Composting, Global Climate Change and Carbon Trading
The following bulletin was released by the Chicago Climate Exchange (CCX) on January 8, 2008:
“A protocol for issuing offsets for waste management practices that avoid methane emission to the atmosphere from decaying organic wastes (e.g. composting) was considered and approved for use on a pilot basis. The project proponent must submit to the Offsets Committee a completed verification for final approval of the project and protocol. Once the final approval is received and any technical adjustments are made, the Offsets Committee will approve the protocol for use by all CCX members.”
The Chicago Climate Exchange operates North America’s only cap and trade system for all six greenhouse gases, with global affiliates and projects worldwide. CCX Members are leaders in greenhouse gas (GHG) management and represent all sectors of the global economy, as well as public sector innovators. Reductions achieved through CCX are the only reductions made in North America through a legally binding compliance regime, providing independent, third party verification by the Financial Industry Regulatory Authority (FINRA, formerly NASD).
The US Composting Council (USCC) views this position by the CCX - which will hopefully soon shift from pilot status to become formal policy, allowing those facilities who qualify to receive bankable carbon credits - as one of the more exciting and encouraging events to impact the composting industry in many years.
What are carbon credits?
The terms “carbon credits” or “carbon offsets” can mean different things to different people, but usually they refer to certified, tradable greenhouse gas emission reductions used within a cap-and-trade program. Reducing emissions doesn’t automatically create carbon credits – they result from a formal process or “protocol” that quantifies, verifies, and certifies qualifying emission reductions from eligible projects. Credible carbon credits represent real, permanent, quantifiable, verifiable, and enforceable emission reductions. Often carbon credits are formally issued or registered by a carbon “registry” or exchange to facilitate market trading and ensure that the same credits are not sold more than once. Carbon credits are usually quantified in units of metric tons of carbon dioxide equivalents.
Is there a market for carbon credits?
From 2005 to 2006 the value of the total world market of carbon credits tripled. In 2006, over one billion tons of credits, with a market value of about $20 billion, were traded through the European Trading System (by countries that have adopted the Kyoto Protocol) (Capoor and Ambrosi, 2007). In the U.S., which is not participating in the Kyoto cap-and-trade system, the market is much smaller, but still significant: in 2006 over 10 million tons of carbon traded on the CCX with a value of over $40 million. Since 2003 CCX prices have ranged from less than a dollar per metric ton to almost $5. In 2007 the U.S. carbon credit market is expected to surpass $100 million. Due to international agreements and action on climate change, the carbon market is one of the fastest growing markets for financial commodities.
How do composters get carbon credits for composting?
Carbon credits are intended to provide financial incentives to reduce emissions over and above “business as usual”. New facilities, facility expansions, and new programs designed to accept new or increased volumes of certain feedstocks may be eligible. The types of feedstocks, and where they were going before the new composting project, are also important since credits are only valid where real emission reductions (relative to a baseline scenario) occur. In other words, you don’t get credit just for composting, but for composting those feedstocks that would otherwise be emitting methane or nitrous oxide into the atmosphere. Formal protocols for quantifying compost-related emission reductions have been developed by the Intergovernmental Panel on Climate Change (IPCC) and are already being used for offset projects within the Kyoto Protocol framework. In the U.S., protocols for the Chicago Climate Exchange and other programs are being developed.
How would it work?
A recent study by the City of Portland, Oregon’s Office of Sustainable Development can provide data to illustrate how a facility might gain carbon credits through composting (Visse, 2004). The City would like to divert 40-60% of the 37,000 tons of food waste that it sends to a landfill each year. The landfill is 151 miles away, and the compost facility is 8 miles further. Let’s assume that the compost facility is already processing 100,000 tons per year and has sufficient bulking agents (brush and crop residues) to accept whatever tonnage of food waste gets diverted. To figure out what their credits would be we add up their emissions reductions and emission increases and if the reductions exceed the increases they could earn or sell the credit for that emission reductions. Since the bulking agents were already being composted, they can get no credits for that. Also, the carbon released in composting is part of the short-term carbon cycle, so not considered in greenhouse gas computations.
Emission reductions:
The source of the reduction in this situation is the methane avoidance that will be achieved by NOT sending those food scraps to the landfill. Of course, not all the methane that those food scraps might produce would escape into the atmosphere; some of it will be captured by the landfill’s gas collection system. Portland’s report noted that while the manufacturers and operators of the landfill gas collection system claimed a 70-75% methane recovery, actual measurements at the landfill yielded collection rates of only 23-26%. At a 75% capture rate the GHG reduction was calculated to be 1 ton CO2E (carbon dioxide equivalents) per ton of food waste, whereas at 26% the reduction was only .45 tons CO2E. If the protocol that was being used to calculate carbon credits averaged those collection efficiencies, that would mean .72 tons CO2E per ton of food waste diverted. If Portland achieved the low end of their diversion goal, 40%, that would divert 14,800 wet tons of food waste which would equal 10,656 tons of carbon. At the 2008 rate of $3.50/carbon credit, that could be worth $37,296 for the methane avoidance.
Compost Use
Additional credits could be available from the compost use! Those 14,800 tons of food scraps might result in 2100 tons of finished compost (wet weight at 30% moisture). The EPA estimated that .05 metric tons of carbon equivalent per wet ton of finished compost is sequestered after 10 years. That would add an additional 105 tons of credit to the methane avoidance credit. The ROU study noted that this is a conservative estimate, as it does not include multiplier effects that might accrue from increased yield due to higher organic matter content. In the Life Cycle Analysis performed by the Recycled Organics Unit, the reduction in crop inputs such as fertilizer, herbicides and irrigation water coupled with the carbon sequestration more than made up for the emissions stemming from compost production and production transportation. They concluded that there is a net reduction in Global Warming Potential from the windrow composting of yard debris. This was true even if the compost was transported over 400 miles and the trucks returned empty.
Getting those credits…
As can be seen in this example, the primary benefit of composting from a climate change perspective is in the avoidance of methane generation. Sending organics to an anaerobic digester for methane production and use as energy would likewise avoid the greenhouse gas release with the additional benefits of replacing non-renewable energy. Some additional credits may come from the use of compost, via carbon sequestration and via reduction of GHGs by displacing other inputs. The specific benefits of any composting venture will have to be figured on a case-by-case basis. For more help in determining your potential carbon credits, you can contact: Chicago Climate Exchange (CCX) - www.chicagoclimatex.com, (312) 554-3350
The USCC is a national not-for-profit organization dedicated to the development, expansion and promotion of the composting industry in the U.S.The USCC also directs the Composting Council Research and Education Foundation (CCREF), a charitable foundation, which administers public and private research and education activities. For more information about the composting industry and membership in the USCC, visit www.compostingcouncil.org – call the USCC office at 631.737.4931, or email us at uscc@compostingcouncil.org .
