Carbon trading from rubber plantations

Dr N Yogaratnam

Combating global climate change had a long journey, beginning from 1979 when the first World Climate Conference took place and the last one at Durban in South Africa in November and December 2011.

Climate Change in Context

2011 - COP17 in Durban.
2010 - Cancun Agreements drafted and largely accepted by the COP, at COP16

2009 - Copenhagen Accord drafted at COP15 in Copenhagen. This was taken note of by the COP. Countries later submitted emissions reductions pledges or mitigation action pledges, all non-binding.

2007 - IPCC's Fourth Assessment Report released. Climate science entered into popular consciousness. At COP13, Parties agreed on the Bali Road Map, which charted the way towards a post-2012 outcome in two work streams: the AWG-KP, and another under the Convention, known as the Ad-Hoc Working Group on Long-Term Cooperative Action Under the Convention.

2005 - Entry into force of the Kyoto Protocol. The first Meeting of the Parties to the Kyoto Protocol (MOP 1) takes place in Montreal. In accordance with Kyoto Protocol requirements, Parties launched negotiations on the next phase of the KP under the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP). What was to become the Nairobi Work Programme on Adaptation (it would receive its name in 2006, one year later) is accepted and agreed on.

2001 - Release of IPCC's Third Assessment Report. Bonn Agreements adopted, based on the Buenos Aires Plan of Action of 1998. Marrakesh Accords adopted at COP7, detailing rules for implementation of Kyoto Protocol, setting up new funding and planning instruments for adaptation, and establishing a technology transfer framework.

1997- Kyoto Protocol formally adopted in December at COP3.

1996 - The UNFCCC Secretariat is set up to support action under the Convention.

1995 - The first Conference of the Parties (COP 1) takes place in Berlin. 1994 - UNFCCC enters into force. An introduction to the United Nations Framework Convention on Climate Change.

1992 - The INC adopts UNFCCC text. At the Earth Summit in Rio, the UNFCCC is opened for signature along with its sister Rio Conventions, UNCBD and UNCCD.

1991 - First meeting of the Intergovernmental Negotiating Committee (INC) takes place.

1990 - IPCC's first assessment report released. IPCC and second World Climate Conference call for a global treaty on climate change. United Nations General Assembly negotiations on a framework convention begin.

1988 - The Intergovernmental Panel on Climate Change is set up.

1979 - The first World Climate Conference (WCC) takes place. Source: UNFCCC

Durban Accord: 'will curb all big emitters'

The package of accords extends the Kyoto Protocol, agrees on the format of a fund to help poor countries tackle climate change and maps out a path to a legally binding agreement on emissions reductions.

Climate negotiators agreed on a pact at Durban that would for the first time force all the biggest polluters to take action on greenhouse gas emissions, but critics said it was not aggressive enough to slow global warming.

The package of accords in Durban at the COP-17 talks extends the Kyoto Protocol, the only global pact that enforces carbon cuts; agrees on the format of a fund to help poor countries tackle climate change; and maps out a path to a legally binding agreement on emissions reductions.

But many developing countries at risk of being swamped by rising ocean levels and extreme weather said the deal marked the lowest common denominator possible and lacked the ambition needed to ensure their survival.

Delegates agreed to start work next year on a new, legally binding treaty to cut greenhouse gases, to be decided by 2015 and to come into force by 2020.

The process for doing so, called the Durban Platform for Enhanced Action, would "develop a new protocol, another legal instrument or agreed outcome with legal force", applicable under the United Nations (UN) climate convention.

That phrasing, agreed upon at a last-ditch huddle between the European Union, India, China and the US, was used by all parties to claim victory. UK Energy and Climate Secretary Chris Huhne said the result was "a great success for European diplomacy".

But UN climate chief Christiana Figueres acknowledged that the final wording on the legal form of a future deal was ambiguous: "What that means has yet to be decided."

"Polluters won, people lost," Greenpeace International executive director Kumi Naidoo said.

However, Canada has announced that it is formally withdrawing from the Kyoto accord on climate change. "The Kyoto Protocol does not represent the path forward for Canada," Kent, the Canadian Environment minister told a news conference in the foyer of the House of Commons, after his return from an international climate-change summit in Durban, South Africa.

"It's now clear that Kyoto is not the path forward for a global solution to climate change. If anything, it's an impediment." says Canada.

Kyoto protocol

Under the Kyoto protocol of the United Nations Framework convention on climate change, signatory countries must decrease emissions of carbon dioxide to the atmosphere, or increase rates of removal and storage.

The Protocol's Clean Development Mechanism (CDM) allows a country that emits C above agreed-upon limits to purchase C offsets from an entity that uses biological means to absorb or reduce greenhouse emissions.

The CDM is currently offered for afforestation and reforestation projects, but it is expected that in the future it will be extended to C sequestration in agricultural soils.

Markets for soil and plant C sequestration are also developing outside of the protocol in addition to those promoted by CDM.

The interest in C sequestration and trading as mechanism for both environmental protection and poverty alleviation in developing countries has increased considerably in the last decade.

It is anticipated that the CDM could result in enhanced productivity and income as well as local conservation of natural resources in the developing world. This is of relevance to Sri Lanka.

Under a C trading arrangement, natural resource users who adopt and or reintroduce land management technologies that store additional C in soils and vegetation compared to existing practices would be eligible to receive payments for the C those practices sequester. Two types of payments are anticipated, namely payments for C capture and C Storage.

Rubber based cropping systems

Rubber based agroforestry involve complex and diversified cropping system that combines the growing of rubber and other agricultural crops in one area. A desirable rubber based cropping system would give a good economic yield while protecting the environment, conserving soil, water and nutrients.

Perennial tree crops as in the case of forest trees, are known to function as natural "Sponges" for absorbing carbondioxide from the atmosphere. Carbon sequestration is achieved through the uptake of carbondioxide from the atmosphere and its conversion into cellulose and organic matter.

The rubber tree Hevea brasiliensis was first introduced as a crop for plantation agriculture several years ago from the wilderness of the Amazon Jungles. Hence, one can expect Hevea to behave as a typical tropical rain forest tree that would at least function as efficient as forest trees in C sequestration.

Moreover, technological practices that are known slow down soil C oxidation and increase C fixation and storage are also being adopted in rubber plantations. Such strategies include improved soil and water conservation practices such as leguminous cover cropping, application of organic manure, mulching, inter-cropping etc., which are known to have helped in the increased enrichment of soil organic C by about 30 to 50% from about 1.9% C to 2.39% C in the lower depth of soils and to 2.9 C% in the top soil.

Carbon accumulation within the mature Hevea ecosystem in the early years of maturity comprises mainly the carbon locked up within the mature tree through increase in dry matter accumulation, from within the interrow leguminous cover system and associated litter, decomposing Hevea leaf litter and branch material arising from self pruning and in shed reproductive parts including mature seed and fruit components and within the fertile top soil region.

Annual leaf fall which includes falling branches twigs and fruit is estimated to be around 3.7 to 7.7 ton/ha.

Carbon trading

Malaysian estimates indicates that mean annual leaf litter fall for a mature Hevea rubber ecosystem which included falling branches, twigs and fruits to be around 3.7 to 7.7 ton/ha.

Some preliminary studies done in Sri Lanka on biomass accumulation and crbon sequestration in rubber plantations from year 1 to year 33 when the trees are due for uprooting, indicates that total biomass accumulated in a tree at the age of 33 years is 1.8 mt which amounts is 963 mt per hectare.

This value is made up of biomass accumulated in fruits, leaves and fallen branches and trees uprooted at the end of the trees' economic life span of 33 years. The amount of Carbon sequestered in one hectare of a 33 year-old stand is 596 mt, the major portion coming from the trunks and branches.

The total amount of carbon sequestered in one hectare of rubber plantation made up of tree biomass, latex produced and contribution from leguminous cover crops amount to 680 mt.

The possible credit revenue entitlement per hectare at the end of 33 years at the rate of US$ 12 per mt is about US$ 8160 which is approximately equivalent to one million Sri Lankan rupees.

Consideration of additional soil C sequestration in the same land will provide additional financial benefits.

These indicate that the economic potential for soil and plant Carbon sequestration and trading in rubber plantation appears to be vast and justifies further exploration.

Although technologies are available for the determination of carbon sequestration in soils and plant samples, development of more simpler, rapid and cost effective systems for both the technical potential to store soil organic carbon ( SOC) and the economic returns to growers who adopt practices that sequester carbon in soils and rubber plants would be an impetus for rubber growers to consider carbon trading business.

Institutional arrangement

The C market system appears to provide ample opportunities for buyers and sellers of C stock as a profit earning business but in practice however, C markets are very complex because they presuppose the existence and integration of many conditions at multiple levels.

Prerequisites include the technical capacity to enhance C storage in crop production systems, the capacity for rubber growers and other resource users to collectively adopt and maintain land resource practices that sequester C, the ability for dealers or brokers to monitor C stocks at the field level, the institutional capacity to aggregate C credits at levels large enough for dealers to consider worth while and the financial mechanisms for incentive payment to reach growers.

Hence, while C payments may contribute to increasing grower incomes and promoting productivity enhancement practices, they may also expose resource users to additional tension and risks.

Given its reliance on complex global agreements, contractual commitments and possibly subsidy programmes, C trading will not be able to function without government's firm backing. State's support will be instrumental in funding technology development and transfer, providing extension services, offering subsidies and incentives, regulating certification processes etc.

Ultimately, it will be the synergy of land management practices, measuring and monitoring methods, scaling up procedures and institutional mechanism that will generate and deliver a "marketable product". Therefore, more applied research and practical experience are needed to better understand the uncertainties entailed in C sequestration and trading and to devise approaches that minimize risks and costs, create efficiencies and promote participation.

Because technical economic and institutional conditions are not yet in place to make C sequestration as a successful business venture, it is more practical for resource limited rubber industry to pursue C sequestration initially as " long-term pilot projects" in partnership with global carbon trading professionals and ventures.

Pilot Project

The pilot project should focus on the CDM potential resulting from the possible introduction of new processes, technologies and practices that may result in additional reductions in greenhouse gases (GHG) in the rubber commodity sector, such as recent genetic engineering developments that promise more wood and latex in rubber trees. Since rubber trees are grown over long periods of time (20-30 years) as managed forests, the possibility of sequestering more carbon resulting from new genetic technology and forestry practices, for example, is at the onset a possibility worth exploring. The effect would be greater carbon sequestration in existing managed forests.

The introduction of bagasse energy technologies in some early CDM pilot projects in the sugar sector also points to other possibilities that may also exist in the rubber sector. Since, rubber production involves relatively inefficient use of large amounts of energy in its production, from the use of firewood in small-holdings to coal-fired energy plants in large plantations, energy-efficient technology can be applied.

The combination of both CDM possibilities - rubber plantations as carbon sinks and the introduction of more energy-efficient technology in rubber production - may present some innovative means of reducing the high transaction costs of CDM projects.

The project should investigate both perspectives as well as the legal and institutional issues and barriers relevant to the eligibility of potential CDM projects in the rubber sector.

Given the continued volatility in real prices of rubber in the world market, it is worth exploring if CDM can be an additional incentive for investment in the rubber sector.

CDM investment projects have great potential to promote sustainable development in the volatile rubber sector.