an e mail.

Roberts was an observer, not a signatory to the document, which means the state hasn't committed to any specific policy recommendations. He characterized the yearlong process of crafting the policies as mainly informational.

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It's unlikely that South Dakota would join such a market, at least until the cost to the consumer is better understood, said Hunter Roberts, state director of energy policy.

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