It Is Complicated

BioCycle January 2010, Vol. 51, No. 1, p. 49

Climate Change Connections

Sally Brown

THE title of the recently released movie, “It’s Complicated,” really befits the current landscape for carbon credits and composting. With a president who believes that climate change is a real issue and several carbon exchanges up and running, you might be thinking about carbon credits for what you do. Taking stuff out of the landfill and making compost isn’t complicated and has measurable greenhouse gas (GHG) reduction benefits. You’d think there would be value on a carbon exchange for that. In certain cases, there is, but not all. This is why it’s complicated.

This column is a guide to carbon markets in the U. S. — what counts for credits and what doesn’t. Remember as you read this, that rules are not yet rigid or fixed. Your input — especially on the climate bills in Congress — can make a difference and make things more favorable for composting. But understanding the basic ground rules is fundamental.

TIMING IS CRITICAL
In the carbon credit world, timing is critical. The whole goal of carbon credits is to bring atmospheric CO2 concentrations down to pre 1990 levels. When you think back to 1990 in the organics field, you think of the repercussions of the garbage barge. Recycling programs were just getting going. Yard trimmings disposal bans were being adopted in a number of states. As a result, we saw explosive growth in composting, primarily yard trimmings, in the 1990s.

What does this mean in terms of carbon credit eligibility? If you started composting leaves in 1993, you can be proud that you have been doing good for the environment for over 15 years. But you can’t get carbon credits. This is because the good that you were doing 15 years ago is considered part of the carbon balance from 15 years ago. It is not new and innovative (key phrases to remember here) and so it doesn’t result in additional reductions in atmospheric CO2. It is considered business as usual or BAU (another phrase to remember). BAU may be good for the environment but it isn’t new and innovative. For projects to qualify for carbon credits, they have to be doing something new and innovative, something that generates carbon emission reductions above and beyond what was going on in the recent past. A key date has been 2000, but that is likely to change as we move past the first round of carbon crediting.

Another thing to remember is that you don’t get carbon credits for following the rules. As I said earlier, the big boost to composting in the 1990s was accompanied by landfill disposal bans on yard trimmings in many states. Currently, 23 states have some version of a yard trimmings ban. Composting yard trimmings in those states will not get you credits as credits for composting currently derive from methane avoidance from landfill diversion. If the stuff isn’t allowed in the landfill, you can’t argue for credits.

In states without a ban, you might be able to get credits. Again, only if you started composting yard trimmings recently or have dramatically increased the volume of materials that you compost. Here the other complication is which exchange you look to for your credits. Things are different if you look towards California (the Climate Action Reserve or CAR) than if you look towards Chicago (the Chicago Climate Exchange or CCX).

VOLUNTARY MARKET
Carbon credits are voluntary in the U.S. There are no federal rules and standards for carbon offset projects. Because it is voluntary, the whole credit program has to fight to assure credibility. If you make a car that gets really good mileage, it is easy to confirm that. You drive it and see how quickly you go through a tank of gas. You also have EPA rules on how to measure your mileage. In contrast, the carbon market in the U.S. is a voluntary market attempting to regulate something that is generally much more difficult to measure than how far you go with a tank of gas.

For carbon credit projects, it is not so easy to confirm that you are doing a good job or the right thing. And at this point, all of the markets are operating outside of any federal oversight. Mandatory reductions in greenhouse gas (GHG) emissions are not the rule and there is still some doubt that Congress will have the political will to make them the rule. So to assure credibility, the exchanges have to be very conservative in how they determine that CO2 reductions did occur and are actually worth real money.

The exchanges have a number of options to assure they are sufficiently conservative and legitimate. One is by deciding when eligibility starts. Another is by defining what is new and innovative. A third is requirements on how reductions are verified. So instead of using anything after 1990 as a start date for eligible projects, most exchanges use projects that started after 2000. This is a way for them to assure credibility. The greater the credibility, the stronger the potential price for the sequestered carbon.

To be credit worthy then, a project has to be a very clear and defensible source of offset credits, and it has to be new enough and different enough to count as innovative. The two primary markets in the U.S., CAR and CCX, have taken different approaches to assure their credibility. As a result, yard trimmings composting operations get a very different reception if they look towards Chicago instead of California.

CALIFORNIA VERSUS CHICAGO
CCX has registered 73 million tons of carbon credits and has no more takers for the first round of offsets; the price of carbon there is in the toilet. CAR, which prides itself in being very tight with the credits, has issued less than two million and thus has been able to maintain a higher price. Although its price per ton is much higher than CCX, CAR has such rigorous verification standards that you eat up your profit verifying that you made the reductions.

So where does that leave yard trimmings composting? The Clean Development Mechanism (CDM) and CCX have protocols in place for diverting yard trimmings from landfills to composting facilities. You get about 0.3 metric tons of CO2 credits for each wet ton of yard trimmings. You only get this in places where landfill bans are not in effect and if you started composting after 2000. CDM protocols are for developing countries and CCX currently pays $0.15 for each ton of CO2.

CAR is currently developing a protocol for composting, based on methane avoidance, just like the CCX and CDM. However, CAR is much more conservative in how they define BAU than CCX. With yard trimmings bans in 23 states, whether or not these are really enforced, composting yard trimmings for CAR is BAU and not credit worthy. At CAR, chances are that the most you’ll qualify for is a pat on the back, whenever you started composting yard trimmings.

What this means is that we currently don’t have a protocol in place that provides a real economic incentive for yard trimmings composting. The best thing that composters can hope and push for are federal regulations governing carbon emissions and an official cap and trade system. It is expected that this type of system would result in an automatic jump in the value of carbon to $12/metric ton.

CAR and CCX are both jockeying for positions should this come to pass. CAR has the plus of starting as a state government program (an outcome of California’s AB 32 GHG regulations). The CCX has the plus of strong ties to heavily agricultural states and USDA. The story of composting needs to be told so that should these regulations become reality, the benefits of composting as an organics management option are included. These benefits include methane avoidance, energy production (controlled anaerobic digestion does not preclude composting), fertilizer avoidance and soil carbon sequestration. By making it clear that composting is a management technology for both solid waste and agriculture, composters stand the best chance for getting more than a pat on the back for taking leaves. The issue may be complicated but the potential for some credits is real.

Sally Brown, Research Assoc. Prof. at the Univ. of Washington, authors this monthly column on the connections of composting, organics recycling and renewable energy to climate change. slb@u.washington.edu.

Copyright 2010, The JG Press, Inc.