soil carbon trading: lessons learned from forests
DESCRIPTION
Dr Annette Cowie of the NSW Department of Primary Industries shares the secret formula for success used by forest offset promoters to get credititation and to convince governments that they were socially positive.TRANSCRIPT
Annette CowieNSW Department of Primary Industries
Soil carbon trading: Lessons learned from
forestry
N S WD P I
Biosequestration - reforestation
N S WD P I
Biosequestration – soil OM
Sequestration potential: Sequestration potential: GuesstimatesGuesstimates
Potential increase* tCO2e/ha/year
Range; Average
NSW totalMtCO2-e/year
Cropping 0 - 2 0.7 2
Pasture management –Higher rainfall
0 -1.8 0.9 8
Rangeland management
0 - 1 0.4 8
*Relative to conventional practice
18Mt = 11% total NSW (2006) = 100% NSW agriculture emissions
Sequestration potential: reforestationSequestration potential: reforestation
Sequestration rate tCO2-e/ha/year
Annual rainfall mm
400-600 600-800 >800
4-10 6-12 10-25
1.5 -2Mha reforestation required for 18Mt/yr sequestration
Montagu et al Carbon Sequestration Predictor
Across Australia: 657 mt CO2e from 2.25m ha, over 40 years cf annual emissions 560 mt CO2e
Hatfield-Dodds et al, 2007
Biosequestration in soil is Biosequestration in soil is significantsignificant
How do we encourage it?
Can soil carbon trading work?Can soil carbon trading work?
• Should landholders be paid for soil carbon?
• Can a workable scheme be designed?• Will it be an effective incentive?
• What can we learn from forestry?
Forest C trading Forest C trading Allow forest offsets:• NSW GGAS• Greenhouse Friendly• Kyoto, incl Clean Development Mechanism• California• Chicago CCX• CPRSNo forest offsets:• European ETS
Participation alternativesParticipation alternatives
• Optional offset mechanism
• Full coverage of sector
Can soil carbon trading work?Can soil carbon trading work?
• Should landholders be paid for soil carbon?
• Can a workable scheme be designed?• Will it be an effective incentive?
• What can we learn from forestry?
Benefits of soil carbonBenefits of soil carbonBiological
• Energy for biological activity
• Nutrient cycling
Physical• Structural
stability• Erosion
resistance• Water
infiltration• Water holding
capacity
Chemical• Nutrient holding
capacity• Buffer against pH
change
↑ Soil carbon = ↑ Soil health↑ Resilience
Should landholders get credit?Should landholders get credit?
Yes: Climate change mitigation is a public good
Can a workable scheme be Can a workable scheme be designed?designed?
Project level emissions trading requires:• Standard product• Efficient estimation of emissions and
removals• System for verification• Market structure, buyers
Can a workable scheme be Can a workable scheme be designed?designed?
Hurdles for offset projects:Offsets must be • Credible (real net abatement) • Permanent (or deal with non-permanence) • Measurable• Additional • Verifiable
Hurdles for offsets: credibilityHurdles for offsets: credibility
Is it real?Is carbon sequestered? Is there a net benefit?
Are there negative offsite impacts? (Leakage)– Increased emissions offsite, attributable to the project,
should be considered Are ‘life cycle’ emissions considered? – Emissions due to fossil fuel use, indirect (fertiliser,
herbicide), and non-CO2 greenhouse gases should be considered
Nitrous oxideNitrous oxide
• Increased soil N, by fertiliser, legumes or some organic amendments, will increase N2O
• Emissions of N2O could partially negate the mitigation benefit of increased soil C sequestration (GWP of N2O is 298 x CO2)
• C credit for offset activities should be discounted for increase in N2O (but uncertainty in estimation is high)
Hurdles for offsets: permanenceHurdles for offsets: permanence“abatement should represent a permanent
reduction in CO2 equivalents in the atmosphere”
Biosequestration is vulnerableNSW GGAS forestry offset:• “100 year rule”
Can only trade carbon that will remain sequestered for 100 years
• Registration on title: forest carbon rights, restriction on use
Kyoto CDM: temporary credits
Hurdles for soil C offsetsHurdles for soil C offsets
Handling (im)permanence• restriction on land use?• restoration provision?• alternative approach to permanence?
Hurdles for offsets: measurementHurdles for offsets: measurement
Can it be measured / estimated?• Easy for forests
N S WD P I
Counting Carbon in plantations - easy!
Carbon makes up 50% of tree biomass
Predict carbon from growth models, inventory
Focus on stock change, not absolutes
Allometric approach for estimating carbon in treesfrom inventory data
0
1
2
3
4
5
6
7
8
9
10
0 1 2 3 4 5
Log dbh(cm)
log
Abo
ve-g
roun
d bi
omas
s (k
g)Heaton PFOurimbah NFWabby NFMckenzie NFMyall Lakes NFHills PFTooloom PFHannam Vale PF
Hurdles for offsets: measurementHurdles for offsets: measurement
Dealing with uncertainty• GGAS: discount for uncertainty “70% rule”
Can only trade quantity for which 70% probability that actual sequestration exceeds traded C
Hurdles for offsets: measurementHurdles for offsets: measurement
Soil C• Monitoring is not feasible• Cost-effective accounting
– Based on calibrated models informed by baseline measurement
• Credit based on modelled rather than measured impact of land use
Hurdles for offsets: additionalityHurdles for offsets: additionality
Is it new abatement? (“Abatement should be “additional” to “business-as-usual” if it used to offset emissions”)
• Additionality test determined by scheme• GGAS: environmental• GF, CDM: financial
Hurdles for C offsets - verificationHurdles for C offsets - verification
Is it verifiable?• GGAS: audit• Spot checks?• Remote sensing?Soil C• Compliance based on land management
practice rather than measured soil C stock change (CCX approach)?
Will it be an effective incentive?Will it be an effective incentive?
• Sufficiently attractive to encourage participation?
• Costs vs returns– Legal : ownership– Record keeping, GIS– Monitoring– Reporting– Audit
• Risks
New South Wales GGASNew South Wales GGASConservative calculation methodsStrict rules for accreditation, accounting, record
keeping, reporting, audit “Restriction on Use”
= Confidence in the market-place
But= High transaction costs, low net return
= Barrier to participation
www.dpi.nsw.gov.au
© State of New South WalesDepartment of Primary Industries
NSW Greenhouse Gas Abatement Scheme
NGACs created to Feb '07
05000
1000015000200002500030000
Generat
ion
Deman
d side
Carbon se
questr
ation
Large u
serN
umbe
r of N
GA
Cs
X100
0
What about risk?What about risk?
• Terrestrial carbon is vulnerable: risk of loss• Australia elected to exclude “Article 3.4
activities” due to perceived risk of losses
N S WD P I ‘Factoring-Out’
COP 7 Marrakesh Accord: ….accounting excludes removals resulting from
(i) elevated carbon dioxide concentrations above their pre-industrial level; (ii) indirect nitrogen deposition; and (iii) the dynamic effects of age structure resulting from activities and practices before the reference year
IPCC invited to develop methods for “factoring-out” direct human-induced changes from changes due to indirect human-induced and natural effects, and effects due to past practices in forests
Requirements for Soil carbon trading – Requirements for Soil carbon trading – lessons from forestry (1)lessons from forestry (1)
• Credibility of concept– Document the potential– Handle non-permanence– Satisfy additionality, report leakage– Adjust for impact on whole farm GHG balance
• Marketable product– Standard offset unit – fungible credit– Compatible with international markets
• Compliance approach– Based on practice, not measured stock changes
Requirements for Soil carbon trading – Requirements for Soil carbon trading – lessons from forestry (2)lessons from forestry (2)
Minimise barriers• Eligibility requirements:
– practices, legal -ownership• Accreditation costs• Participation costs
– Cost-effective GHG accounting: models– Record-keeping, monitoring and verification
• Marketing costs– Pooling mechanism
• Risk– Factoring out effects that aren’t directly human-
induced
Can’t wait for 2015
Mitigation needed now!