Accounting for the time value of sequestered carbon: temporal crediting vs. faux permanence

[摘要] The Australian land sector has the potential to make a significant contribution to climate change mitigation efforts through the sequestration of carbon in vegetation and soils. So far only a small proportion of this potential has been realised. A complicating factor is the inherently uncertain and reversible nature of biological sequestration, compared to the clear and irreversible emissions from the burning of fossil fuels. Carbon offset programs address this by requiring biological sequestration to be maintained permanently. In practice permanence is typically defined as 100years, with provisions to replace offsets from sequestered carbon which is lost in the meantime. In some cases permanence periods are shorter; for example, the Australian Emissions Reduction Fund offers a 25 year option for sequestration projects, with a 20% discount applied to the number of carbon credits issued.There are a number of problems with this approach. A 25, or even 100, year period is clearly not actually permanent, and enforcement depends on the efficacy of future governance arrangements. It is an all-or-nothing arrangement, placing no value on carbon that is stored for slightly shorter periods. And despite not guaranteeing true permanence it still presents a massive barrier to adoption by landholders. There is significant option value from the ability to change land management (e.g. crop types) in response to changes in market or environmental conditions. From an economic perspective, entering into even a 25 year agreement incurs a major loss of option value, which will significantly impact the value of the land. These option values mean that the financial returns from carbon sequestration projects need to be substantially higher than current agricultural returns for adoption to occur (how much higher depends on the number of alternative land uses). This means we are likely to continue to see low rates of carbon sequestration projects in all but the most marginal agricultural land.An alternative approach is to recognise and reward carbon sequestration while it is ongoing. Sequestered carbon has value in reducing the effects of climate change while it remains sequestered, so landholders could be rewarded for providing this service to the atmosphere. This avoids the all-or-nothing nature of arbitrary permanence periods, and allows landholders to retain the flexibility to change their land management, for example moving away from carbon if other opportunities become more attractive. This arrangement effectively represents renting, rather than buying, carbon offsets. Clearly temporary sequestration is worth far less to the atmosphere than a permanent arrangement, but the costs to landholders are also greatly reduced.We show that this temporal carbon crediting approach may be more or less costly to landholders than conventional fixed term arrangements depending on economic parameters such as the discount rate and expected carbon price trajectories. Such temporary arrangements would greatly reduce the risks of carbon projects to landholders, and make carbon more like other agricultural commodities, easing the pathway to adoption. While some would likely reverse their projects, others may find the costs lower than anticipated (e.g. if there are productivity benefits) and be willing to continue at a lower cost. Aggregators could manage a portfolio of rental carbon, entering and exiting individual projects to maintain an ongoing flow of carbon sequestration services. Through better aligning incentives with values of carbon sequestration temporal crediting could unleash sustainable and profitable land sector participation in carbon markets.

[发布日期] 2018-10-04 [发布机构] CSIRO

[学科分类] 地球科学(综合)