CARBON ACCOUNTING IN AUSTRALIA - United Nations

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T O W A R D S A C O M P R E H E N S I V E A N D F U L LYI N T E G R AT E D S T O C K A N D F L O W F R A M E W O R K F O RCARBON ACCOUNTING IN AUSTRALIAJUDITH AJANI AND PETER COMISARIHC CoombsPolicy ForumANU College ofAsia & the PacificFenner School ofEnvironment & SocietyANU College ofMedicine, Biology &EnvironmentRevised September 2014

TOWARDS A COMPREHENSIVE ANDF U L LY I N T E G R A T E D S T O C K A N D F L O WFRAMEWORK FOR CARBON ACCOUNTINGIN AUSTRALIADr Judith Ajani1 and Peter Comisari2This discussion paper was prepared as a partnership project between the Australian Bureau of Statistics, theAustralian Department of the Environment and The Australian National University. The views presented in thisDiscussion Paper are those of the authors and should not be taken for those of the Australian Government or itsagencies.June 20141. Dr Judith Ajani, HC Coombs Policy Forum and Fenner School of Environment and Society, The Australian NationalUniversity: Primary author and biocarbon stock estimation as an experimental exercise.2. Peter Comisari, Australian Bureau of Statistics: Geocarbon stock methodology and estimation as an experimentalexercise.

Steering Committee:Ian Ewing (ABS), Rob Sturgiss (DoE), Bill Allen (ABS), Michal Vardon (ABS), Andrew Cadogan-Cowper (ABS),Mark Matthews (ANU), Stephen Dovers (ANU), Judith Ajani (ANU)Research information and advice:Leigh Hunt, rangeland ecosystems, CSIROMark Conyers, agricultural ecosystems, NSW Department of Primary IndustriesMatt Bradford, rainforest ecosystems, CSIROAndy Steven, marine ecosystems, CSIROCris Brack, trees and settlements ecosystems, Fenner School of Environment and Society ANUHeather Keith, forests and natural ecosystems, Fenner School of Environment and Society ANUAndrew MacIntosh, FullCAM and forests, ANU Centre for Climate Law and PolicyBrad Opdyke, fossil fuels, Research School of Earth Sciences, ANUHelen King, agricultural soils, Fenner School of Environment and Society ANUJanet Stein, GIS support, Fenner School of Environment and Society ANUMichael Vardon, Australian Bureau of StatisticsDisclaimer:Much of the information presented in this Discussion Paper is the outcome of experimental research. The objective was to facilitate discussion about advancing carbon accounting in Australia and to inform data users aboutthe potential information so they could provide feedback. The authors do not vouch for the accuracy of theinformation.To cite this paper:Ajani J. and Comisari P. 2014, ‘Towards a comprehensive and fully integrated stock and flow framework forcarbon accounting in Australia’, a Discussion Paper, Australian National University, Canberra Australia.

KEY POINTS1. Australia faces a very real opportunity to build a comprehensive carbon stock and flowaccounting system fully integrated with our economic information system. Regularlyreporting such data will enhance significantly the information for policy making, publicunderstanding and debate.2. For countries undertaking carbon stock accounting for their jurisdiction, the primaryreservoirs in the geosphere (geocarbon in largely fossil fuels) and the biosphere(biocarbon in biomass and soils) are the most important. The release of carbon byhuman activity from primary reservoirs is the primary cause of global warming. The longexperience in national economic accounting confirms that accounting frameworks withcomprehensiveness (completeness) built in from the start are highly desirable. This doesnot mean that all carbon stocks and flows should be or need to be reported. Thepurpose of the statistics and resources available for information collection and reportingwill determine coverage and priorities. As these priorities change or new information andunderstanding becomes available, comprehensive accounting frameworks can morereadily accommodate such changes and therefore better serve the multiple informationneeds of users.3. The carbon classification system is fundamental for generating useful information fromthe accounts. With climate mitigation being the primary purpose of the information,criteria that separates the different carbon reservoirs (for example, in different arbonstockstability/longevity/restoration capacity attributes is important. Such science-basedcriteria should be consistent across both geocarbon and biocarbon. Furtherdisaggregation in the classification for biocarbon should be science-based using thesame criteria of stock stability/longevity/restoration capacity.4. Australia’s carbon stock and flow information is reported using IPCC designed industryactivity or product classifications. DoE and the ABS have developed concordance tablesto enable linkages with economic data (ex post). Benefits in information quality, andease and cost of reporting are likely to be realised by designing the carbon classificationsystem to be consistent with the product classifications used to generate Australia’seconomic information (ex ante).5. The Australian Greenhouse Energy Information System (AGEIS), managed by DoE tomeet the Australian Government’s reporting commitments under the UNFCC, containsinformation that could populate large components of an Australian carbon stockaccount. This is particularly the case for biocarbon in the land sector (coverage of themarine sector is under development) with stock-based models underpinning thereporting of flow information. Geocarbon stock information is not available with the mainexception being DoE work to estimate carbon in non-energy products such as plastics,lubricants and fertilisers. AGEIS contains limited information on biocarbon-basedproducts that accumulate in the economy: the primary one being wood products. TheABS experimental work to populate the fossil fuel component of an Australian carbonstock account fills a major information gap. Feedback on the questions accompanyingthe exercise is keenly sought.i P a g e

CONTENTSKey pointsiList of tablesivList of figuresvAbbreviationsviExecutive summary11 Introduction41.1What is carbon?51.2Stocks, flows and system dynamics61.3Global carbon cycle71.4Uses for carbon stock accounting and information8InformationBenefits for information providersImproving current data and information910111.4.11.4.21.4.32 Mapping Australia’s carbon stocks and flows and other preliminaries122.1Mapping Australia’s carbon stocks and flows122.2Statistical units152.3Reporting unit162.4Reporting year and frequency173 Carbon reservoir classification system183.1Criteria for classifying primary reservoirs183.2Geocarbon classifications183.3Biocarbon classifications203.4Accumulation in economy223.5Residuals234 Australia’s primary reservoir carbon stocks254.1Experimental exercise254.2Methods for geocarbon stock e or limited reportingEstimating carbon in Australia’s coal reservesEstimating carbon in Australia’s oil and gas reservesMethods for biocarbon stock iewCarbon in Natural ecosystemsCarbon in Semi-natural ecosystemsCarbon in Agricultural ecosystemsCarbon in Settlements and Other3334353536ii P a g e

5 SEEA EEA carbon stock accounting framework375.1Overview375.2SEEA EEA carbon stock account386 The Australian Greenhouse Emissions Information System (AGEIS)416.1Energy and industrial processes416.2Waste436.3Land and marine 4FullCAMNative forestsEnvironmental plantingsNon-forested natural and semi-natural terrestrial ecosystemsMarine ecosystemsCrop lands, grazing lands and horticulturePlantations for woodSettlementsCarbon stock estimates for the land sector using data available to Australia’s NationalInventory System4446494949505050517 Carbon stocks in the economy and linking carbon and economic information537.1Accumulation in economy537.2Linking carbon and economic information558 Stock change classification568.1Stock changes, flows and netting568.2Stock change classification578.3Using AGEIS to report stock changes58Appendix A – Glossary60Appendix B – Schedule of units and conversion factors64Appendix C – Biocarbon stocks Australia: Information sources and methods65Appendix D – Main information providers/sources for Australian greenhouse gas reporting71References72iii P a g e

LIST OF TABLESTable ES 1Estimated carbon stocks in Australia’s primary reservoirs today (milliontonnes C). An experimental exercise to provide an indicative picture toassist discussion about methods for regularly reporting carbon stocks andthe usefulness of the information.2Table 1Criteria for classifying primary reservoirs of geocarbon and biocarbon.18Table 2Estimated carbon stocks in Australia’s primary reservoirs today (milliontonnes C). An experimental exercise to generate an indicative picture toassist discussion about methods for regularly reporting carbon stocks andthe usefulness of the information.26Table 3Carbon content of Australian coal.28Table 4Australia’s carbon stocks in coal resources at 30 June 2011. Estimation forillustrative purposes to assist discussion about methods and informationuse.29Australia’s carbon stocks in oil and gas resources at 30 June 2009.Estimation for illustrative purposes to assist discussion about methods andinformation use.32Table 6SEEA EEA carbon stock account.39Table 7FullCAM carbon stock information.46Table 8Forest and agricultural land sector carbon stocks in 2010 estimated usingdata available to the National Inventory System.51Change in land sector carbon stocks between 2009 and 2010 estimatedusing data available to the National Inventory System.52Scope for Australian greenhouse gas information and information systemsto populate carbon stock account for Accumulation in economy.54Disaggregation of Australian biocarbon stocks by ecosystem type:information sources and methods. Estimates generated for illustrativepurposes to assist discussion about methods and information sources forregularly reporting carbon stocks.65Table 5Table 9Table 10Table A1iv P a g e

LIST OF FIGURESFigure 1The global carbon cycle and carbon stocks.7Figure 2Global carbon flows, decoupling and climate system inertia.8Figure 3Carbon stocks and flows mapping.14Figure 4Grazing Land Management Zones of the Australian rangelands.34Figure 5Stock and flow mapping of geocarbon and linkages to the economy.42Figure 6Allometric relations between forest height and above ground living biomassof calibration plots using in Saatchi et al. 2011.48v P a g e

ABBREVIATIONS3PGABARESABSAGEISALUMANUANZICAPI BRAIMFIPCCkgkmLLidarLPGLULUCFm3Mtn.d.a physiological growth modelAustralian Bureau of Agricultural and Resource Economics and SciencesAustralian Bureau of StatisticsAustralian Greenhouse Emissions Information SystemAustralian land use and management mapThe Australian National UniversityAustralian and New Zealand Standard Industrial ClassificationAmerican Petroleum Institute gravity or density measure of petroleumAustralian System of National Accounts (economic)barrelBureau of Resources and Energy Economicscarbonagricultural component of FullCAMforestry component of FullCAMcarbon carrying capacitycarbon capture and storagemethanecentimetrecarbon monoxidecarbon dioxidecommon reporting format tablesCommonwealth Scientific and Industrial Research OrganisationDepartment of the Environmenteconomically demonstrated resourceUS Environmental Protection AgencyFood and Agriculture Organization of the United Nationsfull carbon accounting modelgramgeneral decomposition modelgeographic information systemgross primary productiongigalitregrazing land management zonesgigatonnehectarehydrofluorocarbonInterim Biogeographic Regionalisation for AustraliaInternational Monetary FundIntergovernmental Panel on Climate Changekilogramkilometrelitrelight detection and rangingliquid petroleum gasLand Use, Land Use Change and Forestrycubic metremillion (mega) tonneno datevi P a g e

NEBNEENEPNGERSNGLNMVOCN ASEEA EEASISNASOCtUNUNFCCCnet ecosystem balancenet ecosystem exchangenet ecosystem productionNational Greenhouse and Energy Reporting systemnatural gas liquidsnon-methane volatile organic compoundnitrous oxidenet primary productionnot reportedNorthern TerritoryNational Vegetation Information SystemOrganisation for Economic Co-operation and DevelopmentOnline System for Comprehensive ReportingperflurocarbonQueenslandReducing Emissions for Deforestation and Degradationsoil carbon component of FullCAMSoil Carbon Research Programsub-economic demonstrated resourceSystem of Environmental-Economic AccountingSystem of Environmental-Economic Accounting Experimental EcosystemAccountingInternational System of Units (scientific)System of National Accounting (economic)soil organic carbontonneUnited NationsUnited Nations Framework Convention on Climate Changevii P a g e

EXECUTIVE SUMMARYSince only the mid-1990s, national governments have invested substantially in information systems tomeet their reporting obligations under the United Nations Framework Convention on Climate Change(UNFCCC) and the Kyoto Protocol. These systems, developed under Intergovernmental Panel onClimate Change (IPCC) guidance, generate considerable amounts of information and undergo constantrefinement and coverage. They are designed to report flow information, i.e. greenhouse gas emissionsto and removals from the atmosphere. This information is crucial not just for reporting against climatechange mitigation commitments but also for understanding the climate change process. Theinformation system, however, is incomplete because data users – be they policy makers, researchersor the public – need stock and flow information. Our core objectives are usually expressed in stockterms. How we get there is usually expressed in flow terms. For example, the economic wealth of acountry (a stock) is built through a combination of processes (various flows such as investing andworking).At the country level, carbon flow information needs complementing with information about carbonstocks in fossil fuels and in ecosystems to provide policy makers and other data users with a completeset of information. Recent advances in understanding and research have made the reporting ofcomprehensive carbon stock and flow information a real possibility. These include: DoE work toprogressively develop a comprehensive carbon accounting framework to support multiple informationneeds; the stock-based modelling underpinning much of the flow information reported by DoE for theland sector; the experience and skills in the ABS developed over many decades of economicaccounting in the principles of comprehensiveness and linking multiple stock and flow accounts; theendorsement and publication in 2012 of the System of Environmental-Economic Accounting (SEEA)Central Framework by the United Nations, European Commission, FAO, OECD, IMF and World Bankas a global statistical standard and the subsequent SEEA work to develop stock accountingframeworks for various ‘assets’ including carbon as presented in SEEA Experimental EcosystemAccounting and published by the European Commission, OECD, United Nations and World Bank in2013. The consistency in concepts, standards and classifications between the SEEA and the economicSystem of National Accounts (SNA) presents a real opportunity to fully integrate carbon and economicinformation to enhance research and policy making in Australia.In November 2012, officers from the ABS, DoE and ANU agreed on a partnership project to investigatethe potential for reporting Australia’s carbon stocks. This Discussion Paper was prepared to supportdiscussions with data providers and consultations with information users. It includes the results of anexperiment to populate a carbon stock account with indicative estimates to assist discussion aboutmethods for regularly reporting carbon stocks and the usefulness of the information. We identifiednumerous methodological issues which are presented as questions within the text to encouragefeedback and advice.We limited the experiment to investigating Australia’s carbon stocks in the primary reservoirs 1 of: geocarbon (carbon in the geosphere), and further limited to fossil fuel resources, andbiocarbon (carbon in the biosphere): comprehensively across all biomass and soil organiccarbon to 30 cm (100 cm for marine ecosystems) irrespective of ecosystem type andland/water use.Our results are presented in Table ES 1. The experiment did not cover carbon stocks in the economy,for example in concrete, plastics and wood products. We did however identify opportunities to applyDoE’s existing information systems to populate this part of a carbon stock account and in ways thatcould assist DoE in data verification.1A glossary is presented in Appendix A.1 P a g e

Table ES 1 Estimated carbon stocks in Australia’s primary reservoirs today (million tonnes C)a. Anexperimental exercise to provide an indicative picture to assist discussion about methods for regularlyreporting carbon stocks and the usefulness of the information.Primary reservoirGeocarbonFossil fuelBlack coalBrown coalCrude oilbLPGcNatural gasShale oilTotal fossil fuelCarbonate rocksLimestoneOther carbonate rocksTotal carbonate rocksOther (includes methaneclathrates)BiocarbonNatural ecosystemsRangelandsNon rangelands:Eucalypt native forestsShrub lands & woodlandsGrass, shrub & heath landsRainforestsOtherMarine ecosystemsFresh water ecosystemsTotal Natural ecosystemsSemi-natural ecosystemsHighly modified rangelandsGrazing in modified pasturesoutside rangelandsTotal Semi-natural ecosystemsAgricultural ecosystemsCroppingIrrigated agriculturePlantation woodReservoir/damOtherTotal Agriculture ecosystemsSettlementsOtherTotal Settlements and OtherTotal biocarbonda.b.c.d.Geocarbon(Mt C)Hectares(million)Biomasscarbon(Mt C)Soilorganiccarbon(Mt C)Totalbiocarbon(Mt 71082613431,081Coal estimates are for 30 June 2011. Oil and gas estimates are for 30 June 2009. Biocarbon estimates have beenderived using various information sources mostly in the 2000s.Includes naturally-occurring condensate.Comprises LPG naturally occurring in crude and natural gas production fields.Numbers do not add due to rounding.2 P a g e

The main finding from our investigation is the very real potential for Australia to build acomprehensive carbon stock and flow accounting system fully integrated with our economicinformation system. Generating such information requires drawing multiple threads together intoa comprehensive and consistent framework, populating the accounts with existing informationand working, overtime, to fill the gaps and address the methodological issues identified in thisDiscussion Paper.Carbon stock information has many uses. Of importance is its capacity to support governmentpolicy and implementation. The Australian Government’s mitigation policy, which aims toaddress climate change and improve the environment by rewarding abatement at the lowestcost, attracts a diverse range of competing abatement actions in both the energy andland/marine sectors. Comprehensive carbon stock and flow information can support AustralianGovernment policy by providing comparable information on carbon stocks in fossil fuels and allecosystems and land uses across Australia’s land and marine scape. Scenario analysis can beused to examine policy options expressed as stock changes over periods of time and, bylinkage with economic information, the economic and employment impacts of these

carbon accounting in Australia’, a Discussion Paper, Australian National University, Canberra Australia. i Page KEY POINTS 1. Australia faces a very real opportunity to build a comprehensive carbon stock and flow accounting system fully integrated with our economic information system. Regularly

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