Bringing further clarity to the EU CRCF: Recommendations from the Carbon Farming Summit

During the recent European Carbon Farming Summit in Dublin, Seqana hosted a workshop where we discussed the practical challenges of implementing MRV for soil carbon sequestration in accordance with the draft methodology for mineral soils under the EU Carbon Removal and Carbon Farming (CRCF) Certification mechanism.

Our goal was to highlight gaps and shortcomings of the current draft and find solutions  with industry experts, ensuring the seamless, widespread adoption of carbon farming projects under the CRCF. The discussion demonstrated the momentum within the industry, but also called out some clear questions that remain. We want to take a closer look at these recommendations and highlight why we believe they should be adopted under the CRCF. 

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What is the EU CRCF?

The European Union Carbon Removals Carbon Farming Framework (CRCF) provides an opportunity for Europe to emerge as the global leader in carbon farming through an innovative framework that rewards carbon sequestration on land as the key indicator of regenerative land management practices to build and maintain healthy ecosystems. 

The EU-CRCF will introduce a binding, but voluntary, mechanism that will encourage investment in carbon farming to incentivize this transition to regenerative agriculture for stakeholders along the agri-food value chain.
So what? Are there not existing incentive structures for carbon farming through the voluntary carbon markets for offsetting or the Science-based Target Initiative for insetting? 

The key difference with the CRCF is that it will be the first major outcome-based regulatory framework for the European agricultural market. Until now, the only existing large-scale outcome-based carbon farming market has been the Australian Clean Energy Regulator with its Soil Carbon Method (AUS CER). And while the voluntary carbon market registries have paved their way with standards (e.g. Verra (VM0042), Gold Standard (GS SOC FM) and Climate Action Reserve (CAR SEP)), they lack the integration in a legal framework that governs broader market design. Another relevant market sector for carbon farming is the insetting or scope-3 emissions market which is governed by the Greenhouse Gas Protocol. While there is a draft methodology in the Land Sector and Removal Guidelines (GHG LSRG), the final rules to govern soil carbon sequestration within the insetting/scope-3 market have yet to be finalized and published.

All the existing methodologies and standards provide similar approaches to soil carbon quantification, with key differences. The CRCF proposes yet another similar, but different approach to soil carbon quantification. To maximize adoption, it is important that the requirements and protocols within the EU-CRCF are transparent and straightforward so that they can be easily implemented by a broad audience. 

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Recommendations for the EU CRCF

In our workshop, we discussed how the CRCF could be aligned with existing standards to bring greater clarity and enable the creation of more carbon farming projects across Europe. 

Our recommendations are based on discussions with industry experts at the conference and our own experience of implementing a high volume of soil carbon projects within Europe and beyond. These recommendations strike the balance between building trust in carbon farming and enabling a straightforward implementation of new projects. 

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1. Methodologies should establish a clear framework for carbon removal projects while ensuring claim integrity

For the widespread adoption of regenerative agriculture to occur, the methodologies that incentivise this transition must be economically viable, scientifically rigorous, transparent, and offer clear instructions for implementation. 

Frameworks like the CRCF are critical to accelerate the transition to an agricultural sector that can prioritize improving soil health and carbon sequestration at scale. Therefore, it is key that the final version of the CRCF embodies these traits in order to see quick adoption by the industry. 

Carbon farming should be a credible, impactful tool to unlock the industry shift to regenerative agriculture and these goals must be reflected in the standards. 

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2. Guidelines on uncertainty deductions must be transparent and practical

Carbon removal claims have to be a conservative estimate of the sequestration and take uncertainty of the SOC change quantification into account. These deductions that have to be subtracted from the mean change quantified are called "uncertainty deductions." Methodologies provide guidance on how to calculate these uncertainty deductions. One fundamental issue across methodologies is that uncertainty deduction calculation is often convoluted or unclear, which introduces intransparency when implemented at the project level.  

The finalized CRCF uncertainty deduction calculations will have critical implications on economic viability, scientific rigor and transparency of the projects. It heavily impacts the quantification approach that should be selected for a particular use case. The GHG LSRG draft requires a significance test, leading to a harsh cutoff for which projects are able to claim the removals while most methodologies in the voluntary carbon market rely on a 1-sided confidence interval which enables more fluid returns for project developers.

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In line with IPCC guidance and best practices from the Voluntary Carbon Market, Seqana advocates for the implementation of a 1-sided confidence interval approach with a set confidence interval that balances project economics and scientific rigor. By implementing a transparent calculation of uncertainty deductions through confidence intervals, project developers can fully evaluate the return on investment for various approaches to implementing a carbon farming project.  

In order to incentivise the widespread adoption of carbon farming, uncertainty deductions must be clear and transparent throughout the project lifespan. This transparency gives project developers the ability to better understand the potential removal claims of their chosen carbon farming project. 

3. Quantification approaches and their uncertainty deductions should be transparently disclosed on a project level

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The realities of every carbon project will be unique and often the model validations, uncertainty deductions, and project deviations are communicated intransparently. This intransparency makes it difficult to externally validate the claims made by the project developer. We believe that the CRCF should require un-biased, project-specific estimates for removal claims and model validations and transparency on uncertainty deductions for the project. 

Each quantification approach comes with its own advantages and disadvantages for  implementation, especially when it comes to uncertainty deductions. Uncertainty deductions for Measure and Remeasure are calculated differently from those of Measure and Model. Evaluating the return on investment for the overall project requires a clear understanding of how those uncertainty deductions will impact the broader project.

At present, uncertainty deductions are often not thoroughly considered during project development. This is due, in part, to the fact that they are currently very intransparent across quantification approaches. This lack of clarity is a hindrance to the broader adoption of the standards and should be made more transparent in the final version of CRCF. 

In order to improve the accountability of project developers and increase transparency on calculating uncertainty deductions, independent modeling experts should be required to review the calculations. Currently, the role of independent modeling experts (IMEs) is to validate the model without considering whether or not the model has high uncertainty deductions. Uncertainty deduction calculations on a project level lack transparency in the market. Uncertainty deductions are currently checked by Validation and Verification Bodies (VVBs). However, to truly understand and validate the uncertainty deductions from modelling a certain understanding of the modelling is required, for which IMEs have more expertise. Broadening the scope of the IME to review model uncertainty deductions increases the transparency of the projects and improves overall project credibility by requiring independent validation that uncertainties were correctly calculated according to methodology requirements.  

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4. Required confidence intervals must enable economic viability at a project level and have a goal of obtaining a higher confidence level at the policy level

Choosing the right confidence interval is key for widespread adoption of carbon farming initiatives under the CRCF. The chosen confidence interval should balance incentivising investment in carbon farming (through a lower confidence interval) and avoiding over-crediting underperforming projects (through a higher confidence interval).

It is critical to find the right balance between holding projects to a high scientific standard, while avoiding increasing the cost of sampling to the point that it makes the project economically unviable. Enticing a broader industry shift is key; however, it is also important to ensure that projects meet a threshold of scientific rigor that demonstrates the legitimacy of the projects and the industry. 

We are advocating for a confidence interval between 60-70%, which strikes the balance between a high level of scientific rigor, while still ensuring that executing these projects is not too expensive to be economically viable. 

We acknowledge that there will be a minority of projects that run the risk of over-crediting their projects. With the minority being only around 30% of projects, we believe that this is a tolerable starting point for the industry as innovations pertaining to accuracy of measurement continue to evolve. 60-70% of projects are likely under-crediting their actual removals, due to the conservative confidence interval. On a macro level, the combined actual sequestration of soil carbon projects will be higher than the carbon removal claims, due to the likely under crediting of the majority of projects. 

By setting the confidence interval between 60-70%, we believe that the CRCF reasonably considers scientific rigor and economic viability in order to enable scalable project development. 

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Looking Ahead

At Seqana, we look forward to continuing the discussion on these topics with industry experts and policy makers to ensure that the final version of the CRCF enables carbon farming and the regenerative agriculture transition. 

With innovations like Digital Soil Mapping, providing a potential avenue for increasing precision while decreasing costs, the CRCF must be flexible enough to accommodate scientifically rigorous innovations. They are key to increasing the scalability of regenerative agriculture and carbon farming on the whole. 

Want to dive deeper? We’re happy to talk about these topics in greater detail, whether you’re a project developer or just interested in the CRCF and its implementation.

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