IATP’s Karen Hansen-Kuhn was in Panama City last week for negotiations on the United Nations Framework Convention on Climate Change.
Climate change delegates and advocates from around the world were in Panama last week to make progress on the UN climate talks before the Durban Conference of Parties in December. They debated a lot of tough issues, especially how to pay for climate change adaptation and mitigation in an era of tight budgets. Carbon markets have been held out as a way to “leverage” private sector funds for deforestation, energy and other much needed projects. Last year, the World Bank’s BioCarbon Fund launched the Kenya Agricultural Carbon Project, as a pilot project on soil carbon sequestration and to bring agriculture into carbon markets. IATP, ActionAid and the Pan African Climate Justice Alliance (PACJA) held a packed side event at the Panama talks to challenge that idea and refocus the debate on the urgency of finding realistic solutions to climate chaos and food production.
Doreen Stabinsky, from the College of the Atlantic (and an IATP Senior Advisor) led off the panel with a bold assertion: there is no market for soil carbon. While the Kenya project assumes that offset credits generated by sequestering carbon in the soil can eventually be sold to generate funds, in fact, no compliance markets will accept them. The EU Emissions Trading Scheme doesn’t (and isn’t open for changes until at least 2020); the Clean Development Mechanism doesn’t (and in any case, 97 percent of its credits go through the EU ETS). There are legitimate concerns about how to measure the carbon sequestered in the soil and how to be sure the carbon would stay in the soil, both of which make it unlikely that the carbon markets would embrace it anytime soon. Even if the voluntary markets were to open up, Doreen pointed out that they are orders of magnitude smaller than the compliance markets. The compliance market is $142 billion a year; the voluntary markets are just $338 million, of which some 40 percent are already dedicated to reforestation efforts.
In any case, it’s unlikely that soil carbon markets could actually generate much money. A recent study by IFPRI asserted that soil carbon markets could generate $4.8 billion in funding. If we take a peek behind the curtain of the assumptions, however, it turns out that they assume soil carbon would sell at $18 a ton, when even the World Bank only assumes $4 a ton for the Kenya project. Going beyond the hypothetical to the real, at least in the few voluntary markets that do accept such credits (3 percent of the total), the current price is $1.30 a ton. Soil also just can’t hold a lot of carbon. Most scientific studies say that it can range from zero tons in dry and warm regions to one ton in humid and cool zones, making it an even less enticing option for smallholder farmers. The World Bank estimates that the transaction costs involved in verifying and marketing soil carbon credits would absorb some 40 percent of any resources that could be generated. One audience member from Zambia commented that if African farmers can’t even sell the crops they can see, why would they believe they could sell carbon, which they can’t?
Harjeet Singh from ActionAid International commented, "The soil carbon capture idea is both a distraction and a diversion. The environmental integrity and measurement of soil carbon is uncertain and investing scarce resources on setting up soil carbon markets is a distraction. The urgent need is to find public financing through budgetary allocations from rich countries and innovative sources towards climate resilient agriculture. Promoting soil carbon markets–led agriculture in developing countries diverts attention from the fact that it is developed countries that have generated most greenhouse gas emissions and they need to take action domestically."
Mithika Mwenda from the Pan African Climate Justice Alliance concluded the panel with the need to find fair and realistic solutions to help African farmers adapt to climate change. Rather than pushing African governments to line up in support of soil carbon markets, climate delegates should insist that developed countries honor their commitments to provide adequate, new and reliable climate finance—above all public finance—rather than pinning their hopes on an elusive new market. Proposals for “bunker fuels” taxes on international shipping and transportation, a Financial Transactions Tax and other ideas are on the table in Panama and leading up to Durban.