Allan Sommer and Brian Murray (RTI) sommer@rti

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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. - PowerPoint PPT Presentation

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<ul><li><p>Alternative Approaches to Quantifying and Reporting Carbon Sequestration Projects: The Case of Afforestation.Allan Sommer and Brian Murray (RTI)sommer@rti.orgThird USDA Symposium On Greenhouse Gases and Carbon Sequestration in Agriculture and Forestry, March 21-24, Baltimore MD</p></li><li><p>Outline of Presentation and AnalysisOverview of the role mitigation projects and quantification protocols play in GHG policyApplication of a generalized WRI/WBCSD GHG Protocol to a hypothetical mitigation projectImplications that variation in quantification procedures and protocols may have on quantified project benefits</p></li><li><p>Project Based Approaches to GHG MitigationProjects involve intentional activities or actions to reduce GHGsThe product of these projects may (may not) be used to produce GHG emission offsetsMitigation projects are voluntary, not required by lawDevelopment of mitigation projects contain nuances that are location and sector specific</p></li><li><p>GHG Mitigation Project Programs/RegistriesDomestic USFederalSection 1605(b) of the Energy Policy Act of 1992: GHG RegistryStateCalifornia Climate Action RegistryOregon Climate TrustOther emerging state programsPrivateChicago Climate ExchangeInternationalKyoto Mechanisms (JI and CDM)</p></li><li><p>The Role of ProtocolsEmergence of different project-based GHG mitigation projects has created some confusion and demand for quantification/reporting standardsProtocol guidance on methods for quantifying and reporting GHG emission and sequestration effects at the project levelCurrent EffortsProgram-specific: e.g., CA registry protocol, 1605(b), Kyoto Broad/harmonization: WRI/WBCSD </p></li><li><p>General Framework for Project Quantification</p></li><li><p>Project Baselines and AdditionalityGeneral DefinitionsBaselines activity and GHG effect that would occur without the projectAdditionality GHG mitigation relative to the baselineTwo options/methods to setting baselines existProject specific approach bottom-up approach, detailed evaluation of the circumstances pertaining to a specific projectPerformance standard approach top-down approach, based on the historical activities in a region and tracking the performance of a reference group over time </p></li><li><p>Case Study Application of Bottomland Hardwoods in the Lower Mississippi ValleyProject Description Afforestation of marginal croplands in Miss. River ValleyFrequently flooded (2-year floodplain)Issaquena County13,784 acres in total; 2,000 met selection criteria </p></li><li><p>Data SourcesBiophysical DataLand Use Characterization (National Resource Inventory)Geo-referenced Soil type, elevation etc Timber yields (Local Growth and Yield Functions)Carbon yields (FORCARB)Economic DataTimber prices and costs Agriculture prices and costs </p></li><li><p>Preliminary AssessmentGenerally involves a qualitative assessment of the following:Eligibility of project activities and GHG poolsInitial screening forAdditionalityLeakageAssess Project CostsAssess Project Benefits</p></li><li><p>Project GHG QuantificationRecall basic steps from general quantification frameworkPerformance Standard Approach to setting baselinesEstimate the baseline afforestation rateNRI Data and logistic regressions to calculate annual afforestation rates in MS countiesEstimate Baseline Carbon AccumulationCombine county specific afforestation rates with carbon yield functions (time-dependent and dynamic), biophysical data, and forest carbon prediction model</p></li><li><p>Quantification: Estimate Baseline Afforestation Rate Using Logistic Regression Analysis 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. Dependent Variable: Plot Conversion to Forest</p></li><li><p>Baseline Afforestation Rate Confidence Interval Upper Bounds Derived from Regression AnalysisCalculated from confidence intervals, upper bound most conservative</p></li><li><p>Baseline Quantification: Carbon Accumulation at Different Points in TimeBaseline carbon accumulation at year 10 and 60</p><p>Chart2</p><p>1509.01674095562634.4242869821</p><p>62722.856789186169624.3233687122</p><p>Baseline Afforestation Rate (Mean)</p><p>Baseline Afforestation Rate (Upper Bound)</p><p>Secondary Effects</p><p>Potential Secondary EffectsDoes the project change the magnitude of the effect?If there is a change, is it positive or negative? Is the effect significant?Monitoring requirement/ relevance to GHG reduction calculation</p><p>Life Cycle Effects:Carbon emissions (Tree Harvests).Yes. Without the project we are assuming that net GHG emissions are zero.Negative. The harvest of timber results in the emission of CO2.The emissions do not need to be monitored as the occur at the end of the project. The carbon offsets generated through the project are debited to account for this release.</p><p>Market LeakageYes. Without the project market demand for agricultural commodities produced will continue to be met.Negative. The removal of agricultural lands from production may result in the harvest or deforestation of other lands to meet the agricultural demand.The leakage potential resulting from the project is accounted for by debiting offset credits to account for potential relaese of GHG through deforestation.</p><p>Proj Spec. Inv. Rank</p><p>For MU10 from original wheaton output</p><p>BaseA (tC/ac)Project (tC/ac)Baseline C Accum rate (tC/Ac)Project C accum (t/Ac)Base A = NRI Regression w/flooding frequency</p><p>52,911.8261,265.922.9842748535113.4121626299Result of MU 10 with no carbon priceResult of MU 10 with $25/tC carbon price</p><p>Key parameters (user-entered)Key parameters (user-entered)</p><p>Carbon price per ton$0$ per ton CCarbon price per ton$25$ per ton C</p><p>Discount rate0.04percentDiscount rate0.04percent</p><p>Timber Prices20%</p><p>oak sawtimber$/mbf227272.4</p><p>oak pulpwood$/cord1720.4</p><p>cottonwood pulpwood$/cord1720.4</p><p>Management UnitManagement Unit</p><p>Investment Ranking Test</p><p>PeriodNetGHGOtherNetPeriodNetGHGOtherNet</p><p>Ending inGHGcreditProjectProjectCashPresentEnding inGHGcreditProjectProjectCashPresent</p><p>Need to check on the afforestation rate being used in the analyzer.YearcreditsrevenuerevenueCostFlowvalue (Yr0)YearcreditsrevenuerevenueCostFlowvalue (Yr0)</p><p>The way it is set up now we are using .76% per year rather than the .5% we have been talking about.</p><p>0$0$024,390.09-24,390.09-24,390.090$0$024,390.09-24,390.09-24,390.09</p><p>12060.4039576407$0$0303,362.86-303,362.86-291,695.0612060.4039576407$51,510$0303,362.86-251,852.76-242,166.12</p><p>22060.4039576407$0$021,173.75-21,173.75-19,576.3222060.4039576407$51,510$021,173.7530,336.3528,047.66</p><p>32060.4039576407$0$06,377.64-6,377.64-5,669.6932060.4039576407$51,510$06,377.6445,132.4640,122.60</p><p>42060.4039576407$0$06,377.64-6,377.64-5,451.6342060.4039576407$51,510$06,377.6445,132.4638,579.42</p><p>52060.4039576407$0$06,377.64-6,377.64-5,241.9552060.4039576407$51,510$06,377.6445,132.4637,095.60</p><p>64229.3788817321$0$06,377.64-6,377.64-5,040.3464229.3788817321$105,734$06,377.6499,356.8478,523.15</p><p>74229.3788817321$0$06,377.64-6,377.64-4,846.4874229.3788817321$105,734$06,377.6499,356.8475,503.03</p><p>84229.3788817321$0$06,377.64-6,377.64-4,660.0884229.3788817321$105,734$06,377.6499,356.8472,599.07</p><p>94229.3788817321$0$06,377.64-6,377.64-4,480.8494229.3788817321$105,734$06,377.6499,356.8469,806.80</p><p>104229.3788817321$0$06,377.64-6,377.64-4,308.50104229.3788817321$105,734$06,377.6499,356.8467,121.92</p><p>112518.0236443468$0$06,377.64-6,377.64-4,142.79112518.0236443468$62,951$06,377.6456,572.9636,748.71</p><p>122518.0236443468$0$06,377.64-6,377.64-3,983.45122518.0236443468$62,951$06,377.6456,572.9635,335.30</p><p>132518.0236443468$0$06,377.64-6,377.64-3,830.24132518.0236443468$62,951$06,377.6456,572.9633,976.25</p><p>142518.0236443468$0$06,377.64-6,377.64-3,682.93142518.0236443468$62,951$06,377.6456,572.9632,669.47</p><p>152518.0236443468$0$06,377.64-6,377.64-3,541.27152518.0236443468$62,951$06,377.6456,572.9631,412.95</p><p>163400.3522729695$0$06,377.64-6,377.64-3,405.07163400.3522729695$85,009$06,377.6478,631.1741,981.83</p><p>173400.3522729695$0$06,377.64-6,377.64-3,274.11173400.3522729695$85,009$06,377.6478,631.1740,367.14</p><p>183400.3522729695$0$06,377.64-6,377.64-3,148.18183400.3522729695$85,009$06,377.6478,631.1738,814.56</p><p>193400.3522729695$0$06,377.64-6,377.64-3,027.10193400.3522729695$85,009$06,377.6478,631.1737,321.69</p><p>203400.3522729695$0$06,377.64-6,377.64-2,910.67203400.3522729695$85,009$06,377.6478,631.1735,886.24</p><p>212715.9410525236$0$06,377.64-6,377.64-2,798.72212715.9410525236$67,899$06,377.6461,520.8926,997.43</p><p>222715.9410525236$0$06,377.64-6,377.64-2,691.08222715.9410525236$67,899$06,377.6461,520.8925,959.07</p><p>232715.9410525236$0$06,377.64-6,377.64-2,587.57232715.9410525236$67,899$06,377.6461,520.8924,960.65</p><p>242715.9410525236$0$06,377.64-6,377.64-2,488.05242715.9410525236$67,899$06,377.6461,520.8924,000.62</p><p>252715.9410525236$0$06,377.64-6,377.64-2,392.36252715.9410525236$67,899$06,377.6461,520.8923,077.52</p><p>262943.9442827939$0$06,377.64-6,377.64-2,300.34262943.9442827939$73,599$06,377.6467,220.9724,245.88</p><p>272943.9442827939$0$06,377.64-6,377.64-2,211.87272943.9442827939$73,599$06,377.6467,220.9723,313.35</p><p>282943.9442827939$0$06,377.64-6,377.64-2,126.80282943.9442827939$73,599$06,377.6467,220.9722,416.68</p><p>292943.9442827939$0$06,377.64-6,377.64-2,045.00292943.9442827939$73,599$06,377.6467,220.9721,554.50</p><p>302943.9442827939$0$06,377.64-6,377.64-1,966.34302943.9442827939$73,599$06,377.6467,220.9720,725.48</p><p>312580.0680731625$0$06,377.64-6,377.64-1,890.72312580.0680731625$64,502$06,377.6458,124.0717,231.48</p><p>322580.0680731625$0$06,377.64-6,377.64-1,818.00322580.0680731625$64,502$06,377.6458,124.0716,568.73</p><p>332580.0680731625$0$06,377.64-6,377.64-1,748.07332580.0680731625$64,502$06,377.6458,124.0715,931.47</p><p>342580.0680731625$0$06,377.64-6,377.64-1,680.84342580.0680731625$64,502$06,377.6458,124.0715,318.72</p><p>352580.0680731625$0$06,377.64-6,377.64-1,616.19352580.0680731625$64,502$06,377.6458,124.0714,729.54</p><p>362877.935897261$0$06,377.64-6,377.64-1,554.03362877.935897261$71,948$06,377.6465,570.7615,977.54</p><p>372877.935897261$0$06,377.64-6,377.64-1,494.26372877.935897261$71,948$06,377.6465,570.7615,363.02</p><p>382877.935897261$0$06,377.64-6,377.64-1,436.79382877.935897261$71,948$06,377.6465,570.7614,772.14</p><p>392877.935897261$0$06,377.64-6,377.64-1,381.53392877.935897261$71,948$06,377.6465,570.7614,203.98</p><p>402877.935897261$0$06,377.64-6,377.64-1,328.39402877.935897261$71,948$06,377.6465,570.7613,657.67</p><p>412961.2792392561$0$06,377.64-6,377.64-1,277.30412961.2792392561$74,032$06,377.6467,654.3513,549.67</p><p>422961.2792392561$0$06,377.64-6,377.64-1,228.17422961.2792392561$74,032$06,377.6467,654.3513,028.53</p><p>432961.2792392561$0$06,377.64-6,377.64-1,180.94432961.2792392561$74,032$06,377.6467,654.3512,527.43</p><p>442961.2792392561$0$06,377.64-6,377.64-1,135.51442961.2792392561$74,032$06,377.6467,654.3512,045.61</p><p>452961.2792392561$0$06,377.64-6,377.64-1,091.84452961.2792392561$74,032$06,377.6467,654.3511,582.32</p><p>462854.5101542839$0$06,377.64-6,377.64-1,049.85462854.5101542839$71,363$06,377.6464,985.1210,697.45</p><p>472854.5101542839$0$06,377.64-6,377.64-1,009.47472854.5101542839$71,363$06,377.6464,985.1210,286.01</p><p>482854.5101542839$0$06,377.64-6,377.64-970.64482854.5101542839$71,363$06,377.6464,985.129,890.39</p><p>492854.5101542839$0$06,377.64-6,377.64-933.31492854.5101542839$71,363$06,377.6464,985.129,509.99</p><p>502854.5101542839$0$06,377.64-6,377.64-897.41502854.5101542839$71,363$06,377.6464,985.129,144.23</p><p>513100.2054077233$0$06,377.64-6,377.64-862.90513100.2054077233$77,505$06,377.6471,127.509,623.59</p><p>523100.2054077234$0$06,377.64-6,377.64-829.71523100.2054077234$77,505$06,377.6471,127.509,253.45</p><p>533100.2054077233$0$06,377.64-6,377.64-797.80533100.2054077233$77,505$06,377.6471,127.508,897.55</p><p>543100.2054077233$0$06,377.64-6,377.64-767.11543100.2054077233$77,505$06,377.6471,127.508,555.34</p><p>553100.2054077234$0$06,377.64-6,377.64-737.61553100.2054077234$77,505$06,377.6471,127.508,226.29</p><p>563003.747583568$0$06,377.64-6,377.64-709.24563003.747583568$75,094$06,377.6468,716.057,641.72</p><p>573003.747583568$0$06,377.64-6,377.64-681.96573003.747583568$75,094$06,377.6468,716.057,347.81</p><p>583003.747583568$0$06,377.64-6,377.64-655.73583003.747583568$75,094$06,377.6468,716.057,065.20</p><p>593003.747583568$0$06,377.64-6,377.64-630.51593003.747583568$75,094$06,377.6468,716.056,793.46</p><p>603003.747583568$0$6,437,2116,377.646,430,833.66611,317.63603003.747583568$75,094$6,437,2116,377.646,505,927.35618,456.06</p><p>Net Present Value of Project ActivityNet Present Value of Project Activity</p><p>NPV Cash Flow from project activity$144,007NPV Cash Flow from project activity$1,800,485</p><p>PV of harvest debits$0$0PV of harvest debits$2,789,914$265,210</p><p>Total Project NPV$144,007Total Project NPV$1,535,274</p><p>Net Annualized Returns to Project Activity (relative to current value)Net Annualized Returns to Project Activity (relative to current value)</p><p>TotalAnnualizedTotalAnnualized</p><p>Total NPVAnnualizedPer acreTotal NPVAnnualizedPer acre</p><p>Project activity$144,007$6,365.37$2.99Project activity$1,535,274$67,861.96$31.92</p><p>Current use (Agriculture)$36,734.40$17.28Current use (Agriculture)$36,734.40$17.28</p><p>Investment Ranking Test</p><p>Net return to project activity-$30,369.03-$14.29Net return to project activity$31,127.56$14.64</p><p>* Total project activity acres =2125.9* Total project activity acres =2125.9</p><p>Timber Price + 20%</p><p>Management Unit</p><p>PeriodNetGHGOtherNet</p><p>Ending inGHGcreditProjectProjectCashPresent</p><p>YearcreditsrevenuerevenueCostFlowvalue (Yr0)</p><p>00024390.0867088544-24390.0867088544-24390.0867088544</p><p>12060.403957640700303362.8629489-303362.8629489-291695.060527788</p><p>22060.40395764070021173.74992972-21173.74992972-19576.3220504068</p><p>32060.4039576407006377.635521-6377.635521-5669.6947550993</p><p>42060.4039576407006377.635521-6377.635521-5451.6295722108</p><p>52060.4039576407006377.635521-6377.635521-5241.9515117412</p><p>64229.3788817321006377.635521-6377.635521-5040.3379920588</p><p>74229.3788817321006377.635521-6377.635521-4846.4788385181</p><p>84229.3788817321006377.635521-6377.635521-4660.0758062674</p><p>94229.3788817321006377.635521-6377.635521-4480.842121411</p><p>104229.3788817321006377.635521-6377.635521-4308.5020398182</p><p>112518.0236443468006377.635521-6377.635521-4142.7904229022</p><p>122518.0236443468006377.635521-6377.635521-3983.4523297136</p><p>132518.0236443468006377.635521-6377.635521-3830.2426247246</p><p>142518.0236443468006377.635521-6377.635521-3682.9256006968</p><p>152518.0236443468006377.635521-6377.635521-3541.2746160546</p><p>163400.3522729695006377.635521-6377.635521-3405.0717462063</p><p>173400.3522729695006377.635521-6377.635521-3274.1074482753</p><p>183400.3522729695006377.635521-6377.635521-3148.1802387263</p><p>193400.3522729695006377.635521-6377.635521-3027.0963833906</p><p>203400.3522729695006377.635521-6377.635521-2910.6695994141</p><p>212715.9410525236006377.635521-6377.635521-2798.7207686674</p><p>222715.9410525236006377.635521-6377.635521-2691.0776621802</p><p>232715.9410525236006377.635521-6377.635521-2587.5746751732</p><p>242715.9410525236006377.635521-6377.635521-2488.052572282</p><p>252715.9410525236006377.635521-6377.635521-2392.3582425788</p><p>262943.9442827939006377.635521-6377.635521-2300.3444640181</p><p>272943.9442827939006377.635521-6377.635521-2211.8696769405</p><p>282943.9442827939006377.635521-6377.635521-2126.7977662889</p><p>292943.9442827939...</p></li></ul>

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