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Iowa Farm Bureau Carbon Credit Aggregation

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Title: Iowa Farm Bureau Carbon Credit Aggregation


1
Iowa Farm BureauCarbon Credit Aggregation
2
(No Transcript)
3
Topics to be Covered
  • What is Carbon Sequestration?
  • Background on the Chicago Climate Exchange
  • Exchange Offsets
  • Exchange Offset Sales Contracts

4
Greenhouse Gases
  • Carbon Dioxide (CO2)
  • Methane (CH4)
  • Nitrous Oxide (N2O)
  • Sulfur Hexafluoride (SF6)
  • Perfluorocarbons (PFCs)
  • Hydrofluorocarbons (HFCs)
  • 6.9 billion metric tons CO2e total
  • 545 million metric tons from CH4
  • 40 million metric tons from manure management
    alone

5
What is carbon sequestration?
  • Transformation of atmospheric carbon to a
    fixed-state carbon. Land-based carbon
    sequestration is typically done through
  • Forestry
  • Increased Soil Organic Matter (SOM)
  • Reduced tillage
  • Grass plantings

6
SOIL CARBON DYNAMICS IN RESPONSE TO TILLAGE
  • SOIL CARBON ( OF ORIGINIAL) IN RESPONSE TO
    CULTIVATION

100
PERENNIAL VEGETATION
PLOWING
CONSERVATION TILLAGE
SOIL CARBON
50
0
1 50
years
7
HOW OUR LAND IS USED
8
What are Carbon Credits?
  • Carbon credits encompass two ideas
  • (1) Prevention/reduction of carbon emissions
    produced by human activities from reaching the
    atmosphere by capturing and diverting them to
    secure storage.
  • (2) Removal of carbon from the atmosphere by
    various means and securely storing it.

9
Carbon Credit Program
Greenhouse Gas Emission Reductions
Achieved via qualifying GHGemission reduction
projects
  • Carbon Credit Program
  • Eligibility Assessment
  • Protocol Development
  • Monitoring
  • Reporting
  • Verification
  • Registration

Chicago Climate Exchange, EPA, state or UN
(Kyoto) Protocols
Carbon Credits (certified, tradable, )
Trade, bank, orsell through CCX, ECX, or direct
10
The Chicago Climate Exchange
  • Phase 1 Pilot Project 2003 - 2006
  • Phase 2 Pilot Project 2006 - 2010

11
The Chicago Climate Exchange
  • The Chicago Climate Exchange (CCX) is a
    greenhouse gas (GHG) emission reduction and
    trading pilot program for emission sources and
    offset projects in the United States and for
    offset projects undertaken in Brazil. CCX is a
    self-regulatory, rules-based exchange designed
    and governed by CCX Members.
  • These members have made a voluntary, legally
    binding commitment to reduce their emissions of
    greenhouse gases by four percent below the
    average of their 1998-2001 baseline by 2006, the
    last year of the first phase of the pilot
    program.

12
CCX Reduction Timetable
  • 2003-2006 Reduce emissions to 1, 2, 3, 4
    below 1998-2001 baseline
  • 2006 2010 Reduce emissions to 6 below 98-01
    baseline

13
Meeting CCX Reductions
  • Allowances (x less than baseline)
  • Own reductions
  • Industry credits from excess reductions
  • Offsets (no more than 50 of reduction
    requirement)
  • Industry
  • Agriculture
  • No-till
  • Rangeland Improvement
  • Ag Methane
  • Forestry

14
XSO Eligible Land
  • Land must be in the eligible project area
  • Land must be capable of being cropped
  • Must be farmed with no-till, strip till or ridge
    till practices
  • Crop land can be in hay, but if row-cropped must
    be done in compliant manner
  • Crop land that was recently converted to
    permanent grass (after Jan 1, 1999)

15
Exchange Soil Offsets (XSOs)
  • Commitment to 5 years of conservation tillage
  • Annual certification of compliance
  • Credits transferred to FB on Jan 1
  • 20 reserve held until end of pilot project
  • Transfer price will be the price as determined by
    sale through CCX less a 10 service fee.

16
Documentation For CCX Ag sector offsets
  • Enrollment form information
  • legal description of acreage, practice(s)
    employed
  • FSA maps and crop report (CCC-578)
  • lessees reasonable expectation that acres are
    under control though 2010.
  • Failure to keep land in compliance throughout the
    pilot program voids all credits on non-compliant
    land during the pilot program.
  • Submit annual signed attestation to aggregator
  • acknowledge that CCX verifiers will be given
    access to fields and CCX documents

17
Definition of Conservation Tillage
  • For CCX purposes these practices are as defined
    in the Natural Resources Conservation Service
    National Handbook of Conservation Practices.
  • No-till/Strip-till - Managing the amount,
    orientation, and distribution of crop and other
    plant residue on the surface year-round while
    growing crops in narrow slots or tilled or
    residue-free strips in soil previously untilled
    by full width inversion implements
  • Ridge-till - Managing the amount, orientation,
    and distribution of crop and other plant residue
    on the soil surface year-round while growing
    crops on preformed ridges alternated with furrows
    protected by crop residue.

18
Tillage Equipment
  • Full width inversion
  • Moldboard plow
  • Chisel plow
  • Field cultivator
  • Tandem disk
  • Offset disk
  • Row crop cultivator (except ridge till)
  • Okay to use
  • No-till/ridge-till planter
  • No-till drill
  • Rolling harrow
  • Tools with wide knives
  • Subsoiler/ripper
  • Anhydrous applicator
  • Manure knife applicator
  • Ridge till cultivator
  • General Guideline After the implement has been
    through the field, there must still be a
    substantial amount of surface residue present and
    the soil disturbance must not be full width. If
    use of the implement would require that a
    leveling or smoothing activity follow, it would
    probably result in too much soil disturbance.

19
UCurrent Region for CCX Soil Offsetssets
Offsets for no-till or grassesOffsets for
grasses only
20
Rangeland Zones
21
Rangeland Credit Rates
22
Proposed Soil Credit Zones
  • A, C, D, E,U N/A
  • G(South), N(West), I 0.20 (Irrigated
    0.5)
  • T 0.25
  • G(North), H, J, R 0.3 (Irrigated
    0.5)
  • B, F, K, N(East), P, S 0.4 (Irrigated 0.5)
  • L, M, O selected MLRAs in H, K, N(East) 0.5
  • B,F,G,H,I, J, K, L, M, N, O, P, R, S, T (New
    Grass) 0.75

23
Proposed Soil Credit Rates by Region
24
Proposed LRR Boundary Descriptions
  • F Areas in South Dakota lying northeast of the
    Missouri River All of North Dakota areas in
    Montana lying north of the Missouri River and
    east of I-15.
  • G (North) Northwest Nebraska bounded by
    I-80/I-76 on the south and the counties of
    Lincoln, Logan Wheeler, Holt, Knox on the east
    Areas in South Dakota lying southwest of the
    Missouri River Areas in Wyoming lying east of
    I-25 and Areas in Montana lying south of the
    Missouri River and east of I-15.
  • G (South) Areas in Colorado lying east of I-25
    and areas in New Mexico lying east of I-25 north
    of I-40 and areas east of US Route 285 south of
    I-40.
  • H J Areas in Nebraska bounded by I-80/I-76 on
    the north and the counties of Lincoln, Gosper
    Webster on the east Areas of Kansas west of
    Cowley, Butler, Harvey, Rice, Ellsworth, Lincoln,
    Cloud Republic counties Areas in Oklahoma west
    of I-35 Areas of Texas west of I-35 and north of
    I-10.
  • I Areas in Texas west of I-35 and South of I-10
  • K Areas of Minnesota and Wisconsin north of I-94
  • L M O (Existing Zone A of the CCX, along
    with selected MLRAs from areas H, K N(east))
  • N (West) the Ozark areas of Missouri, Arkansas
    and Oklahoma.
  • N (East) Areas of Kentucky not in CCX Zone A
    Areas of Tennessee east of I-65 Areas of Alabama
    north of US Route 78 Areas of Georgia north of
    US Route 78 and west of US Route 19 Areas of
    North Carolina west of US Route 19 Areas of
    Virginia west of US Route 19 All of West
    Virginia Areas of southeastern Ohio bounded on
    the west by US Route 23 (south of I-70 and I-71
    north of I-70 and bounded on the north by US
    Route 30 Areas of Pennsylvania south of I-80 and
    west of US Route 220 and north of I-80 and west
    of US Route 15 all of West Virginia.
  • P Areas east of US Route 19 and west of I-95 in
    VA, NC Areas west of I-95 in SC Areas of GA
    south of US Route 78 and east of US Route 19 and
    west of I-95 Areas of AL south of US Route 78
    and North of I-10 Areas of FL west of I-95 and
    north of I-10, MS, Areas of Tennessee west of
    I-65, LA, TX)
  • R All of New York, Vermont, New Hampshire,
    Maine, Massachusetts, Rhode Island, and
    Connecticut.
  • S Areas of Pennsylvania east of US Route 15 and
    north of I-80 and areas of Pennsylvania east of
    US Route 220 south of I-80 areas of New Jersey
    and Maryland west of I-95.
  • T Coastal Plain areas east of I-95 in MD, DE,
    VA, NC, SC, GA Areas of FL north of Gainesville
    Areas south of I-10 in AL, MS, LA areas of TX
    east of US Route 77

25
Pool 1-3 Statistics
26
Carbon Offset Prices2004 - 2006
27
Price forecasts for US carbon credits
Figure 1. Projected price curves for US carbon
credits (US per metric ton).
Sources Carbon Finance, August 2004 EIA/DOE
2004. Analysis of S. 1844, the Clear Skies Act of
2003 S. 843, the Clean Air Planning Act of 2003
and S. 366, the Clean Power Act of 2003. Energy
Information Administration, USDOE,
SR/OIAF/2004-05, May 2004 EIA/DOE 2005.
Impacts of Modeled Recommendations of the
National Commission on Energy Policy. Energy
Information Administration, USDOE,
SR/OIAF/2005-02, April 2005 AEP 2004. An
assessment of AEPs actions to mitigate the
economic impacts of emissions policies. American
Electric Power, August 31 2004
28
Rangeland Project Eligibility
  • Land meets CCX definition of Rangeland
  • Rangeland is in a CCX-approved area
  • Project involves rangeland management practices
    that include use of all of the following tools
  • Light or Moderate Stocking rates
  • Sustainable Livestock Distribution

29
Rangeland Protocol
  • The Natural Resources Conservation Service (NRCS)
    Field Office Technical Guides publish guidelines
    for managing the controlled harvest of vegetation
    with grazing animals.
  • Stocking rates and livestock distribution
    criteria are defined according to County and
    State in the NRCS Prescribed Grazing
    Specification code.

30
Rangeland Areas
31
Forestry Offsets
  • Eligible Projects
  • Planting and/or natural regeneration after Jan 1,
    1990 on land not forested on Dec 31, 1989.
  • Working forest lands projects
  • Credits based on net annual increase in carbon
    stocks (CO2 equivalents) during 2003-2010.
  • Long-term commitment
  • Evidence that the carbon stocks in forest parcels
    will be subject to long-term maintenance in a
    manner deemed acceptable by CCX Offset Committee
    (easement, contract, etc.)

32
Forestry Offsets Contd
  • XFOs will be issued based on annual increases in
    above-ground living biomass.
  • Forestation projects are subject to verification
    by CCX approved verifiers.
  • Small medium forestry can used CCX tabled
    quantities.

33
Methane Offsets
  • Ag Methane destruction projects that were put
    into place after Jan 1, 1999.
  • Dairy
  • Swine
  • Eligibility
  • Liquid slurry storage
  • Pit storage below animals (gt 1 month)
  • Uncovered anaerobic lagoons

34
Credit Calculation
  • Baseline Calculation -- The lower of
  • (a) Actual monitored amount of methane captured
    and destroyed by the project activity (using
    existing CCX monitoring protocols but with full
    GWP for methane). The default methane combustion
    efficiency for flared biogas from anaerobic
    digesters is 90. Higher efficiencies may be used
    if supported by manufacturers specifications or
    other acceptable data. The default methane
    combustion efficiency for biogas utilized by
    electricity gensets is 100.
  • (b) The methane emission calculated ex ante based
    on the amount of the animal manure that would
    decay anaerobically in the absence of the project
    activity, using the most recent country-specific
    IPCC tier 2 approach (for a description of the
    proposed calculation methods for projects in the
    U.S., see Appendix B).

35
Ex Ante Calculation of Baseline Methane
  • Appendix B Ex Ante Calculations of Baseline
    Methane Emissions for U.S. Manure Digester
    Projects
  • 1. Characterize the average livestock populations
    included in the anaerobic digester project for
    the reporting period
  • 2. Characterize the baseline manure management
    system for the project
  • 3. For each livestock population category and
    baseline manure management system, multiply the
    number of animals by the appropriate emission
    factor for that state (from Tables B.2 and B.3),
    by the appropriate solids separation correction
    factor, by the proportion of manure from those
    animals used in the digester, by the number of
    days in the period (Equation 1)
  • 4. Sum the estimates for all population
    categories and baseline manure management systems
    (Equation 1)
  • 5. Multiply the total estimate of methane
    emission by the appropriate methane GWP for the
    reporting period (Equation 2).

36
Baseline Credit Rates - Iowa
37
Mechanics of Ag Offset Aggregation in CCX
  • CCX
  • issues offsets to aggregators registry account
  • commissions verifiers

documentation
offsets
  • Aggregators
  • accepts initial registrations from producers
  • assembles annual attestations of activities from
    producers
  • receives offsets into CCX registry account from
  • executes sales on CCX trading platform on behalf
    of growers
  • manage multi-grower reserve account

documentation
sales proceeds
Individual Growers - register undertake actions
as per 4-year contract sign annual attestations
allow access to CCX verifiers ultimate owner of
offsets
38
Mechanics of Trading
  • CCX Registry
  • CCX Trading Floor

39
Contact Information
  • David Miller
  • Director, Commodity Services
  • Iowa Farm Bureau
  • 5400 University Ave
  • West Des Moines, IA 50266
  • www.iowafarmbureau.com/carbon
  • Ph 515-225-5431
  • E-mail damiller_at_ifbf.org
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