Business Times

Rubber tree should not only be for latex but for carbon trading too!

By Dr. Lakshman Rodrigo & Dr. Enoka Munasinghe

Precise decision-making, safety and comfort are essential terms in modern day life and those would greatly be contributed by natural rubber. It decides the birth, provides a shield against deadly diseases and also joy in the life. Rubber cultivation protects the environment safeguarding the rights of future generations to come. Certainly, it is not second to any, so useful for long term sustainable development. As being the case with any raw material, rubber has also experienced some short-term price fluctuations; nevertheless, its usage never diminished bouncing the price over the earlier values. Fossil fuel based synthetic rubber would replace a part of the requirement, however the demand for natural rubber could never be challenged not because it is renewable but its premium quality. Nature value can never be taken off!

Sri Lanka produces 137,000 MT of natural rubber for both local industries and raw rubber exports. Rubber-based local industries are booming with 70% of the country produce coming as value added (on average, price increases by about 500% in product development). By the end of next six years, the country needs 150,000 MT per year just to meet the escalating demand from local rubber based industries. Considering the global demand for raw rubber exports, ideally 200,000 MT of natural rubber is to be produced per year by 2016 according to the Minister of Plantation Industries, Mahinda Samarasinghe.

Lands in the traditional rubber growing areas, i.e. in the wet zone, is virtually insufficient to meet this demand. Therefore with the direction of the ministry, rubber cultivation is in the process of expansion to the drier non-traditional areas of the country. More emphasis has been given to the Monaragala district in Uva province with an ultimate aim of cultivating 40,000 ha of rubber; however very recently, it has been identified that rubber could be grown in another 10,000 ha in the intermediate zone of Eastern province. Further, with the directions of the Minister of Plantation Industries, a pilot project has been launched to ascertain the feasibility of growing rubber in the North. Lands under rain-fed cultivation are usually targeted in this expansion process. With repeated cultivation of seasonal crops, land productivity is rather poor and climatic viability makes the income uncertain. However, rubber would provide a permanent and steady income to the farmers in such areas.

In addition to the above said benefits, there is another opportunity to remunerate a part of the environmental services rendered by the rubber cultivation particularly in these non-traditional areas. With the recognition of human intervention in increasing Green House Gases (GHGs) in the atmosphere and resulting in adverse effects, the Kyoto protocol was adopted at the meeting of United Nations Framework Convention on Climate Change (UNFCCC) held in Kyoto, Japan in 1997. Accordingly, developed countries have an obligation to cut down the emission of their GHGs by 5.2% from the values in 1990 by 2012. Obviously, GHGs are highly dispersive; hence developed countries are permitted to build up partnership with other countries to meet their obligatory reduction in GHG emission. Among the systems in operation, the Clean Development Mechanism (CDM) of the protocol allows developing countries including Sri Lanka to participate in new economic ventures like planting tree crops for carbon trading. In this context, our attempt is to review the potential of rubber cultivation in carbon trading for the mitigation climate change.

Rubber cultivation for CDM
Obviously with less production costs and high rate of plant growth under tropical climatic conditions, developing countries in the tropics have an advantage of trading their potential emission reductions and/or sequestrations to developed countries (i.e. carbon trading). Commitment of developed countries for CO2 abatement by 2012 is far beyond reach. Nevertheless, negotiations are going on to set 2020 and/or 2050 as another milestones for the reduction of global emissions. Therefore, the future for carbon trading projects with rubber cultivation will remain certain.

UNFCCC has emphasized the importance of the forest sector in climate change mitigation in three aspects, i.e. emission reduction, sequestration and substitution. Being a tree crop with over 20 years of economic lifespan and 5 metres (upper limit) height, rubber has an entitlement to be a forest plantation. The eligibility comes under Aforestation and Reforestation categories of CDM and the lands concerned should have had no forests since 1990. Obviously, lands targeted for rubber cultivation in non-traditional areas had been cleared well before 1990. Accordingly, opportunities arise in developing rubber based carbon sequestration projects to combat the green house effect and/or to provide a degree of protection in buffering rapid changes in climate.

Amount of carbon fixed in the rubber tree has been assessed in different genotypes and geographic locations. In Sri Lanka, simple allometric models to quantify the amounts of carbon fixed in the rubber tree have been developed by the Rubber Research Institute (RRISL) for the convenience in field applications. Further, amount of carbon sequestered through the process of photosynthesis has been investigated. In particular, growth curves of rubber under wet and dry conditions in Sri Lanka have been established for average management conditions and so, the amount of carbon fixed in rubber trees at varying age levels is known. Therefore, sufficient information is available to build up CDM projects on rubber cultivation.

The rubber tree is capable of fixing ca. 1 MT of CO2 during its 30-year economic life cycle and therefore, within a hectare of rubber having over 300 trees, a minimum of 300 MT of CO2 is available for trade. This is under the average management conditions and so, more carbon could be fixed with good management strategies. For instance in Sri Lanka, the average tree circumference at the end of 30 years was about 90 cm; however trees with well over 100 cm circumference have been observed with proper adoption in the recommended management practices of RRISL. Further, about 400 trees could be maintained with initial planting of 515 trees per hectare. Therefore, the potential of fixing atmospheric CO2 in the tree lies over 450 MT/ha. At a rate of 15 UD$/MT CO2, this may provide an additional earning of 6,750 US$ per hectare of rubber within its 30 year lifespan. In addition to carbon retained in the tree, rubber trees add ca. 23 MT/ha of carbon to the soil (i.e. 84 MT of CO2 equalent) during its economic lifespan through the annual leaf fall. Not only the leaf fall from rubber, but also cover crops and/or intercrops in rubber lands add huge amount of organic matter to the soil. Despite the difficulty in claiming for such carbon, it adds a cosmetic value to CDM projects for its service to enhance soil properties.

Also, ca. 23 MT/ha of carbon (i.e. 84 MT of CO2 equalent) is taken away from the tree as rubber (latex yield) in 30 year lifespan. Almost all rubber harvested as latex is subjected to vulcanization in the value addition process. This delays the decomposition and degradation; hence, chances are few to evolve CO2 back to the environment in short-run. As a replacement to the fossil fuel based synthetic rubber products, natural rubber based products could be marketed with the label of clean products, so adding a value.

Business as usual is not an option for CDM. Hence, only the new planting of rubber in non-traditional areas where forest lands have been cleared well before 1990 for shifting cultivation, is allowed under forestry of CDM. Unlike in traditional areas, greater investment is required to cultivate rubber in new areas. Being a new crop, farmers are to be well educated on the cultural practices of rubber (i.e. additional cost on knowledge transfer). Adaptive research is required to refine the existing technologies to be matched with regional needs. Farmers are to be provided with additional material inputs as an encouragement and also as they are not in a position to obtain them at correct time. For instance, the existing subsidy scheme provides farmers only half of the fertilizer requirement expecting them to apply the rest by their own. However being remote, a proper mixture of fertilizer is not found in local market in non-traditional areas and also with limited rainfall, precise timing is important. Therefore, the full dose is to be supplied at the correct time. Extra cost involved justifying the need of CDM to have rubber in such situations. Over the additionality in carbon fixation, rubber in those areas provides a stable and greater income to the poor farmers who face uncertainties with seasonal/traditional crops. For instance, it is expected to increase the annual farmer family income of ca. Rs.55,000 in the Eastern province to ca. Rs. 450,000 by introducing one hectare of rubber per family, according to the studies of RRISL. Reclamation of degraded soils (due to continuous shifting cultivation) with addition of organic matter and change in regional climate with increased tree cover are the others important environmental benefits in rubber cultivation. Further, employment opportunities arise with associated industries and trading. Such additional social and environmental benefits provide a decorative effect to rubber projects hence increase the value of carbon traded.

Options other than forestry
In addition to the aforestation/reforestation projects targeting direct sale of carbon in the rubber tree, energy based CDM projects could be built up using rubber firewood as a renewable energy source replacing the fossil fuel burning. Not being a forestry project, this could be applied to both traditional and non traditional areas for rubber. In general, three kilograms of biomass are required to compensate one kilogram of fossil fuel. On this basis, biomass in one hectare of land (at the end of 30 years under average management conditions) is equal to 64 MT of fossil fuel. Therefore emission reduction would be ca. 187 MT CO2 per hectare. As discussed before, the amount to be claimed would be higher with good management conditions.

Biogas generated from rubber factory effluents could also be used as a replacement for fossil fuel, thereby qualified in carbon trade. Potential emission reduction in this manner from the rubber effluents in Sri Lanka has been estimated to be ca. 12,000 T per year. Factory modernization for electricity saving in rubber processing industry is also qualified for carbon trading due to emission reduction.

Present status
Being meticulous, the cost involved in building up CDM projects is as high as Rs 5 million. Therefore, large projects are always preferred and in general, a minimum amount of 10,000 MT of CO2 is to be traded to make the project worthwhile. For small projects, bundling of similar type of projects can be done with a view to reducing the administrative costs. Developing the Project Design Document (PDD) is not an easy task and the certification from the CDM executive board is required for the sale of carbon credits in the open market. Resembling the ordinary share market, the trading value of CO2 (unit value for one MT of CO2) depends on the demand and supply and then the quality of the project. In particular, a high level of assurance in CO2 fixation and associated social benefits signifies the quality. With direct reduction in CO2 emission, the energy based CDM projects provide high level of assurance, so marketing would be easier. Forestry based CDM projects are subjected to environmental changes hence this adds a certain level of uncertainty. This could be overcome by leaving a reasonable allowance for such risks. Further, social and other environmental benefits mentioned before could be provided in quantifiable terms adding cosmetic value to the project. Since the market rate for a unit sale of CO2 (1 MT) varies from US$5 to 20, the quality matters a lot in determining the overall income from carbon trading.

Unfortunately, no rubber cultivation project has so far been marketed under CDM; nevertheless some are in the pipeline. At the moment, 19 forestry projects have been registered in CDM’s Executive Board for the sale of 0.8 million MT CO2 per annum. Obviously, this is an encouragement to explore the potential market for rubber in carbon trading. In addition to the well regulated CDM market met for the obligatory reduction in CO2 emission in developed countries, there is also a voluntary market for carbon trading which adds a decorative effect to other businesses in advertising. Documentations like PDD are still required but not as stringent as in CDM. The value of carbon would be less, however a forward agreement for carbon sale could be obtained, so the sale is assured with no delay.

Individuals may face difficulties in developing such projects, however all relevant parties could join hands to achieve the goal. In this case, initiatives should be taken at the country level with government-private sector partnerships. The income from carbon trading could be diverted to meet the extra cost involved in rubber cultivation in non-traditional areas or perhaps, resource poor farmers could be granted the extra benefits. Ultimately the country gains with some equity in income distribution. In particular, an unforeseen value of rubber cultivation comes to surface in monetary terms.

Further, negotiations are going on to recompense existing forests/tree crops under the newly proposed programme of Reduce Emission from Deforestation and forest Degradation (REDD) for their service in climate change mitigation. Though there was no outcome from recent Copenhahen and Cancun summits, REDD is likely to be effective after 2012. Therefore, readiness programmes for REDD are also essential to achieve the benefits on time. This is high time to march beyond the latex!
(Dr. Rodrigo is Head/Department of Biochemistry & Physiology while Dr. Munasinghe is Asst. Agronomist at the Rubber Research Institute of Sri Lanka at Agalawatta).

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