Monitoring adoption of climatetechnologies in the agrifood sector

GBEP Bioenergy Week

Budapest

22 June 2016

Investment opportunities for GHG

emissions reduction in Morocco

FAO/EBRD collaboration on promotinggreen food value chains

▸ Promote investment in more efficient use of water, biomass, land, energy in EBRD countries of operation

▸ Key assignments:

Developing/testing methodology for assessing irrigation investment needs (Egypt)

Supporting Public/Private Capacity in Bioenergy/Agriculture Investments (Turkey, Egypt, Ukraine)

Water along the food chain study (Turkey, Jordan, Ukraine, Kyrgyzstan)

Monitoring adoption of key sustainable climate technologies in the agri-food sector (Global/Morocco)

4 step methodologyIdentify the most relevant GHG

emission sources in the agri-food chain and ascertain trends

Ascertain the maturity of technologies/practices and their costs and potentials

Put the stage of technology development into context

Assess technical and market aspects

Identify key factors hindering market uptake

Assess market penetration vis-à-vis policies. Confirm most suitable

technologies/practices.

Identify any sustainability issues

Consider any trade-offs such as within the water/energy/food nexus and adaptation benefits

1 Target agri-food activities that emit most GHGs

Identify drivers to support adoption of

technologies/practices

2

3

4

Produce marginal abatment cost curves

Identify technologies/ practices with significant

potential

Key issues to consider

▸ New technologies can be added/removed

▸ From Morocco to Ireland - with the same analyticalprinciples can be:

o a quick assessment

o in-depth study

▸ Mitigation vs Adaptation?

▸ Land use?

Step 1 – Sources of GHG emissions

Step 1 – GHG Emitting ActivitiesAnalysis 1 of 3 - ‘Agrifood’ Emissions (including energy)

Countries of the region

(Tunisia, Algeria, Libya)

Total:

23.4

MtCO2eq

Year 2012

FAOSTAT + UNSD + NATIONAL GHG

EMISSIONS INVENTORY + 3EME

COMMUNICATION NATIONALE + IEA FOR

ELECTRICITY DATA + OUR ESTIMATIONS

FROM THE NATIONAL ACCOUNTS ON GHG

EMISSIONS FROM THE FOOD INDUSTRY

FAOSTAT + UNSD

Livestock emissions important(as in other countries in the Maghreb), particularly those related to manuremanagement.

GHG emissions from energyconsumption and crop residues are alsoimportant

Step 1 – GHG Emitting ActivitiesAnalysis 2 of 3 – Recent Trends

The emissions sources that have increased the most in the last several years are: ▸ Energy consumption in the food industry; ▸ Crop residues, manure management and

manure applied to soils;▸ Synthetic fertilizers manufacturing.

Step 1 – GHG Emitting ActivitiesAnalysis 3 of 3 – Emissions Intensity

Based on

FAOSTAT, 2015

in accordance

with the 2006

IPCC guidelines

Step 1 – GHG Emitting ActivitiesResults

MANURE MANAGEMENT

MANURE LEFT ON PASTURE

ENERGY IN AGRICULTURE

ENERGY IN THE FOOD INDUSTRY

ENTERIC FERMENTATION

SYNTHETIC FERTILIZERS

18% of the total with an increasing trend (+150% since 2000). The intensity of GHG emissions from bovine animals is high

‘Only’ 24% with an upward trend (+18%). It contributes in an important manner to the high intensity of GHG emissions from bovine animals

Important part of emissions, similar to other countries in the region, with upward trend until recently, followed by a slight decline

Strong upward trend

Important part of emissions (25%) as in other countries in the region. Emissions have increased slightly (+10%). Intensity of GHG emissionsfrom bovine animals is high

The portion of emissions from the application of synthetic fertilizerssimilar to other countries in the region (5%) and is declining (-14%). However, fertilizer use is on the rise

Selected technologies

• The methodology could consider othertechnologies based on the opportunities available

Step 2 – Techno-Economic Evaluation

Step 2 – Techno-Economic Evaluation

▸ Series of Indicators evaluated through a simple notation system (1 to 3 stars)based on quantitative or qualitative criteria:

Performance relative to best international practices

Maturity of technical support services

Potential to reduce annual GHG emissions

Adoption rate of the actual technology

Trends in gap between current technology uptake and technicalpotential

Financial attractiveness

Mitigation cost

Data availability

Step 2 – Techno-Economic EvaluationExamples

Criteria * ** ***Current technology adoption rate

Technology market penetration or adoption of the practice is high, leaving little space for improvement.

The market for the technology or adoption of the practice is mature but there is still space for marginal improvements and small increases (possibly with reduced risk and limited profit).

The technology is in a growing phase but with market share still much reduced. Few innovators have adopted the practice.

Financial attractiveness fIRR<12%, or

Pay-back time > 8 years

fIRR 12%-20%, or

Pay-back time 3-8 years

fIRR >20%, or

Pay-back time 0-3 years

Mitigation cost Positive mitigation cost Between USD 0 and -20 /tCO2-eq avoided

< -20 /tCO2-eq avoided

Data availability Indicators based on ad-hoc surveys or research: data is collected in the field by inspection of installations, undertaking surveys of equipment suppliers, analysing financial investments, etc.

More disaggregated indicators: data is sourced from a number of other sources, often of specialized nature, for example, from organizations that certify boilers or associations that import tractors.

High-level indicators: data is normally sourced from statistical offices or other official national or international data sources and not always easily disaggregated to the required level of detail.

Step 2 - Techno-Economic EvaluationConservation Agriculture

Technical Evaluation

Performance compared with international best practice

Maturity of technical support services

Potential to reduce annual GHG emissions

****

***Economic Evaluation

Financial attractiveness

Mitigation cost

*****

Market Evaluation

Current technology adoption rate

Trends in gap between current technology uptake and technical potential

*****

Data Availability **

• Not applied in all dimensions therefore a part of itspotential to reduce GHG emissions has not been realised

• Support services for this technology are still limited• Potentiel of 3M ha: 80 kgCO2eq /ha from fuel

savings +550 kgCO2eq /ha sequestration• Very weak adoption: >1% of the most conservative

scenario for technical potential• Financial IRR can be high with subsidies in place,

also highly dependent on the number of seeders per hectare

• Mitigation cost vary between -140 et +45 USD / tCO2eq

• Good availability of data in these zones but littleinformation on costs of equipment and performance

Step 2 – Techno-Economic EvaluationResults

Technologies

Evaluation technique Evaluation du marché Evaluation économiqueDisponibilité

des données

Performance

compared with

international

best practice

Maturity of

technical

support

services

Potential to

reduce annual

GHG emissions

Current

technology

adoption rate

Trends in gap

between uptake

potential

Financial

attractiveness

Mitigation cost Data availability

Conservation agriculture

** ** *** *** *** *** ** **Efficient field machinery

*** ** * *** *** *** *** *Drip irrigation

** ** * ** ** *** *** *Solar/wind power for water

pumping *** ** ** *** *** *** *** *Grazing management

*** ** ** *** *** ** * *Manure as soil amendment

*** ** ** *** *** * * *Livestock dairy breeds on

improved diets ** ** * ** ** *** *** **Efficient water boilers

** ** * ** ** ** *** *Efficient cold storage

*** ** * ** *** *** *** *Biogas from manure and agri-

residues ** * ** *** *** * * **Renewable energy systems

*** *** ** *** ** ** ** **Small dams

** ** * *** ** * * **

Technical Evaluation Market Evaluation Economic Evaluation

10% 10% 15% 10% 15% 15% 20% 5%

Step 2 – Techno-Economic EvaluationResults

Step 2 – Techno-Economic EvaluationMitigation cost and technical GHG mitigation potential

Cumulative technical mitigation potential (MtCO2eq/year)

Step 2 – Techno-Economic EvaluationWith other financial and technical criteria

Lo

we

r M

itig

ati

on

co

st

(US

D/t

on

CO

2e

q)

Higher Techno-economic efficiency rating

Size of bubbles proportional to

mitigation potential (MtCO2eq/year)

Step 3 – Evaluating sustainabilityissues

Step 3 - Evaluating sustainability issues

Conservation Agriculture

• Positive impact throughreduction of surface runoff

• In the absence of rotations there ispotential for groundwatercontamination due to increased use of herbicide and fertilizers

Water Energy Food Security Others/Social

Importance for adaptation to CC HIGH

• Positive impact throughreduction in aggregatediesel consumption

• Positive impact on long term soil fertility

• Reduced yield volatilitydue to improved resultsunder droughtconditions

• Less time spent in soilwork and shorter delay in optimal sowing time

• More skilled workers maybe needed to operatedirect seeders and theymay not be locallyavailable

Step 3 - Evaluating sustainability issues

Results (Steps 2+3)

Step 4 – Barriers and drivers

Step 4 – Analysis of barriers and drivers

Knowledge and

information

Organization/social Regulations/

Institutions

Support services/

structures

Financial returns

Information

asymmetries;

Lack of awareness

about the

technology;

Not enough

technical expertise

to use the

technology

adequately;

Collective action

needed for

technology to take

off

Social norms that

can hinder

adoption

Focuses on

private/non-

governmental

issues

Laws, regulations

and other that may

prevent adoption

Technology

specifications not

well defined

Focuses on

government/ public

domain

Existence of

research institutes

Efficiency and

coverage of

supplier networks

Efficiency and

coverage of

maintenance

companies

Are low returns a

barrier and in

which cases?

IRR, payback as

per step 2

Step 4 – Analysis of BarriersConservation Agriculture

BARRIERS Risks

Knowledge and

information

Organization/so

cial

Regulations/

Institutions

Support

services/

structures

Financial

returns

Access /cost of

capital

Lack of farmerknowledgeabout the technology isa major issue in Morocco

Also amongearly adoptersappropriateknowledge on technologyuse is a problem and can influence initial resultsand sustainability

Direct seederrental marketsor alternativelyfarmersorganized to shareequipmentwould help adoption

Organizationand social practices linked to livestockproduction do not favourmaintainingcrop cover

N/R Repair shops exist for conventionalequipmentand can beadapted but still not able to service direct seedersadequately

Direct seedersimportedfrom abroadare heavy and not adaptedto most local tractors

Financiallyattractive

Cash flow profile in first years can beproblematicdepending on farmerknowledge

Rotations maynot beincorporatedby farmersdue to pricesignals and value chaindevelopmentconstraints

Upfrontinvestmentcost is high

Access to credit for poorerfarmers canbeproblematic

Possible increase in the use of herbicides in the short term canpotentiallyhave a negativeimpact on water quality

Low-hanging fruits

Results

BIOGAS FROM MANURE AND

AGRI-RESIDUES

SMALL DAMS

LIVESTOCK DAIRY BREEDS ON

IMPROVED DIETSGRAZING

MANAGEMENT

BEST-BET TECHNOLOGIES

SECOND-BEST TECHNOLOGIES

MODERATELY PROMISING

TECHNOLOGIES

DRIP IRRIGATION

MANURE AS SOIL AMENDMENT

EFFICIENT WATER BOILERS

SOLAR/WIND POWERED WATER

PUMPING

CONSERVATION AGRICULTURE

RENEWABLE ENERGY SYSTEMS

EFFICIENT FIELD MACHINERY

EFFICIENT COLD STORAGE

Next Steps

▸ June 2016 – Final draft of the application of the methodology to Morocco

▸ July 2016 – Revise the methodology based on the experience with the Morocco pilot

▸ From July 2016 onwards

o Support to Moroccan Govt counterparts:

NDCs

Strategie Sobre en Carbone

GCF proposals?

o Application of the methodology to other countries

▸ November 2016 – Organisation of a FAO and/or EBRD event at COP22 to present the methodology and the experience of the pilot countries

nuno.santos@fao.orgalessandro.flammini@fao.org