Carbon trading from Carbon trading from smallholder farmssmallholder farms

- towards environmentally friendly and eco-efficient watershed - towards environmentally friendly and eco-efficient watershed managementmanagement

Veli PohjonenVeli PohjonenTana-Beles WME projectTana-Beles WME project

National Environmental Workshop National Environmental Workshop Institute of Land AdministrationInstitute of Land Administration

Bahir Dar UniversityBahir Dar University17 May 201117 May 2011

COCO22 in our air in our air

Despite climate conventions in Kyoto, Despite climate conventions in Kyoto, Copenhagen and Cancun (Mexico):Copenhagen and Cancun (Mexico):

COCO22 concentration of the air is rising concentration of the air is rising

24 per cent between 1958 – 201124 per cent between 1958 – 2011

No sign of drop after Kyoto (1997)No sign of drop after Kyoto (1997)

COCO22 in the atmosphere 1958-2011 in the atmosphere 1958-2011

Two ways to combatTwo ways to combat

Through the Through the sourcessources: reduce CO: reduce CO22 emissions. Technological way.emissions. Technological way.

Through the Through the sinkssinks: increase Carbon : increase Carbon

Offsets to trees and soils. Ecological Offsets to trees and soils. Ecological way.way.

Carbon Offsets via treesCarbon Offsets via trees

Conserve and manage the existing Conserve and manage the existing natural forestsnatural forests

Establish (large) block plantationsEstablish (large) block plantations

Agroforests , forest farmsAgroforests , forest farms

Carbon Offsets in agroforests and Carbon Offsets in agroforests and forests farms forests farms

Plant treesPlant trees Count the trees in year 1Count the trees in year 1 Define carbon stock in year 1 (= A, tn Define carbon stock in year 1 (= A, tn

C/farm)C/farm) Recount the trees in year 2Recount the trees in year 2 Define carbon stock in year 2 (= B, tn Define carbon stock in year 2 (= B, tn

C/farm)C/farm) Carbon Offset = B – A (tn C/farm/yr)Carbon Offset = B – A (tn C/farm/yr)

Ato Minale, Gelawdeos, Dera: Ato Minale, Gelawdeos, Dera: 400 400 agroforesry trees; how much carbon offsetted in a year?agroforesry trees; how much carbon offsetted in a year?

Ato Minale’s Carbon OffsetAto Minale’s Carbon Offset

Year 2010: 438 trees, Carbon stock Year 2010: 438 trees, Carbon stock 5.47 tn5.47 tn

Year 2009 : 356 trees, Carbon Year 2009 : 356 trees, Carbon stock 5.04 tnstock 5.04 tn

Carbon Offset B – A = 0.421 tn C/yrCarbon Offset B – A = 0.421 tn C/yr

How much in Birr (How much in Birr (or Euroor Euro) is B – A?) is B – A?

CER pricing principleCER pricing principle

Certified Emissions Reduction, CER Certified Emissions Reduction, CER ((http://www.pointcarbon.comhttp://www.pointcarbon.com ) )

Price of CER = 12.73 Euro / tn COPrice of CER = 12.73 Euro / tn CO22

Price of C = 46.68 Euro / tn C Price of C = 46.68 Euro / tn C ((factor factor 44/12)44/12)

Price of C = 1114 Birr / tn C Price of C = 1114 Birr / tn C (exch. rate (exch. rate 23.87)23.87)

Value of tree farmer’s Offsetted Carbon changes Value of tree farmer’s Offsetted Carbon changes with daily CER-value at international marketwith daily CER-value at international market

Ato Minale: Birr value of Ato Minale: Birr value of Offsetted Carbon Offsetted Carbon

Carbon Offset in one year B-A = Carbon Offset in one year B-A = 0.421 tn C/farm/yr0.421 tn C/farm/yr

Price of Carbon 1114 Birr/tn C Price of Carbon 1114 Birr/tn C (47 €/tn (47 €/tn C)C)

Value of Offsetted Carbon: Value of Offsetted Carbon: 469 469 Birr/yr Birr/yr (20 €/yr)(20 €/yr)

Summary of 8 sample farmsSummary of 8 sample farmsall measured twiceall measured twice

Principle of Carbon Offset paymentPrinciple of Carbon Offset payment

Year A gives the baseline value (tn C/farm)Year A gives the baseline value (tn C/farm) If B-A > 0, payment is doneIf B-A > 0, payment is done B becomes new baseline valueB becomes new baseline value

If B-A < 0, payment is not doneIf B-A < 0, payment is not done The payment is done in the year when new The payment is done in the year when new

carbon stock exceeds the baseline value carbon stock exceeds the baseline value

Expected Carbon payment to Expected Carbon payment to smallholder farmers & enterprisessmallholder farmers & enterprises

Fair price would be CER = 1114 Birr / tn CFair price would be CER = 1114 Birr / tn C In real trade two middlemen are presentIn real trade two middlemen are present Would the price to farmer or enterprise Would the price to farmer or enterprise

drop to one third? That is 371 Birr / tn Cdrop to one third? That is 371 Birr / tn C (or 156 Birr/yr/farm to Ato Minale) (or 156 Birr/yr/farm to Ato Minale)

Humbo project got payment (from World Humbo project got payment (from World Bank) of 248 Birr / tn C Bank) of 248 Birr / tn C (= 4 USD / tn CO(= 4 USD / tn CO22))

How Ato Minale’s 156 Birr/yr/farm compares How Ato Minale’s 156 Birr/yr/farm compares to smallholder farm annual sales? to smallholder farm annual sales?

How to organize Carbon trade?How to organize Carbon trade?

Smallholder farmerSmallholder farmers group into s group into Forest Forest Producers OrganizationProducers Organization (FPO) (FPO)

FPO buys once a year the Carbon Offsets FPO buys once a year the Carbon Offsets (CER-units) from member farmers(CER-units) from member farmers

FPO sells the Carbon Offsets as CER-units to FPO sells the Carbon Offsets as CER-units to International Carbon Trade marketsInternational Carbon Trade markets

Requires: (i) Export trade license, (ii) Trade Requires: (i) Export trade license, (ii) Trade Identication Number, (iii) Payment of Identication Number, (iii) Payment of royalty to royalty to District Revenue OfficeDistrict Revenue Office

=> CER-unit becomes a new export => CER-unit becomes a new export commoditycommodity

More tradable carbon into soilsMore tradable carbon into soils

Tree planting immediate way to Tree planting immediate way to increase carbon in smallholder farms increase carbon in smallholder farms (above ground)(above ground)

How to increase and store carbon in How to increase and store carbon in smallholder farm soils (below ground)?smallholder farm soils (below ground)?

BiocharBiochar has huge potential has huge potential

Poor soil (left) transformed into Poor soil (left) transformed into fertile fertile Terra pretaTerra preta, using biochar, using biochar

(source Wikipedia : Biochar)(source Wikipedia : Biochar)

Biochar stores carbonBiochar stores carbon

Biochar was invented by Amazonian indians Biochar was invented by Amazonian indians 2000 years ago (2000 years ago (Terra preta Terra preta soils)soils)

Biochar remains in the soil without Biochar remains in the soil without decomposing, similarly to coaldecomposing, similarly to coal

Biochar makes permanent carbon sinkBiochar makes permanent carbon sink Via pyrolysis from crop and forest residuesVia pyrolysis from crop and forest residues Increment of biochar to smallholder farm Increment of biochar to smallholder farm

soils can be added to Carbon tradingsoils can be added to Carbon trading Biochar could be component in CER-units Biochar could be component in CER-units

trading (export), organized by FPO’s. trading (export), organized by FPO’s.

Biochar – ultimate Watershed Biochar – ultimate Watershed management agent?management agent?

Soil acidity decreasesSoil acidity decreases Cation exchange capacity increases, leaching of Cation exchange capacity increases, leaching of

nutrients decreasesnutrients decreases Soil microbial activity increases, more nitrogen Soil microbial activity increases, more nitrogen

is retained in the soilis retained in the soil Fysical soil particle structure for crops improvesFysical soil particle structure for crops improves Soil water retention capacity improvesSoil water retention capacity improves

=> Crop yields raised in sustained manner=> Crop yields raised in sustained manner

Environmental friendliness, eco-efficiencyEnvironmental friendliness, eco-efficiency

Biological sinks becoming more important in Biological sinks becoming more important in combat against climate changecombat against climate change

Carbon Offsets trade encourages farmers to Carbon Offsets trade encourages farmers to plant more treesplant more trees

Planting of trees on most eroded sites Planting of trees on most eroded sites increasesincreases

Biochar sustains and improves agricultural Biochar sustains and improves agricultural soil fertilitysoil fertility

Carbon sequestration and trading becoming Carbon sequestration and trading becoming essential component in Watershed essential component in Watershed managementmanagement

Economic advantagesEconomic advantages

Farmers get immediate added value from Farmers get immediate added value from planted trees, and later from biochar planted trees, and later from biochar improved agricultureimproved agriculture

The value of Ethiopian smallholder forestry The value of Ethiopian smallholder forestry increases annually by about 10 per centincreases annually by about 10 per cent

Carbon offsets (CER-units) are to be Carbon offsets (CER-units) are to be understood as a new export commodity from understood as a new export commodity from the farms, like exporting construction poles the farms, like exporting construction poles or sesame seeds from Ethiopia to Sudanor sesame seeds from Ethiopia to Sudan

=>A new export commodity is created =>A new export commodity is created

Building the Carbon TowersBuilding the Carbon Towers

Smallholder tree planting is on a good drive in Smallholder tree planting is on a good drive in EthiopiaEthiopia

Farmers are motivated especially after successful Farmers are motivated especially after successful steps in land tenure and certificationsteps in land tenure and certification

Ethiopia is already converting into Carbon Tower of Ethiopia is already converting into Carbon Tower of African Horn. This accelerates with Carbon tradingAfrican Horn. This accelerates with Carbon trading

Trees – Biochar - Carbon towers – Sinks are Trees – Biochar - Carbon towers – Sinks are becoming more important in the coming UN becoming more important in the coming UN climate conventions. climate conventions. They should be approved They should be approved already in Durban, South Africa in December 2011already in Durban, South Africa in December 2011

Carbon Tower gets greenerCarbon Tower gets greener

Thank youThank you

veli.pohjonen@gmail.com

http://veli.pohjonen.org