Value chains for bio-carbon sequestration services: Lessons from contrasting cases in Canada, Kenya and Mozambique

One way to mitigate greenhouse gas emissions is to provide incentives to forest and farm mangers for adopting practices that store greater amounts of carbon in trees and soils. There is strong interest in the use of carbon finance in agriculture and forestry, particularly in developing countries where large proportions of total emissions are land-based, and where there is good technical potential to turn carbon sources into carbon sinks. The development of mechanisms to incentivize bio-carbon storage is limited, however, by the dearth of working examples. In Africa, for example, the few bio-carbon projects that have been put in place have been financed through the voluntary market or the World Bank BioCarbon Fund. One of the few compliance-based offset programs in the world that allows bio-carbon offsets operates wholly in the province of Alberta, Canada. In this paper we draw lessons from a comparative analysis of the Alberta experience with projects in Mozambique and Kenya. The analysis is based on a conceptual framework of actors, functions and incentives in the bio-carbon offset value chain. We identify key success factors in the three cases and conclude that scaling up of successful project experience will require reliable sources of carbon finance, clear institutional frameworks, and much greater participation by both public and private-sector actors in all phases of the bio-carbon value chain.

► A 6-point value chain framework for analysis of carbon offsets is developed.
► Three carbon sequestration initiatives for agriculture and forestry are assessed and compared.
► Successful pilot initiatives can be effective with local or international impetus.
► Activity-based C accounting and effective floor prices make offsets more attractive for land users.
► Demand for offsets is enhanced by compliance-based mechanisms.
► Mechanisms with multiple private actors have potential to have lower transaction costs and be more resilient.
► Mechanisms operating within across jurisdictions will tend to have more complex institutional structures.