carbon markets and biochar: an offset buyers perspective north american biochar conference

Carbon Markets and Biochar: An Offset Buyers Perspective

North American Biochar ConferenceAugust 10th, 2009

Peter WeisbergOffset Project Analyst

pweisberg@climatetrust.org503-238-1915

Outline

• Theory of offsets• How offsets could support biochar projects• Current funding from The Climate Trust

Source: The McKinsey Quarterly. 2007. “A cost curve for greenhouse gas reductions.”

Sequestration and Carbon Markets

• Very little sequestration thus far:– No soils– Only reforestation/afforestation with temporary

credits

HFCs, PFCs & N2O reduction27%

Renewables35%

CH4 reduction & Cement & Coal mine/bed

20%

Supply-side EE10%

Fuel switch6%

Demand-side EE1%

Afforestation & Reforestation0.4%

Transport0.2%

Expected CERs Until 2012 (%) in each category

US Offset Market• Trends

–Fossil fuels will likely be capped–Favor domestic projects over international projects

• Destroying methane emissions– Dairy digesters– Landfill gas capture– Wastewater treatment plants– Coal mine methane

• Sequestration– Forestry

• Afforestation/Reforestation• Improved Forest Management• Avoided Conversion/Deforestation

– Soil Management– Biochar?

Outline

• Theory of offsets• How offsets could support biochar projects• Current funding from The Climate Trust

$ = CO2 Sequestered x Price• Low Quality US Projects

• Chicago Climate Exchange: $2-$4• High Quality US Projects

• Voluntary Carbon Standard: $4-$9 • California Climate Action Registry: $5-$11

• Mature International Markets• EU Emissions Trading Scheme: $10-$40

• Projections for Early US Market• Markey-Waxman Bill : $10-$15

GHG Reduction Reduction Size Qualify for Carbon Finance?

Sequestration Large Yes

Fuel switch Medium Likely to be capped

Less fertilizer fewer soil emissions(N2O and CH4)

Medium/Large Hard to measure

Less fertilizer less fertilizer production

Small/Medium Indirect, hard to measure, likely to be capped

Currently Available Methodologies

Avoidance of methane production from biomass decay through controlled pyrolysis

• Small scale• No credit for carbon sequestration• Char must be “biologically inert”

• Volatile C/Fixed C ratio lower than 50%

Next Step: Sequestered Carbon

Carbon Gold methodology for proposed to the Voluntary Carbon Standard

Unresolved Methodology Issues

• Recalcitrance• Guarantee 100 years of permanent sequestration

• Carbon Gold: Volatile C/Fixed C ratio lower than 50%

• Erosion• What happens to char that erodes out of the soils?

Unresolved Methodology Issues

• Ownership – Three entities with valid ownership claims• Feedstock owner • Pyrolysis plant• Soil owner/Farmer using char

• Can only be claimed once

Unresolved Methodology Issues

• No environmental harm– Heavy metals– Criteria air pollutants– Microbe health

Unresolved Methodology Issues

• Environmental impact– Heavy metals– Criteria air pollutants– Microbe health– Carbon already in soil

Resolved Issue: Waste Feedstocks

• Leakage– Changes in emissions outside the project

itself• Direct: Biomass fuel unavailable• Indirect: displace current farm land for biochar

feedstock plantations land use change• Carbon Gold: “biomass that would otherwise

have been left to decay or been burned in an uncontrolled manner”

Outline

• Theory of offsets• How offsets could support biochar projects• Current funding from The Climate Trust

• 3 Programs• Oregon Program• Smart Energy• Colorado Carbon Fund

• 16 projects, $8.8 million in funding, 2.6 million tons of CO2 offset

• Non-profit- Laboratory for innovative offset projects

Project Development Timeline

Proposal Due Diligence

Contract Negotiation Commercial

Operation

Annual Monitoring

Upfront Payment

Annual payment“upon delivery”

Peter WeisbergOffset Project Analystpweisberg@climatetrust.org503-238-1915 x 207