PREPAREDBY:
FORRESTCOBB
AMANDAGOLDSMITH
ALEJANDRARODRIGUEZ
CHADELLIS
WILLIAMFOX
DOUGTOLLESON
JEFFGOODWIN
EDWARDOSEI
ROELLOPEZ
REVIEWEDBY:
ANNEEGELSTON
KEVINSILVERMAN
SHELBYMCCAY
BRITTANYWEGNER
ABIGAILHOLMES
RANGELAND CARBONMARKETS REPORTINBRIEF
A PRIMER ON THE HISTORY, FUNCTION AND PROCESSES OF CARBON MARKETS RELEVANT TO TEXAS RANGELANDS
DECEMBER 2022
STARTHERE ABOUTECOSYSTEMSERVICES
Voluntarycarbonmarketshavegrown rapidlyandcontinuetoevolveinresponse tosupplyanddemand,aswellas controversiesaroundcreditqualityand whetheroffsetcreditsareyieldingtheir statedbenefitsforclimatemitigation.
Giventhistransformingandsometimes volatilespace,thefutureofthevoluntary carbonmarketishardtopredict Whatever happens,thesemarketsareengaging landownersandaffectingchangeson Texaslands.Informedandcautiousnatural resourcesprofessionalsandlandowners willbetterprepareusforthesechanges andforothernascentmarketsforwater, biodiversityandotherecosystemservices.
Sincethisissuchacomplextopic,we encouragereaderstoalsouseourfull reportonthehistoryandprocessesof voluntarycarbonmarketstohelpnavigate informationaroundvoluntarycarbon marketsbyvisiting:
bit.ly/RangelandCarbonMarkets
PAYMENTFORECOSYSTEMSERVICES
Ecosystemsaredynamicandcomplex systemsmadeupoflivingorganisms includingplants,animalsandmicrobes whichinteractwith,transform,anddepend uponnon-livingabioticcomponentssuch aslocalclimateorgeologyEcosystem servicesarethebenefitspeopleobtain fromtheseecosystemsandaregenerally describedasfallingintofourcategories:
1
Provisioningservicesaredirectly receivedbenefitssuchasfood,water, timber,orfiber.
2
Regulatingservicesarethosethat moderatenaturalphenomenaand includeclimateregulation,floodcontrol, orwaterqualityprotection.
3.
4.
Culturalservicesproviderecreational oraestheticbenefits
Supportingservicesarethosethat supportorfacilitatemanyoftheother servicebenefits.Forexample,soil formation,photosynthesis,andnutrient recycling
AnincreasingnumberofPaymentforEcosystemServices(PES)schemeshavebeendeveloped inthelastdecadetofacilitategovernmental,Non-GovernmentalOrganizations(NGOs),and privateorganizationstopayfororreceivepaymentforthesepublicgoods.Thelargest collectionofPESmarketsisforecosystemservicesrelatedtoclimatechangemitigationand theremovalofatmosphericcarbondioxidethroughnaturalcarbonsequestrationandthe reductionofcarbonemissionsfromlanduseconversionorlandmanagementpractices (ie,voluntarycarbonmarkets) Bottomline:Whilethesecarbonmarketsalldifferintheir application,mostattempttoincentivizethelandownerorlandmanagertoenhanceor conservetheecosystemservicesprovidedbytheirlands.
WHATISCARBONSEQUESTRATION?
Primarilyduetofossilfuelcombustion, human-drivenemissionshaveincreased CO₂levelsintheatmosphereby45%since theIndustrialAge.Terrestrialecosystems sequesterandstoreanenormousamount ofatmosphericcarbongloballyandland management,conservation,andstewardshippracticesthatenhanceorprotectthat ecosystemserviceareincreasinglyseenas anareaofimportanceforaddressing climatechange.
Carbonsequestrationistherateatwhich carboniscaptured,converted,assimilated, andstoredinanecosystem Through photosynthesis,plantsconvertcarbonin theatmosphere,mostlyCO₂,into compoundsthatareusedasenergyorto createplanttissues.Alivingplant’smassis madeupmostlyofwater,butmostofthe drymassofaplantiscarbonsourcedfrom theatmosphere.
WHATISCARBONSTORAGE?
Carbonstorageistheamountofcarbonalreadyinthesystemandisgenerally describedasresidingincarbon“pools”includingabovegroundbiomass(e.g.tree trunks,stemsandleaves),belowgroundbiomass(eg rootsystems),andsoilorganic matter(eg plantlitterthatgetsincorporatedintothesoil) Thesoilcarbonpoolis generallythelargestandmostlycloselytrackedcarbonpoolwithingrassand shrublandsystems.
Thetypeofecosystem,soils,climate,aswellasthelandmanagementandstewardship practicesonaplotoflandaffectsoilcarbonsequestration,carbondistributionand storageovertime.
NATURE-BASEDCARBONOFFSETS
Nature-basedoffsetprojects attempttoreduceatmospheric carbonbyfundingchangesin agriculture,forestryorlandusethat resultin:
avoidedorreducedcarbon emissions, increasedcarbonsequestration, ormorecarbonstorage protectionthanwouldhave occurredwithoutproject funding
Thereducedemissionsand/orthe amountofcarbonremovedor protectedisquantified,credited, purchased,andtheoffsetclaimed byapurchasertooffsettheirown emissionsinventory
25%
Carbonremoved fromthe atmosphere and/orcarbon emissions avoidedare quantifiedand thenoffsetcredits issuedto purchaser
25% Privateentitypays tooffsetemissions whichfundsacarbon reductionproject
Landowner implementsan additionalland managementor conservation practice
25%
Atmosphericcarbon iscapturedthrough photosynthesisand storedorganiccarbon isprotected
HOWTHEVOLUNTARYCARBONMARKETPROCESSWORKS
25%
Nature-basedoffsetcreditsaregeneratedandsoldinhighlyfragmentedmarkets which arebetterdescribedasasetofco-existingandcompetingprivateprograms,ratherthan acohesivesingularmarket.Whilenotwomarketsfunctioninexactlythesameway,the followingisagoodoverviewoftheentities,theirroles,andtheprocessbywhichacreditis generatedandsoldWhilethisprocessdoesnothaveasinglestartingpoint,wewillbegin withprotocoldevelopmentunderaregistry(alsocalledstandards)
Althoughtherearemanyregistries/standards,thefourlargestentitiesthatdominatethe voluntarycarbonmarketare1)Verra,2)GoldStandard,3)ClimateActionReserve,and4) theAmericanCarbonRegistry.
1. 2 3.
Thenature-basedvoluntary carboncreditapproachto offsettingemissions.
GENERATINGCREDITS
Theregistryreviewsandcertifiesprotocols,whicharelargeinstructionmanualsthat canbeusedbyanyonetogeneratecredits.
Aprojectdeveloperapproachesanddevelopsacontractwithalandownerthat ensuresallprotocolrequirementsaremet.
Thelandowneragreestoimplementadditionalornewmanagementactionsontheir landlikechanginggrazingpatterns,restoringdegradedlands,orswitchingtono-till agricultureaswellasmeetingotherconditions
Onceallrequirementsaremetandmanagementactivitieshavebeenaccomplished, theprojectdevelopertakestheprojectdataandestimatestheamountofemissions avoided,netcarbonsequestered,orcarbonprotectedintherelevantcarbonpools.
Theestimateandallotherprojectinformationisthenverifiedbyathird-partyviasite visits,reviewofdocumentation,andotheractions.
Ifeverythingisverified,thenthethird-partyverifiersendstheinformationtothe registrytoissuecredits
SELLINGCREDITS
Theregistrywillthenissuecreditstotheprojectdeveloper.Acreditisgenerallyaunique serialnumberthatisassignedtotheprojectdeveloperintheregistrydatabaseand represents1tonneCO2e.
Theprojectdevelopercanthensellthecreditstoapurchaser Thepurchasercanbethe end-userwhowillclaimtheoffset,oritcanbebrokersandaggregatorswhowillfurther bundleoffsetsforlatersale Duetothelongtimelinesrequiredfortheseprojects, sometimescreditprojectsarefinancedaheadoftimethroughvariousfinancial vehiclesincludingemissionreductionpurchaseagreements(ERPA).
Oncethecreditispurchasedbytheend-user,itcanthenbeusedtoclaimanGHG emissionoffsetandsubtractthecompany’snetGHGemissionsbythecreditamount (1tonneCO2e)
Theprocessofclaimingthecreditbenefitiscalled“retiring”sincetheregistrywillretire theuniqueserialnumberofeachcreditinitsdatabaseafteritisused.
Amodelofthe traditionalvoluntary carbonoffsetcredit processshowing steps1through10.
AdaptedfromPlastina2022