Aggregation and Sampling Impact on Low Emission Rice Economics. October 9, 2013 Terra Global Capital, LLC

Transcription

1 Aggregation and Sampling Impact on Low Emission Rice Economics October 9, 2013 Terra Global Capital, LLC

2 Table of Contents Topics Page 1. Overview of Key Terms 2 2. Profiles of Early Adopters 3 3. Profile of Costs for Developing Rice Offsets 5 4. Technology Development to Reduce Costs 6 5. Economics of Aggregation and Sampling for Offset Creation CA 8 6. Economics of Aggregation and Sampling for Offset Creation AR 9 Page 1

3 Aggregation Key Terms The ability for one entity to act on behalf of multiple farmers in the capacity of a Project Offset Operator (ARB) or a Project Proponent (ACR and VCS) Verification frequency How many years between the verification and issuance Sampling and Field visit requirements Sampling: the % of fields that require in- depth review (field visit or other independent data sources for practices) Use of geo-tagged pictures to demonstrate practices may be used as data for in-depth review Use of remote sensing data may demonstrate practices may be used as data for in-depth review Fields are selected for in-depth after the project actions are implemented Crediting Period Impacting economics of aggregation and sampling Five growing seasons, with renewal for 5 more years subject to baseline update Page 2

4 Rice Acres Planted by State CA and AR Largest Page 3

5 Profiles of Early Adaptors CA tends to have larger field sizes California # Farmers: 5 # Fields: 37 Total Acres: 4,909 Avg Field Size: 133 # Fields/farmer: 7.4 Mid-South # Farmers: 20 # Fields: 35 Total Acres: 2,000 Avg Field Size: 57 # Fields/farmer: 1.8 First Growing Season for Issuance 2013 Potential Practices Straw baling and removal Dry Seeding Early Drainage Page 4 First Growing Season for Issuance 2014 Potential Practices Straw bailing and removal Early Drainage Intermittent Flooding Energy efficiency /Fuel switching (pumps)

6 Profile of Costs for Developing Rice Offsets Costs maybe be further reduced with more technology Support for field data collection and input QA/QC on field data Establishing baselines in DNDC Creating ex-ante and ex-post project emissions in DNDC GHG Project Plan Development GHG Assertion Report 3 rd Party Validation and Verification Support for validation and verification process Farmer engagement and feasibility Farmer contracting Monitoring plan development 3 rd Party Validation and Verification Communication on offset creation and carbon revenue Managing farmers carbon payments Note: - There are some efficiencies in # fields per farmer - Issuance and activation fees vary based on # tons Page 5 Collection of nonfarmer/field data (remote sensing, weather soil, etc.) GHG Project Plan Development GHG Assertion Report Contracting and managing validator Registry account and other fees 3 rd Party Validation and Verification

7 Technology for Efficiencies Rice Middle Layer Feasibility Analysis for Farmer Engagement and Training Page 6

8 Technology for Efficiencies Rice Middle Layer Simple Entry of Baseline Data with Error Checking Page 7

9 Aggregation and Sampling for Offset Creation - CA Typical California Farmers With and Without Sampling CALIFORNIA SCENARIOS Scenario - Key Inputs 20% Sampling 100% Sampling Description Pilot - CA 1st - Roll-out Wide Rollout CA Farmers CA out CA Pilot - CA1st - Roll-out Wide Roll- Farmers CA Farmers Fields , ,000 Acres 4,909 40, ,000 4,909 40, ,000 # Fields per Farmer Avg Field in Acres % of CA total rice production 1.0% 8.0% 50.0% 1.0% 8.0% 50.0% % of AR total rice production 0.4% 3.3% 20.8% 0.4% 3.3% 20.8% ERs per acre per year Verification Frequency % of Fields Visited 20% 20% 20% 100% 100% 100% Crediting Period (Assertion Years) 1,3,5,7,9,11 1,3,5,7,9,11 1,3,5,7,9,11 1,3,5,7,9,11 1,3,5,7,9,11 1,3,5,7,9,11 Financial Projections - Key Outputs 20% Sampling 100% Sampling GHG Development/Issuance Cost per Ton (over crediting period), without farmer costs/income Net Income (over crediting period) 146,381 2,332,609 15,613,492 (6,658) 1,091,750 Note: - Costs for farmer management changes not included - Incremental revenue or costs savings from farmer management changes are not included - Energy and fuel switching opportunities not included - Assumes initial technology of Rice Middle Layer is deployed - Does not reflect full efficiencies of using independent data to reduce field visits and offering validators, a unified system to access all data for GHG Project Plan and GHG Assertion Reports Page 8 7,341,100 Net Income per acre (over crediting period) (1) Net Income per farmer (over crediting period) 29,276 51,836 52,045 (1,332) 24,261 24,470

10 Aggregation and Sampling for Offset Creation - AR Typical AR Farmers With and Without Sampling Scenario - Key Inputs 20% Sampling 100% Sampling Wide Rollout Pilot - 1st - Roll-out Pilot - 1st - Roll-out Description MidSouth Midsouth MidSouth Midsouth Midsouth Wide Rollout Midsouth Farmers , ,000 Fields , ,750 Acres 2,000 25, ,000 2,000 25, ,000 # Fields per Farmer Avg Field in Acres % of CA total rice production 0.4% 5.0% 25.0% 0.4% 5.0% 25.0% % of AR total rice production 0.2% 2.1% 10.4% 0.2% 2.1% 10.4% ERs per acre per year Verification Frequency % of Fields Visited 20% 20% 20% 100% 100% 100% Crediting Period (Assertion Years) 1,3,5,7,9,11 1,3,5,7,9,11 1,3,5,7,9,11 1,3,5,7,9,11 1,3,5,7,9,11 1,3,5,7,9,11 Financial Projections - Key Outputs 20% Sampling 100% Sampling GHG Development/Issuance Cost per Ton (over crediting period), without farmer costs/income Net Income (over crediting period) (189,943) 520,729 4,390,910 (334,710) (1,030,345) (2,847,432) Net Income per acre (over crediting period) (95) (167) (41) (23) Net Income per farmer (over crediting period) (9,497) 2,604 4,391 (16,736) (5,152) (2,847) Note: - Costs for farmer management changes not included - Incremental revenue or costs savings from farmer management changes are not included - Energy and fuel switching opportunities not included - Assumes initial technology of Rice Middle Layer is deployed - Does not reflect full efficiencies of using independent data to reduce field visits and offering validators, a unified system to access all data for GHG Project Plan and GHG Assertion Reports Page 9

11 Thank you Contact Information TERRA GLOBAL CAPITAL Name Leslie Durschinger Name Nora Nelson Page 11