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What is a Carbon Credit?What is a Carbon Credit?
WFE M tiWFE MeetingMay 4, 2010
John Perez-Garcia, School of Forest ResourcesSchool of Forest Resources, University of Washington
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Sinks (part of LUCUCF account)
Forest– Soil– Understory
T B l– Tree Bole– BranchesHarvested Wood ProductsHarvested Wood Products– Products in-use– LandfillLandfill
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LULUCF Sink Issues
Permanence (Non–permanence)Additionality / BaselineLeakage
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G hi E l f R l U itGraphic Example of a Removal Unit (RMU) (Afforestation project)
Year 1 RMU
Year 20 RMU
tons
Year 1 RMU
CO
2e t
100 years
0 100-50Year
Growth model Length (permanence), Thickness (additionality)
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Anatomy of a Carbon Credit
Project design and submission of d t tidocumentationIndependent Validation ReportAccreditation body accepts report to register the projectI d d t dit ifi th ff tIndependent auditor verifies the offsetSubmit to a registry
Real, additional, verifiable, permanent and enforceable
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Sink Enhancing Activities
afforestation projects f t ti j treforestation projects
implementing forest management practices on commercial and other working forestson commercial and other working forestsplacing forestland in set aside or conservation usagegavoid deforestation and forest fires
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Afforestation
Permanence: Requires 100 year lifetime. Threats of fire wind disease can greatlyThreats of fire, wind, disease can greatly reduce cumulative carbon sinkAdditionality: Baseline is established asAdditionality: Baseline is established as non-forested area prior to 1990. May require adjustment to trends observed prior to 1990. Leakage: Limited if land is relativity available and alternative land use has a lower opportunity costlower opportunity cost.
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Reforestation
Permanence: Same as afforestationAdditionality: Same as afforestationLeakage: Same as afforestation
The difference between afforestation and reforestation is what qualifies as eligible land
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Implementing Forest Management
Permanence: Same as afforestation j tprojects
Additionality: Requires defining current t l l f b li imanagement level for baseline, may require
adjustment to trends observed prior to 1990Leakage: minimal if impacts to marketLeakage: minimal if impacts to market supplies are small
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Longer-rotation Conservation Forest
Permanence: Same as afforestationAdditionality: Requires establishing a trend baseline over existing management levelsLeakage: With harvesting has an economic effect on financial returns, temporarily shorts HWP sinkHWP sink
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Avoided Deforestation
Permanence: Same as above. In addition i i ht t l d irequires oversight to ensure land is
maintained in forest.Additi lit P i t 1990 l dAdditionality: Prior to 1990 land use, may require adjustment to trends observed prior to 1990to 1990Leakage: Can be extensive if other land-uses have higher opportunity costuses have higher opportunity cost
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Avoided Forest Fires
Permanence: Reduces the risks in other forest-based sink activitiesbased sink activitiesAdditionality: …Leakage:Leakage: …
Avoiding forest fires is not considered a sink-enlacing activity, but rather viewed as a project component that increases permanence.
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T di S t R i t i Pl tfTrading Systems, Registries, Platforms and Intermediaries
Trading System Registry Platform Intermediary
The European Union EmissionsThe European Union Emissions Trading System (ETS)* X X X
The Climate Registry (TCR) and The California Climate Action Registry (CCAR)
X X
The Chicago Climate ExchangeThe Chicago Climate Exchange(CCX) X X X
The US Department of Energy Section 1605b GHG Registry Program
X
World Resources Institute X X
The Voluntary Carbon Standard (VCS)
X
The Climate Trust X
NatSource Transaction Services* X
Regional Greenhouse Gas Initiative (RGGI) X X
NSW Greenhouse Gas Reduction Scheme (GGAS)* X X X
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Th E U i E i iThe European Union Emissions Trading System (ETS)
Trial SystemLULUCF activities not covered directlyClean Development Mechanisms, but LULUCF activities are lacking
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The New South Wales (NSW) Greenhouse Gas Reduction Scheme (GGAS)
Commenced on January 1, 2003Benchmark ParticipantsCompliance Regulator (IPPT)Scheme Administrator– Assesses projects, accredits parties, creates
tifi t d it licertificates and monitors compliance– Manages registry
Force forest managers to purchase on the market– Force forest managers to purchase on the market for insufficient carbon stock
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Forest Credits (Abatement Certificates)
NGAC cover a range of activities including afforestation and reforestationafforestation and reforestationCombines Kyoto Protocol with Australian StandardEnhance LULUCF sink using eligible landEnhance LULUCF sink using eligible landRegistered Carbon Sequestration RightAnnual credits
– 100 years (easement) and reporting schedule
Managed forests (sequestration after Dec 31, 2002)?70% probabilit that net increase > n mber of NGACs it has– 70% probability that net increase > number of NGACs it has created
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Regional Greenhouse Gas Initiative
Draft forest activity recommendationsrecommendationsConsidering
– afforestationid d d f t ti– avoided deforestation
– active forest managementAfforestation is only current qualifying activity
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A ti F t M t (D ftActive Forest Management (Draft Recommendation)
Source: Draft Recommendations to RGGI for Including New Forest Offset Categories: A Summary. Maine Forest Service Environment Northeast Manomet Center for Conservation Sciences Maine Department of Environmental Protection 5/1/08
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The Chicago Climate Exchange
Offset Providers or Offset AggregatorsCarbon Financial Instrument (CCI) contractsCarbon Financial Instrument (CCI) contractsProjects must not be required by lawOwners must make long-term commitments to gmaintain stocks in forestry although not permanentlyHoldings must be certified for sustainable management under a CCX approved programmanagement under a CCX approved programProjects must be third party verified by CCX approved verifiers
t i t i b l f 20% fmust maintain a carbon reserve pool of 20% of annual CCI contracts
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Approved Activities: CCX
afforestation, managed forestry, carbon stored in long lived wood products, reduced emissions from deforestation and degradation, and urban tree planting.
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Managed Forests: CCX
Offsets for the additional net carbon t d i th i f t t k f thsequestered in their forest stocks from the
previous yearL li d d d t b t d iLong-lived wood products carbon stored in long-lived wood products in use and landfill at the end of 100 yearsat the end of 100 yearsA committee on forestry provides case-by-case approvalcase approval
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Th US D E S ti 1605b GHGThe US DoE Section 1605b GHG Registry Program
Voluntary Reporting of Greenhouse Gases PProgramIncludes Forest and HWP sinksUses tabular data reflecting averages over large areaM USDA F t S i d lMany USDA Forest Service models
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World Resources Institute (WRI)
Two separate but linked standards (methods)– Corporate Accounting and Reporting Standards– Project Accounting Protocol and Guidelines
Two projects types:Two projects types: – reforestation and – forest management
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St I A ti d R tiSteps In Accounting and Reporting GHG Reductions
define the assessment boundary select the baseline procedureselect the baseline procedure identify the baseline candidate estimate the GHG reductions from the baseline using a project specific procedure or performanceusing a project-specific procedure or performance standard apply a land-use or management trend factor monitor and quantify GHG reductions by creating amonitor and quantify GHG reductions by creating a monitoring plan develop a carbon reversibility management plan that assesses and mitigates carbon reversibilityassesses and mitigates carbon reversibilityreport the GHG reductions
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Th C lif i Cli t A ti R i tThe California Climate Action Registry (CCAR) and The Climate Registry
CCAR has two protocols– forest-related activities in forest sector– forest project protocol
CCAR h th tifi bl ti itiCCAR has three certifiable activities– Conservation-based Forest Management
Reforestation activities– Reforestation activities – Conservation projects
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Implementation
Project Steps– Design projectDesign project – Complete the project pre-screening process (optional)– Implement project– Collect direct sampling information– Report project activity– Certify project activity
After reporting a forest project for the first year, you will need to complete the following steps on an ongoing basis until the project is completed:
– Maintain project activity C tif bi l i l i i ll ( t tit l l)– Certify non-biological emissions annually (at entity level)
– Certify biological carbon stocks and CO2 emissions for entity and project in years 1 and 5 of the certification cycle
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Project Eligibility
ownership summary, entity-wide inventory reportingentity wide inventory reporting, long-term carbon security and environmental integrity, baseline characterization (temporal or projectbaseline characterization (temporal or project-based), project additionality (must exceed existing laws or threat to conversion exists)threat to conversion exists), activity-shifting leakage, market leakage and other effects.