Advances in upland carbon financingMark Reed

Reader, Birmingham City UniversityResearch Manager, IUCN UK Peatland Programme

Plan Underpinning and related ongoing research UK Peatland Code

1 Underpinning research

Underpinning research VNN Valuing Peatlands project

Links between management, function and flows of ecosystem services and their value in uplands

Implications for upland agri-environment schemes Pressure-response functions can cost-effectively

show how climate regulation & other services are likely to respond to multiple pressures

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Ecosystem service

Underpinning research

Important for managing & valuing multiple upland services…

Underpinning research Developing place-based approaches for

Payments for Ecosystem Services in the English Uplands Cost-effective vegetation based proxies for changes

in GHG flux post-restoration to underpin future code Feasibility of place-based PES

schemes that bundle/layer carbon

with other services

Underpinning research NERC internship with Viki Hirst, Charles Cowap,

Mark Reed & South West Water Bundling carbon & biodiversity in a new scheme

to run alongside existing clean water scheme Exploring pricing,

payment & contractual issues

Implement and review PES agreements

Identify ES prospects, potential

buyers and sellers

Resolve institutional, legal

& technical issues

Negotiate agreements

1. Identify PES opportunity

2. Identify potential PES actors

3. Assess the prospects for trade

4. Establish appropriate institutional set up

5. Address legal issues

6. Address technical issues

7. Develop ‘win-win’ markets

8. Formalise the PES scheme

9. Monitoring, evaluation & review

10. Identify opportunities for multiple-benefit PES

Payments for Ecosystem Services Best Practice Guide

Visitor Payback for ES

Potential of VP to elicit PES from the public?

Suite of smart phone apps for Lakes plus VP module

4 investment (not offset) options including peat restoration

Interactive maps to learn more

2 UK Peatland Carbon Code

Peatland carbon: in demand

Legislative targets Climate (Kyoto Protocol &

national legislation) Biodiversity (many

peatlands in poor condition designated under UK and EU legislation)

Water quality (Water Framework Directive)

Peatland carbon: in demand Market demand for UK land-based carbon

reduction: 1-10M tonnes p.a. (BRE, 2008) Woodland carbon code secured 1 million tonnes of

CO2 through projects covering 2733 ha in first year

Premium for local carbon with co-benefits

£8B p.a. corporate carbon accounting for FTSE100

Demand could increase if: Co-benefits can be quantified and either bundled

or layered with carbon schemes Benefits can be counted in company carbon

accounts under GHG Accounting Guidelines There is effective regulation of UK peatland

carbon projects to ensure benefits are: Additional Verifiable Avoid trade-offs with other ecosystem services

Supply Restoration & manage-

ment of upland and lowland peats can deliver significant

carbon savings over the long-term

Supply Peatland restoration is approximately equivalent

to the carbon benefit provided by woodlands Assuming 1km2 restoration delivers 250 tonnes CO2

savings per year, 30 km2 bog rewetting could deliver 0.75 million tonnes CO2 saving over 100 years

Plentiful supply: >80% UK deep peats

damaged Potential for 1.8M ha UK

rewetting

UK Peatland Carbon Code Develop a UK Peatland

Carbon Code to: Open, consistent, credible and

verifiable basis for good practice peatland restoration

Register to account for projects & avoid double counting

Standards to ensure projects are of high environmental quality & genuinely additional

Technical guidance to calculate emissions savings

UK Peatland Carbon Code Option to include peatland

restoration in official carbon accounting to become “carbon neutral” Greenhouse Gas Accounting

Guidelines Not possible to trade this carbon Government could count it

towards Kyoto targets if we opt in to Wetland Rewetting & Drainage under Article 3.4 Kyoto Protocol

UK Peatland Carbon Code If also designed to meet the requirements of the

Verified Carbon Standard: Peatland Code would be cheaper alternative, better

tailored to the UK context, that would still provide investors with confidence

Possible to generate tradeable carbon credits for voluntary carbon market (and compliance in future?)

Similar to UK Woodland Carbon Code & German MoorFutures: we can learn from their experience

Export expertise to develop similar peatland regional markets elsewhere internationally

Legislative targets

Funding

Peatland carbon markets

Re-wetting/conservation

Climate regulation

Co-benefits

Voluntary C market

Compliance C market

Regional Carbon Market

GovernmentPrivate

CAP Rural Development eg

Agri-environment

Changes to EUETS & JI

Peatland CRUs

Value of carbon outweighs accreditation

& other costs

VCS accred-itation

Peatland AAUs

UK Peatland Carbon Code

GHG Accounting Guidelines integration

Higher uptake if carbon accounting

becomes mandatory across all sectors

Peatland projects used in

corporate C accounting

UK climate targets

Targets under WFD & Habitats Directive

Underpinned by robust scientific evidence and monitoring, overseen by a science panel

REDD & Art 3.4

Corporate Social Responsibility

GHG change from peats damaged/restored since 1990 in GHG inventory

UK opt into WDR Art 3.4 Kyoto

Kyoto targets

Next steps

Developing metrics DEFRA PES Pilot with

German MoorFutures and learning from UK Woodland Carbon Code

Plan to launch draft code for CSR (not offset) investment July 2013

Market research to tailor the code to needs of the market

Next steps

Consider for inclusion in Defra/DECC GHG Accounting Guidelines for corporate carbon accounting

Option to trade on voluntary C markets if prices increase

Top ranked opportunity

Conclusions

Peatland carbon markets are coming soon – we want to work with people across the sector to devise effective ways of regulating and paying

Opportunities to bundle payments for carbon with existing PES schemes e.g. for clean water, and to bundle other services with carbon schemes to get premium prices