Harnessing Opportunities for a Vibrant Carbon Market for Rice in SEA

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BANGKOK, THAILAND – 23 May 2024 – The International Rice Research Institute (IRRI) is accelerating research and partnerships on low-emission technologies and enabling policy frameworks to help Southeast Asia harness the potential of a rice carbon market.

“The pulling force of the climate-resilient rice market is its ability to incentivize and motivate farmers to change their practices. Realizing a vibrant carbon market for rice and agriculture in the region is a delicate dance and one that will rest on more coordinated and elaborate effort across the value chain. All sides of the market – farmers, and government, and private actors – depend upon each other,” said IRRI Thailand Representative Ole Sander.

ASEAN leaders projected that investments of between US$ 5.8 and US$ 5.9 trillion will be needed for them to achieve their Nationally Determined Contributions (NDCs) before 2030.[1] While there has been some progress in the areas of GHG inventory and monitoring, reporting and verification (MRV) for reductions, and sector policy planning in the course of their NDC development, the 2021 ASEAN State of Climate Change Report indicates a still significant region-wide ambition gap and that greater commitments to emissions reduction are still needed in the region’s successive NDCs.[2] Now more than ever, increased climate finance for decarbonization measures in agriculture is critical for countries to reconcile their net-zero commitments.

Speaking at the multistakeholder IRRI-led side event titled “Carbon Market Development for the Agriculture Sector in Southeast Asian Countries”, Institute for Global Environmental Strategy Regional Center (IGES) Deputy Director Ariel Yu shed light on Article 6 of the Paris Agreement that sets out how countries can pursue voluntary cooperation to achieve their targeted mitigation outcomes.

“The country needs to consider if the agriculture sector is included in their respective country’s NDCs. There should be a strong demonstration of commitment on the part of the country as this commitment determines the buyers’ actions and flow of investments,” Yu said.

The accomplishment of these long-term commitments is largely dependent on the country’s NDCs, which embodies each nation’s efforts to lower national emissions and prepare for the effects of climate change. While some progress is evident, new challenges emerge in reporting for projections of future GHG emissions, GHG emission reductions estimates by policies and measures, and additional indicators to track progress toward the region’s NDC goals.[3]

“With the kinds of technologies now available, we are in a better position in rice than ever before for carbon credit mechanisms. That said, the Agriculture, Forestry and Other Land Use (AFOLU) is still the weakest of all the GHG inventory sectors. Many rice growing countries have developed inventory systems but the real result of this is not truly reflective of full rice production systems on the ground. There remain challenges in technical requirements, among other areas, ” said FAO Regional Office for Asia and the Pacific Climate Change Officer Beau Damen. He cites the ongoing MRV research collaborations of IRRI in the region as a step in the right direction.

Globally, rice cultivation is the third-largest source of non-CO2 greenhouse gas emissions in agriculture. Despite this, many top rice-producing countries did not include quantified measures for the rice sub-sector in their NDCs.[4]

“While the region’s carbon market readiness is coming, there will still be challenges on MRV that cover the full range of the rice value chain. We need to build a system where all these options are available and accessible by producers and other carbon market actors,” says IRRI Climate Change Scientist Katie Nelson, adding that MRV systems need to be open-source, versatile, have strong linkages across different tools, and links to national inventories.

Effective MRV systems are vital for validating the success of carbon reduction initiatives and ensuring transparency and accountability in the carbon market. IRRI’s collaborations with the Business Partnerships Platform (BPP), Gold Standard, Rikolto, and CarbonFarm, to name a few, are helping level the playing field for rice producers by de-risking and simplifying rice producers’ access to carbon markets, and supporting farmers’ transition toward sustainable farming practices, such Alternate Wetting and Drying (AWD).

AWD case studies: A well-positioned agricultural intervention for climate financing under Article 6 of the Paris Agreement

IRRI’s work in Vietnam with the CGIAR climate change research initiatives Low-emission Food Systems and Asian Mega Deltas scales the implementation of AWD, among other climate-smart interventions, to help reduce methane emissions from rice production and support the Vietnamese government’s efforts to move to low-carbon rice production in line with the country’s NDC. Close collaboration with national partners through these research programs and bilateral projects led to the development of a roadmap for achieving NDCs in the agriculture sector in Vietnam and supporting tools for emission calculation, MRV, and climate finance.

For Thailand, AWD is among the four low-emission technologies under the Thai Rice Nationally Appropriate Mitigation Action (NAMA) project that represent best practices to improve rice yield and mitigate greenhouse gas emissions effectively. The project has helped over 9,400 farmers transition into mitigation practices and technologies, with cumulative GHG emission reductions of 68,000 tCO2e equivalent. Further, approximately 108,500 tonnes of low-carbon rice have been produced and verified under the project, with a fully segregated value chain, still developing.[5]

The ‘Thai Rice: Strengthening Climate-Smart Rice Farming’[6] project funded by the Green Climate Fund (GCF), slated to begin in 2024, will help IRRI build on the Thai Rice NAMA’s success and will drive transformative change within the Thai rice sector through a dual-purpose adaptation-mitigation strategy.

 

Leveraging science to increase investments for climate mitigation in rice 

Despite its high (non-CO2) mitigation potential, climate financing in rice remains low compared to other sectors. IRRI Senior Scientist for Policy Analysis and Climate Change Alisher Mirzabaev believes minimizing large farm- and system-level transaction costs can not only help agriculture carbon markets and functioning regulatory mechanisms emerge, but also channel much needed investments to the low-carbon rice segment.

Through its recently launched Methane Accelerator for Southeast Asia (MASEA) project, IRRI is able to employ farm surveys and analyses, and investment and policy evaluations, to assess farm- to system-level transaction costs, advise on investment opportunities, and develop policy options for promoting regulatory and market mechanisms for carbon mitigation in the agricultural sector.

“The technologies and the science to support carbon mitigation already exist. The economic, socio-technical, and institutional aspects are where much more research and multisectoral dialogue is needed.” Mirzabaev said.

  • IRRI’s climate change research and partnerships aim to support the accelerated development of a rice carbon market in Southeast Asia; to help the region’s rice value chains transition to a low-emission future that aligns with their climate commitments.
  • Transparent monitoring, reporting and verification (MRV) systems are needed for tracking reductions to realize the global rice mitigation potential.
  • Investments are needed to help ASEAN achieve their nationally determined contributions (NDCs) before 2030.

Visit GHGmitigation.irri.org to learn more about IRRI’s climate mitigation research.

 

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