Draft IFOAM WB Position on Carbon Trading Markets
To be used to develop a World Board Position for the Developments of Projects as per GA Motion 62, 2011
Author: Andre Leu, IFOAM President, March 22, 2014.
EXECUTIVE SUMMARY
· Carbon Market financing systems can only form a small part of the farm’s income and should not be seen as a major income source
· There are numerous co-benefits of ensuring better carbon management practices - increases in soil carbon to improve climate change adaption through water use efficiency, increased resilience and better fertility; biogas generation, energy efficiency, encourage better composting techniques, greater uptake of compost use and higher yields for traditional small holders
· The concept of systems that are based on paying for multiple best practice, eco-system and social services should be preferred over systems just limited to carbon
· Insetting - where a dedicate price is set to go to producers within organic supply chains would be more beneficial than the uncertainties of offsetting schemes
· Insetting can also be used as a very effective to marketing tool to ‘sell’ the value of the multifunction benefits of organic systems to consumers
BACKGROUND
IFOAM’s position and activities on Carbon Markets should be defined by a motion passed by the General Assembly in Korea in October 2011.
Motion 62: Exclusion of Agriculture from Carbon Trading Mechanisms in speculative markets
The World Board should promote the development of alternative financing systems to support organic farming projects and agro-ecological approaches to agriculture that provide a real solution of climate change for vulnerable populations and a fair compensation to organic farmers for their contribution to mitigation and adaptation strategies.
At the same time, IFOAM should strongly advocate against including agriculture in any speculative carbon market schemes, especially those controlled by the international finance system.
This motion was reached after considerable debate over market based carbon trading systems.
This paper outlines the types of financing systems that IFOAM could support as well as those that should not be supported, giving examples of both. The issues of climate change and carbon markets are very complex with many issues that need to be covered.
Consequently this document is divided into a SUMMARY OF THE PRIMARY DOCUMENT that outlines the key points and a longer PRIMARY DOCUMENT that goes into more detail in the key areas so that they can be covered adequately in order for people to fully understand them.
SUMMARY OF THE PRIMARY DOCUMENT
Introduction
The world is failing to reduce greenhouse gas (GHG) emissions despite commitments made under the Kyoto Protocol. According to the International Energy Agency (IEA, 2011), energy-related CO2 emissions reached a record high of 30.6 gigatonnes (Gt) in 2010 – a 5 per cent jump from the previous record in 2008. Emissions continue to increase despite the reduction in economic activity due to the global economic and financial crisis.
The international agreements on climate change come under the United Nations Framework Convention for Climate Change (UNFCCC). The only legally binding agreement is the Kyoto Protocol (KP). The first commitment period of the (KP) and its Clean Development Mechanism (CDM) led to a small reduction in emissions by the Annex 1 parties to the Protocol, however they have failed to reduce the overall rate of global GHG emissions. The CDM has had very little impact because its complex rules make it difficult to achieve effective project results. A major issue has been GHG leakage (or rather outsourcing) from the Annex 1 countries to developing countries. Under KP only Annex 1 countries are committed to reduce GHG emissions whereas all the other countries are under no legally binding obligation to reduce their emissions. Annex 1 emissions now account for less than 30% of global emissions. Any small gains that have been achieved by the Annex 1 countries in reducing GHG emissions have been more than lost by the polluting industries moving to developing countries and importing GHG-intensive products from there. The non-Annex 1 countries now account for the majority of the world’s GHG emissions caused by expanding industries, increased use of motor vehicles, increased power generation from fossil fuels, deforestation, the burning of savannahs and the loss of soil carbon through poor agricultural practices.
The current state of the economies of developed countries, with their massive debts, means that they do not have the funds to shift significantly to the use of renewable energies and improve energy efficiency in the short term. Furthermore, the political climate has changed since the United Nations Climate Change Conference in Copenhagen in 2009, with very few governments willing to accept a slowdown in economic activity to meet emission reduction targets or to introduce major GHG reduction strategies.
The Cancun Climate Change Agreements mean that sequestration and emission offsets along with carbon markets will be part of any strategy mix to stabilize the level of atmospheric CO2 and other GHGs. (UNFCCC, 2011)
The agreement in Copenhagen was to keep the rise in global temperatures to 2 degrees. A number of climate change scientists are stating that the world has missed the threshold in keeping the rise to 2 degrees and that the most likely scenario is between 3 and 4 degrees. Consequently the world is facing catastrophic climate change events with a greater frequency of extreme events such as more frequent and longer droughts, floods, summer heat waves and winter freezes. Given the urgency of the situation it is critical that multiple strategies are used to combat this. Until the world can move comprehensively to renewable, low carbon and efficient energy systems, mitigation strategies have to be used as part of the mix of strategies needed to reduce emissions.
1. Addressing Concerns about Soil Carbon Trading Systems
Schemes that pay farmers for sequestering carbon into the soil, not only will help to mitigate and adapt to climate change, they could help alleviate rural poverty and provide a strong financial incentive to adopt good farming practices; if they are done fairly and properly.
There are concerns being expressed by many NGOs, as they do not understand the multifunctional benefits of increasing soil carbon. It is for this reason that these benefits have been clearly articulated and elaborated in the PRIMARY DOCUMENT. These NGOs are concerned about corporate land-grabs and the increase of no till GMO systems if money was paid for the soil carbon sequestration. The data shows that on average conventional farming systems can only reduce the rate of soil carbon loss, not increase soil carbon levels. (Gattinger 2012, Sanderman 2010, La Salle and Hepperly 2008)
Preliminary research into no till herbicide systems shows that they only increase soil carbon in some circumstances and this seems to level off after a period of years. Research by Professor Rattan Lal and colleagues from Ohio State University compared carbon levels between no-till and conventional tillage fields and found that, in some cases, carbon storage was greater in conventional tillage fields. (Christopher, Lal and Mishra, 2009)
Given that there is very little evidence for economic levels of soil carbon sequestration in conventional farming systems, including no till GMO systems, it is highly unlikely that there will be any economic rationale for large scale land-grabs to generate soil carbon credits.
The majority of the current land-grabbing activities and forest clearing are for conventional farming commodity production for the international commodity markets especially for GMO maize, soy and cotton and for oil palms, rubber and sugar production. This is where the concern needs to be focused, rather than on possible land grabbing for soil carbon trading as this is something that does not exist and is unlikely to occur.
2. The Multiple Co-Benefits of Soil Carbon
There are multiple co-benefits that come with increasing the levels of soil carbon in the form of soil organic matter.
Adaptation
The current United Nations negotiations on climate change are at a deadlock with limited actions being taken to reverse the increases in greenhouse gases. This means that farmers have to adapt to the increasing intensity and frequency of adverse weather events such as droughts and intense damaging rainfall events.
More Resilient in Adverse Conditions
Organic farming systems are more resilient to weather extremes. Studies show that organic systems have higher yields than conventional farming systems in periods of heavy rains and droughts. (Drinkwater 1998, Welsh R. 1999, Pimentel D. 2005)
The Wisconsin (US) Integrated Cropping Systems Trials found that organic yields were higher in drought years and the same as conventional in normal weather years. The researchers attributed the higher yields in dry years to the ability of soils on organic farms to better absorb rainfall. This is due to the higher levels of organic carbon, making the soils more friable and better able to store and capture rain (Posner et al. 2008).
The Rodale FST showed that the organic systems produced 30 per cent more corn than the conventional system in drought years (Pimentel D. 2005). ‘This yield advantage in drought years is due to the fact that soils higher in carbon can capture more water and keep it available to crop plants.’ (La Salle and Hepperly 2008)
Scientific research shows that organic systems are more resilient to the extreme weather events caused by climate change due to higher level of soil organic matter.
Improved water use efficiency
Research shows that organic systems use water more efficiently due to better soil structure and higher levels of humus and other organic matter compounds (Lotter, Seidel and Liebhart, 2003; Pimentel, 2005).
Lotter and colleagues collected data for over 10 years during the Rodale FST. Their research showed that the organic manure system and organic legume system (LEG) treatments improve the soils' water-holding capacity, infiltration rate and water capture efficiency. The LEG maize soils averaged a 13% higher water content than conventional system (CNV) soils at the same crop stage, and 7% higher than CNV soils in soybean plots (Lotter, Seidel and Liebhart, 2003).
The more porous structure of organically treated soil allows rainwater to quickly penetrate the soil, resulting in less water loss from run-off and higher levels of water capture. This was particularly evident during the two days of torrential downpours from hurricane Floyd in September 1999, when the organic systems captured around double the water than the conventional systems captured (Lotter, Seidel and Liebhart, 2003).
Long term scientific trials conducted by the Research Institute of Organic Agriculture (FiBL) in Switzerland, comparing organic, biodynamic and conventional systems (DOK Trials) had similar results showing that organic systems were more resistant to erosion and better at capturing water. (Mader et al 2002)
The higher levels of organic matter allow the soil in the organic field to resist erosion in heavy rain events and capture more water. (Source: FiBL DOK Trials)
Mitigation - Soil carbon sequestration through agricultural practices
A preliminary study by the Research Institute of Organic Agriculture (FiBL), Switzerland and published by FAO, collated 45 comparison trials between organic and conventional systems that used 280 data sets. (FAO, 2011) These studies included data from grasslands, arable crops and permanent crops in several continents. A simple analysis of the data shows that on average that the organic systems had higher levels of soil carbon sequestration (Gattinger et al, 2011).
In a later peer reviewed meta-analysis study, published in the Journal PNAS, that used 41 comparison trials and removed four outliers in the previous data sets in order not to over-estimate the data and to obtain a conservative estimate, Gattinger and colleagues reported that organic systems sequestered 550 Kgs C per hectare per year. This equates to 2018.5 Kgs CO2 per hectare per year. (Gattinger et al., 2012)
A meta-analysis by Aguilera et al. published in the peer reviewed journal, Agriculture, Ecosystems & Environment, of 24 comparison trials in Mediterranean climates between organic systems and non-organic systems without organic supplements found that the organic systems sequestered 970kg of C/ha/yr more than the non-organic systems. This equates to 3559.9 kg of CO2/ha/yr (Aguilera et al., 2013). The data came from comparison trials from Mediterranean climates in Europe, the USA and Australia.
Potential GHG Mitigation of organic practices
Based on the conservative figures of Gattinger et al., the widespread adoption of current organic practices globally has the potential to sequester 10 Gt of CO2, which is just under 20 per cent of the world’s current GHG emissions.
Incentives for Farmers to Develop Best Practice in Increasing Soil Carbon
The substantial co-benefits of both mitigation and adaptation of increasing soil carbon means that it is worthwhile to develop payment systems as incentives for farmers to develop best practices. Given that current studies show that organic systems are superior in this area it will also provide incentives for farmers to adopt more good organic practices.
Soil Carbon Mitigation buys the time needed to get the world to adopt renewal energy sources. Given that urgent action is needed now, we need to actively support methodologies that strip the CO2 out of the atmosphere and store it into the soil.
3. Developing the Soil Carbon Offset Methodologies
At this stage there are soil carbon offset methodologies for the voluntary market, however there are none that are recognized by the UNFCCC or by government schemes such as the EU trading scheme.
Soil carbon and agriculture are not part of any UNFCCC agreement and it could be 2020 at the earliest before there are accepted methodologies. Part of the problem is involved in establishing the best methods for measuring soil carbon. There are many that are available, however some of the proposals by scientists are not economically feasible due to the enormous amount of time and labor needed to take the soil samples. There is a major disagreement amongst scientists and other stakeholders on one agreed method that would be economically viable for a payment scheme.
4. Carbon Offset Markets
Most of these schemes come with disadvantages. The collapse of the price for carbon in market based systems as well as some schemes where most of the price has gone towards administering the scheme rather than paying the land holders, shows that there are major problems with these schemes.