Voluntary carbon mechanisms: a useful tool to improve the economic value of investments in agroforestry sector

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Primrose Gilmore
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1 Voluntary carbon mechanisms: a useful tool to improve the economic value of investments in agroforestry sector dott. Simone Targetti Ferri PHD University of Basilicata Consultant FAO Maroc prof. Severino Romano School of Agricultural, Forest, food and Enviromental science - University of Basilicata 1

Global Context 31% of GHG emission totals:

$ 20/tCO2 Source: IPCC 2007 89% of the increase

to land use change finance become essential to

2 Global Context 31% of GHG emission totals: Agriculture and Forestry Mitigation economic potential around to MtCO2-eq/yr by 2030 at price U.S. $ 20/tCO2 Source: IPCC % of the increase comes from carbon stored in the soil The access to land use change finance become essential to achieve the objectives of mitigation, adaptation and food security Source: IPCC

LULUCF at the International level. UNFCCC: Key role of the sector (art. 4) BUT Additionality: how to distinguish the human induced effect by the natural scenery at the beginning?

3 LULUCF at the International level. UNFCCC: Key role of the sector (art. 4) BUT Additionality: how to distinguish the human induced effect by the natural scenery at the beginning? saturation: how long is effective the absorption capacity? Uncertainty: What is the level of accuracy of the estimates of emissions / releases? Kyoto Protocol : +activities started after 1990 ETS: industrial sector +direct human-induced CDM: A/R (LDCs) JI: reforestation, forest management, the management of pastures and crops, can be implemented only in Annex I countries EU : EC LULUCF decision (first validation 2012) a first step towards the inclusion of LULUCF activities in the Union s emission reduction committment 3

Complulsory carbon markets US and Canada: Western Climate Initiative (WCI) Emissions coming from industrial sector 2015 trasports and fuels Australia: NSW Greenhouse Gas Abatement scheme production

4 Complulsory carbon markets US and Canada: Western Climate Initiative (WCI) Emissions coming from industrial sector 2015 trasports and fuels Australia: NSW Greenhouse Gas Abatement scheme production and consumption of energy Need to implement voluntary initiatives -innovative -less severe regulation -credits generated can be sold in advance -permanence of credits -important to experiment conditions for compulsory markets 4

Voluntary carbon market Innovative platform for agriculture and forestry 1 Reduced and fragmented market 2 Maturation through standards and third part verification 3

5 Voluntary carbon market Innovative platform for agriculture and forestry 1 Reduced and fragmented market 2 Maturation through standards and third part verification 3 Market volume in 2010: 131 million tco2 4 Average price: US$ 6/tCO 2 Land-use sector Market volume in 2010: 28 million tco2, most Forestry Average price US$ 5.5/tCO2 5

6 Voluntary carbon initiatives.(with strong government implication) 1) Chicago Climate Exchange (CCX) Trade of credits from activity of soil conservation, management and herbaceous plantations 2) OKLAHOMA Carbon Sequestration Certification Program (2008) Afforestation / Reforestation Improved forest management Conservation tillage Rangeland management Grassland management 3) THAILAND Verified Emissions Reduction Program (T-VER) (2013) Afforestation / Reforestation Improved forest management Agro-forestry Urban forestry rketplace.com/repository/moder ncms_documents/em_governm entmarkets_2012_3-12.pdf 6

Voluntary initiative (project based) Governance

(VCS;CCBS;CFS; VSS panda standard) Projects in

GCP/RAB/013/ITA; Carbon project Kenya) Third

7 Voluntary initiative (project based) Governance internationally recognized standard (VCS;CCBS;CFS; VSS panda standard) Projects in the agro-forestry sector including sustainable land management activities (carbon sequestration) (ex. GCP/RAB/013/ITA; Carbon project Kenya) Third part verification and MRV exchange platform for exchange credits National registry for generated credits 7

8 Supply: IO (FAO, UNDP), Specific funds (Biocarbonfund), ONG (OXFAM), Nat. Instit (Ministries)..etc Project investments (carbon stock but also: biodiversity, Watersheed management, crops quality and quantity, water etc..) Credits generated and sold on local carbon market (market price) Demand: private companies, privates (CSR, Image etc..) Beneficiaries (local communities): salary surplus, revolving fund for extra development activities Certification of products! 8

2 levels of action: Micro -short term: pilot projects of mitigation and adaptation to CC at the local level contributing to increase tco2 in the soil, or to prevent its emission for a better

through dynamic models, of CO2 balance in different types of simplified treatment plants and the amount of CO2 fixed in soils and in the biomass irrigated with treated wastewater Macro- long term:

9 2 levels of action: Micro -short term: pilot projects of mitigation and adaptation to CC at the local level contributing to increase tco2 in the soil, or to prevent its emission for a better management of the environment and the improvement of living conditions of a rural community GCP/RAB/013/ITA: -maximize the production of biomass -use of non-conventional water SO: Evaluation, through dynamic models, of CO2 balance in different types of simplified treatment plants and the amount of CO2 fixed in soils and in the biomass irrigated with treated wastewater Macro- long term: Provide information and data to national institutions at the local level on the agroforestry sector (potential storage) for the elaboration of low carbon strategies (NAMAs) and the creation of a national market 9

10 For the good implementation of a carbon project... Ensure compliance with the principles of the market: Additionality of the project Measurability of credits generated Permanence of its effects in time Exclusivity of the project Avoid double credit counting 10

11 Weaknesses Access to finance Start up financing. Transaction and Monitoring costs Opportunity costs etc.. 2. stakeholders trust 3. Political will (required) 4. Carbon projects size KEY: Awareness and capacity building 11

12 Some information: Kenya carbon project 12

13 Why Morocco. Nearly 50% of the population depends on agriculture 15 to 20% of national PIB The agricultural sector will soon be the second largest source of CO2 emissions in Morocco Passing from currently 28,188 Gg CO2-e to 54,099 Gg CO2-e in «Moroccan green plan» avoid emission of 63.5 million tco2-e over the next 20 years trough improved agronomic practices LDC developing countries No longer eligible for CDM Morocco UN REDD partenair (sept 2012) 13

14 National framework But decrease in the coming years of green investment from Annex I countries: Credits (CERs) generated by CDM registered after December 2012 will not be sold on the regulated market (European Commission) NAMAs under development (UNDP Project LECB) more oriented towards improving energy sector and the transport sector management The Carbon Market Partnership (CGP) promoted by the World Bank in Morocco does not expect to take into account the moment the agriculture sector 14

15 Legal and institutional framework National Plan for the Fight against Climate Change Morocco has signed the United Nations Framework Convention on Climate Change in 1992 and ratified in Organization of the Seventh Conference of the Parties "COP 7", 2001 in Marrakech, which made operational the Kyoto Protocol Ratified the Kyoto Protocol in National Communications to the UNFCCC. It currently holds the consultation for the preparation of the third national communication. 15

16 Then. Morocco is actually preparing: National Strategy on Climate change Energy Strategy for for the promotion of energy efficiency and the development of large-scale renewable energy Medium and long term goals Reduce energy consumption of 12% by 2020 and 15% in 2030 Bring the installed renewable energy capacity to 42% (14% solar, 14% wind and 14% water) of total electricity capacity by

Key National initiatives: National Agricultural development Agency: Study on potential mitigation of climate change in the agriculture sector in Morocco;

Generators income activities etc...) -public private partnership 2) Contribution of Forests to a Green Economy in the Middle East and North Africa http://www.

17 Key National initiatives: National Agricultural development Agency: Study on potential mitigation of climate change in the agriculture sector in Morocco; Evaluation of the potential of the Green Morocco Plan (PMV) and access to the Carbon Fund GIZ/HCEFELD: 1) Partnership for Moroccan forests (afforestation, Generators income activities etc...) -public private partnership 2) Contribution of Forests to a Green Economy in the Middle East and North Africa Contacts are actually ongoing with key institutions to set up a partnership in this framework... 17

18 Potential voluntary initiative actors... International: World bank, FAO, UNDP, IUCN, Carbon fund etc.. National: Ministry for the environment, Ministry of Agriculture, High commissioner for Forestry NGO: OXFAM, VI agroforestry.. Private sector: Maroc Telecom, Royal Air Maroc, Crédit Agricole, Coca Cola, Festival Mawazine, Festival de Jazz de Chella. 18

19 Implementation steps: Analysis of supply and demand and beneficiaries aptitude interviews, questionnaires.. (on going) Analysis of standards for AFOLU activities including agroforestry VCS; CCBS; CFS; VSS panda standard (on going) Analysis of transaction costs linked to Vol. Market (based on similar experiences and other voluntary markets) Analysis of local exchange platforms and registries (idem) SWOT analysis of the Governance system Analysis of credits accounting for AFOLU activities. (Ex: Act FAO, others..) 19

20 Thank you 20

FINANCING CLIMATE CHANGE ADAPTATION AND MITIGATION IN THE AGRICULTURE AND FORESTRY SECTORS

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