The voluntary market may be small (less than 3% of the value of the regulated markets), but it is more open to blue carbon projects, according to a new study titled Blue Carbon Policy Options Assessment.

Marine and coastal ecosystems, such as mangroves, salt marshes, and sea grasses, store large amounts of carbon, often referred to as “blue carbon”.

These types of ecosystems and vegetation may have an annual mitigation potential in the range of 300 to 900 Mt CO2e. This is equivalent to 7-20% of the annual emissions from global deforestation and forest degradation, despite blue carbon ecosystems only covering 1-2% of the total area of forest ecosystems.

Unlike terrestrial forests in which a higher percentage of carbon is found in above-ground biomass, in coastal habitats, the largest carbon pool is found in the soil; about 95-99% of the total carbon stock for salt marshes and sea grasses, and 50-90% for mangroves. Mangroves in particular are among the most carbon-rich vegetation forms, and may store approximately 3,750 tCO2e per hectare on average, with organic-rich soils ranging from 0.5 to over 3 meters.

A number of opportunities exist to promote blue carbon as a legitimate climate change activity. However, promoting blue carbon as a new and separate agenda item under the UNFCCC in the same way as REDD+ was developed is unlikely to succeed. The current UNFCCC and Kyoto Protocol negotiations are already overloaded and adding yet another item to the list may be counterproductive in the short term – especially before IPCC reporting guidelines have been developed and improved and the impact of blue carbon is better understood. Any advocacy within the UNFCCC should therefore be focused on improving IPCC guidelines and integrating blue carbon into the existing NAMA and REDD+ agendas.

Blue carbon is not fully covered in current Kyoto Protocol accounting rules for Annex-I countries. A CMP (“COP-Meeting of the Parties”, the governing body of the Kyoto Protocol) decision is required to change Annex I LULUCF accounting rules so that blue carbon (in particular, wetlands) is recognized within Annex I emission limitation or reduction commitments. More research is needed on quantifying and monitoring sea grasses before a discussion could be launched on adding this marine ecosystem into the accounting framework.

Blue carbon projects are an attractive addition to the voluntary carbon market since the recognition of carbon sequestration under the CDM is limited to Afforestation and Reforestation (A/R) activities. A small scale methodology already exists for mangroves and a large scale methodology was approved by the A/R Working Group in May 2011, so additional work on CDM A/R methodologies is not a priority.

Extending the CDM into new project activities covering blue carbon will be extremely difficult in time for the next commitment period. This is because of

i) a lack of understanding over the amount of emissions from blue carbon; and i

i) a lack of IPCC guidance on how to accurately assess these emissions and removals.

Both of these unknowns will almost certainly result in strong opposition to including these systems within the CDM until they have been resolved. Moreover, the future of the Kyoto Protocol and demand for certified emission reduction credits (CERs) – particularly CERs from CDM A/R projects - is uncertain.

Lobbying for the expansion of the CDM should not be an immediate priority. Efforts should be directed towards quantifying blue carbon emissions in developing countries and developing IPCC guidance on estimating these emissions and removals. Once these steps have been completed there may be scope for expanding the scope of the CDM to other activities. Changing the rules on using temporary CERs (tCERs) and long-term CERs (lCERs) to address permanence is also needed.

Hence the best bet is the voluntary carbon market-which is already thought of as the place where innovative carbon offset projects are developed. Methodologies developed for blue carbon restoration and conservation projects in the voluntary market may ultimately inform the development of regulated market methodologies. VCS is taking an important first step in developing methodologies specifically targeting blue carbon conservation.