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  • QA 192
    Question:
    Can coffee growers, especially smallholders, benefit from carbon offsets?
    Background:
    We hear more and more of the possibility of turning reductions in carbon and greenhouse gases emissions into profit but we find it difficult to get information on how coffee growers can benefit from any of this? How can smallholders growing coffee join in this and benefit? After all we already have the plantations and trees that help to reduce greenhouse gases…
    Asked by:
    Extension Officer - East Africa
    Answer:

    The carbon-offset or carbon-credit market would appear to offer potential for coffee growers.*  Supermarket chains, other retailers and consumer organizations are asking the coffee distribution chain (roasters, importers, others) to move to what is called a carbon-neutral product footprint (carbon-dioxide or CO2). This is a situation wherein the carbon emissions the coffee chain produces are offset by carbon-reducing activities. And yes, in theory coffee growing offers potential for such activities but it must be stressed that as yet agri-based offsets are not widespread.

    Greenhouse Gases (GHG) like Carbon-dioxide (CO2), contribute to global warming. Other such gases are Methane (CH4), Nitrous Oxide (N2O), Hydro Fluorocarbons - HFCs, Per Fluorocarbons PFCs and Sulfur Hexafluoride - SF6. Defining mechanisms for isolating GHG from the atmosphere and goals for limited GHG emissions were needed and the global response was materialized in a document called The Kyoto Protocol.

    The Kyoto Protocol** created what is known as the Clean Development Mechanism or CDM. This allows developed countries to invest in projects in developing countries to reduce GHG emissions, and to promote sustainable development by structured projects that can result in the selling of Certified Emission Reductions or CER. CDM projects must demonstrate their additionality, i.e. they have an additional/added value effect in the GHG scenario.  Under the additionality concept, coffee farms would have to prove that they create GHG savings which are additional to anything that might happen anyway. The additionality margin is always confronted against a baseline that is traced comparing the farms with and without the CDM Project.

    Different ecosystems each have a distinct potential to trap carbon atoms. A tropical forest will isolate more carbon than a temperate forest, or grasslands or an agricultural ecosystem. In the same way, different agricultural coffee systems have distinct potential to trap carbon atoms: forest coffee, smallholder plots, commercial plantations, coffee with or without shade, with or without intercropping etc. To note that only net absorptions of GHG will be taken into account as agricultural practices also produce GHG emissions, for example when tractors or electric motors are used. Because of such leakages every CDM project should consider the entire farming process to calculate the net reduction, including the impact the seasonality of some of the agricultural practices has on the total GHG reduction.

    Put differently…

    • Established stands of both coffee and shade trees are not taken into account as they are part of an already existing situation. However, the conservation of existing forest cover and improvement of general agricultural practices, resulting in more eco-friendly coffee stands, are other avenues towards earning carbon credits, provided net GHG gains can be shown.
    • New activities such as the introduction of intercropping with suitable GHG absorbing plants, the planting of additional shade trees and the rehabilitation of degraded lands and hillsides can count. This could include the planting of additional coffee and shade trees but only if it can be proven that the land in question had previously been in a prolonged state of degradation…
    • The calculations to determine the net result of different activities are complex and the final result may only justify the effort if larger areas are covered. This makes it difficult if not impossible for individual smallholders to participate directly in carbon offsets.

    The advantage of the CDM process is that it results in "certified" carbon credits with traceability and credibility as set out in the Kyoto Protocol procedures.  These credits can be traded on established, formal markets with transparent pricing procedures. In practical terms however the CDM approach may not be the best suited for smallholder coffee because of the difficulty to measure the different coffee production processes accurately in terms of GHG impact.

    An alternative is to search for answers in the voluntary markets…

    These markets do not require as much documentation and financial investment as do the mandatory (CDM) markets.  However, prices are highly variable because the project developers have the freedom to adopt standards or not, to create new methodologies, and to have or not have third part verifications. ***  

    However, this freedom of negotiation affects the prices of the credits as these are directly related to the quality and credibility of the methodology that was used, and the degree of verification by third part audits or other assurance mechanisms.  Critics refer to a lack of regulated methodologies for setting up the credits and the impossibility of tracing back the volume of GHG alleged. Lack of regulations could result in double counting of credits, intentionally or unintentionally, and having to trust that already purchased credits will be accounted for in the future. After all, projects can fail whereas standards and verification systems could turn out to be inadequate.

    Even so, the voluntary route may be more appropriate for small or medium sized initiatives (projects) that may lack the capacity and knowledge to develop true coffee carbon credits. Widening the sphere of activities and extending the target areas might then also result in more people or communities being able to participate.

    Standards that could potentially be adopted by coffee growers include The Voluntary Carbon Standard, which has a section of Agricultural Land Management (coffee trees, vegetation, soil and waste water); and the CCB - Climate, Community and Biodiversity Alliance Standards (www.climate-standards.org). CCB includes three kinds of credits: Approved, Silver and Gold depending on the findings of the audit process. But, as yet we are not aware of any concrete examples where application is taking place in the coffee sector.

    However, The Starbucks Company (www.starbucks.com) , together with Conservation International (www.conservation.org),  recently announced the launch of a pilot project that aims to combine best agricultural practices on coffee farms with protection of the land, water and forests that surround them. The project will be governed by the CCB standards and will focus on promoting tree protection and increasing forest cover. One expectation is that these activities may ultimately create opportunities for farm income diversification through access to emerging international carbon markets. Go to www.conservation.org, click on Press Releases and go to the 19 March 2008 article.

    To summarise:

    It is not possible to 'sell coffee or shade trees' but, it is possible to work towards producing carbon credits that can be traded, either through the mandatory CDM process, or through voluntary arrangements. For individual smallholders though pure coffee carbon credits may be very difficult if not impossible to achieve. The better route is probably through 'umbrella projects' that encompass larger areas and take a holistic approach to the issue.

    *   This question highlights the fact that little concrete information exists on this complicated issue for coffee growers. As a result the answer is unusually long whereas the information provided is certainly not complete. Readers' comments are therefore invited by email to coffeeguide@sco.eastcoast.co.za in an attempt to gather more information on what may actually be happening on the ground.

    ** Defining mechanisms for isolating GHG from the atmosphere and goals for limited GHG emissions were needed and the global response was materialized in a document called the Kyoto Protocol. The most publicised source of global warning are fossil fuels (electricity generation, manufacturing, transport etc) but deforestation in non-industrialised countries also contributes quite considerably as it reduces the available tree park. Trees are efficient absorbers of CO2 whereas burning them releases carbon dioxide into the atmosphere... Industries and others that produce GHG can calculate their emissions and offset these against certificates of emission reduction or CER. For example by investing in planting new trees or sources of renewable energy, either directly or (mostly) through the purchase of offset or renewable energy certificates generated by others who engage in these activities. The international market for such certificates is developing rapidly and is generally referred to as the emissions offset market. Much background information is available at www.v-c-s.org

    *** Exchanges trading in carbon allowances include: the Chicago Climate Exchange at www.chicagoclimatex.com, the European Climate Exchange at www.europeanclimateexchange.com, Nord Pool at www.nordpool.com and BlueNext  at www.bluenext.eu.

    Posted 15 May 2008

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