A/R CDM Projects are perhaps the most pertinent intervention in semi arid drought prone regions where rain dependent field cropping is risky due to spatial and erratic precipitation. Hardy fruit, fodder and manure trees, on the other hand, do not need timely water. Carbon revenues can be used for both — attracting capital for initial investments of planting and protecting saplings, and later to supplement income from harvesting.
In spite of this, there are only a handful of large scale A/R CDM Projects registered or under validation in the whole world. We will examine why.
Project Preparation
The time, energy and resources needed to prepare an A/R PDD and see it through validation are very heavy. By a conservative estimate, it takes 2-3 years and ₹ 3.5 million to develop, validate and register a large scale A/R CDM Project covering about 10,000 hectares. The steps involved in developing an A/R CDM Project include:
- Collecting demographic data on participating families
- Recording their land holding, land type and land use
- Obtaining title documents
- Marking each discrete plot with permanent boundary stones
- Taking GPS readings of the polygons that comprise each discrete plot where activities will be taken up
- Transferring the data onto a Polygon Recorder and generating shape maps of each discrete plot
- Overlaying shape maps onto satellite imageries
- Recording the trees found in the baseline
- Writing the PDD and appointing a Validator
- Obtaining Host Country Approval
- Validation & Registration
Challenges
A/R CDM Projects pose many challenges that the Project Proponent and communities have to seriously consider.
- The "Project Life" of an A/R CDM is 100 years. It has 3 Crediting Periods of 20 years each. A lot can happen in that time span.
- Trees take a very long time to get established on rain fed dry lands in drought prone regions (A/R CDM Project activities cannot be undertaken on irrigated lands).
- Survival rates can be adversely affected due to a number of reasons — inadequate tree management practices, interrupting the watering regime for even a few weeks during peak summer, goats straying onto unprotected fields, fire, pests and disease are just some of the dangers that constantly loom.
- Existing allometrics on tree growth are not all that accurate. Unless calculated very cautiously and conservatively, you may not be able to meet estimated Emission Reduction targets laid down in the PDD.
- Land value and land use patterns could drastically change, and trees cut down to make room for non agricultural use.
The risk of "Reversal" in pro-poor projects that aim at changing land use patterns is very real. (If, on the other hand, it is a commercial project undertaken to grow lumber trees of large and contiguous holdings and generate tCERs, risk gets reduced.)
Pricing Forestry CERs
There are 2 types of A/R CDM Projects.
- The first are where trees will be established on a permanent basis with only fruit, fodder and manure harvested. These generate "long CERs" or lCERs.
- The other are where trees are grown for lumber, and get cut down after a certain period. Emission reductions generated by these are called "temporary CERs" or tCERs.
Unlike CERs generated by Biogas, Photovoltaic Lamps, Fuel Efficient Woodstoves and other Energy CDM Projects, tCERs and lCERs are both deemed to be "Impermanent" — i.e. they need to be replaced in the UNFCCC Registry with Energy CERs after a stipulated time period.
As a result, tCERs and lCERs command a far less market price than regular CERs. Please see the About CDM section of this website for a more detailed discussion. Along with that is the lack of linking directives issued by the European Union to it's Emission Trading System. These linking directives serve to fix lCERs as well as tCERs with a relative value vis-à-vis permanent CERs.
Financing A/R CDM Projects
Typically, a hectare of rain fed land under A/R sequesters 7 to 9 tCO2-e per unit per annum. At € 5 per lCER/tCER and an exchange rate of ₹ 70 this translates to a carbon revenue of ₹ 2,450 to ₹ 3,150 per hectare each year of the 60 year crediting period.
Moreover, considering the difficulties in the pricing of A/R CERs, many suggest pursuing the VER route. But the (depressed) price offered for A/R CERs are still considerably higher than that of Forestry VERs.
In the end, it is just a toss up. From a financial viability point of view, the UNFCCC created CDM route is more attractive. But from the implementation/monitoring point of view, VER+ is better.