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Carbon Crediting Challenges

Carbon Crediting Challenges. Richard Tipper Edinburgh Centre for Carbon Management November 2002. 4 specific issues: Bureaucratic barriers! Double-counting danger! Confounding definitions! Crediting confusion!. Bureaucratic Barriers. Project preparation requires:

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Carbon Crediting Challenges

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  1. Carbon Crediting Challenges Richard Tipper Edinburgh Centre for Carbon Management November 2002

  2. 4 specific issues: • Bureaucratic barriers! • Double-counting danger! • Confounding definitions! • Crediting confusion!

  3. Bureaucratic Barriers • Project preparation requires: • Rigorous technical assessment • Environmental and social impact • Legal issues • Accounting issues • Government approvals • Monitoring and verification systems • All these factors work against small-scale, community type projects

  4. Bureaucratic Barriers Smallholder agriculturalists have / are: • Diverse land use systems that do not fall into convenient categories • Small areas • Limited access to technical, financial and legal services • Less political power • Difficult to manage

  5. Double-counting Danger Torren Energy: Woodchip fired HW boilers (100kw) replacing fuel oil • Torren install and maintain ownership of plant • Retain ownership of carbon credit (in sales agreement) • But how does customer account for drop in purchase of oil? • What if electricity was generated?

  6. ERU surplus permits substitution Double-counting Danger

  7. Confounding Definitions • CDM LULUCF = afforestation only • Conservation excluded • What if renewable energy substitutes for non-sustainable biomass harvesting?

  8. 1 8 12 0.5 5 timber Woody biomass 260 MtC energy defores Oil Confounding Definitions • Example: Uganda > 90% GHG emissions are from LU sector (figs in MtC)

  9. Crediting Confusion National inventory 1990 National inventory 1990 ? projects

  10. Crediting Confusion • One ERU / CER will almost never = one unit less national emission • One unit less national emission will often not equal one less unit global emission

  11. Tentative solutions • Bureaucratic barriers

  12. The Plan Vivo System - managing the supply of carbon offsets from small scale activities in a way the promotes rural livelihoods ECCM The EDINBURGH CENTRE for CARBON MANAGEMENT Ltd.

  13. Plan Vivo System • Streamlined system for registering carbon assets from smallholders and communites • Standard technical specifications • Monitoring • Carbon accounting

  14. Plan Vivo implementation • Preliminary discussions • How does the plan vivo system work • What is carbon sequestration • Responsibilities • Work programme ECCM The EDINBURGH CENTRE for CARBON MANAGEMENT Ltd.

  15. Plan Vivo Planning

  16. Tuangya plantations of Spanish cedar can offset 111 tC per ha. Live fences of pine and cypress can offset 27 tC per ha. Restoration by enrichment planting and fencing can offset 45 tC per ha. Plan Vivo Forestry Systems

  17. Plan Vivo Monitoring and technical support Monitoring • Conducted through the rotation • Easy to measure indicators • in technical specifications • Carried out by local technicians • Verified by technical team

  18. Plan Vivo Administration • Payments • Based on the results of monitoring • staged over 5-10 years to increase security • Carbon accounting • Producer account books • Trust Fund database • Carbon reserve • Reporting • Website and annual purchaser report

  19. Tentative solutions • Double-counting danger

  20. Double-counting Danger • Labelling of carbon intensity should be standard – (kgCO2/kwh supplied) • Legal framework for ownership of emission credits needs to recognised right of claim over reductions • Build into purchasing contracts

  21. Tentative Solutions • Confounding Definitions

  22. Increased energy demand for pumping as water table falls Inefficient use of fuelwood Inefficient transmission of power to rural areas Loss of forests reduces catchment’s buffer capacity Unsustainable export of charcoal to towns Loss of agricultural productivity and C from soil erosion CH4 emissions increased from poorly nourished livestock and sub-optimum paddy irrigation Increased requirement for fertilizer as soil quality drops Tools 1: ILEW Projects

  23. Tentative Solutions • Crediting confusion

  24. Crediting confusion • Do not mix permit and credit based systems • Use existing tax system to encourage production of credits – e.g. by addition to products • Where systems overlap – e.g. companies with permits also create credits ensure separate accounting

  25. Endwww.planvivo.orgwww.eccm.uk.com

  26. Scale 1/3 Estimated non-discounted CERs from Forestry and Land Use Projects in the CDM during the 1st Commitment Period (MtCper year) Min interpretation of socio-ecological constraints Maximum interpretation of socio-ecological constraints Afforestation & reforestation only 25 to 100 15 to 50 5 to 10 1 to 5 Avoided deforestation 20 to 40 10 to 20 Forest management & other land use 20 to 60 10 to 20 10 to 20 5 to 15 Small-scale land, energy, water projects n.a. <5 10 to 20 5 to 15

  27. Forest Biomass 398 CARBON STOCKS UGANDA Existing Forests 2 TOTAL NET EMISSIONS 11 New Plantations n.s. Deforestation 4 Fuelwood 3 6 Industrial timber 0.6 Livestock 2 Agric biomass 2 Crop biomass 2 Fertiliser 3 5 Fossil fuel reserves Uganda Oil, Natural Gas and Coal – Fossil fuels & Cement 0.3 0.3 All figures are in MtC 1 Includes emissions from production and application of fertilisers 2 Excluding emissions from fertiliser production ns – not significant Imports –

  28. Forest Biomass 1,898 Crop biomass 241 INDIA TOTAL NET EMISSIONS 477 Deforestation 45 Existing Forests 18 Fuelwood 52 New Plantations 1 85 Timber 6 154 Livestock 93 Crops 241 Fertiliser 35 CH4 rice 26 238 Fossil fuel reserves India Oil, Natural Gas and Coal 89,328 Fossil fuels and cement 238 Imports – 73

  29. Options for modifying flexibility 3/3 Option C:Give CDM executive / SBSTA power to approve some new categories of activities as methodologies become developed: e.g. management of Miombo woodlands for sustainable fuelwood and charcoal supply • Could increase CER generation to 25 MtC/yr • Could be used to enhance social benefits and address leakage problems

  30. Tools 2: Standard Baseline Method 2. Map driving factors 1. Quantify historic emissions

  31. Tools 3: Permanence • Buffering is preferable to discounting for scientific and equity reasons • Columbian proposal of buyer liability could work (James Cameron; Rachel Bennett)

  32. Tools 4: Assurance of socio-ecological benefits • Existing schemes, such as FSC can work effectively for large-scale projects • Adaptations for specific country situations required (development assistance may be necessary) • Group certification and streamlined processes required for small-scale project • Many CDM projects will have modest / benign socio-ecological impact

  33. Conclusions To create socio-ecological benefits, while maintaining environmental integrity CoP should consider: • Allowing small-scale integrate land, energy water projects in fast-track • Strict interpretation of additionality • Allow CDM executive some freedom to modify eligible project categories • Scale of CDM LUCLUCF will not compromise overall Kyoto targets unless rampant free-riding occurs • Most of a these proposals are achievable with minor changes to neg. text • Forestry activities are naturally slow to get started, so early experience is essential

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