montpellier, apr. 4th 2008 basics of cdm using forests to reduce ghg emissions thomas dufour

Montpellier, Apr. 4th 2008Montpellier, Apr. 4th 2008

Basics of CDMBasics of CDM

Using forests to reduce GHG emissionsUsing forests to reduce GHG emissions

Thomas DufourThomas Dufour


Presentation developmentPresentation development

1 – General basics1 – General basics

2 – Project cycle2 – Project cycle

3 – Methodologies3 – Methodologies

5 – Project design5 – Project design

6 – Dealing with non permanence6 – Dealing with non permanence

7 – Example of CDM project7 – Example of CDM project


- 2001: COP6 part 2 (Bonn) – Carbon Sinks included in the Kyoto Protocol (CDM projects)- 2001: COP7 (Marrakech) – Modalities for CDM forest projects: only afforestation and reforestation activities (Dec.11/CP7) - 2003: COP9 (Milán) – Modalities for CDM forest projects: implementation of CDM forestry projects (Dec.19/CP9) - 2005, July 16th : Kyoto Protocol active

General basicsGeneral basics

A bit of History…A bit of History…



• Generate GHG credits based on project activities that reduce GHG emissions and contribute to sustainable development in countries that have not taken an emission reduction commitment under United Nations Kyoto Protocol ;

• Help meet GHG emissions targets of companies and governments in countries like Japan, Europe, etc.

Goals of CDM…Goals of CDM…


Emissions Before Project

Annex 1

Host

Total

Watch this level


PrinciplePrinciple


But Annex 1 country anticipates it will exceed its target

Annex 1

Host

Total



CDM project initiated

Annex 1

Host

Total



Transfer of carbon credits

Annex 1

Host

Total

$

Credit

Atmosphere

neutral



• The emission reductions are real, measurable, verifiable and attributable to project participants;

• The emission reductions are “additional”, i.e could not have happened without the support of the CDM project;

• The project is approved by the host country;



• The project is independently validated (DOE) and registered before it starts

• Emission reductions are credited against a “baseline scenario” and adjusted for “leakage”;

• GHG credits are issued after emission reductions are monitored, reported and independently verified;



• GHG credits are valid for 1 ton of carbon dioxide equivalent (tCO2-e);

• GHG credits are shared however project participants wish to;

• They are issued in electronic registries from where they can be traded;



Sectoral scopes for CDM project activitiesSectoral scopes for CDM project activities

- Energy industries (1)- Energy distribution (2)- Energy demand (3)- Manufacturing industries (4)- Chemical industries (5)- Construction (6)- Transports (7)- Mining/Mineral production (8)

- Metal production (9)- Fugitive emissions from fuels (10)- Fugitive emissions from production and consumption of halocarbon and sulphur hexafluoride (11)- Solvent use (12)- Waste handling and disposal (13)- Afforestation and reforestation (14)- Agriculture (15)



Forest plantations

• Usually commercial enterprises• Often high rates of sequestration (e.g.

40+ t CO2e/ha/yr)• Must be able to demonstrate

additionality• Leakage is possible through displaced

land uses• Best examples where the reforestation

is part of a wider landscape project and/or is contribution to land rehabilitation




Land rehabilitation

• Often community based• Usually small plantings• Complex monitoring

issues; but we have examples

• Modest carbon contents (<20 t CO2e/ha/yr)

• Usually clearly additional• Low leakage risk



Agroforestry

• Must convert non-forest to forest• Significant gains from carbon in the

trees; sometimes from the under-crops; and usually from improved soil carbon

• Additionality usually based on barrier tests



Reforestation and pastoralism

• Good, biologically, economically, socially and in terms of GHG reduction

• Carbon sequestered in trees; methane emissions from cattle often reduced

• But complex to set up as they must be split into two projects because of Kyoto rules




2 – 2 – Project cycleProject cycle






PP = Project Proponent

DOE = Designated Operational Entity

DNA = Designated National Authority

EB = CDM Executive Board

CER = Certified Emission Reduction

Afte

r im

p lem

e nt a

ti on

Bef

o re

imp l

eme n

t ati o

n

Life cycle of a CDM project activityLife cycle of a CDM project activity

Project cycleProject cycle


• Validation:– Process of independent evaluation of a project activity by

a designated operational entity following the requirements of the CDM, on the basis of the project design document (PDD).

• Validation is a result of the review of :– the eligibility of project activities; – the approval of the host country;– the baseline scenario; – the monitoring plan; – the analysis of social and environmental impacts; and – the public consultation process.



• Registration: – Formal acceptance by the Executive Board of a

validated project as a CDM project activity= prerequisite for the verification, certification and issuance

of CERs related to that project activity.

• Verification:– Periodic independent review and ex post determination

by the designated operational entity of the monitored reductions in anthropogenic GHG emissions that have occurred as a result of a registered CDM project activity during the verification period.



• Certification:– Written assurance by the designated operational

entity that, during a specified time period, a project activity has achieved the reductions in anthropogenic GHG emissions as verified. The certification report shall be used as a request for issuance to the Executive Board of emission credits equal to the verified amount of GHG emissions reduction.






3 – 3 – MethodologiesMethodologies





MethodologiesMethodologies

Nothing is Nothing is simple when simple when dealing with dealing with CDM CDM methodologiesmethodologies


Approved methodology

Design of project activity. Presentation of the Project Design Document (PDD) to the DOE

New methodology

Project approval

No

Request for revision in 8 weeks

EB reviewes and decide in 2 meetings

DOE: control validation criteria

Yes

No

DOE finish validation

YesEB registers the project

Yesi

No

EB studies the new methodology

EB

EB registers the new methodology

Approbation of the new methodology



• The forms used to asses new methodologies refer to Baseline and Monitoring methodologies.

• However, these forms asses various additional technical issues, among them:• Project boundaries• Additionality• GHG emission sources• Uncertainties assessment• Leakage• Application of methodologies to different project or

regions







5 – 5 – Project designProject design

6 – Dealing with non-permanence6 – Dealing with non-permanence

7 – Example of project7 – Example of project


Geographical boundaries

• The “project boundary” : project activity under the control of the project participants. It May contain more than one discrete areas of land.

– Each discrete area of land should have a unique geographical identification;

– The boundary should be defined for each discrete area and should not include the areas in between these discrete areas of land.


Land eligibility

• Is it really afforestation or reforestation activity? – “Forest” is a minimum area of land of 0.05-1.0 hectares with

tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest;


Land eligibility

• Is it really afforestation or reforestation activity? – “Afforestation” is the direct human-induced conversion of

land that has not been forested for a period of at least 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed sources;

– “Reforestation” is the direct human-induced conversion of non-forested land to forested land through planting, seeding and/or the human-induced promotion of natural seed sources, on land that was forested but that has been converted to non-forested land. For the first commitment period, reforestation activities will be limited to reforestation occurring on those lands that did not contain forest on 31 December 1989;


Emission sources and carbon pools: stocks and flows


Carbon pools definition

Pool Description

Biomass

Aboveground biomass

All live biomass above the soil including stem, stump, branches, bark, seeds, and foliage. Note: In cases where forest understorey is a relatively small component of the above-ground biomass carbon pool, it is acceptable for the methodologies and associated data used in some tiers to exclude it, provided the tiers are used in a consistent manner throughout the inventory time series.

Belowground biomass

All biomass of live roots. Fine roots of less than (suggested) 2mm diameter are often excluded because these often cannot be distinguished empirically from soil organic matter or litter.

Dead Organic Matter

Deadwood

Includes all non-living woody biomass not contained in the litter, either standing, lying on the ground, or in the soil. Dead wood includes wood lying on the surface, dead roots, and stumps larger than or equal to 10 cm in diameter or any other diameter used by the country.


Carbon pools definition

Pool Description

Dead Organic Matter

Litter

Includes all non-living biomass with a diameter less than a minimum diameter chosen by the country (for example 10 cm), lying dead, in various states of decomposition above the mineral or organic soil. This includes the litter layer as usually defined in soil typologies, Live fine roots (of less than the suggested diameter limit for below-ground biomass) are included in litter where they cannot be distinguished from it empirically.

SoilsSoil organic matter

Includes organic carbon in mineral soils to a specified depth chosen by the country and applied consistently through the time series. Live fine roots (of less than the suggested diameter limit for below-ground biomass) are included with soil organic matter where they cannot be distinguished from it empirically.


11

22

3344

55

1) above-ground biomass,

2) below-ground biomass,

3) litter, 4) dead wood, and 5) soil organic carbon.

Representation of carbon pools


Emission sources and carbon pools [2]

• Projects may exclude some carbon pools or emission source from the baseline scenario estimation and/or the monitoring:

– Transparently demonstrate that it is conservative,

i.e. that it does not lead to an overestimation of the net GHG removals,

– Or grossly assess that these sources are not material (sum of neglected sources < 5% of total)


Baseline scenario

• It is the scenario that reasonably represents the sum of the changes in carbon stocks in the carbon pools within the project boundary that would occur in the absence of the A/R CDM project activity.

• Derived using a(n approved) baseline methodology.

• Shall cover all carbon pools within the project boundary but project participants may choose not to account for one or more carbon pools…


Baseline scenario [2]

• Different baseline scenarios may be elaborated as potential projections of the situation existing before the proposed A/R CDM project activity.

(continuation of an existing activity, implementation of the proposed A/R CDM project activity, and many others)

• To elaborate the different scenarios, different elements shall be taken into consideration, including related guidance issued by the Executive Board.

(national / sectoral policies and circumstances, ongoing technological improvements, past land uses and land-use changes, investment barriers, etc.)


3 Baseline approaches to choose from

• Existing or historical, as applicable, changes in carbon stocks in the carbon pools within the project boundary (a);

• Changes in carbon stocks in the carbon pools within the project boundary from a land use that represents an economically attractive course of action, taking into account barriers to investment (b);

• Changes in carbon stocks in the pools within the project boundary from the most likely land use at the time the project starts (c).


Additionality tool


Leakage

• Leakage is the increase in GHG emissions by sources which occurs outside the boundary of an A/R CDM project activity which is measurable and attributable to the A/R CDM project activity;

• Types of leakage:

– activity displacement,

– Demand/supply displacement,

• Market leakage may be ignored (recent ARWG decision)


Formulae

• Net GHG removals (net project balance) = CERs

= Actual net GHG removals(increase in carbon storage minus GHG

emissions)

- Baseline net GHG removals(increase in carbon storage under the b. scenario)

- Leakage


Data from project implementation

• Stratification of project area into homogenous strata

• Sample size determination and sampling

• Measurements [= f (pools)] on control plots, permanent or not

• Carbon conversion– Total tree carbon stock as a function of (, h) requires

calibration of allometric function;– Commercial wood volume as a function of (, h), then

application of Biomass Expansion Factor, Root-shoot ratio, Basic density and Carbon content factor;

• Scaling up to whole project area


Data from project implementation [2]

• Other data: – Report on forest management activities– Fuel consumption? – Nitrogen fertilization? – If dynamic baseline/leakage estimation,

• measurements on contrast plots?

• monitoring of land use statistics?

– Etc.


Parameters for model calibration

• It is good practice to use locally/nationally established parameters whenever possible

• Or refer to IPCC default factors (www.ipcc.ch): – IPCC 1996 Guidelines for GHG inventories, – IPCC 2002 Good practice guidance for Land

Use Land Use Change and Forestry, – IPCC 2006 Guidelines for GHG inventories.


More on monitoring

• All about accuracy, conservativeness and transparency;

• Uncertainty analysis;• Quality assurance and quality control plan

required. QA/QC plan should cover: – collecting reliable field measurements;– verifying methods used to collect field data;– verifying data entry and analysis techniques; and – data maintenance and archiving.


Variations to standard procedures

• Simplified modalities and procedures for small scale project activities (<16,000 tCO2-e/yr,

since Bali) ;

• New! “Programme of Activities” (PoA), ability to register an umbrella PoA and specific project activities to be described later;

• Voluntary market standards (e.g gold standard)


For further info, check references @ http://cdm.unfccc.int/

• CDM Modalities and Procedures (Decision UNFCCC 19/CP.9)• Guidelines for preparing CDM AR PDDs and CDM AR new

methodologies, inc. Glossary of CDM AR terms;• Approved methodologies AR-AM0001 to AR-AM0010;• Various tools to determine land eligibility, demonstrate

additionality, etc. • CDM AR PDDs of projects already validated;• Reports of Meetings of CDM Executive Boards and its AR

Working Group;• Available soon: Tool to search all decisions of the CDM EB

and its panels by keyword.






6 – 6 – Dealing with non permanenceDealing with non permanence




CO2e

2012 2017 2022 2027 2032

CO2e

20 credits valid 5 years60 credits valid 5 years80 credits valid 5 years90 credits valid 5 years

20

60

8090

20

60

8090

20 credits valid 20 years40 credits valid 15 years20 credits valid 10 years10 credits valid 5 years

250 credits tCERs 90 credits lCERs

Dealing with non-permanence

Crediting periodCrediting period


Net CO2e

Net CO2e

V1 V2 V3 V4 V1 V2 V3 V4R E R E

What happens if carbon (forest) is lost ?

lCERs invalid

NothingCO2e net

CO2e net

Dealing with non-permanence


• On the project side, – new temporary credits can be issued every five years

after verification that the carbon remains stored. On top of these renewed credits, extra credits can be issued for newly sequestered CO2 tonnes.

• On the investor side, – postpones by five years the responsibility for tonnes of

GHG emitted. Practically, it means that an entity that uses a temporary credit for compliance is liable to provide a replacement unit 5 years after (on top of the credits/allowances it has to provide for recently emitted GHG tonnes).







7 – 7 – Example of CDM projectExample of CDM project



Reforestation of pastures in Magdalena Bajo region, Colombia



Principle of the project

Allow access to project for large and small landowners :Allow access to project for large and small landowners :• social impact more important,social impact more important,• wide potential area.wide potential area.

Necessity of cattle Necessity of cattle grazing technificationgrazing technification




Project zone




Project boundaries…

…Some discrete area




Agro ecological environment

• Mean annual rainfall:– 1 300 mm

• Mean annual temperature:– 27.9°C

• Relative humidity– 70%

• Original environment– Caribbean forest

• Soils: alluvial origin

0

20

40

60

80

100

120

140

160

180

200

E F M A M J J A S O N D

Précipitations(mm)ETP (mm)




Reforestation activity (mixed plantations)

Area: 25 000 ha

Species: - Gmelina arborea (40%) - Bombacopsis quinata

(20%) - Tectona grandis (40%)




Actors:

- Local farmers

- State agency (CORMAGDALENA)

- Agriculture bank (FINAGRO)

- Private investor (Carbone Positive)

Benefits shared following participation




Colombia forest definition:

Minimum area: 1 ha

Minimum tree cover: 30%

Mature tree height : 5 m

GHG considered:

CO2, CH4, N2O

Carbon pools selected:

aboveground biomass belowground biomass

Stratififcation:

Following land cover classes

Crediting period:

20 years renewed one time

Addressing non-permanence:

t-CERs

Project start:

September 1st, 2000 (pilot)

September 1st , 2007 (project)




-1 000 000

-

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

Baseline scenario:Evolution of pastures

(loss of carbon by increase of pasture)

Net GHG removals:655 000 tCO2-e

Low leakage (vehicles)



tCO2-etCO2-e




Additionality : Second option chosen (barriers)

Some strong barriers:

- Financial barriers

- Technical barriers barriers

- Cultural/psychological barriers

- Operational barriers




A few numbers…

• Transaction costs: 10 USD/ha• Site preparation: 364 USD/ha• Plantation: 380 to 500 USD/ha following species• Monitoring: 25 USD/ha

• Total costs: 53 000 000 USD• Total incomes: 70 000 000 USD (82% from wood)



A new perspective of carbon project…A new perspective of carbon project…

REDD mechanismREDD mechanism

Reduction of Emissions resulting from Reduction of Emissions resulting from Deforestation and DegradationDeforestation and Degradation


Dec. 2005Dec. 2005 - - COP11COP11 Montreal, proposal from Papoua and Costa Montreal, proposal from Papoua and Costa Rica to include avoided deforestation in the negotiation.Rica to include avoided deforestation in the negotiation.

March 2006March 2006 – National – National submissionssubmissions

August 2006August 2006 – Technical workshop in Rome – Technical workshop in Rome

Nov. 2006Nov. 2006 - - COP12COP12 Nairobi – continuation of discussions and Nairobi – continuation of discussions and request of national new positions.request of national new positions.

Febrary 2007Febrary 2007 – – National National submissionssubmissions

March 2007March 2007 – – Technical workshop inTechnical workshop in CairnsCairns

History of the negociationHistory of the negociation


May 2007May 2007 - - SBSTASBSTA (Bonn), works on a (Bonn), works on a DecisionDecision to take in Bali to take in Bali – no real progress. New request of national positions. – no real progress. New request of national positions.

August 2007 August 2007 – National – National submissionssubmissions

Dec. 2007Dec. 2007 – – COP12COP12 Bali, Decision to include deforestation Bali, Decision to include deforestation and degradation in the framework of the UNFCCCand degradation in the framework of the UNFCCC. .

March 2008 March 2008 – methodological – methodological submissionssubmissions

History of the negociationHistory of the negociation


What is the purpose ?What is the purpose ?

• DeforestationDeforestation = forest area passing to a non-forest area = forest area passing to a non-forest area

• DegradationDegradation = loss of carbon stocks of forests = loss of carbon stocks of forests

• Deforestation and degradation Deforestation and degradation produce Greenhouse Gas produce Greenhouse Gas emissionsemissions

• Implementation of a Implementation of a financial mechanismfinancial mechanism (incentives) to pay (incentives) to pay countries (or projects) making efforts to reduce these countries (or projects) making efforts to reduce these emissions.emissions.


Forest Non Forest

Deforestation

Carbon

t


DeforestationDegradation

Forest Non forestCarbone

t


Which forest definition ?Which forest definition ?

Which degradation: natural , anthropogenic ?Which degradation: natural , anthropogenic ?

Which limit for degradation ?Which limit for degradation ?

Deforestation and degradation but…Deforestation and degradation but…


National or project scale ?National or project scale ?

Should estimations be done on a Should estimations be done on a national basisnational basis or could some or could some project mechanismsproject mechanisms be allowed ? be allowed ?

A A national basis national basis : remunerate countries for their global efforts : remunerate countries for their global efforts (policies, programs).(policies, programs).

- Large scale action, - Large scale action, - Governance problems can occur.- Governance problems can occur.

A A project mechanismproject mechanism : give : give creditscredits to efforts realized on a local to efforts realized on a local scale without considering what occurs on the national level scale without considering what occurs on the national level

- incentive for private sector (sovereignty ?)incentive for private sector (sovereignty ?)- probable leakage.probable leakage.


On historic dataOn historic data (Brazil) (Brazil) or projections taking into account or projections taking into account potential future evolutions through adjustment factors ?potential future evolutions through adjustment factors ?

Historic data are verifiable, but penalize countries that have low Historic data are verifiable, but penalize countries that have low deforestation ratesdeforestation rates

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

1 2 3 4 5 6 7 8 9

How to define a reference scenario ?How to define a reference scenario ?


Deforestation issues were mainly politic untill the Decision Deforestation issues were mainly politic untill the Decision taken in Bali. Next steps will be much more methodological taken in Bali. Next steps will be much more methodological with a lot of points to be clarified:with a lot of points to be clarified:

- Which GHG consider ?Which GHG consider ?

- How to deal with permanence ?

- How to deal with leakage ?

- … …


{UNFCCC& KP

Implementation of the mechanism

Pilot activités, test of instruments

Instruments for capacity-building

2012

Transition

2008

Learning

Voluntary initiatives (prototype fund, project)

Market mechanim or fundNegotiation


Thank you for your attention !Thank you for your attention !

Thomas Dufour Thomas Dufour ONF InternationalONF International

[email protected]@onfandina.com


ONF INTERNATIONALONF INTERNATIONAL

ONF Sylvafrica ONF Sylvafrica Libreville, GabonLibreville, Gabon

[email protected]@netscape.net

ONF InternationalONF International2, Av. de Saint Mandé, 75578 2, Av. de Saint Mandé, 75578

Paris Cedex 12, FranceParis Cedex 12, [email protected]@onf.fr

ONF BrasilONF Brasil Cuiaba, MTCuiaba, MT

[email protected]@terra.com.br

ONF ConosurONF ConosurTemuco, ChiliTemuco, Chili

[email protected]@onfconosur.tie.cl

ONF AndinaONF AndinaBogota, Bogota, ColombieColombie




2001

2002

2003

2004

2005

2006

2007

Decisions on CDMOthers sectors xForestry sector x

Methodologies

Others sectors 9 19 30 50 63Forestiry sector 1 5 10

Registered projects

Others sectors 2 140 560 832Forestry sector 1 1 + ?

Carbon credits before 2012 (MtC02)Others sectors 0.2 294 816 1.070Forestry sector 0.1 0.1 +

Forestry projects in the CDM marketForestry projects in the CDM market

montpellier, apr. 4th 2008 basics of cdm using forests to reduce ghg emissions thomas dufour

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