CA-CoP CONSERVATION AGRICULTURE COMMUNITY OF PRACTICE
for sustainable production intensification
Dear Subscribers,
Please see herebelow a post by Professor Alan Matthews, Trinity College, Dublin, Ireland, based on his presentation at the Green Carbon Conference on 3 April 2014 in Brussels, organized by ECAF and IAD.
Amir Kassam
Moderator
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CAP Reform: Incentivising soil carbon sequestration |
Incentivising soil carbon sequestration Posted: 04 Apr 2014 07:45 AM PDT Soil contains a huge amount of carbon, twice as much as in the atmosphere in the 0-30 cm layer alone. However, continuous cultivation over a long period has reduced stocks of soil organic carbon (SOC, which I will abbreviate here to soil carbon), often to dangerously low levels. The EU’s Joint Research Centre estimates that some 45% of the soils of Europe have a low or very low organic matter content (0-2% organic carbon). The main mechanism for soil carbon loss is associated with ploughing, due to increased decomposition of SOC due to soil aeration and soil aggregate destruction, increased aggregate turnover and a reduction in aggregate formation. Reversing this process to build up soil carbon stocks has thus the technical potential to sequester a lot of carbon. The practices to do this are now well known: they include the use of winter cover and catch crops; crop rotation; adding legumes or N-fixing crops; reduced or zero tillage; and incorporating crop residues and other organic matter. However, the effectiveness of these practices in rebuilding carbon may vary depending on soil type and climatic conditions (see this article among many for a review). From a climate policy perspective, where the objective is to keep the carbon concentration in the atmosphere below a certain level, a tonne of carbon sequestered has the same value as a reduction in one tonne of carbon emissions. Thus it makes sense to try to incentivise soil C sequestration, assuming that the costs of doing this are below the social cost of carbon. As there may be debate about the appropriate price of carbon, a practical rule of thumb is that soil C sequestration should be encouraged whenever it is cheaper than the least expensive measure currently being used to meet climate policy targets. In a presentation given to the Green Carbon: Making Sustainable Agriculture Real conference organised by the European Conservation Agriculture Federation (ECAF) in Brussels yesterday, I looked at the options for maintaining and restoring soil carbon, particularly in light of the changes in the CAP regulations agreed at the end of last year. I examined five options in particular: (a) counting soil carbon changes towards EU targets under climate change policy My conclusion was that incentives under EU climate policy are not foreseen in the medium term. As regards agricultural policy, although there are some positive elements in the new regulations, on their own they are unlikely to make much of a difference. There is a need for more innovative thinking. One possible approach would be to allow emission reductions in the Land Use, Land Use Change and Forestry (LULUCF) sectors, including soil C sequestration, as offsets in the EU Emissions Trading System. While arguments can be made against this approach, it seems to me to have some positive advantages which make it worth considering further. Incentivising soil C sequestration under climate policy The paper commented
New LULUCF accounting rules entered into force in July 2013, following the agreement within the UNFCCC at Durban in November 2011 on new accounting standards for soils and forests. The new legislation phases in mandatory accounting for grassland and cropland management at the level of member states.. Accounting for the draining and rewetting of wetlands will remain voluntary, as in the international context. It requires member states to report on their actions to increase removals and decrease emissions of GHG from activities related to forestry and agriculture. Importantly, the regulation makes clear that LULUCF targets will only be set once the accounting rules have been validated. Regulatory approaches However, the proposal was prevented from advancing further by a blocking minority in the Council, including Britain, France, Germany, Austria and the Netherlands. While the argument that soil protection should not be an EU responsibility under the subsidiarity principle was used, the fact that these countries are home to the most intensive farming in Europe also played a role in their opposition. National soils legislation may provide some legal protection in some countries but I do not know how comprehensive such protection is. Protecting existing carbon stocks Under the previous CAP rules, protection of wetland and carbon-rich soils was included as a cross-compliance standard (GAEC 7). Environmental NGOs expressed alarm during the legislative process on the new CAP rules that this GAEC standard was in danger of disappearing. In fact, it has been moved into the basic text and it is now part of the permanent grassland eligibility condition for the green payment in Pillar 1. This change in positioning has implications for the penalties that farmers face if they decide to ignore the restriction (cross-compliance penalties as a GAEC standard, the loss of the green payment as a green payment requirement). In addition, the wording has become more specific. Member states now have an obligation and an option. The obligation is to designate permanent grasslands which are environmentally sensitive in areas covered by the Habitats or Birds Directives, including in peat and wetlands situated in these areas, and which need strict protection in order to meet the objectives of those Directives. The option is, in addition, to decide to designate further sensitive areas situated outside areas covered by these Directives, including permanent grasslands on carbon-rich soils. Farmers are not allowed to convert or plough permanent grassland situated in these areas designated by member states. If member states really take the opportunity to designate all potential carbon ‘hot-spots’, this could potentially be an effective measure in limiting future carbon emissions from soils. The GAEC soil standards Member states have the flexibility to interpret how to implement these standards. This flexibility is, in principle, desirable to account for the heterogeneity of agricultural conditions across Europe. However, the criticism is made that member states in the past have interpreted these standards in a lax way and that they have not really been enforced. Certainly, the latest JRC report on soils documents that the reduction in the carbon content of the EU’s soils has not yet been halted. It is the Commission’s role to evaluate that cross-compliance standards are adequately transposed and enforced in member states. At a minimum, its reviews of national GAEC standards should be published to enable the public to assess the extent to which member states are fulfilling their obligations. Pillar 1 greening measures and soil carbon The equivalent practices can be undertaken either as part of an agri-environment measure under Pillar 2 or as part of a national or regional environmental certification scheme. The equivalent practices must yield the same or a higher level of environmental benefit. Member states can decide whether to allow the option of claiming eligibility through an environmental certification scheme and, if so, whether to make it compulsory or not. EFAs are primarily intended to encourage biodiversity even if they may also have benefits for soil carbon. Crop diversification is beneficial for soil carbon but as so few farms will be required to change current practices to abide by this measure, it is not considered further. The main greening condition with relevance to soil carbon is therefore the requirement to ensure that the ratio of permanent grassland to the total agricultural area does not decrease by more than 5% compared to 2015 levels. If this level is exceeded, then individual farmers who converted grassland will be required to reconvert it. Although the explicit statement of this latter requirement is new, it applied de facto in the past where a member state was likely to breach the ceiling. The requirement is deemed fulfilled if the absolute level of permanent grassland is maintained. The obligation can apply at national, regional or the appropriate sub-regional level or even at holding level if a member state wishes. Member states shall notify the Commission of any such decision by 1 August 2014. The updating of the baseline to 2015 from 2003 (for the old member states) and 2004 (for the new member states) constitutes a small change from the previous regulation. This will have a different impact on member states where the ratio has been decreasing compared to those where it has been increasing. The former get the chance to wipe the slate clean and decreases in permanent pasture between 2003 and 2015 are ignored; the latter will have a higher reference standard to adhere to in the future. Maintaining permanent grassland avoids the release of soil carbon which would occur on first ploughing. However, there is the potential for substantial leakage if this grassland is used for ruminant production with the potential for continued non-CO2 emissions as a result. This may be offset if grassland soils are able to act as a carbon sink but the soil under arable use continues to lose carbon. Overall, whether protecting the permanent grassland area, in general, is a cost-effective way of achieving a reduction in GHG emissions remains to be proven, in my view. It may also run counter to the flexibility needed for agriculture to adapt to climate change in the decades ahead. Pillar 2 agri-environment measures and soil carbon In the previous rural development programming (RDP) period, a number of countries and regions incentivised cropland management practices which had the effect of improving soil C stores in the soil. The synthesis report of the mid-term evaluations of these programmes noted that climate change impacts were assessed as positive for 42 RDPs (just under half of all programmes) and that some 28 RDPs had tried to quantify these impacts at least partially. However, evaluations of the other half of RDPs did not measure the climate change impacts at all. Potentially, there is scope to use this measure to encourage specific soil C sequestration measures. The efficiency of the measures adopted, however, will depend greatly on the contract design. The simpler measures are those which pay farmers a per hectare payment in return for following farm practices (above the cross compliance baseline) which can help to sequester soil carbon. More complex measures would pay farmers on the basis of each additional tonne of carbon sequestered above an agreed baseline. While more costly to verify and monitor, US experience suggests that the cost per tonne of carbon sequestered might be four to five times lower using the second approach, suggesting that there could be a high pay-off to devising simple monitoring, reporting and verification (MRV) procedures. However, it is not clear that ‘payment by results’ is permitted under the regulation. The relevant Article 28 states that:
Paying for tonnes of carbon sequestered (or for the number of wild flowers in a farmer’s field, for that matter) does not seem covered by the way the regulation is phrased. Another problem is that soil C sequestration schemes can run foul of the requirement in agri-environment schemes that the level of payments must be related to the additional costs incurred by the farmer in adopting the new practices. Conservation agriculture (which advocates minimum soil disturbance through no-till systems and permanent soil cover as well as crop rotation) has the possibility to sequester considerable amounts of soil carbon (even if the scientific literature disagrees on whether this is always and inevitably the case). However, advocates of conservation agriculture also emphasise that the system can improve farmers’ margins without an additional payment (largely due to reduced fuel and machinery costs). Under AEM rules in Pillar 2, it may be difficult therefore to reward farmers for practices which sequester soil carbon. Again, one solution would be to pay farmers directly for the carbon sequestered in their soil but, as we saw above, the rural development regulation is not designed to allow this economically efficient solution. Another solution might be to focus only on those aspects of the conservation agriculture system where increased costs are incurred (e.g. the establishment of a catch crop) and to ignore those elements (such as no-till) where cost savings might be expected to occur. The European Innovation Partnership for Agricultural Productivity and Sustainability which has a focus on land management may also have a role to play in helping to incentivise good practices. Developing a carbon compliance offset market Under a cap-and-trade emissions trading system, offsets are a reduction in GHG emissions/increase in sequestration realised by an unregulated party that can be used to counterbalance emissions from a regulated party. Offsets are allowed in the EU’s Emission Trading Scheme under the Joint Implementation/Clean Development Mechanisms for carbon offset projects in developing countries. Because LULUCF is not covered under the ETS or ESD, it could be linked to the ETS by allowing LULUCF offsets to count towards compliance. This would be separate from any voluntary carbon offset market that might develop as a result of demand from large companies seeking to improve their carbon performance – for example, the World Expo in Milan in 2015 is seeking to buy voluntary carbon offsets to offset its carbon emissions when it is in operation. The big advantage I see in developing a compliance carbon offset market is that it would encourage the development of protocols for the measurement, reporting and verification (MRV) of soil carbon changes. We need to see a lot more ‘learning by doing’ in developing appropriate methodologies for MRV for LULUCF activities. It would also be politically popular as it would potentially benefit both the ETS sectors and farmers. The ETS sectors would benefit to the extent that they gain access to a cheaper source of carbon emission reductions. Farmers would benefit because they gain access to another stream of income. Many of the initial projects might be in the forestry sector, but Alberta’s experience suggests that agricultural offsets can also be competitive. There might be criticism that allowing such offsets in the ETS dilutes the level of ambition in reducing emissions in the ETS sector. But the point is to reach the overall EU emissions reduction target at the minimum cost. The ETS and the ESD are just instruments to achieve this end. Climate policy is not an exercise in sado-masochism. Provided that the emissions reduced in the LULUCF sector are genuinely additional to what otherwise would have been achieved, they are just as valuable as emissions reduced in the ETS sector itself. There would be some issues to watch out for, including the need to avoid ‘double-counting’ when reporting on international commitments. There are also thorny issues in designing carbon offset contracts in the land use sector, such as addressing permanence, saturation and leakage as well as ensuring additionality, but these have been addressed in other jurisdictions. It is precisely the experience we would gain in learning how to address such issues which would add value to the exercise. The ECAF conference presentation can be viewed here. This post was written by Alan Matthews. Photo credit: Geograph, used under a Creative Commons licence |
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