Deriving financial benefit from SOIL’s climate mitigation action: is it possible?

Ground-breaking research on SOIL’s ecological sanitation service, published in the journal, Nature Climate Change, investigated the potential for container-based sanitation to mitigate greenhouse gas emissions when compared to other traditional waste treatment methods. The research revealed that SOIL’s service and method off off-site waste treatment effectively mitigates significant and measurable greenhouse gas emissions. The research is an exciting development for the sanitation sector and opens up the opportunity to explore carbon credits as a way to derive financial benefit, or additional revenue, from the service’s emission reduction potential, to help increase the financial sustainability of the service.

Sanitation’s Greenhouse Gas Emissions

Different types of sanitation and waste treatment practices have the potential to impact anthropogenic emissions of carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O), differently – as in, not all sanitation practices are equal in emissions. Further, emissions are calculated using both “direct” and “indirect” emissions data: the biological decomposition of feces and urine produces direct emissions; whereas, the operation and infrastructure used to manage feces and urine produces indirect emissions. For example, there can be emissions from the vehicles used to transport fecal sludge to a waste treatment site, or emissions related to the construction of sewage pipes. Additionally, the transformation and application of excreta into reuse products (like SOIL’s compost) can further sequester carbon and reduce anthropogenic emissions. This new body of research examining the intersection of sanitation and waste treatment with climate change is expanding rapidly and is revealing the importance of sanitation in climate change action.

Over, the past few years, SOIL has been directly involved with empirical and modeling work to quantify the direct and indirect emissions associated with SOIL’s sanitation and waste treatment system. In collaboration with Dr. Ryals’ research group at the University of California-Merced, SOIL compared the greenhouse gas emissions of their composting waste treatment process with other waste treatment outcomes in Haiti. The research partnership was able to estimate the total climate change mitigation potential of SOIL’s service from initial containment to application of the produced compost (with subsequent positive carbon sequestration benefits). Estimates show that the adoption of SOIL’s sanitation and waste treatment service could mitigate 126 kg of CO2-equivalent per person per year. For context, this represents about 42% of the average GHG emissions per capita per year in Haiti (or about 1% of the average GHG emissions per capita per year in the United States). This means that SOIL’s sanitation and waste treatment service could have significant implications for Haiti’s greenhouse gas emissions.

A recent analysis from Johnson et al. found a similar conclusion: sanitation represents more than half of the total city-level emissions in Kampala, Uganda. Johnson et al. modeled GHG emissions using the Kampala’s Shit Flow Diagram and then mapped corresponding emissions to each element of the diagram using the established Intergovernmental Panel on Climate Change (IPCC) methodology. For example, 8% of Kampala’s sewerage is transported to a waste treatment site that has direct emissions produced from the decomposition of excreta, indirect emissions from the operation of the site (e.g. fossil fuel consumption), and embedded carbon related to the construction of said site. In total, the waste treatment site contributes to 31% of Kampala’s total annual sanitation emissions. One key finding from Johnson et al. is that the highest per-capita emissions are associated with treatment of wastewater, storage of fecal sludge in pits and tanks, treatment of fecal sludge, and unsafe discharges to the environment. This key finding complements SOIL’s work and understanding that container-based sanitation (CBS) and an aerobic composting process effectively mitigates GHG emissions associated with global sanitation and waste treatment practices.

Financial Benefits of Carbon Mitigation Potential

SOIL’s sanitation and waste treatment service has been identified by peer-reviewed publications as a pathway to low-carbon safely managed sanitation in Haiti. The next step is for SOIL to use these proven findings from academia to unlock carbon financing. Carbon financing is a mechanism of assigning and awarding a monetary amount to carbon emission reduction. Carbon financing could serve as an alternative and sustainable funding stream for these services and thereby make them more replicable and scalable. In other words, SOIL’s sanitation service could derive financial benefits by achieving climate change benefits.

There are two primary ways to access carbon financing for climate change mitigation: the compliance carbon market and the voluntary carbon market. The compliance market is used by companies, and others, that have to account for their GHG emissions. As you can imagine, it is complex, requires rigorous monitoring and verification, and has limitations on who can participate. The voluntary market is more open and generally consists of four groups:

  1. Third-party carbon credit certification companies that establish methodologies for measuring and monitoring GHG mitigation;
  2. A “project” (i.e. a company or organization like SOIL) that is able to demonstrate GHG emission mitigation;
  3. Interested purchasers of carbon credit offsets; and
  4. A “marketplace” that sets a price for the carbon credit offset and connects purchasers with projects.

Like in other capitalist marketplaces, the price for the carbon credit offset is determined by supply and demand. On the voluntary market, the average price of ton CO2-e mitigated per year is between $10 and $25. Via the voluntary market, SOIL could theoretically access about $19 per household per year in the service at a price of $25 per ton CO2 eq, which represents about 50% of SOIL’s operating costs.

Bridging the Gap Between Academia and Implementation

Unfortunately, the reality is that the potential financial benefit to SOIL of carbon credit certification is much lower than about $19 per household per year for the following reasons:

  • The carbon credit price is probably lower than $25 per ton CO2-e mitigated and the price is also volatile. The price is likely to change (and optimistically will increase!), but we can’t reliably anticipate potential carbon credit revenue.
  • Third-party carbon credit certification companies charge for the initial certification as well as ongoing monitoring of emission mitigation year-to-year. This means that we would need to generate enough carbon credit revenue to pay for the one-time and recurring costs.
  • Only “eligible” emissions are awarded carbon financing. Eligibility is determined relative to a baseline, e.g. if we certify SOIL’s sanitation and waste treatment service this year when we have 1,700 households in the service, then this would serve as our baseline, and next year we could only generate revenue for all the climate change emission mitigation associated with any new households added to the service. We don’t benefit financially from those households that are already in the service. After validation, emission reductions from all new households will be considered throughout the entirety of the project. The duration of the project varies between 5 and 14 years dependent on the carbon credit certification company and options for renewal.
  • The application of compost and the subsequent soil carbon sequestration benefit is considered to be “outside the project boundary” of a carbon credit project. What this means is that someone who purchases and applies compost can receive the carbon credit, but not the producer.
  • The “science” of carbon credit certification lags behind the science of academia. Because the carbon credit certification process requires regular monitoring and verification, the emission reduction calculation is based on simplifying assumptions, accepted literature values, and easy-to-make measurements.

The Johnson et al. paper further shared that sanitation emissions are being underestimated. SOIL also recently found that underestimating baseline sanitation emissions reduces the overall mitigation potential. SOIL’s recent engagement with a third-party carbon credit certification company revealed significant differences in how the mitigation potential (and the subsequent carbon credit revenue) is considered in theory vs reality. The table below compares two methodological approaches: one followed by McNicol et al. and one followed by a carbon credit certification company. Both consider baseline emissions (average per capita emissions associated with the default sanitation and waste treatment system), project emissions (the average per capita emissions associated with SOIL’s service), and the mitigation potential (the difference between baseline emissions and project emissions).

Table 1. Baseline emissions, SOIL’s project emissions, and the overall mitigation reduction potential as calculated via two different methodological approaches.

Both McNicol et al. and the carbon credit certification company calculated similar emissions from the collection, transportation, and treatment of waste in SOIL’s service, but there are otherwise significant differences in methodological approaches and estimates. For example, the carbon credit certification company assumed that because pit latrines and septic tanks are emptied so infrequently in Cap-Haitien that all of the material decomposes in-situ and that there are no emissions associated with collection, transport, and treatment of the waste. This is a simplifying assumption with proxy measurements in order to simplify verifcation year-to-year, but it directly contradicts empirical measurements of significant GHG emissions from an informal emptying site in Cap-Haitien. Based on these adjusted estimates and the constraints of carbon credit certification listed above, it is unlikely that SOIL will be able to generate sufficient carbon credit revenue to make the certification process feasible until some or all of the variables cited above are addressed.

What Now?

Well, we are certainly not giving up! We are hopeful that the carbon credit certification market will continue to grow, evolve and become more nuanced in approach. In the meantime, we’ve found there to be a lot of potential in a “more-than-voluntary” carbon market that aligns well with our carbon financing goals. In a more-than-voluntary carbon market, you can choose to directly support climate-positive solutions around the world, including SOIL’s work in Haiti, independent of the constraints and expenses of the carbon credit certification market. Are you interested in deciding for yourself how much you value the climate change mitigation benefits that SOIL is providing in Haiti? Offset your carbon footprint today!

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