A COMPARISON OF NO TILL PROTOCOLS FOR AGRICULTURAL CARBON OFFSET PROJECTS IN CANADA

A COMPARISON OF NO TILL PROTOCOLS FOR AGRICULTURAL CARBON OFFSET PROJECTS IN CANADA Dennis Haak Agriculture and Agri-Food Canada 1011 11 Innovation Blvd., Saskatoon, Saskatchewan, Canada, S7N 3H5 haakd@agr.gc.ca INTRODUCTION Increased soil carbon sequestration resulting from no till cropping systems is well documented in many studies involving numerous agricultural regions around the world. Significant adoption of no till since the early 1990 s across the Canadian prairie region has fuelled interest in developing carbon offset projects. An initial project was developed in 2004 under Environment Canada s Pilot Emission Removals, Reductions, and Learnings Initiative (PERRL) (Environment Canada, 2004) with the Saskatchewan Soil Conservation Association (SSCA). In 2005 Environment Canada initiated development of a federal offset system (Government of Canada, 2005). As part of this process various technical working groups began working on protocols for specific project types. The Soil Management Technical Working Group (SMTWG) produced a number of seed documents and draft protocols including the Tillage System Default Coefficient Protocol (Haak and SMTWG, 2006). The federal offset system and protocol development was put on hold as a result of a change in government from the spring 2006 election. Around the same time C-Green Aggregators Ltd. independently launched a carbon offset project for no till in Saskatchewan, in cooperation with the Chicago Climate Exchange. In late 2006 C- Green expanded this project to include producers from Alberta and Manitoba. (C-Green Aggregators Ltd., 2006). In 2007 the province of Alberta developed its own carbon offset market as part of the Specified Gas Emitters Regulation. The draft no till protocol developed by the SMTWG became the basis for developing Alberta s Quantification Protocol for Tillage System Management. (Alberta Environment, 2008). This protocol was approved for use in Alberta in early 2008, and no till projects were implemented in the spring of 2008. In March of 2008 Environment Canada announced its intention to resume development of a federal offset system, with the launch of various documents under the Turning the Corner banner (Environment Canada, 2008). In August additional documents were provided to the public on the process for protocol development. Part of this process involves a fast track where a number of existing protocols, including Alberta s Quantification Protocol for Tillage System Management will receive early consideration. At the same time a number of other provinces have been investigating the SMTWG and Alberta 1

no till protocols for consideration in provincial offset system initiatives. While all of these no till protocols and projects use a regional coefficient approach, there are significant differences involving quantification, monitoring, reporting, and verification requirements. These differences have a tremendous impact on project viability and value of credits to project proponents and agricultural producers. The purpose of this paper is to investigate and document these differences and impacts. MATERIALS AND METHODS There are various possible approaches for quantifying GHG emission reductions or removals resulting from a change in tillage practice from full tillage to no till. All of the protocols and projects discussed in this paper utilize the same general approach, namely regional coefficients. Regional coefficients are usually derived from a combination of empirical research and models. Coefficients essentially quantify the rate of GHG emission reduction or removal, for example, tonnes of CO 2 equiv / ac / year. While the science has demonstrated that the rate of GHG reduction or removal is not linear, these coefficients tend to be linear over a defined period of time to make them easier to use for offset projects. Therefore, with this approach all farmers within one project located in the same region receive the same carbon credit on a per land and year basis. Another fundamental concept of the regional coefficient is that it is based on a well defined set of specific activities that define various tillage systems, such as full tillage (FT), reduced till (RT), and no till (NT). Past research, as well as farmer experience, has demonstrated that there are significant differences in these activities between regions (Haak, 2005). While it is possible to account for these regional differences, one of the challenges is that not all of the tillage related activities performed by farmers are included in research sites or models. Therefore, development of regional tillage system definitions requires a degree of expert opinion. A key element of quantification is ensuring that carbon credits are provided for activities that occur in addition to a baseline scenario (ISO, 2006). For protocols and projects that have addressed additionality, the most feasible approach has been to base this on adoption rate of tillage systems rather than the much more difficult task of estimating the amount of GHG emission reductions or removals that have taken place. An important attribute of GHG sinks and reservoirs, compared to reductions, is their risk of reversal or inherent non-permanent nature. Soil carbon sequestration fits into this category and this risk can potentially be dealt with in various ways. Two possible approaches include assurance factors and a liability / monitoring period. In addition to quantification, other requirements of carbon offset projects involve monitoring, reporting, and verification (ISO, 2006). These requirements are essentially to provide an appropriate level of assurance that the GHG emission reduction or removal has taken place. In practical terms for NT projects, this means ensuring that the activities undertaken on specific land parcels meet the definition of a NT cropping system and that calculations involving 2

coefficients and land area are accurate. The main advantages of a regional coefficient approach is that it minimizes project administration costs. This is achieved by pooling large groups of farmers into one project and treating them in a similar fashion. It is also much cheaper to monitor and verify a set of activities than try to directly measure GHG impacts. The various NT protocols and projects were analyzed and compared with respect to each of the elements discussed above. Information for this analysis was obtained from publicly available documents, a number of unpublished draft documents written by or in collaboration with the author of this paper, and through some personal communication with representatives of the various protocols or projects. It is worth noting that the amount of information analyzed was much greater with the SMTWG protocol than the other protocols or projects, due to the author s much more intimate involvement with that protocol. Nevertheless, the level of information for all projects and protocols was adequate to make the assessments and results provided in this paper. The PERRL project was not included in this analysis for the following reasons: credits not supplied or priced by a market, but rather funded 100% by federal government based on somewhat out of date science developed during an absence of protocol guidance a limited and very small project size with a short duration Nevertheless, learnings about monitoring, reporting, and verification from the PERRL project were used in the development of the SMTWG NT protocol and could still be useful in the improvement of existing or new protocols. Finally, it is important to note that the comparative analysis provided in this paper is not part of any formal protocol review process, but rather analysis conducted voluntarily by the author. 1. Scientific Basis for Raw Coefficients RESULTS AND DISCUSSION GHG reductions or removals resulting from a practice change from FT to NT come from three sources. These include increased soil carbon sequestration, reduced nitrous oxide emissions, and reduced energy consumption. For soil carbon sequestration and nitrous oxide reduction the SMTWG protocol utilized coefficients developed by the National Carbon and Greenhouse Gas Accounting and Verification System (NCGAVS). The purpose of NCGAVS is to report Canadian agricultural GHG emissions and removals on an annual basis under the United Nations Framework Convention on Climate Change. The NCGAVS coefficients involving tillage systems utilize an IPCC Tier II type methodology. These were deemed appropriate for the SMTWG protocol because they represent the most up to date scientific information, are national in scope, and also utilize a regional approach. 3

The soil carbon component of NCGAVS uses the Century 4.0 model to generate coefficients involving five regions across Canada, and 3 tillage system practices changes. These changes are FT to NT, FT to RT, and RT to NT (McConkey, 2006). The nitrous oxide component goes beyond the IPCC Tier I methodology by adding the effect of spring thaw, landscape position, summerfallow, irrigation and tillage on N 2 O emissions (Rochette et al, 2005). It is important to note that a reduction in N 2 O due to change from FT to RT or NT only occurs in the prairie regions. For reduced energy consumption the SMTWG protocol utilized energy coefficients derived from an Agriculture and Agri-Food Canada initiative called GHGFarm (Helgason, 2005), which were the only regionally based coefficients with a national scope available at the time. These coefficients reflect three energy sources: farm fuel consumption, energy consumed during farm equipment fabrication, and energy consumed during production of herbicides. Of the three GHG reduction or removal sources, soil carbon storage by far provided the largest coefficient. The three coefficients were integrated into a single raw coefficient, as shown in Table II. The Alberta protocol utilized the same raw coefficient as described above. The C-Green project provides coefficients based on 20 years of research done by the Swift Current Research Station (C-Green Aggregators Ltd., 2006). One can assume that much of this research is the same as that used for developing the NCGAVS coefficients, since most of the NCGAVS work was coordinated by Agriculture and Agri-Food Canada scientists based at the Swift Current Research Station. This is further exemplified by the fact that the coefficients from these different sources use the same regional approach and are quite similar in magnitude, as shown in Table II. Nevertheless, the C-Green coefficients are not identical to those generated by Century 4.0 for the SMTWG protocol. 2. Tillage System Definitions Tillage systems are complex because they are linked closely with other management activities that are part of a larger cropping system. These other activities include crop inputs such as seed, fertilizer, manure, pesticides, and irrigation water, diverse crop types and rotations, harvesting methods and crop utilization. Crop management is further complicated when responding to variable and extreme weather conditions such as drought, flooding, and hail. Table I provides a list of specific management practices and an indication of whether the various NT protocols or projects address each practice. Table I: Protocol Handling of Various Tillage and Crop Related Activities Tillage and Crop Related Activities C-Green Alberta SMTWG Number of tillage system classes 2 (full and minimum) 3 (full, reduced, no till) Allowable soil disturbance from seeding < 34 % < 47 % < 41 % Chemical fallow included in no till No Allowable discretionary tillage 2 % 10 % 4

Allow post seed harrowing and land rolling Low disturbance injection of fertilizer or manure separate from seeding Year of credit for fall seeded crops defined Uncertain Inclusion and coefficient for irrigated crops Uncertain Use parkland coefficient for entire prairie region Define transition to & from perennial cover Handling of crop failure, cover crops, reseeding Only mentions hail Flexibility permitted, providing no tillage Allow chaff removal & residue burning No Uncertain Livestock grazing Swathgrazing allowed Uncertain Other removal of above ground biomass No Uncertain Inter row tillage Uncertain No There are some commonalities between protocols for some activities, but also some significant differences for others. There are a few activities not addressed in the C-Green and Alberta protocols. 3. Baseline Approach The only national dataset on adoption of tillage systems is from the Census of Agriculture conducted by Statistics Canada once every five years. This dataset has been used to estimate carbon sequestration from NT and RT in the Canadian GHG inventory reporting process. This dataset also was used to establish baseline adoption rates for both the SMTWG and Alberta NT protocols. These adoption rates are used to develop a baseline discounted coefficient, that essentially reduces the raw coefficient, as shown in the following equation. Baseline Discounted NT coefficient = [Raw Coefficient(FT to NT)*(%Area in FT)] + [Raw Coefficient(RT to NT)*(%Area in RT)] The C-Green project does not consider baseline adoption rates, nor apply any baseline discount factor. The impact of a 2001 baseline in reducing the raw coefficient for the Alberta protocol is shown in Table II. The impact of the SMTWG baseline discount is not shown, since it is not certain at this time what the baseline year would be. 4. Non - Permanence of Soil Carbon The SMTWG protocol was based on policy guidance provided at that time, that suggested a liability and monitoring period that follows the crediting period. During this period the NT activity must be maintained in order to maintain the soil carbon that was sequestered during the crediting period. In any given year during this period if the tillage system changes to RT or FT, then a reversal coefficient is applied and must be addressed by the project proponent. This could be done through a repayment of carbon credits by the project proponent to the program authority or other suitable means to maintain environmental integrity. 5

Another option under the SMTWG protocol involved issuing temporary credits. These credits could be provided annually during the crediting period but would not extend into a liability period. Therefore, under this arrangement there is no requirement to adhere to a liability period, but the value of a temporary credit is much less than a permanent credit because it only provides an offset for one year. The Alberta protocol addresses non-permanence by establishing an assurance factor, which involves a conservative estimate based on expert opinion of the risk of reversals in tillage system activity. This assurance factor is applied as an upfront coefficient discount and is much easier to implement from a proponent business perspective because it removes the risk factor. The C-Green project does not appear to address the non permanence issue beyond the crediting period. However, during the crediting period they apply more stringent consequences from reverting to full tillage. For example, a single year of excessive or FT results in complete removal of land from the project for the entire crediting period, whereas in the SMTWG and Alberta protocols reverting to FT only results in loss of credit for that year. The impact of non-permanence is shown in Table II. The impact of the SMTWG protocol is not quantified because of uncertainty of the length of the liability period, rate of reversals, and monitoring requirements. However, it is assumed that there would be significant cost impacts that would negatively impact project feasibility. Table II: No Till Example: Dry Prairie Region Variable C-Green Alberta SMTWG Draft Raw Coefficient (*MT CO 2 equiv / ac / yr) 0.20 0.195 Baseline Discount No 52%? Assurance Factor Discount No 7.5% No Net Coefficient 0.20 0.0875? Liability Costs (monitoring, reversals) No? ** Price ($ / MT) 4.00? 15.00?? ** Gross Revenue ($ / ac / yr) 0.80? 1.31?? Notes: * MT = metric tonnes ** Price and Gross Revenue amounts, while somewhat reflective of past market trends and speculation, are highly uncertain, yet provide some rough indication of value. 5. Crediting Period Since the adoption rate of NT has increased significantly since the early 1990 s, issues such as baseline year, project start date, retroactivity, crediting period, and baseline reassessment have a large impact on net coefficients and project feasibility. Appropriate decisions regarding these issues are driven primarily by policy, rather than science. Nevertheless, some of these issues and decisions have science or technical implications. For example, retroactive projects create unique monitoring and verification challenges, which are discussed later in this paper. 6

Table III illustrates the key decisions used by each protocol around these issues. The SMTWG protocol was initially based on draft policy developed by Environment Canada in 2005. In 2008 Environment Canada published an updated draft policy document for a possible federal offset system, called Turning the Corner. Table III provides the author s interpretation of this updated policy, but it must be noted that both the policy and interpretation are not finalized at this point. Table III: Baseline and Crediting Period Variable C-Green Alberta SMTWG Draft Baseline Year for 1 st Crediting Period None 2001? 2001 + Project Start 2006 2007? 2008 + Start of Crediting Period 2003 2002? 2008 + Retroactivity? No Length of Crediting Periods 2003 2006 11? 1 to 8 2006 2010 2008-2011 Baseline Reassessment None 6. Monitoring and Verification The SMTWG protocol assessed various issues and potential methodologies for monitoring and verification that are unique or specific to the activity of tillage system. For example, by far the most conclusive evidence of tillage activity is obtained from a field inspection taken shortly after crop emergence. The key criteria for meeting the definition of NT is achieving less than a prescribed level of soil disturbance. There are a number of useful indicators to access degree of soil disturbance, but the most reliable is orientation and anchoring of previous crop stubble. This indicator can only be accessed through an in field assessment. (Haak et al, 2006). Other techniques such as remote sensing are currently not effective in assessing previous crop stubble condition. The C-Green project utilized provincial crop insurance agencies as auditors for the verification process. The Saskatchewan Crop Insurance Corporation utilized the information developed in the SMTWG protocol to develop their verification process, but had to also consider new methods to assess retroactive NT activities, such as development of a mulch layer. This indicator while somewhat useful does not provide as conclusive evidence as stubble condition. The Alberta protocol does not address monitoring or verification processes that are specific to tillage system activities, but rather provides general verification guidance common to all project types. Table IV provides a list of various methods for monitoring / verifying tillage system, the relative level of assurance associated with each method, and an indication of whether that method is used for each protocol or project. 7

Table IV: Methods for Monitoring and Verifying Tillage System Variable Level of Assurance C-Green Alberta SMTWG Draft Signed Adherence (contract) Low Specific Field Practice Records Moderate Unlikely Uncertain Field Inspection of Small Sample - soil disturbance (stubble condition) - mulch layer (retroactive) - equipment and invoice Remote Sensing - unable to access stubble condition 7. Summary High Moderate Moderate 8 Uncertain Uncertain Uncertain No Low Unlikely Uncertain No Based on the previous sections it is possible to provide relative ratings to assess how each element is addressed in each protocol. This is provided in Table V. Following is a brief summary description of the impact of each protocol. a) SMTWG: This protocol provides the highest degree of rigour that supports adherence to the ISO 14064 elements involving quantification, monitoring, reporting, and verification. However, even though specific net coefficients and project costs cannot be provided due to policy uncertainty regarding baseline and non-permanency, it is anticipated that strict adherence to these elements could result in low project feasibility. b) Alberta: This protocol exhibits a relatively moderate to high degree of rigour in support of ISO 14064. It could be argued that the development of specific policies regarding crediting period, non-permanence, and monitoring / verification reflect a less stringent adherence to these elements than the SMTWG protocol, but result in increased project feasibility. c) C-Green: This protocol exhibits a relatively low to moderate degree of rigour in support of ISO 14064. Part of this rating is due to the lack of publicly available documentation to rationalize the protocol s elements. However, even if this documentation was available, this protocol would most likely still rate below the other two, because of it doesn t significantly address the elements of baseline additionality and non permanence of soil carbon. Table V: Relative Rating of Protocol Elements Protocol Element C-Green Alberta SMTWG Draft Science Basis moderate high Practice Guidance Tillage Definitions moderate - high high very high Baseline or Additionality low moderate - high high Impermanence of Soil Carbon low moderate - high high Monitoring and Verification moderate high low - moderate high Protocol Documentation low moderate high

Overall Adherence to ISO 14064 low - moderate moderate - high high Project Feasibility moderate moderate low Feasibility Constraint low price baseline & non-permanence Note: Ratings reflect interpretation by author and do not constitute any formal review process 8. Conclusions While both Alberta and C-Green protocols have been successfully used in carbon offset projects, different methodologies to generate credits for the same activity tend to create an atmosphere of uncertainty. For the producer and project proponent the primary question is which methodology will provide the greatest carbon credit value. For governments and large final emitters the primary question is validity of these credits for specific purposes, such as meeting regulation. For example, credits sold by the Chicago Climate Exchange have recently been referred to as anyway credits by some groups (Gardner, 2008). To the extent that various jurisdictions are able to develop consistent policy, there may be an opportunity to develop a single standardized protocol for a NT regional coefficient approach. Nevertheless, in Canada where no till adoption is already high the issue of maintenance of soil carbon may becoming more important than the generation of soil carbon. REFERENCES Alberta Environment, 2008, Quantification Protocol for Tillage System Management: Specified Gas Emitters Regulation, 35 pages, ISBN 978-0-7785-7239-8, Website: http://www.carbonoffsetsolutions.ca/offsetprotocols/finalab.html Alberta Environment, 2008, Additional Guidance for the Interpretation of the Quantification Protocol for Tillage System Management for Carbon Offsets in Alberta: Specified Gas Emitters Regulation, 9 pages, ISBN 978-0-7785-7339-5, Website: http://www.carbonoffsetsolutions.ca/offsetprotocols/finalab.html C-Green Aggregators Ltd., 2006, Terms and Conditions and Carbon Credit Question and Answer Sheet, 5 pages, Website: http://www.c-green.ca/index.html (Note: Documents may not be available if sign up period is expired) Environment Canada, 2008, Turning The Corner: Canada s Offset System for Greenhouse Gases, 28 pages, Catalogue No. En84-42/4-2008, ISBN 978-0662-05520-4, Website: http://ec.gc.ca/doc/virage-corner/2008-03/526_eng.htm Environment Canada, 2008, Turning The Corner: Canada s Offset System for Greenhouse Gases, 28 pages, Catalogue No. En84-42/4-2008, ISBN 978-0662-05520-4, Websites: http://ec.gc.ca/doc/virage-corner/2008-03/526_eng.htm and http://www.ec.gc.ca/creditscompensatoires-offsets/default.asp?lang=en&n=109ddfba-0 Environment Canada, 2004, PERRL Proponent s Application Manual Version 4.0. Appendix 4: Agricultural Soils Organic Carbon Quantification Protocol, pages 55 74, Website : 9

http://www.ec.gc.ca/perrl/home_e.html (Note : Document no longer available on line, but can be accessed through PERRL office) Gardner T. & Szabo M., 2008, U.S. Climate Exchange Farm Deals Raise Questions, Reuters News Service, 2 pages, August 22, 2008 Website: http://www.reuters.com/article/newsone/iduslm33027820080822. Government of Canada, 2005, Offset System for Greenhouse Gases, Overview Paper and Technical Background Document, 57 pages, Library and Archives Canada Cataloguing in Publication, ESPM-679 Haak D, 2005, Issues Management Problems and Solutions for Maintaining a Zero Tillage System and Other Beneficial Soil Management Problems, 74 pages, Agriculture and Agri- Food Canada Website: http://www4.agr.gc.ca/aafc-aac/displayafficher.do?id=1187204956758&lang=e Haak D and Soil Management Technical Working Group (SMTWG) for Canada s GHG Offset System., 2006, Tillage System Default Coefficient Protocol: based on Canada s Offset System for Greenhouse Gases Technical Background Document 2005, 77 pages, Note: Draft document not formally published, but available from author) Haak D, 2007, Soil Management Protocols and Projects for Greenhouse Gas Offsets in Canada, 18 pages, Agriculture and Agri-Food Canada Website: http://www4.agr.gc.ca/aafc- AAC/display-afficher.do?id=1191435366810&lang=e Helgason, B, 2005, GHGFarm: An assessment tool for estimating net greenhouse gas emissions from Canadian farms, 42 pages, Unpublished draft document prepared by Agriculture and Agri-Food Canada. International Standards Organization (ISO) 2006, ISO 14064-2 Specification with Guidance at the Project Level for Quantification, Monitoring, and Reporting of Greenhouse Gas Emission Reductions or Removal Enhancements, Standards Council of Canada, CAN\CSA-ISO 14064-2:06 McConkey B, 2006, Carbon Change Estimation Method Used for Agricultural Practice Changes in Canadian Greenhouse-Gas Inventory, 9 pages, Unpublished Draft Document prepared for National Carbon and Greenhouse Gas Accounting and Verification System (NCGAVS) Paragon Soil and Environmental Consulting Inc., Guide to Development of Customized Agricultural Soil Carbon Sink (DRAFT), 2006. Rochette P. Worth D., 2005, Inventory of N 2 O Emission from Canadian Agricultural Soils at the EcoDistrict Scale Using an IPCC Tier II Methodology, 54 pages, Unpublished Draft Document prepared for National Carbon and Greenhouse Gas Accounting and Verification System (NCGAVS) 10