Carbon Credits For Rubber

[JungleBiker]

CARBON TRADING: OPTIONS AND OPPORTUNITIES FOR NATURAL RUBBER

By Dr. N. Yogaratnam

Chairman / Tree Crops Agro Consultants

Source: Daily Mirror, Sri Lanka 30 Jul 08

The International Rubber Research and Development Board (IRRDB),

recognizing the importance and scope for Clean Development Mechanism

(CDM) and Carbon Trading in rubber plantations, hosted a meeting on

this subject in Bangkok, recently. The objective of this meeting was

to examine opportunities for Natural Rubber (NR) growers, processors

and also rubber product manufactures to participate in tapping the

huge potential in CDM and Carbon Trading.

This article analyses the options and opportunities for NR in Carbon

Trading, drawing examples from the discussion held at this meeting.

NR’s role

Natural rubber is now widely accepted as an important tree species

that can sequester significant amounts of carbon dioxide from the

atmosphere.

Several studies have been published in support of this conclusion.

Total amount of carbon sequestered in 1 hectare of Rubber has been

reported by few workers; 318.7 tonnes/ha ( 27 yr old trees 270 trees/

ha) in Malaysia by Wan A. Rahman & Sivakumaran in 1998; 139 tonnes/ha

(29 yr old trees; 270 trees/ha) in Malaysia by Yew Foong Keong & M.

Nasaruddin in 2003;

164.2 toones / ha (21 yrs old trees; 375 tree/ha) in India by James

Jacob in

2003 and 1831 tonnes/ha ( 30 yr old trees; 400 trees / ha) in Sri

Lanka by Yogaratnam, (2008).

World’s total area of NR plantation is about 9 m ha. Based on Indian

experience ,0n average a 21 year old rubber plantation has the

capacity to sequester 28.7 T CO /ha /yr which amounts to about 258

million tonnes

CO2 /yr by the world’s total NR plantation. The current rate of

atmosphere

CO2 increase is 1.9 ppm/ year, which is equal to 2128 million tonnes.

Therefore, 258 million tonnes of CO2 / year by the NR plantations

works out to 0.12 ppm per year which amounts to 6.3%. This indicates

that 6.3% of the current rate of the CO2 increase in the atmosphere is

being reversed by the world NR plantations itself, an encouraging

phenomena.

Advances in breeding of new clones, modified agronomic practices and

new exploitation techniques can further boost Rubber tree’s capacity

for carbon sequestration. The new Sri Lankan clones, RRISL 200 and

2000 series can achieve 25 to 30% increases in girth size ( greater

biomass), innovative exploitation techniques can boost yield/ha

between 2000 to 2800 kg/ha/yr, modified agronomic practices such as

planting of higher densities/ha ( 450 to

525 trees), manipulation of fertilizer regimes for increased biomass

can all lead to higher CO2 sequestration by trees and agro-forestry

system with mixed cropping can further enhance the capacity of rubber

plantations to boost

CO2 sequestration.

Environmental Credits

There are many significant environmental credits of NR such as ability

to lock carbon both in biomass and rubber, rubber plantations

functioning as self- sustaining eco-system ( annual leaf fall,

branches, fruits, twigs, root hairs), cultivation being less demanding

on fertilizers and pesticides, promotes soil conservation ( in view of

25 to 30 year replanting cycles), up keep of soil groundwater through

groundwater infiltration, scope for biodiversity ( integration of

other species in the inter-rows; animal integration) being largely a

smallholder crop for purpose of livelihood, is less profit driven

through exploitation of environment area of concern for environmental

NGOs, Social Activists, Rubber wood going into rubber wood based

furnitures etc which are held in inert form for a considerable period

of time and the woody portion

remaining in the soil after the removal of timber, decomposes in situe

etc., all

go in favour of NR.

Environmental debits

At the same time, there are some significant environmental debits of

NR, contra-indications that need to be rationalized such as, 60% of NR

produced going into the manufacture of tyres and tyres are used in

automobiles which burn up fossil fuels. Combustions leads to CO2

emission. Rubber products used in the health sector are normally

destroyed by burning leading to CO2 emission. NR is slightly less

energy friendly at the mastication and mixing stages than the

synthetic counterparts and may require greater protection from

oxidation than its synthetic competitors, Intractability of tyre

recycling which should be resolved with new technologies, De-link

process “Green Rubber” etc. are some of them.

Challenges facing NR Growers

How to exploit the positive environmental attributes of NR to the

advantage of growers in terms of payment for environmental services

provided by NR cultivation.

One window of opportunity is, flexible mechanisms created under Kyoto

protocol to help Annex countries meet their Green House Gas (GHG)

emission reduction targets, is the Clean Development Mechanism ( CDM)

( Article 12 of the Kyoto protocol). The objectives are to assist

parties not included in Annex

1 in achieving sustainable development and in contributing to the

ultimate objective of the convention and to assist Annex 1 countries

in achieving compliance with their quantified emission limitations and

reduction commitments ( QELRCs). Funding from Annex 1 countries for

environmental friendly projects such as in non-Annex 1 NR cultivation

will earn Annex 1 countries certified emission reduction ( CER)

Credits to offset its QELRC.

Criteria Governing

Projects under CDM

Sustainability involving environment, social and economics,

Additionally, which indicates that Project practices are additional to

“ business as usual” or baseline scenario. New rubber projects must

demonstrate that they would not have taken place without the

additional projected income from sale of CERs and Definition of

reforestation, which specifies that no areas are eligible if covered

with forest on 31 December 1989. This excludes replanting of existing

rubber planting and only allows establishment of new plantings.

Forestry projects under CDM

Afforestation and reforestation are the only eligible LULUCF

activities in the CDM ( 1st Commitment period – 2008 – 2012).

Afforestation refers to direct human induced conversion of land that

has not been forested for a period of 50 years to forested land

through planting / seedling etc. Reforestation is the direct human

induced conversion of non-forested land to forested land through

planting/seedling on land that was forested but that has been

converted to non-forested land and limited to lands with no forest on

31 December 1989.

Implications for NR industry

Globally the existing 8 to 9 million hectares, including the 110,000

hectares of NR in Sri Lanka may not be eligible under CDM. Further

there is now the need to develop an additional 3 million hectares of

rubber to meet projected global demand of 15 million tonnes of NR by

2035 ( an additional 7 million tonnes).

Therefore, the question that arises is can consumers be convinced

through negotiations to pay a Green Premium for environmental benefits

of existing NR cultivations? One possible mechanism is through

creation of an “ in house prototype Carbon Fund”.

In Sri Lanka, potential lands in non traditional areas like Moneragala

can be exploited, but can CDM be the mechanism for funding expansion

of NR cultivation in these areas. If we can satisfy criteria of :

Additionally, Sustainability, Afforestation / reforestation, then such

lands become eligible.

Land with potential for expansion of NR cultivation will have the

ability to comply with required criteria for projects under CDM. In

terms of additionally, compliance will not a problem. With regard to

sustainability, criteria for sustainable cultivation of NR has not

been worked out and therefore compliance may be a problem. There is a

need for producers to work out criteria for sustainable cultivation of

NR which will be acceptable to consumers and the Executive Board of

CDM. Afforestation/ reforestation project’s compliance with defined

attributes will not be a problem and there are an abundance of

deforested and logged over areas prior to 31 December 1989 and

abandoned Chena Land.

Chena lands ( slash and burn cultivation) in the Moneragala district

with no history of rubber would be ideal eligible lands for rubber CDM

projects. This is also in keeping with Sri Lankan governments’ policy

of extending rubber

cultivation into non-traditional areas eg Moneragala.

A task force on rubber eco-project under the auspices of the

International Rubber Study Group (IRSG) ( 2004 – 2006) has prepared a

working paper on sustainable cultivation of Natural Rubber. This could

be used as the basic framework for formulating the criteria for

sustainable cultivation of NR under the auspices of IRRDB /

Association of Natural Rubber Producing Countries

(ANRPC) / International Rubber Study Group (IRSG). Sri Lanka can form

a joint working group for this purpose in Sri Lanka with the

Plantation Association (PA), Colombo Rubber Traders Association

(CRTA), Regional Plantation Companies (RPC), and Rubber Research Board

(RRB) and forward their proposals to IRRDB who are willing to assist

the NR industry in this regard. They have already initiated action.

Agenda

We should therefore move agenda for funding of rubber cultivation

under CDM. Tyre manufacturers in Europe / Japan are known to purchase

CERs through cultivation of NR in countries such as Kampuchea,

Indonesia , Papua New Guinea with potential land. Sri Lanka should

attempt to have a link with such consumers and jointly facilitate the

process and bring interested parties together to jointly draft Project

Design Document (PDD) following guidelines laid down for submission to

Executive Board of CDM through IRRDB for more effectiveness.

Operational entities (OEs) accredited by CDM Executive Board will

independently validate such projects and OE will verify results and

their reports will be basis for issuance of Certified Emission

Reductions (CERs) by Executive Board. There is therefore an urgent

need to initiate the first project which could then serve as a model

for subsequent projects.

Globally, there is presently only one project registered under the

afforestation or reforestation sector and it is given by China as “

Facilitating reforestation of Guengxi Watershed Management in Pearl

River Basin”. Ghana has submitted a CDM / Carbon Trading project on

rubber which is still under consideration by the UNFCCC Executive

Board.

Commercial initiatives

The value of a metric tonnes of carbon in commercial initiatives on

Carbon Trading is very attractive. According to “ The Economist” ,

charges for 1 ton of CO2 released into the atmosphere by commercial

ventures was U$ 30 in June 2008. For example, the Tyre Manufactures/

Synthetic Rubber Manufactures/ Rubber Product Manufactures will pay

USD 18,150 for the development of 1 hectare of rubber and earn 605

CERs per hectare to be used to meet their respective QELRCs

( Quantified Emissions Limitations and Reduction Commitments) and the

cost to be paid by industries for every 1 ton of CO2 emitted into the

atmosphere would be U$ 30.00. (Box1)

Guidelines for development

of CDM projects

Initially, this involves the preparation of Project Identification

Note (PIN) followed by Project Design Document (PDD) according to

specific rules / modalities applicable for forestry projects to form

the basis for validation and registration as an approved CDM Project.

The project developer must give an estimation of GHG mitigation

potential based on analysis of project and baseline carbon flows. They

can use baseline methodology approved by CDM Ex-Bord in this exercise

and also can submit specific methodologies for approval. PA / CRTA /

RRB could jointly work on this aspect possibly with assistance and

support from IRRDB / IRSG.

Research and Development agencies should provide guidelines and

recommendations on methodologies required for such purposes.

Methodologies panel having examined the methodologies will advise CDM

board on it’ acceptability / rejection. Subsequently, this has to be

validated by operational entities accredited by CDM board. Crediting

period can be “ One Off” period of 30 years or 20 years period

renewable twice ( Max 60 Yrs).

After registration, implementation phase commences when actual

reductions or sequestration takes place.

Related Issues

Additionality where a CDM project on LUCUCF has to be additional to

every activity that would have taken place in the absence of the

project.

Additionally is the result of the carbon sinks created in the project

minus those sinks that would exist in the project ‘s absence

(Baseline).The additionality concept is a threefold shaping of

environmental, programme or investment and financial additionality.

Permanence which is related to the time that carbon can stay in the

biosphere is another issue. Due to different risks, including fire and

pest, carbon can be released to the atmosphere reducing the project’s

climate change mitigation effect.Leakage which is the increase in GHG

emission by sources that occur outside the boundary of an

afforestration or reforestation project activity under the CDM and

which is measurable and attributable to afforestration or

reforestation project activity, as also to be considered.

Carbon Potential which is the net anthropogenic GHG emission removal

by sinks and is the actual GHG removal by sinks minus baseline net GHG

gas removal by sinks minus leakage.

Environmental and socio-economic impacts are provided by the CDM -

LULUCF project and these impacts are to be maintained during the

implementation of the project.

NR carbon Fund for Sri Lanka

- Initiate action for establishment of NR carbon fund for Sri Lanka.

- Fund to be managed under the auspices of PA / CRTA / RPC / RRB,

jointly.

- This fund is to be created on the premise that all stakeholders

particularly at the consumer end of the value chain have accepted the

ecological strengths and environmental benefits of Natural Rubber

cultivation. The creation of the fund will therefore proceed on the

basis of internalization among all stakeholders, independent of

developments under CDM as proposed in the Kyoto Protocol and Certified

mission reductions for purposes of trading in Carbon under the Carbon

off-set market.

- Mechanics of operation, terms of reference and creation of a special

Committee or Panel to specifically manage the fund can be worked out.

- Payment of Green premium for the role played by NR in carbon

sequestration (removing carbon from the atmosphere) should be in

place.

- Members for Committee or panel can be drawn from among the growers,

rubber processors, rubber products manufactures, environmentalists

etc.

- Total amount of carbon sequestered in 1 hectare of rubber plantation

has been estimated in Sri Lanka (Yogaratnem, 2008) as 1831 tonnes with

soil carbon included by a 30 year old rubber plantation.

- According to the above estimate, amount of Carbon Sequestered per

hectare per year is therefore 61 tonnes per hectare. Total amount

sequestered per year by the stand of 110,000 hectares of NR would be

about 6.7 million tonnes.

- These are only indicative values for purposes of illustration.

Absolute values will have to be worked out based on more comprehensive

data that takes into account impact of age of trees and type of

cultivation, carbon sequestered etc.

- Price per ton CO2 is USD 3.50 based on World Bank Proto-type carbon

fund ( LMC study report) Amount that can be generated annually for the

rubber proto type carbon fund would therefore be USD 23.45 million

- This will be voluntary and based on negotiations

- Based on global rubber production of 8 million tonnes from the 8

million hectares (1 ton / Ha), the payment per kg of rubber consumed

would be USD 1.7 cents. Synthetic Rubber producers, tyre manufactures,

NR rubber processing factories and Rubber goods manufacturers should

pay a green premium of USD 1.7 cents per kg of rubber consumed or

processed, globally.

A similar estimate could be worked out for Sri Lanka with the total

rubber production of about 120,000 kg from 110,000 hectares of land.

Way forward

Initiate action to bring together all stakeholders across supply and

consuming ends of value chain under the auspices of PA/ CRTA. RRB for

purposes of negotiating and securing agreement for creation of a “Sri

Lankan NR carbon fund”. This should provide funds for the expansion of

NR cultivation, top-up funds for replanting and specific R & D

projects to enhance green value of NR and also, provide support for

development of eligible rubber CDM projects

To summarise

- Ecological strengths and environmental benefits of NR cultivation is

well documented and widely accepted

- Need to rationalize contra-indications with regard to NR and

environment

- To formulate urgently, criteria for sustainable cultivation of NR

- Additional NR cultivation in forested, logged over areas and Chena

lands can qualify as projects under CDM

- Initiate expeditiously first project on rubber cultivation under CDM

to serve as a model for successive projects

- Methodologies relevant to rubber CDM projects should be made

available by R & D for approval by UNFCCC.

- Create a “Sri Lankan NR Carbon Fund “through negotiations and

agreements among all stake holders across value chain.

- Explode the huge potential that exists for NR in Clean Development

Mechanism and Carbon Trading by following the guidelines provided by

the UNFCCC.

[basilic13]

very interesting article...

does anyone know the CMD status for other tree crops?

[sunsamourai]

very interesting article...

does anyone know the CMD status for other tree crops?

+ 1 here