Agriculture and CDM

8/3/2019 Agriculture and CDM

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Carbon Trading & Agriculture

BY

Gurpreet Singh,

Cornell Institute

For

Public

Affairs



Cap and TradeRegulatory mechanism that sets a maximum total amount of allowableemissions of one or more pollutants or greenhouse gases within a sector

or sectors and then allocates tradable emissions allowances or permits.Regulated entities within those sectors can trade, sell or otherwiseexchange those allowances and are required to submit tradable emissionallowances that correspond to emissions related to the services orproducts they provide.

Historical Precedent ?

•Emission cap and trading system was written into Clean Air Act of 1990by Senator George Mitchell of Maine and John Dingell of Michigan.

•Emission trading system was made in America and was proposed by USdelegation at Rio climate convention treaty in 1992.



Carbon credits

• What are

they?

• Their role?

• How are credits traded and between whom?

• Quality of

credits.

• Kyoto Protocol , (It launched the largest global compliance carbon market).

• Countries that

ratified

Kyoto

can

achieve

their

targets via three “flexibility mechanism”:

1. International Emission trading(IET), 2. Joint Implementation(JI), 3.

Clean development mechanism(CDM).



Annex-1

Country Annex-1

Country

IET $

AAU

$

ERU/JI

$

CER/ CDM

Non-Annex

Country



Mec hanism Uni t s Type Regulat ory

fram ew ork

IET‐International

Trading

AAUs‐Assigned

Amount unit

Quota Kyoto

JI‐Joint

Implementation

ERUs‐Emission

reduction units

Credit Kyoto

CDM‐Clean

Development

Mechanism

CERs‐Certified

Emission

Reductions.

Credits Kyoto

Voluntary

Carbon

Credits

VERS‐Verified

Emissions

Reductions

Credits No

unified

regulatory

framework

International carbon trading and project MechanismSource:

Stockholm Environment Institute offset info



CDM (Clean Development Mechanism)

•Provides a structure for developed nations to achieve GHG emission reduction

targets.

•The CDM

is

a mechanism

for

project

based

emission

reduction

activities

in

developing

countries .Certificates will be generated through the CDM from projects that leads to

certifiable emissions reductions that would otherwise not occur.

•Establishes systems for registering, verifying, and trading Certified Emission Reduction

(CER) credits.



CDM Cycle



Markets• Climate exchanges have been established to provide a spot market in allowances, as

well as

futures and

options

market

to

help

discover

a market

price

and

maintain

liquidity.

• For trading purposes, one allowance or CER is considered equivalent to one metric tonne of CO2

emissions.

• Carbon prices are normally quoted in Euros per tonne of carbon dioxide or its equivalent (CO2

e).

• Other greenhouse gasses can also be traded, but are quoted as standard multiples of carbon

dioxide with

respect

to

their

Global warming potential(GWP).

• Currently Exchanges trading

in carbon allowances are as follows:

1.

The Chicago Climate Exchange

2.

European Climate Exchange

3.

Nord Pool(the Nordic Power Exchange)

4.

Powernext

5.

Multi Commodity Exchange

6.

National Commodity and Derivative exchange.

7.

Nymex (The Green Exchange Initiative).



US GHG MARKETS

STATE REGULATION:a) Oregon Standard

b) RGGI

c)

California’s

global

warming

solutions

Act(AB‐

32)d) The Western Climate Initiative (WCI)

e) Midwestern Regional GHG Reduction Program(MRP)

FEDERAL REGULATION:

• Precedent‐National

sulfur

dioxide

‐

cap

and

trade

system

(Clean

Air

Act

1990).

• Climate Stewardship and Innovation Act(S.280),sponsers‐Obama,McCain &other.

• Lieberman‐Warner bill (Climate Security Act2007(S.2191).

VOLUNTARY MARKETS:

1.CCX(CHICAGO CLIMATE EXCHAGE)‐2007 transactions 22.9 Mt Co2e.

2. OTC(disaggregated over the counter OTC market)‐2007

transactions‐42.1 Mt

Co2e.



There are 15 categories of

eligible CDM project activities:

1. Energy industries (renewable/non-

renewable sources);2. Energy distribution;

3. Energy demand;

4. Manufacturing industries;

5. Chemical industries;6. Construction;

7. Transport;

8. Mining/mineral production

9. Metal production;

10. Fugitive emissions from fuels(solid, oil and gas);

11. Fugitive emissions fromproduction and consumption ofhalocarbons and sulphurhexafluoride;

12. Solvent use;13. Waste handling and disposal;

14.Afforestation and

reforestation; and15. Agriculture.



AR CDM Sole eligible land use, land‐use change and forestry

(LULUCF)

activity

under

the

current

phase

of

the

CDM.

• Model Project: Facilitating Reforestation for Guangxi Watershed Management inPearl River Basin

• This project proposes to alleviate local poverty and reduce threats to forests byafforesting 4,000 hectares in the Guangxi ZhuangAutonomous Region, including

half of the Pearl River basin.

• Local farmers/communities will contribute lands and labors.• The use of the carbon sequestered by a plantation as a “virtual” cash crop will

generate income for local communities.

• The project is expected to sequester around 0.34 million t CO2-e by 2012 andaround 0.46 million t CO2-e by 2017.

• Project implementation will create about 5 million person-days of temporaryemployment and 40 long-term positions for local farmers.About 5,000

households are expected to see their incomes increase through the sale ofcarbon, timber and non-timber forest products.



Methane Recovery in agricultural activities

at household level/small farm level

• Green house gas emissions on livestock farms can be reduced byimplementing practice changes in Animal Waste ManagementSystems

• Model Project: Biogas Support Program – Nepal

• Under the proposed project activity, the Alternative Energy PromotionCenter aims to sell biogas digesters (biogas plants) to households locatedprimarily in the rural areas of Nepal.

• The proposed activity additionally reduce CH4 and N2O emissionreductions by introducing a proper disposal of animal waste and byproducing a bio-slurry for replacing the household consumption of chemical

fertilizers.

• Potential employment will add more than 15,000 people-years for skilledpeople in the construction,maintenance, marketing, and financing of biogas

plants.



Years Annual estimation of emission

reductions in tonnesCO2 (tCO2e)

1 Aug 2004- 31 July 2005 46,990

1 Aug 2005- 31 July 2006 46,990

1 Aug 2006- 31 July 2007 46,990

1 Aug 2007- 31 July 2008 46,990

1 Aug 2008- 31 July 2009 46,990

1 Aug 2009- 31 July 2010 46,990

1 Aug 2010- 31 July 2011 46,990

Total estimated reductions

(tones of CO2e)

328,900

Annual average over the creditingperiod of estimated

reductions (tones of CO2e

46,990



Kerela’s

Village Example

• (Angamali) KOCHI: Global warming has added a new commodity to

the Kerala farmers' basket, a virtual commodity called carbon credit,thanks to their use of biogas.

• The carbon credits, earned by around 16,000 farmers for theircontribution towards controlling emission of greenhouse gases, are

being traded now at Chicago Climate Exchange (CCX) providingthem a small amount annually.

• It was an NGO, Anthyodaya, which pioneered the idea of carboncredit for farmers in the state.

• "Biogas plant is part of our farming infrastructure. The cow dungslurry from the plant is excellent manure. Now, we know we aredoing something good by using biogas and got a reward for that."



Conservational Agriculture

• Intensive arable with zero‐tillage results in

accumulation of

0.3

‐0.6

t C /ha/year,

but

ZT

with mixed rotations and cover crops can

accumulate 0.66‐1.3 t C/ha/year.

• The rates are higher in humid‐temperate

areas (0.5‐1.0 t C/ha/yr), lower in the humid

tropics (0.2

‐0.5

t C/ha/yr),

and

lowest

in

the

semi‐arid tropics (0.1‐0.2 t C/ha/yr).



System Under improvedmanagement within

land use (t C/ha/year)

Accumulated carbon withland

use change (t /ha/year)

Forest management 0.4‐0.5

Cropland management 0.3

Grazing landManagement

0.5‐0.7

Agroforestry 0.3‐0.5 3.1

Rice paddies 0.1

Urban land management 0.3

Conversion of arable tograssland 0.8

Wetland restoration 0.4

Degraded landrestoration 0.3



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Agriculture and CDM

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