A Hedge Hog Thinks…

1. A Hedge Hog Thinks… Two of the greatest threats to global peace and prosperity…. • climate change and rural poverty in the developing world …can be managed with a single intervention: • a greener, more carbon intensive forestry and agriculture.

2. Carbon2MarketsValue chains from carbon credits and agro-forestry products

3. MSU Partners

4. What is carbon2markets? • An example of an active Ecosystem Services marketplace: carbon financial markets • Leveraging two ecosystem services & products to the market: • Carbon sequestration in soils and vegetation • Natural products and their biochemical Derivatives for products • Working now in the tropics on Agroforestry systems in Africa and Asia: • Shea • Neem • Jatropha

5. Markets Require Carbon Accounting Systems and Protocols One of the primary issues in carbon markets is the need for assurances. Emerging technologies provides this assurance. Carbon buyers need assurance that they are buying real carbon sequestration Carbon sellers need to know how to account and report the carbon they have Market growth is constrained by the lack of effective protocols Markets are looking for effective, rigorous and challenge-proof accounting systems

6. Opportunity space Protocols for bio-sequestration offsets will be increasingly in demand as the easy off sets get taken Protocols are either too simplistic (CCX) or too convoluted (CDM) Transaction costs are huge, sometimes more costly than the credit value: boots on the ground problem. Credits are only one dimension of the industry need: certification, verification, assessment and evaluation… Deforestation is the 800 lb gorilla

7. Stakeholer opportunities • Two markets • Compulsory market, driven by Kyoto treaty type and legislative elsewhere (future US) • Voluntary market, driven by companies wanting to reduce carbon risk • Two mechanisms • Trading credits through a formal exchange (e.g. ECX, CCX, MCX) • Corporate direct investment in sequestration projects

8. Carbon Risk • Shareholder Pressure • Shareholder resolutions (40+ in 2007) call for action on climate change • Corporate Social Responsibility • Concrete demonstration of corporate actions • Legal Pressure • Companies can be directly liable for damages from climate change, • Insurance Pressure • Concerns about growing losses, pressuring corporate action before policies are issued • Regulatory Pressure • More than 20 states and 1000 cities in the US are legislating caps equal to or more stringent than Kyoto

9. Carbon Emissions Target A B C 2008 emissions level sink

10. Products Carbon measurement, monitoring and reporting Carbon verification Carbon project aggregation Land carbon registry services Land carbon transaction layers Land carbon forecast and market assessment Project and portfolio carbon impact and evaluation Deforestation monitoring

11. Vision to apply emerging technologies to measure and monitor land use changes to provide accurate environmental and carbon risk information. Technology Convergence (Earth observation (EO) systems, Global Positioning Systems, web-enabled Geographic Information Systems, location-based services, large mass data storage) Global Environmental Services (Climate change, natural resources, biodiversity) APPLIED TO:

12. Three Core Applications • Carbon Accounting for LULUCF offsets • Baseline, ex ante calculations, measurements, monitoring, reporting • Project based, scalable to millions of hectares • Reduces transaction costs • Carbon Monitoring and Evaluation, Carbon Risk Assessment • Project or portfolio based • Reporting on land use project’s carbon impact • Regular and global application and reporting • Tropical Forest Monitoring: Deforestation Measurement • Fine spatial resolution, national to continental scale • Supports REDD and related needs

13. The TRFIC Technology Suite Integrates all of these essential components through key components • Ground measurement and calibration • Site characterization and planning • Carbon and Nitrogen accounting & modeling • Access to web based spatial information

14. Carbon Sellers Earth Observation System WWW Satellite Database Data Analysis Markets Buyers Carbon Models Carbon Accounts

15. Key Elements of the Measurement • Ground measurements provide calibration and detailed sample frame analysis • Remote sensing takes the ground samples to extrapolate spatially to the landscape • Remote sensing characterizes spatial heterogeneity and land use • Spectral analysis provides rapid soil carbon measurement • GIS provides the data base framework for organizing spatial data • Carbon and nitrogen models provide ex ante calculations and detailed accounting

16. 4. Modeler: linking space mapping to C and N accounting models and databases

17. 5. Carbon and Nitrogen Portal C/N Portal centralizes project information and allows users to access and manage their carbon accounts from anywhere.

19. Region east of Kingaroy, north of Nanango

20. Zoom in at high resolution

21. Region east of Kingaroy, north of Nanango. Small blue dots are waypopints. White is non forest/trees. Carbon sequestration range: 4-8 tCO2e per ha per yr (light to dark)

22. Rural Poverty Threat A billion people live in extreme poverty surviving on less than $1 per day as subsistence farmers.

23. Carbon markets can reduce poverty A billion people live in extreme poverty surviving on less than $1 per day as subsistencefarmers Carbon is now a commodity that can be grown on farms Internationally carbon markets can be leveraged as a poverty reduction tool Poor rural farmers in developing countries can promote conservation practices and benefit from carbon sales Multiple benefits: climate and poverty .

25. Example Multiple Benefit Projects Restoration planting Biofuels Community Forestry Agroforestry

26. Shea Nut Over Cassava, Corn

27. Chicago Climate Exchange • World’s first and North America’s only voluntary, legally binding greenhouse gas emission reduction and trading system. • Opened for trading in December 2004. • 500,000 trades in October 2005; 3 million trades to-date • Companies now trading: • Ford Motor Company • IBM • Dow Corning • Motorola • University of Iowa, Minnesota

29. Small holders involved: Shea nut

31. Viet Nam

33. Laos PDR

35. Thailand

36. Inpang Community harvest celebration Jan. 2008

37. Inpang Network – Carbon Training Jay Samek Michigan State Univ. August 11, 2007

38. Natural Para Rubber Plantation on Degraded Land

39. Para Rubber Inter-cropped with Sala fruit

40. Mixed natural and product species community forest

41. Natural forest assisted re-generation

46. Indigo dying

47. Jatropha oil and bio-diesel processing equipment Washing Oil mixed w/catalyst Transestrification Mix catalyst: Methanol & NaOH

48. Simplified Traditional West African Farming System (cont.) • Total system income: 240 USD/ha/yr Cereal + 36 USD/ha/yr Shea Oil + 24 USD/ha/yr Jatropha Oil +350 USD/ha/yr Neem Oil + 78 USD/ha/yr Carbon = 728 USD/ha/yr (gross income) x 2.4 ha (per capita average) = 1747 USD Nearly double the average annual income for those living at the “ethical poverty” level of $2.40/day