The pathway to market for agricultural carbon offsets science policy commodity
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The Pathway to Market for Agricultural Carbon Offsets: Science – Policy - Commodity. Karen Haugen- Kozyra , M.Sc. P.Ag . Principal, KHK Consulting June 17 , 2010 Agriculture and Carbon Markets: Making Carbon Count Washington, DC. Alberta Market Performance. It’s All About Carbon….Why?.

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The pathway to market for agricultural carbon offsets science policy commodity

The Pathway to Market for Agricultural Carbon Offsets: Science – Policy - Commodity

Karen Haugen-Kozyra, M.Sc. P.Ag.

Principal, KHK Consulting

June17, 2010

Agriculture and Carbon Markets: Making Carbon Count

Washington, DC

Alberta market performance
Alberta Market Performance Science – Policy - Commodity

It s all about carbon why
It’s All About Carbon….Why? Science – Policy - Commodity

3 | KHK Consulting | Making Your Carbon Count

Global carbon pricing policies

Alberta Science – Policy - Commodity

US Fed

Voluntary Carbon


Global Carbon Pricing Policies

126b in 2009 2 main commodities
$126B in 2009* 2 Main Commodities Science – Policy - Commodity

*Point Carbon 2010

North american climate change initiatives

Western Climate Initiative Science – Policy - Commodity

Regional GHG Initiative

Midwestern GHG Reduction Accord

AB Specified Gas Emitters Regulation

SK Bill 95

Canada’s Regulatory Framework

The American Clean Energy Security Act

American Power Act Discussion Bill




North American Climate Change Initiatives

Carbon accounting frameworks
Carbon Accounting Frameworks Science – Policy - Commodity

7 | KHK Consulting | Making Your Carbon Count

Quantifying greenhouse gases

  • Two Major International Enablers: Science – Policy - Commodity

    • Intergovernmental Panel on Climate Change

      • Science-based Guidance on GHG quantification

      • Different Tiers of customization (Tier 1,2,3 – Country level accounting)

    • Project-Level (Offset) Accounting Standards

      • WRI GHG Protocol/ISO 14064-2

      • Promotes consistency and transparency in GHG quantification, monitoring, reporting and verification

  • Similarities:

    • Quantification, assessment, fidelity and truthfulness stressed in both

    • Principles - completeness, accuracy, consistency, transparency and documentation

Quantifying Greenhouse Gases

Project based accounting frameworks the carbon market access mechanisms
Project Based Accounting Frameworks– The Carbon Market Access Mechanisms

9 | KHK Consulting | Making Your Carbon Count

Projects accounting relative quantification
Projects Accounting – Relative Quantification Access Mechanisms

Fundamental Principle: Activities and emission reductions must be above andbeyond Business as Usual practices

Project Condition

What happens (GHGs) with the improved practice/new technology?

Baseline Condition

What was happening (GHGs) in the old practice, or common industry practice before the change?

Are they comparable (same level of activity, product, service) to base calculation on

Evidence – Document it:

Quantification and Monitoring Plan

Data Management System and Data Controls

Amount of Offsets = Baseline - Project.

Need to quantify both!

Standards for protocols are harmonizing

Accounting Rigor Access Mechanisms

Standardizing means making policy decisions!






WRI GHG Protocol


Ease of Use

Policy Neutral, Flexible

ISO 14064-2

Standards for Protocols are Harmonizing

Iso 14064 2 standards development process

Part 2 of ISO Access Mechanisms14064 (ie, auditable standard general process requirements)

ApplicableGHG Program (eg, additional requirements, criteria, rules and policies)

Good PracticeGuidance (eg, IPCC, recognized criteria, methodologies, tools and guidance on how to do it)

Stakeholder Consultation (eg, communication with interested parties)

National Emissions Inventory

Tier 2/3 Quantification Science

Relevant Standards (eg, recognized criteria, rules, methodologies, equipment)

RelevantLegislation (eg, regulatory requirements)

Quantification Protocols:

identifying preferred methodologies to quantify GHG reductions/removals

Streamlined Life Cycle Assessment

Considered Technical Review

Within the discipline of the ISO Standard

Best Available Science

ISO 14064:2 - Standards Development Process

Quantification protocols

  • Approved Access MechanismsProtocols:

    • Streamlined use

    • Transparency and consistency

    • Reduced costs and administration

    • Scientifically sound (expert/scientific review)

    • Reduces cost and risk for Project Developers

    • Provides certainty for investors – GHG tonnes reduced

    • Done right – can address scale, risk and transaction cost issues.

Quantification Protocols

We have to identify all ghgs
We have to Identify All Access MechanismsGHGs

14 | KHK Consulting | Making Your Carbon Count

The pathway to market for agricultural carbon offsets science policy commodity

Completeness Principle: Access Mechanisms

Knowledge and Scientific Judgment

Substitute for direct evidence where lacking

Models and conversion factors

Estimate uncertainty

Conservativeness Principle

Applied as a risk-based approach where science is less synthesized, but uncertainties are known

Strive to underestimate baseline emissions

Use the 80:20 rule; collective decisions through expert peer review (IPCC style)

“Serves as a moderator to accuracy”

ISO 14064:2 Principles

Science policy commodity

State of Science of GHG-Management Links Access Mechanisms

Commercializable Commodity = Carbon Offset

Science – Policy - Commodity

Criteria are harmonizing

  • Additional/Incremental Access Mechanisms

    • beyond business as usual practices (needs a valid and defensible baseline at the project start); surplus to regulations/received incentives)

  • Measurable, Quantifiable

    • agreement on best available science and activity data – develop a Protocol. Must stand up to a Review Process; account for all 6 GHGs.

  • Verifiable

    • carbon accounting, and tracking process must be clear, defensible, and have good QA/QC procedures; verified by qualified 3rd party.

  • Permanent

    • must protect against carbon reversals; account and replace mechanisms

  • Functionally Equivalent – Consistent Metrics

    • same level of quantity or service between baseline and project

      • A common base for calculating emission reductions

Criteria are Harmonizing

The pathway to market for agricultural carbon offsets science policy commodity
Relative Quantification Example – Land Fill Gas (LFG); Identifying Relevant Emission Sources, Sinks and Reservoirs

Lfg id project ssrs
LFG – ID Project Identifying Relevant Emission Sources, Sinks and ReservoirsSSRs

Lfg id baseline ssrs
LFG -ID Baseline Identifying Relevant Emission Sources, Sinks and ReservoirsSSRs

The pathway to market for agricultural carbon offsets science policy commodity

Exclusion of SSRs that are related to the manufacturing of materials

Exclusion of SSRs that do not significantly changed from the baseline to the project scenario

Exclusion of SSRs that are unchanged between the baseline and project scenarios

Exclusion of SSRs that are not within the scope of the protocol

Site preparation, installation and commissioning

The c commodity pathway

Project materials


Validation and


Monitoring and


Offset Issuance

  • Project / Baseline Description

  • Monitoring Plan and Methodology

  • GHG emission calculation

  • Review

  • Approve

  • Registration

  • Implement

  • Monitor

  • Verify

  • Issuance of tradable units

Quantification Protocols

3rd Party Verification

Monitoring Requirements

Driven by Reporting Guidance


Market Oversight

Tradable Commodity

The C Commodity Pathway

Alberta almost 4 mt of no till offsets 2 5 years

Farms materials












Potential Tonnes


Compliance Report

Alberta – almost 4 Mt of No Till Offsets (2.5 years)