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Allan Sommer and Brian Murray (RTI) sommer@rti

Alternative Approaches to Quantifying and Reporting Carbon Sequestration Projects: The Case of Afforestation. Allan Sommer and Brian Murray (RTI) sommer@rti.org Third USDA Symposium On Greenhouse Gases and Carbon Sequestration in Agriculture and Forestry, March 21-24, Baltimore MD.

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Allan Sommer and Brian Murray (RTI) sommer@rti

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  1. Alternative Approaches to Quantifying and Reporting Carbon Sequestration Projects: The Case of Afforestation. Allan Sommer and Brian Murray (RTI) sommer@rti.org Third USDA Symposium On Greenhouse Gases and Carbon Sequestration in Agriculture and Forestry, March 21-24, Baltimore MD

  2. Outline of Presentation and Analysis • Overview of the role mitigation projects and quantification protocols play in GHG policy • Application of a generalized WRI/WBCSD GHG Protocol to a hypothetical mitigation project • Implications that variation in quantification procedures and protocols may have on quantified project benefits

  3. Project Based Approaches to GHG Mitigation • Projects involve intentional activities or actions to reduce GHG’s • The product of these projects may (may not) be used to produce GHG emission offsets • Mitigation projects are voluntary, not required by law • Development of mitigation projects contain nuances that are location and sector specific

  4. GHG Mitigation Project Programs/Registries • Domestic US • Federal • Section 1605(b) of the Energy Policy Act of 1992: GHG Registry • State • California Climate Action Registry • Oregon Climate Trust • Other emerging state programs • Private • Chicago Climate Exchange • International • Kyoto Mechanisms (JI and CDM)

  5. The Role of “Protocols” • Emergence of different project-based GHG mitigation projects has created some confusion and demand for quantification/reporting standards • Protocol guidance on methods for quantifying and reporting GHG emission and sequestration effects at the project level • Current Efforts • Program-specific: e.g., CA registry protocol, 1605(b), Kyoto • Broad/harmonization: WRI/WBCSD

  6. DefineProjectDimensions • Initial Assessment • Define primary and secondary effects • Determine eligibility • Perform initial screening • Additionality • Leakage • Assess Costs Revise as needed IfNo, Revise as needed Yes Benefit-cost Screening SetProjectBaseline Top-down (Performance Standard) Approach Bottom-up (Project-specific) Approach Report Estimates resulting from Baseline Approach Estimate Project GHG Effects Estimate Secondary Effects Calculate Net GHG Effects General Framework for Project Quantification

  7. Project Baselines and Additionality • General Definitions • Baselines – activity and GHG effect that would occur without the project • Additionality – GHG mitigation relative to the baseline • Two options/methods to setting baselines exist • Project specific approach – bottom-up approach, detailed evaluation of the circumstances pertaining to a specific project • Performance standard approach – top-down approach, based on the historical activities in a region and tracking the performance of a reference group over time

  8. Case Study Application of Bottomland Hardwoods in the Lower Mississippi Valley • Project Description • Afforestation of marginal croplands in Miss. River Valley • Frequently flooded (2-year floodplain) • Issaquena County • 13,784 acres in total; 2,000 met selection criteria

  9. Data Sources • Biophysical Data • Land Use Characterization (National Resource Inventory) • Geo-referenced Soil type, elevation etc • Timber yields (Local Growth and Yield Functions) • Carbon yields (FORCARB) • Economic Data • Timber prices and costs • Agriculture prices and costs

  10. Preliminary Assessment • Generally involves a qualitative assessment of the following: • Eligibility of project activities and GHG pools • Initial screening for • Additionality • Leakage • Assess Project Costs • Assess Project Benefits

  11. Project GHG Quantification • Recall basic steps from general quantification framework • Performance Standard Approach to setting baselines • Estimate the baseline afforestation rate • NRI Data and logistic regressions to calculate annual afforestation rates in MS counties • Estimate Baseline Carbon Accumulation • Combine county specific afforestation rates with carbon yield functions (time-dependent and dynamic), biophysical data, and forest carbon prediction model

  12. Quantification: Estimate Baseline Afforestation Rate Using Logistic Regression Analysis • Dependent Variable: Plot Conversion to Forest • Full State Sample 82 Counties (4,299 observations) • County coefficients show effects relative to omitted county. • 81 of the 82 MS Counties were included in the regressions • however only those in the LYRB used in the analysis are presented here.

  13. Baseline Afforestation Rate Confidence Interval Upper Bounds Derived from Regression Analysis • Calculated from confidence intervals, upper bound most conservative

  14. Baseline Quantification: Carbon Accumulation at Different Points in Time • Baseline carbon accumulation at year 10 and 60

  15. Estimate Gross Project GHG: No Additionality or Leakage Adjustments • Estimated project carbon for year 10 and 60 • Assume with project all trees planted in 1st year • Quantities accumulated after 10 yrs, 60 yrs given below

  16. Estimate Secondary Effects – Leakage • Leakage: Shifting of GHG emissions to outside project boundaries (undermines project GHG benefits) • Estimates derived from study by Murray, McCarl and Lee (2004) • Commercial forestry in South-Central USA is estimated to be ~20% • Adjust project GHG benefits downward by 20% • See Murray presentation (this session) for more details on leakage

  17. Calculate Net Project Carbon Benefits (Gross – Baseline – Leakage)

  18. Sources of Variation in Results • Choosing the project-specific (“case study”) approach to establishing the baseline would result in all project carbon being deemed additional in our example • If timber harvesting is allowed, debits are imposed for carbon reversal • Natural disturbances also produce the potential for carbon reversal and debiting • These and other sources for variation in project results can affect project economic returns

  19. Impacts on Economic Returns • Economic returns under different baseline stringency levels (Confidence intervals from regression results)

  20. Impacts on Economic Returns • Economic returns with and without baseline adjustments

  21. Impacts on Economic Returns (cont.) • Commercial Forestry vs. Forest Preservation

  22. Program-Specific Issues: CA Registry • Baseline guidance - additionality • Eligibility: Pools - above ground only • Secondary effects – leakage not required in CCAR

  23. Summary and Recap • Protocols are needed to ensure consistency of GHG project reporting • Program-specific and cross-program protocols are now being developed • Treatment of Baselines/Additionality and Leakage can substantially alter project benefits and economic returns • More work is needed to create project-based empirical estimates

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