CDM A/R Project - A ITC case study

CDM A/R Project - A ITC case study By Dr. H D Kulkarni Vice President (Plantation) ITC Ltd Paperboards & Specialty Papers Division Unit: Bhadrachalam, Sarapaka (A.P.) India Presentation at South Asian Media Briefing Workshop on Climate Change Centre for Science & Environment s New Delhi 17.11.2012

Institutional Mechanism & Agreements Project PDD hosted on UNFCCC web site DEC 2005 Validation over (Took nearly 3 years) There is a written agreement 1. Bt Between the Farmers and the MS 2. Bt Between MS and ITC Ltd Tribal Farmers undertake the plantation and its maintenance in their own lands. Sangha s (Mandal Samakhyas - MS) would oversee the project activity implementation in their region, which includes awareness / training / resource provision and distribution. ITC would provide sapling / financial resources. ITC also manages the CDM project cycle and assists it in accrual of CDM benefits. MS will take up the task of applying for and obliging gthe CERs to farmers. Project PDD hosted on UNFCCC web site DEC 2005 Validation over (Took nearly 3 years) CARS and CLS more than 100 Project is Registered on 5 06 2009 Verification Ongoing

Mandal wise, year wise Eucalyptus Plantations in Khammam District, Andhra Pradesh Sl. No Name of the Mandal Year of Plantation Establishment (All figures in ha) 2001 2002 2003 2004 2005 Total 1 Aswapuram 12.14 5.86 14.56 32.56 2 Aswaraopeta 52.13 295.45 25.6 138.42 511.59 3 Bhadrachalam 64.61 118.43 140.97 188.3 32.84 545.15 4 Burgampahad 54.15 74.55 50.3 4.28 15.2 198.47 5 Chandrugonda 12.916 41.63 4.64 59.18 6 Dammapeta 144.8 124.12 111.76 47 148.34 576.02 7 Dummugudem 28.55 28.55 8 Kothagudem 40.31 57.45 30.08 127.84 9 Kukunuru 82.99 75.8 158.79 10 Kunavaram 74.22 74.22 11 Mulakalapally 113.88 231.54 126.54 58.95 530.91 12 Paloncha 65.43 16.09 86.17 40.23 5.68 213.59 13 V R Puram 10.8 10.8 14 Velerupadu 2.52 2.52 Total: 369.29 556.65 971.33 562.42 610.5 3070.19

Number of Land holdings in the project site Sl. No. Name of the Mandal No of Farmers No of Villages Area (ha) 1 Aswapuram 41 7 32.56 2 Aswaraopeta 517 25 511.59 3 Bhadrachalam 641 31 545.15 4 Burgampahad 282 16 198.47 5 Chandrugonda 83 5 59.18 6 Dammapeta 613 34 576.02 7 Dummugudem 33 3 28.55 8 Kothagudem 141 9 127.84 9 Kukunuru 161 11 158.79 10 Kunavaram 80 9 74.22 11 Mulakalapally 488 23 530.91 12 Paloncha 301 16 213.59 13 V R Puram 12 2 10.8 14 Velerapadu 5 2 2.52 Total: 3398 193 3070.19

Land use pattern in Khammam Dist (A.P.) - Area in Ha. Sl. No. Category 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 1 Forests 743793 743793 743793 743793 743792 743798 2 Barren and Un cultivable lands 90381 90381 90381 90381 90384 90127 Land put to non- 3 agricultural use 123527 124967 124967 124967 124864 124665 4 Cultivable waste 21081 21081 21081 21081 21081 20645 5 Permanent Pastures and other grazing g lands 38936 38936 38936 38936 38913 38843 6 Land under miscellaneous tree crops and groves not included in net area sown. 18832 18832 18832 18832 18834 18833 7 Current fallows 74505 74482 107495 158186 91556 75414 8 Other fallow lands 22567 21850 28662 31069 30003 31028 9 Net area sown 447313 446613 406788 3536923692 421509 437582 10 Total geographical area 1580935 1580935 1580935 1580935 1580935 1580935

A BARREN LAND FOR CARBON SINK

Developed Land

Clonal Technology CLONAL PROPAGATION EUCALYPTUS ROOTING OF CUTTINGS

Clonal plants in open nursery

Beneficiaries Participating in Planting Activities Alignment Pitting & planting Anti termite treatment t t Fertiliser application

2 Months old Clonal Eucalyptus Plantation

Climate change - CDM Climate change is one of the most important global environmental issues likely to impact planet earth and its socio-economic systems Every 2 0 C rise in temperature due to GHGs would result in3%dipinglobalgdp In case of India, for every 2 0 C rise in temperature would result in 5 % drop in GDP To combat Climate Change and its adverse effects, CDM mechanism came into existence under Kyoto Protocol

CDM scenario (Data 10-7-2012) 1. Registered dcdm Projects Global = 4312 (2150 million CERs) (2150,000,000 CERs) Project PDD hosted on UNFCCC web site DEC 2005 India = 855 (20%) 2. Scopes = 15 3. Scope 14 A/R Validation over (Took nearly 3 years) Project PDD hosted on UNFCCC web site DEC 2005 Validation over (Took nearly 3 years) CARS and CLS more than 100 Global = 39 (0.90 %) India = 7 4S 4. Scope 15 Agriculture Project is Registered on 5 06 2009 Verification Ongoing Expected Issuance Of CERs by UNFCCC Aug 2010 Global = 152 (3.52 %) India = 11 CARS and CLS more than 100 5. CERs Issued Project is = Registered 959 million 5 06 tonne 2009 (959765823 CERs) 6. Approved Methodologies by Scope Verification Ongoing = 234 Scope 1 to 13 = 208 Expected Issuance Of CERs by UNFCCC Aug 2010 Scope 14 A/R = 20 (8.54 %) Scope 15 Agriculture = 6 (2.56 %)

A/R Projects A/R Projects under CDM were adopted in the Marrakech Accord (MA) in CoP-7 held in 2001 under Chapter LULUCF. IPCC in 2000 came out with a special report on LULUCF and cleared A/R projects and not deforestation. For the first commitment period only 1% (or 20%) addition or subtraction to base year emission of that party is allowed by A/R Projects while 4% for other source (like industry etc). It is estimated that the total global technical potential for afforestation and reforestation activities for 1995 to 2050 period is 1.1 to 1.6 GtC/yr. Tropics will have 70% of the above potential.

A/R Projects CDM Definition of forests under LULUCF Forest is the minimum area of land of 0.5 to 1.0 hectare with a tree cover of more than 10-30% with trees with potential ti to reach a minimum i height ht of 2 to 5 m at maturity. Host country has to adopt single minimum value and report to CDM EB (para 8 and 17/CP7). Afforestation: It is direct human induced conversion of land that has not been forested for a period of at least 50 years to forested land through planting. Reforestation: It is the direct human induced conversion of non-forested land to be forested land through planting on land that was forested but that has been converted to non-forested land. For the first commitment period, reforestation activity will be limited to reforestation occurring on those lands that did not contain ti forestson31.12.1989. 12 1989

What type of A/R Projects are eligible Establishment of wood lots on communal lands, reforestation of marginal areas with native species in existing forest fragments. New large scale industrial plantations. Biomass plantations for energy production. Small scale plantations by land owners. Introduction of trees into existing agricultural systems (agroforestry). Rehabilitation of degraded areas through tree planting or assisted natural regeneration.

What type of A/R Projects are eligible Legal status of land prior to 1990 to beclear. Use of invasive species to be restricted and indigenous species promoted. Define project boundary explicitly. Small scale project - removal of less than 8 kilo tonnes of CO 2 per year (175 ha area produces 4375 MT of wood/yr, converting to 2188 MT of carbon) and are developed by low income communities / individuals. Bundling of small scale into large scale projects allowed.

ITC PSPD 8 Registered CDM Projects PROJECTS Registration # Annual CERs Reg. PDD CERs issued by UNFCCC BCM; BHRS 0677 22,587 60,750 BCM; EVAPORATOR 0679 52,247 1,72,531 BCM; ENCON 0806 21,505 84,934 BCM; SRB3 0890 43,161 NIL TRIBENI; ENCON 0745 8,195 16,096 TRIBENI; TURBINE 0821 3,950 16,689 BCM; FORESTRY 2242 57,792 NIL BCM: GREEN BOILER 3890 74,650 NIL 3,51,000

ITC s Plantation Progress - 125,000 ha

ITC s Social & Farm Forestry Initiative The 125,000 ha plantations over a period of 20 years have Economic value Created an estimated wood asset value of INR 30 billion (for 3 cycles INR 90 billion) over a period of 12 years Social value Provided 56 million person days of employment mostly to tribals and marginal farmers Environment value Carbon sequester potential of 15 million tonnes reducing 54.9 million tonnes of CO2 in a period of 12 years Augmenting Green Cover Top Soil Retention Water Recharge A Competitive Source of Pulp-wood for ITC s Paper mill

Carbon Sequestration

ITC Plantation FSC Certified FSC FM certification is issued to ITC PSPDfor 8028 ha of plantations as a group manager of more than 9000+ farmers

ITC Social Forestry Project Salient features 1. Title: Reforestation of severely degraded landmass in Khammam District of Andhra Pradesh, India under ITC Social Forestry Project 2. Project No: 2241 3. Methodology : ARAM 0001 version 5 4. Carbon sink project on 3070.19 ha 5. Spread over 14 mandals, 193 villages in Khammam district of Andhra Pradesh 6. Beneficiaries = 3398. 7. Species = Eucalyptus 8. project participants = Mandal Samyakhya and Farmers with ITC 9. Land Eligibility = NRSA, GPS demarcation of plots

Salient features 10. Operational Lifetime of the project = 32 years 11. Crediting period = 30 years 12. Rapid Environmental Assessment 13. Case study Baseline, AGB, BGB = IISC, Bangalore 14. Sample plots, Growth data CAI & MAI 15. Operational Manual 16. Monitoring Plan 17. Training i manual

PROPERLY FENCED EUCA PLANTATION BY BENEFICIARY

Carbon sink Plantation

PLANTATION BEFORE HARVEST IN PALAMADUGU

ADDITIONAL INCOME TO BENEFICIARIES BY HARVESTING THEIR OWN PLANTATION IN LEAN SEASON

Wood loading to Truck in Field

BENEFICIARIES OF PALAMADUGU

CDM Training - Mandal Samakhyas

Training programme for MS & Govt. officials

Biodiversity - Aware colony conservation plot, Bhadrachalam Total area= 3.74 Ha No. of plant spp. = 32 No. of endemic plant spp.=11 Funding for preservation by ITC No. of animal spp. Spotted Butterflies = 9, Reptiles = 5 Birds = 12 Mammals = 4

Carbon Pool for Baseline Carbon pools are AGB, BGB & SOC. The features of the project area are: Lands arenot under forests since 1990 and are either crop or fallow lands. The project area has fallow land. Thus the current land use is fallow land.

Project Activity 1 yr old plantation 4yr old plantation CARBON FARMS Growth Rate CAI and MAI for Clone No 7 60 50 40 30 20 10 0 1 2 3 4 5 6 7 Age in years CAI MAI

C Stock Change under Project Scenario The carbon stock at every 4 years (ITC IISC study). 70 Baseline Project 65 C stock (tc/ha) 60 55 50 45 40 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033 2006 2011 2016 2021 2026 2031 2035 Baseline 45.33 45.33 45.33 45.33 45.33 45.33 45.33 Project* 42.93 61.83 64.04 65.43 65.02 61.30 61.30 C Increment -2.40 16.50 18.71 20.10 19.69 15.98 15.98 *The C-stock is estimated after deducting emissions from; biomass burning after harvest and fertilizer application

Project Activity & C - Stock Change The life time of the project is considered 30 years (2001-2031). Carbon Pool (tc) 600,000 500,000000 400,000 300,000 200,000 100,000 0 2006 2011 2016 2021 2026 2031 2035 Baseline Mitigation

Estimated amount of GHG removals by sinks over the crediting period Annual estimation of net anthropogenic Annual estimation of net anthropogenic Year GHG removals by sinks in tonnes of CO 2 e Year GHG removals by sinks in tonnes of CO 2 e 2001 02 2149 2016 17 857478 2002 03 10932 2017 18 922495 2003 04 36811 2018 19 982633 2004 05 85962 2019 20 1036002 2005 06 151556 2020 21 1100206 2006 07 223938 2021 22 1175855 2007 08 288900 2022 23 1237605 2008 09 349088 2023 24 1300960 2009 10 402533 2024 25 1351172 2010 11 466698 2025 26 1418614 2011 12 542291 2026 27 1490995 2012 13 604087 2027 28 1555956 2013 14 667507 2028 29 1616144 2014 15 717675 2029 30 1669588 2015 16 785051 2030 31 1733753 Total estimated net anthropogenic GHG removals by sinks (tonnes of CO 2 e) 1733753 Total number of crediting years 30 Annual average over the crediting period of estimated net anthropogenic GHG removals by sinks (tonnes of CO2e) 57792

Cost Benefits The benefit cost ratio under baseline is 1.42 while under project scenario it is 2.18. Thus, there is large financial incentives for the farmer to take up afforestation (ITC - IISC study). Baseline scenario Project scenario PV of cost (Rs/ha) 13,364 4,855 PV of benefit (Rs/ha) 19,041 10,566 PV of benefit (Rs/ha/yr) 5,677 8,011 Benefit cost ratio 142 1.42 218 2.18

Expected Benefit to Farmers Period Planting Year Area in Ha Total Wood (MT) 8 2001 369.29 36929 7 2002 556.65 48706.875 6 2003 971.33 72849.75 5 2004 562.42 35151.25 4 2005 610.5 28121 Total 3070.19 221757.9 C ertified E mission R eductions (C E R ) 486647.67 (4.86 Lac CER) Value at $4 per CER 1946590.69 (19.46 Lac $) Value in INR @Rs.50/$ 97329534.47 (973.29 Lac Rs) CER Value per Ha Per Year of Plantation Rs. 7925.37 US $ 176.12 CER Value per Tonne of Wood per Cycle Rs. 634.03 US $ 14.09 CER Value per Tonne of Wood per Year Rs. 158.51 US $ 3.52

Present Status of ITC CDM Forestry Project Project PDD hosted on UNFCCC web site DEC 2005 Validation over (Took nearly 3 years 2005 to 2008) Project Registered on 5 06 2009 Verification over 2010 Hosting for issuance of CERs on UNFCCC site 2010-2011 Expected Issuance Of CERs by UNFCCC 15 th Dec 2012

Opportunities Global Forest by 2050 South Asian countries also can plan the vision i on forestry 2050 Community Managed Forests Protected Forests IUCN IV 1.2 bn ha (40%) (Production) 1.2 bn ha (40%) (Timber Production = 0.5 bn m3) 40 % 40 % 17 % 3 % Managed Secondary Forests 50 mn ha (17%) Timber production = 1.25 bn m3 Plantation Forests 100 mn ha (3%) Timber Production = 1.25 bn m3 The global forest vision 2050 (WWF and World Bank)

A/R CDM projects Afforestation and Reforestation (A/R) Projects: C - sequestration project is a win-win-situation from the point of view of climate change It is estimated that if 30 Mn ha of degraded forest lands in India, if afforestated will mitigate 3.32 GT carbon in next 50 years (@5.5 tonnes/ha/yr productivity) It means annual carbon reduction of 0.072 GT C - sequestration projects help reduce C0 2 foot print of industry

Conventional Farm Forestry vs Agro forestry Wood and food security Spacing = 3 X 1.5 m Plants / ha = 2222 Spacing = 1 x 1.5 x 8.5 m Plants / ha = 2000 Farm Forestry Agro Forestry

Issues & opportunities EU ETS Restriction of purchase of T/ L CERs Price of Forestry CERs / VERs very Low No buyers of the project India will reduce emission intensity of its GDP by 20 25% by 2020 in comparison to 2005 level through climate mitigation action Green India Mission enhance C sink in sustainably managed forest by 2020 through A/R, REDD etc mechanism of 20 mn ha in 10 yrs. C-sequestration of 43 mn t CO 2 /yr. Financial resources Rs 44,0000 cr PAT schemes Become Carbon positive Reduce / minimize leakages for project activity Permanence Adoption of Energy efficient technologies in forestry schemes Adoption of Non conventional tech (solar, Wind..) Adoption of forestry programs for reclamation, reforestation, afforestation, rehabilitation and conservation

Thank you Carbon Farm on Degraded area