Zach Willey, economist for Environmental Defense
Release of “Duke Standard” on Greenhouse Gas Offsets

Thursday, May 17, 2007

Thank you, Tim, and thanks to all of you who could make this call.

I’m Zach Willey, economist for Environmental Defense, and I co-edited this guide.

Harnessing Farms and Forests in the Low-Carbon Economy is much more than a publication.  It is a necessary precondition to engaging the potentials of land resources in the fight against global warming.  It is a critical roadmap to the creation of credible greenhouse gas emissions reductions and offsets from changes in agriculture and forestry. And it shows the way to giving forestry and agriculture the chance to produce real greenhouse gas emission reductions, and generate real revenues for those industries.

Although the nation has yet not created a mandatory cap-and-trade system for greenhouse gas emissions, voluntary trading of such emissions and offsets (efforts to remove carbon dioxide from the atmosphere or prevent greenhouse gas emissions in the first place) has already begun. Businesses and individuals seeking to reduce their greenhouse gas emissions have been purchasing these “offsets” from other businesses and individuals who have found ways to reduce their own emissions. Local markets and exchanges, brokerages, registries, and trading clubs have sprouted up to meet the demand.

The standards used to define the emissions reductions and offsets being traded, however, have varied wildly. Until now, we have not had a uniform and credible definition of greenhouse gas emission offsets being marketed and traded in the United States. 

This guide, or The Duke Standard as we’ll call it, provides farmers and foresters with a comprehensive, user-friendly descriptions of how to change their land use practices to reduce atmospheric emissions. It also provides the principles and methods needed to verify those emissions savings are real.

The approaches presented here aim to strike a balance between reliability and affordability. That is, farmers and foresters, regulators, and the public must be able to trust that the offsets landowners create are real, but the costs of measuring and verifying the offsets must not rise so high that projects become economically impractical.

This manual is divided into three sections. The first provides an overview for farmers and foresters, lawmakers, and others unfamiliar with offset markets but interested in learning about them. The second provides a more detailed but nontechnical exposition of the offset process for landowners, investors, and purchasers of offsets. The third, contained in the appendices at the end of the volume, provides the specific technical information that is critical to the individuals responsible for quantifying, verifying, and/or regulating offsets.

The Duke Standard addresses Four basic categories of land-management projects designed to create marketable greenhouse gas offsets:

• Sequestering carbon in soils, such as through the adoption of no-till farming.
• Sequestering carbon in biomass through cultivation of new forests and grasslands or delays in harvesting forests.
• Reducing methane emissions through changes in the practices used to process and dispose of manure.
• Reduce emissions of methane and nitrous oxide through changes in farming practices.

Farmers and landowners also have other options for developing carbon offsets, such as by producing bioenergy crops and constructing wind turbines for generating power. However, because these types of projects do not involve specific land-management practices, this volume does not address them.  

Six types of technical challenges in the development of credible GHG offsets from any of these types of projects are addressed in detail:

• Scoping. Understanding what size of project needs to be undertaken.
• Clarifying ownership. If someone is farming land owned by someone else, for example, who will be able to sell the offset?
• Baseline, or what’s called “Additionality”. Where do we start counting new reductions in greenhouse gas emissions, as opposed to giving credit for actions landowners have already been taking to
• Certainty of quantification. How do we be sure of our measurement?
• Monitoring
• Verification and registration.

This manual is designed for use by all who might participate in developing, marketing, and purchasing offsets based on changes in land management. These include

• Landowners, on whose land a project is executed.
• Farmers, who pursue project activities.
• Project developers, who plan and implement the project, even though they may or may not be the farmers or owners of the land.
• Quantifiers, who perform the monitoring and analysis required to assess the quantity of legitimate offsets the project achieves and who may or may not be the project developers.
• Verifiers, independent agents who audit the quantification of the project’s offsets, vouching for their accuracy and adherence to specific guidelines established by regulators of a carbon market.
• Regulators, who develop and enforce regulations governing carbon offsets in a cap-and-trade system.
• Retailers or brokers, who may purchase offsets from multiple projects, aggregate them, and resell them directly to buyers or through a carbon offset market.
• Buyers, who purchase offsets directly from project developers or retailers or through a carbon offset market.
• Offset owners, who have legal ownership of offsets and who may be the landowner, project developer, retailer, or ultimately the buyer.

This manual is intended primarily for use in two scenarios involving the development of carbon offsets:

• Voluntary development by individuals and companies within a carbon market: Although regulators have not imposed a mandatory cap-and-trade program, individuals and companies who want to voluntarily offset their emissions contract with landowners and developers or retailers to purchase offsets. This situation now applies to most of the United States.

• Mandatory development for major greenhouse gas industrial polluters within a government-imposed cap-and-trade program and carbon market: This situation now applies to power companies participating in the Northeast’s (U.S.) Regional Greenhouse Gas Initiative and to countries participating in the Kyoto Protocol.

Where a regulatory system already exists or is being developed, this manual should prove useful in helping individuals interpret and understand regulatory requirements. Buyers of offsets would be well advised to understand the basic principles used to produce offsets because creating them can be challenging, and potential buyers, especially in unregulated markets, need to assure themselves that the offsets they purchase are real

Perhaps most importantly, the existence of the Duke Standard should help U.S. lawmakers considering enacting a national cap and trade system decide to include agriculture and forestry as part of the market and part of the solution.

Farmers, foresters, and landowners deserve to be paid for their contribution to reducing our nation’s emissions. They ought to have the chance to participate in the solution.

If and when we do have a national system requring the limiting of our greenhouse gas emissions, targeted changes in land uses and management practices in both agriculture and forestry can provide a major source of greenhouse gas offsets. Forests and soils can be managed to remove and store carbon already in the atmosphere and to reduce emissions.  Emissions from livestock production can be vastly reduced.   

For that to happen, however, the resulting greenhouse gas offsets must rest on transparent definitions and standards based on first-rate science. Such standards would give buyers and sellers alike a basis for establishing the value of the offsets and also provide a model for regulations that will surely ensue at the state and federal levels.

The Duke Standard brings us a new combination of science and practicality that can make a national greenhouse gas offset market real