International Inaugural Dialogue “Scaling up Сlimate Action in Eurasia: Carbon Farming and Trading”

 International Inaugural Dialogue “Scaling up Сlimate Action in Eurasia: Carbon Farming and Trading”
Photo: http://eurasiancarbon.com/ 03.10.2022 312

On October 3, the International BRICS Competition Law and Policy Centre, together with the International Institute for Applied Systems Analysis (IIASA), the TALAP Center and the GFC Centre, held the International Inaugural Dialogue “Fighting Climate Change in Eurasia: Carbon Exchanges and Prospects for Carbon Farming” as part of the International Investor Week in AIFC 2022 in Astana, Kazakhstan.

The session was moderated by Alexey Ivanov, Director of the BRICS Competition Centre, and Elena Rovenskaya, Director of the System Analysis Development Program at the International Institute for Applied Systems Analysis (IIASA).

Speakers:

  • Serik Zhumangarin, Deputy Prime Minister, Minister of Trade and Integration of the Republic of Kazakhstan;
  • Aidar Kazybayev, Chairman of the National ESG Club, General Director of the AIFC Green Finance Center;
  • Albert van Jaarsveld, Director General, International Institute for Applied Systems Analysis (IIASA) (virtual);
  • Michael Obersteiner, Director of the Environmental Change Institute, University of Oxford; & Principal Research Scholar, International Institute for Applied Systems Analysis (IIASA);
  • Pradeep Monga, former Deputy Executive Secretary, United Nations Convention to Combat Desertification;
  • Nikolay Durmanov, Director, Carbon benchmarking site Kaluga’s First (online);
  • Abu Bakr Muhammad, Associate Professor, Head of Electrical Engineering Department, Lahore University of Management Sciences (LUMS) (virtual);
  • Saule Moldabayeva, Director, Department of Strategic Planning and Analysis, Ministry of Agriculture of the Republic of Kazakhstan;
  • Gulmira Galieva, Head, Non-Carbon Development Directorate, Climate Policy and Green Technologies Department of the Ministry of Ecology, Geology and Natural Resources of Kazakhstan (virtual);
  • Wu Shuhong, School of Ecology and Nature Conservation, Beijing Forestry University (virtual);
  • Yerlan Syzdykov, expert, Center for Applied Research TALAP;
  • Claudio Lombardi, Professor, School of Law, University of Aberdeen;
  • Rakhim Oshakbayev, Director, Center for Applied Research TALAP.

Opening the event, Alexey Ivanov mentioned the work of the BRICS Competitoon Centre on the project to develop the carbon agriculture industry. BRICS members such as China and Brazil are also actively involved in the project. 

"Carbon farming creates carbon units — this commodity is relevant today and will become increasingly important in the future. I believe in the development of this industry in Eurasia and in the great prospects of Kazakhstan in this sphere," 

- Ivanov said.

The production of carbon units today is comparable to the mining of bitcoins, on which the Eurasian region is capable of rising. A lot of virgin land in Kazakhstan has been abandoned; now it could be turned into carbon farms. This will create a new industry, jobs and opportunities for international integration, the expert is convinced. Moreover, it is also socially useful: the farmer gets an income and an opportunity to participate in the climate agenda. 

In his welcoming speech, Aidar Kazybayev noted the scale of the AIFC International Investor Week 2022, which will include about 50 sessions with the participation of leading experts and business representatives from around the world.

Albert van Jaarsveld mentioned the importance of working with the government of Kazakhstan to address climate change and stressed the need for global cooperation and collaboration in this area: 

“We provide a basis for making sound political decisions: we involve scientists, provide analysis and feedback, and maintain a dialogue with Kazakhstan and Central Asia on the climate agenda and, in particular, the development of carbon farming.”

Michael Obersteiner noted that if we stick to the 2015 Paris Agreement and the goal to keep the global average temperature rise at 1.5 degrees Celsius, we will have exhausted the emission limit by 2030 if we continue at our current rate of carbon emissions. And in order to achieve carbon neutrality, it will be necessary to absorb much more carbon than we emit into the atmosphere. According to Michael Obersteiner, agribusiness and carbon agriculture projects should be one of the main drivers of this process. 

The essence of carbon agriculture is to capture carbon from the atmosphere by plants and store it in the soil. The practices of afforestation, reforestation and re-vegetation also belong to this trend, Obersteiner emphasized. These are all attempts to bring more CO2-absorbing plant biomass to the earth's surface.  Another method is carbon sequestration in the soil, such as in the no-tillage system, in which the soil is not tilled and its surface is covered with specially shredded plant residues to make it more fertile.

Markets for trading carbon units are expanding. Sellers are companies or individuals who implement projects to reduce or absorb carbon emissions. The buyers are companies who want to reduce their emissions in order to meet investor commitments or produce low-carbon products. In this context, carbon farming stands a good chance of becoming a competitive business. For example, when growing wheat, the farmer will be able to earn additional profits from the carbon units sold. 

According to the expert, by 2080 the carbon business share may amount to 2-10% of the global GDP. Carbon farming is a long-term activity, which can bring income for several centuries, he stressed. 

"Over time, the technology will become more available, the markets will grow, and we will definitely see profitable carbon farming projects. Assuming, of course, that they are implemented correctly,"

noted Michael Obersteiner.

The expert emphasized the importance of aggregator companies linking different carbon farming projects. Kazakhstan already has an aggregator that collects carbon credits from various projects and trades them in the market - such a system helps reduce transaction costs for independent farmers and projects. 

Concluding his report, Michael Obersteiner said that Russia and Kazakhstan, with their vast territories and plenty of unused agricultural land, have enormous potential for the development of projects on carbon farming and can become leaders in this field in Eurasia. 

"So now is the right time to develop carbon projects," 

the expert concluded.

Serik Zhumangarin emphasized at the beginning of his speech that carbon agriculture projects "require less investment, but have a higher cumulative sequestration potential than industrial carbon capture and sequestration projects."

The world's largest economies, including the EU, the USA and China, are actively developing programs to encourage their agricultural producers to switch to carbon agriculture. The basic idea of such programs is that farmers should be rewarded either for the introduction of carbon practices or for the actual carbon sequestered. Both state and market mechanisms for financing such payments are envisaged. In the latter case, the farmer is paid for the carbon units, i.e., the volumes of carbon sequestered, by buyers who can use them to meet emission control requirements, or to build a climate-friendly company image, for example.

"In fact, farmers become producers of another type of product: carbon units for agricultural climate projects,"

Zhumangarin pointed out. Major agricultural companies, such as Bayer, Syngenta and BASF, are already forming their carbon farming programs, which involve rewarding farmers for switching to carbon practices.

The introduction of carbonic farming methods is associated with a number of associated positive effects - from improving air quality and reducing soil erosion to increasing biodiversity. Thus, the industry, aimed at achieving some goals, allows us to solve a number of environmental and social problems, Serik Zhumangarin emphasized.

Carbon farming poses new challenges to the breeding industry as well. There is a need for plants with a stronger root system and less developed above-ground part, plants that give acceptable yields with less use of fertilizers (the largest source of nitrous oxide emissions) and plant protection products.

"Thus, carbon farming can play an important role in the implementation of climate, environmental, social and economic policy goals, but presents us with a number of challenges that will need to be addressed in the coming years,"

concluded the speaker.

Pradeep Monga drew attention to the problem of desertification and land degradation (loss of vital resources and fertility due to erosion). This problem is also relevant for Kazakhstan: 36% of the land here has already degraded, 48 million hectares have fallen into disrepair over the past 100 years. The speaker emphasized the importance of the social aspect in the fight against desertification: every 10 hectares of restored land creates 2 jobs, thus by 2030 about 2 million jobs can be created in Kazakhstan.

Pradeep Monga expressed confidence that Kazakhstan can become a leader in land restoration in the Eurasian region and contribute to the development of a unified approach to resolving this issue: 

“It is important to develop interaction, share knowledge and skills, ensure the free flow of information and cooperate with other countries, including BRICS members.”

The second panel session “Development of carbon farming in Eurasia” was opened by Nikolay Durmanov. He spoke about a series of full-cycle climate mini-projects launched in Russia. Scientists calculate mathematical models of the effectiveness of these projects, study them using ground sensors and conduct an audit.

“This network of mini-projects teaches us many things and reduces the risks that we might face in large projects with large investments. In addition, failure with the mini-format in no way compromises the whole idea. Finally, mini-projects help in training,"

said Nikolay Durmanov.

Abu Bakr Muhammad spoke about the integration of digital agrotech solutions and regenerative agriculture in Pakistan, and Saule Moldabayeva noted that the main obstacle to the introduction of carbon-saving technologies in agriculture in Kazakhstan remains the lack of funding for farmers and their low awareness. One of the effective measures of state support for farmers was the program of investment subsidies for reimbursement of 50% of the costs of purchasing modern irrigation systems, Saule Moldabaeva stressed. According to her, the country will expand programs to subsidize the purchase of agricultural machinery, modern varieties of seeds and fertilizers, as well as a preferential leasing program.

Wu Shuhong spoke about what projects to reduce carbon emissions have been implemented in China. In particular, she noted that China was the first to launch the Clean Development Mechanism (CDM) system in 2006. According to the speaker, some companies in China have been actively implementing energy saving and emission reduction strategies, buying Chinese Certified Emission Reduction (CCER) carbon credits, and engaging the Shanghai Environment and Energy Exchange (SEEE) as a carbon neutrality certification body.

Yerlan Syzdykov shared his experience of cooperation with the Food and Agriculture Organization of the United Nations (FAO) in the development of sustainable agriculture. In the process of working with the organization, two of the most promising technologies for Kazakhstan in terms of carbon absorption were identified - conservation agriculture with minimal tillage and pasture management technology. 

“We have 26-27 million hectares of pastures in a state of degradation, and the use of technologies to improve these lands will also increase the volume of carbon sequestration,” 

the speaker said.

Claudio Lombardi noted that digital and green revolutions are taking place at the same time, changing our understanding of the world and the environment. Under these conditions, the principles of ESG and the concept of sustainable development, which are open and affect different areas: the economy, society and the environment, are of particular importance.

Gulmira Galieva spoke about the national system for regulating greenhouse gas emissions in Kazakhstan. The country is actively involved in international processes on climate change: in 1992, the UN Framework Convention on Climate Change was adopted, in 2009, the Kyoto Protocol was ratified, and in 2016, the Paris Agreement, under which Kazakhstan pledged to reduce greenhouse gas emissions by 15% (from the 1990 level). According to the President of Kazakhstan, Kassym-Jomart Tokayev, by 2060 the country will achieve carbon neutrality. A roadmap will soon be proposed for the implementation of this strategy, Galieva stressed.

At the end of the session, Rakhim Oshakbayev drew attention to the fact that over the past nine years in Kazakhstan "there is not a single dollar of offsets sold yet." “Unfortunately, the carbon agenda in Kazakhstan is largely a cargo cult. We just imitate the form, and do not develop a real business,” he stressed.

It is necessary to make specific proposals to farmers so that they understand how much investment they need for carbon agriculture projects and when they will pay off, Rakhim Oshakbayev is convinced. Kazakhstan has great prospects for climate change projects, he said. Referring to the example of the Kaluga carbon landfill in Russia, which is positioned as an art object, the speaker noted:

"I hope that in a year we will have the first polygon on the bottom of the Aral Sea, somewhere in the strip of Northern Kazakhstan, Central Kazakhstan, in the west of our country, and between them will begin a healthy competition for the title of the most creative."

The participants of the session agreed that such discussions should give impetus to the creation of a practical plan for creating sustainable green business models for the countries of the Eurasian region and, in particular, Kazakhstan.

agricultural markets  Kazakhstan 

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