LULUCF ConceptsLULUCF Concepts

Training Seminar for BioCarbon Fund ProjectsTraining Seminar for BioCarbon Fund ProjectsFebruary 8February 8thth 2008 2008

Timothy Pearson and Sarah WalkerWinrock International

Key carbon trading Key carbon trading concept:concept:

ReduceReduce GHG emissions (or GHG emissions (or enhance enhance removalsremovals by sinks) by sinks) in one country to in one country to permit an permit an equivalentequivalent quantity of GHG quantity of GHG emissions in another country, without emissions in another country, without changing the global emission balance.changing the global emission balance.

Basic requirements of emissions Basic requirements of emissions reductions or removals under the reductions or removals under the CDMCDM

CreateCreate ““realreal, , measurablemeasurable, and, and long-long-termterm benefits related to the mitigation benefits related to the mitigation of climate change” (KP, art. 12.5b)of climate change” (KP, art. 12.5b)

Be “Be “additionaladditional to any that would occur to any that would occur in the in the absenceabsence of the certified project of the certified project activity” (KP, art. 12.5c)activity” (KP, art. 12.5c)

Be Be certifiedcertified by operational entities by operational entities designated by the Conference of the designated by the Conference of the Parties (KP, art. 5)Parties (KP, art. 5)

Basic requirements of emissions Basic requirements of emissions reductions or removals under the reductions or removals under the CDMCDM Real, measurableReal, measurable

Long-termLong-term

AdditionalAdditional

In absence of projectIn absence of project

CertifiedCertified

Monitoring (methodology + Monitoring (methodology + plan)plan)

Expiring CERs to deal with Expiring CERs to deal with non-permanence of C non-permanence of C storagestorage

BAU activities not eligible, BAU activities not eligible, must be human-inducedmust be human-induced

Baseline (methodology+ Baseline (methodology+ assessmentassessment

Validation, Verification, and Validation, Verification, and Certification by accredited Certification by accredited entityentity

EligibilityEligibility

What is a forest?What is a forest?

Host country must define a forest within Host country must define a forest within the following guidelines:the following guidelines: Minimum tree crown cover between 10 and Minimum tree crown cover between 10 and

30%30% Minimum land area between 0.05 and 1.0 Minimum land area between 0.05 and 1.0

hectarehectare Minimum tree height between 2 and 5 mMinimum tree height between 2 and 5 m

Values once chosen must remain fixedValues once chosen must remain fixed

1990 Rule for 1990 Rule for AfforestationAfforestation

No land meeting national definition of No land meeting national definition of forest be present within project forest be present within project boundaries between 31 December 1989 boundaries between 31 December 1989 and start of projectand start of project

Different dates for other standards eg Different dates for other standards eg VCSVCS

Eligibility ToolEligibility Tool

Demonstrate the project area is not already Demonstrate the project area is not already forestforest

a.a. Tree heightTree height

b.b. AreaArea

c.c. Tree coverTree cover

Eligibility ToolEligibility Tool

Demonstrate that the activity is an Demonstrate that the activity is an afforestation/reforestation activityafforestation/reforestation activity Cadastral mapsCadastral maps Satellite / aerial photographySatellite / aerial photography Local interviewsLocal interviews

AdditionalityAdditionality

Additionality—key stepAdditionality—key step A project activity is additional if the activity only A project activity is additional if the activity only

takes place takes place because of the anticipation of a because of the anticipation of a potential sale ofpotential sale of Certified Emission Reduction Certified Emission Reduction units (CER)units (CER) e.g. Activity such as forest restoration would not e.g. Activity such as forest restoration would not

have taken place without outside funds paying have taken place without outside funds paying for the planting, etc. in anticipation of receiving for the planting, etc. in anticipation of receiving carbon offsetscarbon offsets

Additionality Tool:Additionality Tool:

Additionality ToolAdditionality Tool

Step 0: Preliminary screening on starting Step 0: Preliminary screening on starting datedate

Step 1: Alternative land use scenariosStep 1: Alternative land use scenarios Step 2: Investment analysisStep 2: Investment analysis Step 3: Barriers analysisStep 3: Barriers analysis Step 4: Common practice analysisStep 4: Common practice analysis

BaselinesBaselines

BaselinesBaselines What would have happened in the What would have happened in the

absence of the CDM project activityabsence of the CDM project activity Must be Must be project specificproject specific and prepared in and prepared in

a a transparenttransparent and and conservativeconservative manner manner

Baselines – Baselines – avoided emissions example:avoided emissions example:

Credits from a project is:Credits from a project is:Difference between C stocks with project Difference between C stocks with project and baseline C stocksand baseline C stocks

Time (years)

Ca

rbo

n S

tocks

With Project

Baseline

Carbon Credits

Time (years)

Ca

rbo

n S

tock

s

Baselines – A/R example:Baselines – A/R example: Credits from a project is:Credits from a project is:

Difference between C stocks with project Difference between C stocks with project and baseline C stocksand baseline C stocks

With Project

Baseline

Carbon Credits

Baselines - three Baselines - three approachesapproaches

1.1. Existing or historical changes in stocks in the Existing or historical changes in stocks in the carbon pools within the project boundarycarbon pools within the project boundary

2.2. Changes in stocks in the carbon pools within Changes in stocks in the carbon pools within the project boundary from a land use that the project boundary from a land use that represents an economically attractive course of represents an economically attractive course of actionaction

3.3. Changes in stocks in the pools within the Changes in stocks in the pools within the project boundary from the most likely land use project boundary from the most likely land use at the time the project starts.at the time the project starts.

CoP-7 defined baseline for CoP-7 defined baseline for CDMCDM

MA CDM (44) MA CDM (44) The baseline is the scenario thatThe baseline is the scenario that:: ““reasonably represents GHG emissions that reasonably represents GHG emissions that would would

occur in the absence of the proposed project occur in the absence of the proposed project activityactivity”;”;

is derived using an is derived using an approved baseline methodologyapproved baseline methodology..

MA CDM (45) MA CDM (45) The baseline shall be established:The baseline shall be established: (b) “in a transparent and conservative manner” (b) “in a transparent and conservative manner”

regarding the choices of approaches, assumptions, regarding the choices of approaches, assumptions, …”…”

(c) “on a project-specific basis”;(c) “on a project-specific basis”; (d) in accordance with simplified procedures for (d) in accordance with simplified procedures for

small scale projects.small scale projects.

Combined Tool:Combined Tool:

Combined ToolCombined Tool

Simultaneous consideration of land use Simultaneous consideration of land use alternatives and barriers and financial alternatives and barriers and financial considerationsconsiderations

Allows determination of alternatives and Allows determination of alternatives and proof of additionality of project scenarioproof of additionality of project scenario

Combined ToolCombined Tool

LeakageLeakage

LeakageLeakage Leakage is the unanticipated loss in Leakage is the unanticipated loss in

carbon benefits carbon benefits outsideoutside of the of the project’s boundary as a result of the project’s boundary as a result of the project activitiesproject activities Carbon emissions from leakage could Carbon emissions from leakage could

offset gains from a carbon project, offset gains from a carbon project, resulting in a reduction of the carbon resulting in a reduction of the carbon “credits” “credits”

Leakage: activity shiftingLeakage: activity shifting Activity shifting: activities that would have Activity shifting: activities that would have

occurred inside project area occur in another occurred inside project area occur in another location outside of project area location outside of project area

Can be minimized by engaging communities in Can be minimized by engaging communities in project and providing alternative lifestylesproject and providing alternative lifestyles E.g.—reforest with multi-purpose tree species, E.g.—reforest with multi-purpose tree species,

employ people to plant and maintainemploy people to plant and maintain

Relates to the phrase in the CDM “..achieving Relates to the phrase in the CDM “..achieving sustainable development” sustainable development”

2007

Project Area

2007

Nearby the Project Area

Leakage – Leakage – avoided emissions exampleavoided emissions example

BaselineCO2 emissions

2013CO2 emissions

Baseline

Project Area

2007

Nearby the Project Area

Leakage – A/R exampleLeakage – A/R example

2013 2013CO2 emissions

Time (years)

Ca

rbo

n S

tock

sLeakageLeakage

Area outside of project area:Area outside of project area:

Carbon stocks without existence of project

Carbon stocks because of project

Carbon stocks reduced = Project Leakage

Time (years)

Cha

nge

in C

arbo

n S

tock

s

LeakageLeakage Area outside of project area:Area outside of project area:

Change in carbon stocks because of project

Carbon stocks reduced = Project Leakage

Time (years)

Ca

rbo

n S

toc

ks

Leakage – Leakage – avoided emissions exampleavoided emissions example

Carbon creditsCarbon credits= Project – Baseline – Leakage= Project – Baseline – Leakage

Put in place measures to reduce leakagePut in place measures to reduce leakage

Carbon credits

With Project

Baseline

Baseline+Leakage

Time (years)

Ca

rbo

n S

toc

ks

Leakage – A/R exampleLeakage – A/R example Carbon creditsCarbon credits

= Project – Baseline – Leakage= Project – Baseline – Leakage Put in place measures to reduce leakagePut in place measures to reduce leakage

Carbon credits

With Project

Baseline

Baseline+Leakage

LeakageLeakage

Vehicle and machinery useVehicle and machinery use Displacement of fuel wood collectionDisplacement of fuel wood collection Fence post use !Fence post use !

Market effectsMarket effects Investment crowding-inInvestment crowding-in Investment crowding-outInvestment crowding-out

PermanencePermanence

Non-permanenceNon-permanence Land-based systems subject to reversal Land-based systems subject to reversal

by human and natural disturbancesby human and natural disturbances Addressed by concept of “rental” of the Addressed by concept of “rental” of the

service service For CDM project two options exist:For CDM project two options exist:

temporary certified emission reduction units temporary certified emission reduction units (tCER)(tCER)

long-term certified emission reduction units long-term certified emission reduction units (lCER)(lCER)

Temporary certified Temporary certified emission reductions- tCERsemission reductions- tCERs

Allotted tCER = net anthropogenic Allotted tCER = net anthropogenic GHGGHG

Issued at each verification and Issued at each verification and certification period – when carbon certification period – when carbon stocks exist on landstocks exist on land

Expire at next certification periodExpire at next certification periode.g. issued 2012 e.g. issued 2012 expire 2017 expire 2017

tCER – ex. One 30 year tCER – ex. One 30 year crediting periodcrediting period

0

20

40

60

80

100

2007 2012 2017 2022 2027 2032 2037YearN

et S

eque

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edt

CO

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40

60

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tCE

R20

12

tCE

R20

17

tCE

R20

22

tCE

R20

27

tCE

R20

32

tCE

R20

37

Year

Ne

t S

eq

ue

ste

red

t C

O2

e

tCER – ex. One 30 year tCER – ex. One 30 year crediting periodcrediting period

02040

6080

100

2007 2012 2017 2022 2027 2032 2037YearN

et S

eque

ster

edt

CO

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tCE

R20

12

tCE

R20

17

tCE

R20

22

tCE

R20

27

tCE

R20

32

tCE

R20

37

Year

Net

Seq

uest

ered

t C

O2e

Long-term certified Long-term certified emission reductions-lCERsemission reductions-lCERs

lCERs issued = net anthropogenic GHG lCERs issued = net anthropogenic GHG

removals achieved by the project activity removals achieved by the project activity

between two certification periodsbetween two certification periods

Issued at each verification and certification Issued at each verification and certification

period period

Expire at end of crediting periodExpire at end of crediting period

e.g. project start date: 2007, e.g. project start date: 2007,

lCER issued 2012 lCER issued 2012 expire 2038 expire 2038

lCER – ex. One 30 year lCER – ex. One 30 year crediting periodcrediting period

020406080

100

2007 2012 2017 2022 2027 2032 2037

YearNet

Seq

uest

ered

C

arbo

n (t

C)

0

20

40

60

80

100

2012 2017 2022 2027 2032 2037

lCER 2032

lCER 2027

lCER 2022

lCER 2017

lCER 2012

Net

Seq

uest

ered

Car

bon

(t C

)

Non-PermanenceNon-Permanence

For non-CDM registries?For non-CDM registries? VCS has a buffer, a proportion of the credits VCS has a buffer, a proportion of the credits

are held in the buffer as an insurance are held in the buffer as an insurance against non-permanenceagainst non-permanence

Legal guarantees in USLegal guarantees in US

Thank You!Thank You!

For more information see:For more information see: http://www.winrock.org/Ecosystems/tools.asphttp://www.winrock.org/Ecosystems/tools.asp

Or contact us:Or contact us: tpearson@winrock.orgtpearson@winrock.org swalker@winrock.orgswalker@winrock.org