Peatlands: our greatest source of carbon credits?

Abstract

Peatlands are the most efficient carbon stores of all terrestrial ecosystems, containing approximately 455 Pg of carbon, which is twice the amount found in the world’s forest biomass. The majority of this carbon is stored in the saturated peat soil. Pristine peatlands are still sequestering carbon at a rate of 0.096 Pg carbon per year; however, anthropogenic degradation of peatlands through draining, fires and exploitation can increase the production of GHGs, switching peatlands from net sinks to net sources of carbon. Conservation of peatlands throughout the UK and the rest of the world is clearly essential for limiting GHG emissions and it is therefore surprising that accounting for emissions from peatlands does not feature prominently in the UNFCCC’s Kyoto Protocol. Discussions at Conference of the Parties (COP) COP-15 and COP-16 look set to make amends for this oversight in any post-2012 climate change legislation, with peatlands becoming important factors in national GHG inventories, the agriculture, forestry and other land use (AFOLU) sector, and in the creation of internationally accredited carbon credits. Using figures from The Economics of Ecosystems and Biodiversity (TEEB), the world’s peatlands can be valued at up to US$18 billion. However, this sum does not take into account pending UNFCCC decisions. The detailed mandatory inclusion of peatlands in national GHG inventory schemes and in accredited carbon markets could see their value rise even further. This review looks at the current GHG emission-monitoring legislation regarding peatlands, with special focus given to those in the UK. It discusses the importance of peatlands in carbon sequestration, reviews how peatlands feature in current GHG emission-monitoring schemes, concentrating on those associated with the Kyoto Protocol, and considers how peatlands may feature in national GHG emission-monitoring schemes and carbon markets in the future.

Figure 1.  Determination of an Annex I Party’s compliance with Article 3, paragraph 1, of the Kyoto Protocol.

LULUCF: Land use, land-use change and forestry.

Reproduced with permision from the UNFCCC [48].

Peatlands cover just 3% of the world’s surface [1], yet they contain nearly a third of all the organic carbon found in the earth’s soils, which is equivalent to approximately two-thirds of the entire atmospheric carbon pool [2]. Peatlands have sequestered this carbon over millennia due, primarily, to the accumulation of partially decomposed organic matter in anoxic soils [3] and it is estimated they continue to do so at an average rate of 0.07–0.096 Pg of carbon per year (1 Pg = 10¹⁵ g) [1,4]. However, decomposition of some soil organic matter (SOM) does take place in peatlands, releasing carbon in solid and gaseous forms such as CO₂ and methane. These two gases alongside nitrous oxide make up the main GHGs emitted by peatlands. Most studies agree that although the natural processes in peatlands produce varying amounts of GHGs, depending on the ecosystem’s condition, type and location, they are currently net carbon sinks on the global level [5]. However, there are fears that anthropogenic and environmental factors could be altering the balance, turning peatlands into carbon sources [6]. Despite peatlands having the highest carbon density of any terrestrial ecosystem [7], they do not feature prominently in GHG emission-monitoring schemes under the Kyoto Protocol. Therefore, any emission savings created through peatland management or restoration projects do not necessarily count towards a Party’s Kyoto commitment. Recent decisions have moved to readdress this issue in any post-2012 climate change legislation.

This review focuses on the current GHG emission-monitoring legislation regarding peatlands, with particular focus given to those in the UK. It has been written for scientists and economists involved with the conservation of peatland habitats. The aims of the key sections are;

	▪ To briefly discuss the importance of peatlands in carbon sequestration;
	▪ To review how peatlands feature in current GHG emission monitoring schemes concentrating on those associated with the Kyoto Protocol;
	▪ To consider how peatlands may feature in national GHG emission monitoring schemes and carbon markets in the future.

Carbon cycling in peatlands

▪ Definition & types of peatlands

Peatland is generally considered to be a generic term for any freshwater wetland that accumulates partially decayed plant-matter peat (usually to a depth of greater than 40 cm), referred to as peat [8]. They are classified as organic wetlands and are estimated to be the most widespread group of wetlands differing from mineral wetlands by having a living plant layer plus thick accumulations of preserved plant detritus. See Table 1 for a definition of the main types of peatland.

The unique biogeochemistry of peatlands make them unbalanced ecosystems (i.e., where the production rate of organic matter exceeds that of decomposition) [1,3]. Traditionally, this impaired decay is attributed to anoxia [1,9,10], low nutrients, low temperatures and low pH [1,11]. Work by Freeman et al. also showed that constraints on the enzyme phenol oxidase could be the main inhibiting factor on decomposition [12]. Phenol oxidases are among the few enzymes able to fully degrade phenolic compounds [9] and their activity can be suppressed by the conditions in peat; allowing the build up of phenolic compounds, which then prevent the major agents of nutrient cycling, hydrolase enzymes, from carrying out normal decay processes [13,14].

▪ Carbon in peatlands

Globally, peatlands cover an area of approximately 400 million hectare (ha) but store approximately a third of all the organic carbon found in the Earth’s soils, estimated to be between 390 and 528 Pg (Pg = 1 × 10¹⁵ g) [1,15–18]. This is equivalent to approximately 60–78% of the entire atmospheric carbon pool and is twice the amount of carbon found in the entire world’s forest biomass [2,7,19]. This quantity is equal to the levels of carbon that would be emitted to the atmosphere from burning fossil fuels at the current annual global rate (∼7 Pg in 2007) for the next 75 years [20]. Such figures mean that peatlands are the most efficient carbon stores of all terrestrial ecosystems and are second only to oceanic deposits as the Earth’s most important stores [7].

Peatlands have been called ‘unusual’ ecosystems, in-terms of GHG scenarios, as although they sequester the GHG CO₂ from the atmosphere as peat, they also emit, in potentially large quantities, CO₂, methane and nitrous oxide [1]. This is due to complicated aerobic and anaerobic decomposition processes, which occur at varying rates, dependent on a number of environmental and biotic factors such as climate, chemical composition of the litter and nature and abundance of decomposing microorganisms [21,22]. A full analysis of these processes is beyond the scope of this article; however, Kayranli et al. have produced a comprehensive review of the relevant carbon cycles and pathways [5]. Although it is clear that more research is needed to gain a better understanding of the range of flux pathways (inputs and outputs) and the various forms of carbon (gases, solutes and particulates) involved in the carbon budget of peatlands [5,23], most research agrees peatlands have been a net sink of atmospheric carbon throughout the Holecene period to the present day [5,24–26].

It is feared the delicate balance between accumulation of peat and decay may cause peatlands to become net carbon sources following human interventions. Degradation of peatlands through drainage, fires, atmospheric deposition and exploitation (e.g., for fuel and horticultural products) are resulting in a growing source of anthropogenic GHG emissions. CO₂ emissions from peatland drainage, fires and exploitation are currently estimated to be at least 3,000 million tons per annum, or equivalent to more than 10% of the global fossil-fuel emissions [7].

Many researches also warn that a warmer, drier climate as is being predicted by some climate change models for many areas of the globe (especially over parts of Western Europe and North America), could lower the water table of some peatlands creating aerobic conditions in the peat matrix. This may affect the soil’s biogeochemical process and lead to a rise in the rate of decomposition, increasing GHG emissions from the peatlands: switching more of them from being net-carbon sinks to carbon sources [27–37]. It is also feared that warmer temperatures will increase peatland permafrost thaw, diminishing the tundra’s carbon-storage capacity [38,39].

▪ Peatlands in the UK

Estimates on the extent of UK peat vary from 1.5 to 5 million ha (∼15% of the land area), depending on whether shallow peats, less than 1 m in thickness, are included. This equates to an estimated minimum of between 2,302 and 3,121 Mt of carbon (Table 2)[23,40].

Work by Billett et al.[23] suggests the carbon-accumulation rate for the UK’s peatland is comparable to the original figure suggested by Gorham’s [1] for Northern Hemisphere peatlands in general: approximately -23 g carbon m^-2 yr^-1 (negative fluxes indicate net uptake from the atmosphere), although the authors concluded when they considered all flux pathways, that the current accumulation rate of some of the UK’s peatlands may be as high as -56 to -72 g carbon m^-2 yr^-1. However, large areas of the UK’s peatlands have been subjected to land management practices that have negatively affected their capacity for carbon accumulation. Such activities include afforestation, drainage, prescribed burning, peat extraction, grazing, fertilization and liming [41]. Indeed, an estimated 1.5 million ha of the country’s peat is believed to have been drained, with the practice of peatland drainage peaking in Britain in the 1970s [35,42]. A report by Natural England went as far as to say that only 1% of England’s peats (>40 cm deep) can be considered ‘undamaged’ [43] and a changing climate may even result in a decline in the distribution of some of country’s actively growing peatlands [44,45]. Fortunately, there are now many projects underway to restore areas of the UK’s peatlands through restoration and rewetting projects, many of them thanks to Government polices and initiatives [40,43,46].

The UNFCCC & the Kyoto Protocol

To understand how peatlands feature in national GHG monitoring schemes and their potential role in carbon markets, it is essential to understand the general mechanisms and main accounting systems of the United Nations Framework on Convention on Climate Change (UNFCCC) and the Kyoto Protocol. Once this has been reviewed, peatlands current and potential role will be considered.

▪ The UNFCCC

During the United Nations Conference on Environmental Development (UNCED) at Rio de Janerio in June 1992, an international environmental treaty was produced, named the UNFCCC. Its main objective: “[The] stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to a climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.” (Article 2 [47]).

The GHG considered by the UNFCCC to be the most important, due to their global warming potentials (GWPs), are CO₂, methane, nitrous oxide, sulphur, hexafluoride (SF₆), hydroflurocarbons (HFCs), and perfluorocarbons (PFCs).

▪ The Kyoto Protocol

A total of 192 Parties have currently signed up to the UNFCCC treaty, which came into force in 1994. However, the UNFCCC itself has no enforcement mechanisms to ensure stabilization of GHG and sets no legally binding limits on GHG emissions for individual countries, or Parties. Instead, the UNFCCC makes provision for updates, or protocols, to set mandatory emission levels (Article 17 [47]). To date, the principal update is the Kyoto Protocol, which was negotiated amongst 84 countries and was adopted in Kyoto, Japan, on 11 December 1997 entering into force on 16 February 2005. The detailed rules for the implementation of the protocol were discussed by the Conference of the Parties (COP) serving as a meeting of the Parties to the Kyoto Protocol (CMP) and finally agreed at the seventh conference of the Parties to the UNFCCC (commonly referred to as COP-7) in Marrakesh, Morocco, in 2001. These ‘Marrakesh Accords’ were formally adopted by the CMP at its first session in Montreal, Canada in December 2005 [48].

The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European Community, known as Annex I Parties, for reducing GHG emissions. These amount to an average of 5% against 1990 levels over the 5-year period 2008–2012 (known as the first commitment period) for the three most important gases – CO₂, methane and nitrous oxide [49].

Annex I Parties have to account for their total GHG emissions from a number of sources listed in Annex A to the Kyoto Protocol. These include GHG emissions from energy and industrial process, solvent and other product use, agriculture and waste sectors [49]. Each Annex I Party has a specific emissions target detailed in Annex B of the Kyoto Protocol, which is set relative its GHG emissions from the base year: 1990 for CO₂, methane and nitrous oxide and either 1990 or 1995 for SF₆, HFCs and PFCs. A Party’s reduction target is expressed as levels of allowed emissions, or assigned amounts, over the 2008–2012 commitment period. These allowed emissions are divided into assigned amount units, each of which represents an allowance to emit 1 metric ton of CO₂ equivalent (t CO₂ eq or CO₂ equivalency).

The Kyoto Protocol not only establishes the GHG-reduction levels for those nations defined as Annex I Parties (generally the more developed countries), but it also outlines the basis of how these targets could be attained, stating in Article 3 paragraph 3: “The net changes in greenhouse gas emissions by sources and removals by sinks resulting from direct human-induced land-use change and forestry activities, limited to afforestation, reforestation and deforestation since 1990, measured as verifiable changes in carbon stocks in each commitment period, shall be used to meet the commitments under this Article of each Party included in Annex I.” [49]

The main source referred to in this article relates to the emissions from fossil fuel consumption and Annex I Parties must meet their targets primarily through national reduction measures; for example, investing in less polluting technology. However, Parties must also take measures to protect and enhance emission removals from specific ecosystems that sequester carbon from the atmosphere, referred to as land use, land-use change and forestry (LULUCF). Article 3 paragraph 3 of the protocol refers to direct, human-induced, afforestation, reforestation and deforestation activities and accounting for these is mandatory for Annex I Parties. However, Article 3, paragraph 4, describes other activities, for which accounting is optional, stating: “The Parties to this Protocol shall, at its first session or as soon as practicable thereafter, decide upon modalities, rules and guidelines as to how, and which, additional human-induced activities related to changes in GHG emissions by sources and removals by sinks in the agricultural soils and the land-use change and forestry categories shall be added to, or subtracted from, the assigned amounts for Parties included in Annex I.”[49]

Once an Annex I Party decides to account for one of these LULUCF activities, which include cropland management, grazing land management and/or revegetation, it must continue to do so for the full commitment period [41]. In contrast to emissions from Annex A sources, the protocol requires Parties to account for emissions and removals from LULUCF activities by adding to or subtracting from their initial assigned amount. Net removals from LULUCF activities result in additional emission allowances called removal units, which a Party may add to its assigned amount, and a Party must account for any net emissions from LULUCF activities by canceling Kyoto units. The quantity of emission allowances issued or cancelled is subject to specific rules, which differ for each LULUCF activity [48,49].

Annex I Parties can also add to or subtract from their initial assigned amount – and therefore raise or lower the level of their allowed emissions over the commitment period – by trading Kyoto units with other Parties in accordance three market-based mechanisms.

These Kyoto mechanisms are:

	▪ Emissions Trading (ET): Article 17;
	▪ The Clean Development Mechanism (CDM): Article 12;
	▪ Joint Implementation (JI): Article 6.

▪ CDM & Joint Implementation

Joint Implementation (JI), outlined in Article 6 of the Kyoto Protocol, is a project-based mechanism whereby one Annex I Party with a higher-than-average emission reduction costs is able to invest in cheaper emission reduction measures in another Party and receive at least partial credit for in any emission reduction resulting from the investment [50]. The unit associated with JI is called an emission-reduction unit and they are converted from existing amount units and removal units before being transferred. It is important to note that JI does not affect the total assigned amount of Annex I Parties collectively; instead, it redistributes the assigned amount among them.

Defined in Article 12 of the Kyoto Protocol, CDM is another project-based mechanism that allows Annex I Parties to implement an emission-reduction project in developing countries. Such projects must follow strict guidelines and accounting requirements to ensure any reductions or removals associated with projects are additional to what would otherwise occur in the absence of the projects. If successful, projects can earn saleable certified emission-reduction credits, since. unlike emission trading and JI, emission-reduction credits increase both the total assigned amount available to the relevant Annex I Party and their allowable level of emissions. This mechanism is seen by many as pioneering since it is the first global, environmental investment and credit scheme of its kind. For any of these projects to be eligible the emission reduction or enhancements they produce must be “additional to any that would otherwise occur”[51].

▪ Emissions trading

Emissions trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare (emissions permitted to them but not ‘used’) to sell this excess capacity to countries that are over their targets [49]. This has therefore created a new commodity in the form of emission reductions or removals. Annex I Parties can create domestic or regional (between a group of Parties) schemes for emissions trading. These are subject to Kyoto Protocol rules laid out in Article 17 of the Protocol and Decision 11 of the first session of the CMP [49].

Since CO₂ is the principal GHG, emission trading operating under the Kyoto Protocol umbrella is generally referred to as trading in carbon and units of emission reductions are equal to 1 ton of CO₂ – giving the popular term, ‘carbon credit.’ Carbon is now tracked and traded like any other commodity and this is known as the ‘carbon market’. However, it is important to note that unlike other commodities ‘carbon’ is a politically generated and managed market with no physical commodity, only a dematerialized allowance certificate [52].

▪ The EU GHG Emission Trading System

Under the Kyoto Protocol, the EU agreed to an 8% reduction in their GHG emissions, compared with the levels in 1990. The EU aims to achieve its target by distributing different rates among its member states. The EU has also offered to increase its emissions reduction to 30% by 2020, on the condition that other major emitting countries in the developed and developing worlds commit to do their ‘fair share’ under a future global-climate agreement [101].

In 2000, the European Commission launched the European Climate Change Program (ECCP) in order to identify and develop all the necessary elements and strategies needed to implement the Kyoto Protocol. This has led to the adoption of a wide range of new policies and measures, including the EU Greenhouse Gas Emission Trading System (EU ETS). Based on the European Emissions Trading Directive on 13 October 2003, the EU ETS began operation on January 2005 and is the largest multi-national GHG emission trading system in the world [53].

The EU ETS only applies to combustion installations with a net heat supply in excess of 20 MW, such as industrial power stations, oil refineries, coke ovens, iron and steel plants, and factories making cement, glass, lime, brick, ceramics, pulp and paper [53]. These industries (totaling approximately 11,500 installations) are believed to be responsible for approximately a third of the EU’s GHG emissions and approximately 45% of the EU’s CO₂ emissions [54]. Each participant is allocated a certain quantity of emission allowances in accordance with their historical emissions, minus a specified reduction commitment amount. Each emission allowance entitles the Party in question to emit 1 ton of CO₂ (as in the Kyoto Protocol) within a specified period. At the end of this obligation period, the Party must demonstrate that the extent of its emissions are covered by its emission allowances. Parties may acquire additional emission allowances, either by purchasing them from other participants in the EU ETS or by carrying over any remaining credit from one obligation period to the next. Those who emit more than their allowance have to make up the shortfall by acquiring the necessary allowances from other market participants. In this way, emissions trading gives market participants the flexibility to fulfill their reduction commitment either by their own efforts or through the purchase of additional reduction certificates [54].

Allowances traded in the EU ETS are held in accounts in electronic registries set up by member states of the EU, although all of these registries are overseen by a Central Administrator at EU level who, through the Community Independent Transaction Log, monitors each transaction for any irregularities. In this way, the registries system keep track of the ownership of allowances in the same way as a banking system keeps track of the ownership of money.

This type of scheme is often referred to as ‘cap-and trade’ scheme because there is as an agreed aggregate cap on a particular source’s accepted level of pollution. These sources are then allowed to trade amongst themselves to determine which can produce the emissions and at what levels. For countries and companies in the EU, which is bound by the Kyoto Protocol, these types of schemes are mandatory with penalties for those not abiding to them. However, the EU ETS is not the only mandatory emission trading market, and countries such as the USA, South Korea, Japan, Australia and Canada are in varying stages of developing their own [55].

Many of the initiatives of EU ETS are developments and extensions of the emission permit trading system of the 1990 Clean Air Act Amendments (1990 CAAA) aimed at regulating sulfur dioxide (SO₂) emissions from US thermal power plants. The system, of harnessing the forces of economic markets to achieve cost-effective environmental protection, proved incredibly effective in the US with 100% compliance in reducing SO₂ emissions [56,57].

There is also a rapidly growing ‘voluntary’ emission trading market aimed at businesses and even individuals looking to offset the GHG they produce. The units of trading in the voluntary sector are still equivalent to 1 ton of CO₂ and are known as verified emissions reductions. Anyone can participate in the market and voluntary offset schemes can be defined as those aimed at generating GHG emission reductions not required by Kyoto Protocol’s derived regulation. Units are generated by projects that are assessed and verified by third party organizations, rather than through the official channels of the UNFCCC [58]. There have been recent improvements in the standardization of the registries that monitor these verified emissions reductions in order to increase trust in the system [55]. In a review of the differences between the voluntary and mandatory markets, Benwell states there are many reasons why Parties would become involved in voluntary schemes and these include a genuine wish to reduce emissions; marketing opportunities from the ‘carbon neutral’ or ‘green’ image; shareholder and/or institutional pressure; and threat of future climate litigation [55] and a wish to potentially influence future regulations. However, it can be argued that the distinction between the two types of market are often blurred and the term ‘voluntary’ is misleading, since although Parties are not forced into entering into a scheme, they are nevertheless enforced by law. The author concludes that both schemes are vital for the reduction of GHG emissions and calls for more hybridization and the divide between the two to be abandoned.

▪ The Kyoto accounting system

At the end of the Kyoto Protocol’s commitment period, the total emissions by each Annex I Party will be compared with its initial assigned amount to check if it has fulfilled its commitment. Each Party’s available assigned amount is equal to its initial assigned amount, plus any additional Kyoto units acquired from other Parties through the Kyoto mechanisms, or issued for net removals from a LULUCF activity, minus any units transferred to other Parties or cancelled for net emissions from a LULUCF activity (Decision 13/CMP.1, Annex, Paragraphs 11, 12 and 14 [102]). Each Annex I Party is therefore required to have established and maintained a national GHG inventory and a registry to track its holdings of and transaction of Kyoto units. These are subject to numerous review and compliance procedures (Article 7, 5, 8 and 18 [49]). The Intergovernmental Panel on Climate Change (IPCC) – an independent body made up of the world’s leading scientists and experts who report directly to the UNFCCC – prepared guidelines for the format and accounting methodologies of national GHG inventories (GHGI) [59].

▪ Peatlands in the Kyoto Protocol

The IPCC’s guidelines for an Annex I Party’s GHG monitoring and accounting provides a broad range of emission factors that can be used to estimate emissions from different activities. The emission factors that they provide are called Tier I and, because they are guidelines for all countries, are generalizations that apply to broad climate zones. However, the IPCC recommends that Parties should develop more detailed Tier II emission factors or Tier III modeling approaches that are relevant to their individual circumstances.

Chapter 7 of the IPCC National GHGI states that emissions from peatlands that are managed for forestry, grazing, cultivation, extraction or development should be accounted for. A series of Tier I emission factors are provided for the main GHG emissions created through different activities in temperate peatlands. Some broad guidelines are also laid out for Tier II and III emission factors although the IPCC confess knowledge and literature on the subject is ‘sparse’ [60].

Under Article 3 of the Kyoto Protocol, Annex I Parties have the option to include emission reductions delivered through a range of land management activities (e.g., LULUCF), such as the improved management of existing forests, increasing soil-carbon sequestration and restoration of degraded land. Peatland restoration is not explicitly included in the list of optional activities in Article 3.4 of the protocol; therefore, any emission savings delivered by peatland restoration would not count towards meeting a Party’s Kyoto commitment.

However, in 2009, at the UNFCCC’s Conference of the Parties meeting in Copenhagen (COP-15) it was agreed in principle that Parties could voluntarily include ‘wetland re-wetting’ as a LULUCF option in any post-2012 international protocol. In 2010, at COP-16 in Cancun, Mexico, it was further agreed that in any future climate agreement, it should be possible for Parties to reduce their emissions by rewetting drained peatlands, identified as sinks of GHG (Agenda item 3 [103]). However, negotiators could not agree on the full details and it was not determined whether accounting for peatland drainage would be mandatory or voluntary. Further discussions are therefore expected at COP-17 in Durban, South Africa, in 2011, to clarify the guidelines relating to LULUCF and peatlands in the second commitment period of the Kyoto Protocol (e.g., after 2012) [104]. Such decisions will affect GHG emission-monitoring schemes under the national GHGI of signatories to the Kyoto Protocol, and will become nationally appropriate mitigation actions (NAMAs) if managed correctly [43].

In the UK, the Department of Energy and Climate Change (DECC) is responsible for the delivery of the Government’s GHGI to the UNFCCC, in accordance with Article 5 of the Kyoto Protocol and European commission decision, in order to comply with the UK and EU’s Kyoto Protocol commitments [61]. Currently, peatlands are classified under the grassland category of land use in the GHGI and numbers on emissions from peatlands only include extraction of peat for horticultural use, oxidation of drained lowland raised bogs and nitrous oxide emissions from the cultivation of histosols.

▪ Reducing emissions from deforestation and forest degradation

Peatlands were also given support at the Cancun climate talks through an agreed text for the reducing emissions from deforestation and forest degradation (REDD) mechanism, which could offer opportunities for the protection and restoration of peatlands in developing countries such as Indonesia, Malaysia and Papua New Guinea [105].

Reducing emissions from deforestation and forest degradation is a scheme proposed at COP-13 in Bali, Indonesia, in 2007, which aims to offer financial incentives for developing countries to reduce GHG emissions by better management of forest resources [62]. Such projects will create quantifiable units, similar to current CDM projects, which can be used in a form of carbon market in the second commitment period of the Kyoto Protocol. REDD Plus (REDD+) moves REDD forward, following discussions and decisions by interested Parties at recent COP meetings and includes the role of conservation, sustainable management of forests and enhancement of forest carbon stocks.

Indonesia, which has 21 out of the 25 million hectares of peatland in Southeast Asia [63], is developing demonstration activities involving peatlands for testing the potential of a global REDD-carbon market. The Indonesian Ministry of Forestry, which is managing the activities, are being given financial and technical support from a number of developed countries as well as the World Bank, [64]. However, more work is needed to create adequate guidelines to assess the emissions from peatlands with the necessary accuracy, because to be tradable under REDD or any other mechanism, GHG emission reductions have to be “results-based, demonstrable, transparent and verifiable, and estimated consistently over time”, as stated at COP-13 [106]. This is a major challenge in terms of developing the necessary accounting and trading systems (Table 3).

Peatlands’ future role

Following the decisions at COP-15 and COP-16, it is clear that GHG emissions from peatlands are to feature more prominently in the Kyoto Protocol and any successor for the second commitment phase. For Annex I Parties, there are two main areas where these ecosystems could prove beneficial: carbon offsetting and in national GHGI.

▪ National GHGI

A report by International Union for Conservation of Nature (IUCN) Peatland Programme [107] suggested that the UK’s peatlands could be delivering over 3 million tons of CO₂ sequestration per annum. However, the report estimates that 10 million tons of CO₂ per year are being lost to the atmosphere from the country’s damaged peatlands, equating to 3–30 tons per ha per year, depending on how badly the site is affected. The IUCN suggests that there is sufficient evidence to show it is possible to halt significant amounts of this loss from peatlands through habitat restoration (e.g., rewetting). Indeed, 1.5 million tons of CO₂ emissions are already expected to be saved by 2015 as a result of the UK Biodiversity Action Plan’s target to restore 845,000 ha of blanket bog.

Although these figures may be useful as a benchmark, continued research in this area is essential. Any increased methane emissions associated with rewetting are likely to be small in relation to the overall GHG losses from a damaged peatland [65]. Although again, more research is needed in this area, as Baird et al. conclude; restoration of a peatland does not necessary result in it becoming a carbon sink [66]. The IUCN argue that such peatland restoration projects are a cost-effective means of addressing climate change, compared with other carbon-abatement methods, such as afforestation and renewable energy. Summarizing their findings the report states, “Restoring peatlands can be considered a natural form of carbon capture and storage, preventing release of carbon from damaged bogs and preserving it for potentially millions of years.”

Writing in 2009, the authors of the report highlighted that the methodologies for national GHG inventory accounting systems, under the Kyoto Protocol, did not fully address the GHG emission savings from peatland restoration. As a result of decisions at COP-15 and COP-16, this is likely to change and it is hoped that a further ruling on this will be made at COP-17.

It is necessary to clarify that although there may be some dispute in IUCN’s figure of peatlands storing carbon for millions of years, owing to the glacial-interglacial patterns, the reasoning of the authors is still valid: peatlands can potentially store and capture carbon for a period of time, which may prove beneficial in stabilizing the amounts of GHG in the atmosphere.

Clearly, for peatland restoration to feature in any national GHG inventory, monitoring of the activities must be measurable, reportable and verifiable (MRV), ensuring that it is possible for the results of individual actions to be quantified and reported in a consistent and transparent way [108]. This will allow for appropriate verification, by a third party review, and ensure adequate information is available to assess progress against the objectives of the UNFCCC and the guidelines of the Kyoto Protocol. Unfortunately, for various reasons, such as the diversity of peatlands and climatic conditions where they occur, as well as the variability of parameters (e.g., weather and vegetation) that control GHG emissions seasonally and between years, assessment of GHG fluxes from peatlands is often more complicated than monitoring industrial processes and even forest management practices. A report by Joosten and Couwenberg concluded that despite the difficulties associated ensuring peatland restoration projects are MRV, affordable methodologies will be available for reliable baseline setting and monitoring in a post-2012 climate framework [108]. This, they claim, will allow inclusion of peatland conservation and rewetting in climate policies. Such methodologies could involve applying various proxies (e.g., waterlevel and vegetation) to GHG flux models. The models themselves are calculated with flux measurements from techniques including the chamber method, which usually enables measurements on a scale of up to 1 m²; or eddy-covariance, which can assess GHG fluxes over larger areas (typically 1 km²).

If Annex I Party are able to include both the negative fluxes of GHG from existing peatlands and the emission reductions from restoring peatlands in LULUCF of their national GHGI, it could help reduce the amount of emission cuts, and therefore investment, they have to make from other sectors, such as industry. Figure 1 demonstrates how LULUCF activities are added to the initial assigned amount units, along with units obtained from the three Kyoto mechanisms, to ensure a Party is in compliance of its Annex A emission targets, in accordance with Article 3 paragraph 1 of the Kyoto Protocol. With relatively large areas of peatland, the UK could benefit from this scheme, as well as other Annex I countries such as Canada and Finland.

▪ Carbon offsetting

The use of ecological restoration projects to offset GHG emissions has been considered for over 20 years and this can work alongside cap-and-trade schemes, such as the EU ETS. The first official biosequestration project involved reforestation in Guatemala in 1988, where one of the world’s largest power companies, Applied Energy Services, provided US$2 million for the planting of 50 million trees in the Western Highlands region of the Central American country. Applied Energy Services, won regulatory approval for the project which they planned would offset the CO₂ emissions of their coal-fired power station in Connecticut, USA, over its 40-year life span, somewhere around 14.1 million tons of carbon [67,68].

Ecological restoration projects using peatlands for biosequestration could be a financially sound method for creating carbon credits to be used in carbon markets. There are a growing number of both mandatory and voluntary markets that include biosequestration projects (Table 4). The Kyoto Protocol’s CDM and any similar mechanisms likely to feature in the protocol’s successor (e.g., REDD, are the most important to the UK. As previously stated, discussions at COP-15 and COP-16 highlighted the importance of peatlands in such mechanisms. Decisions at COP-17 could see investment in peatland conservation and restoration in countries such as Indonesia, for the creation of Kyoto and REDD emission units.

There is some concern that allowing terrestrial sinks as an offset to emissions by developed countries removes some of the responsibility, at least temporarily, for dealing directly with the problem of fossil fuel GHG emissions. This may result in further delays in dealing with the main GHG sources, or as Grubb et al. said, it could become a “distraction from the fundamental goals of sustainable development”[69]. However, Roulet argued that if the UNFCCC’s objective is taken at face value and the stabilization of GHG concentrations is the ultimate goal, then all sinks and sources, regardless of their origin and national implications, should be accounted for and included in mitigation actions [70].

Future perspectives

For Annex I Parties such as the UK, management of peatland areas to specifically maintain and increase the carbon stocks found in their waterlogged organic soil, is set to become a progressively important aspect of GHG emission monitoring and accounting. Such carbon stewardship is likely to be a cost-effective activity in helping to meet national emission commitments under any post-2012 successor to the Kyoto Protocol. Work by Worrall et al. compared the market price of carbon to the cost and effectiveness of different peatland management practices, such as the cessation of grazing, revegetation and blocking of drainage ditches [71]. It was found that, depending on the price of carbon and the restoration technique used, restoring certain areas of the UK’s peatland could prove profitable, creating carbon credits. The CO₂ equivalency units created though could be incorporated into a LULUCF scheme for a GHG inventory, instead of being used in an emissions market. It is important to note that Worrall et al. concluded that no single management technique is best for the carbon stewardship of all peatlands. To maximize their effectiveness as carbon sinks, targeted actions are required: combining several management practices, an issue also raised by Ostle et al.[72]. It is important to note that Worrall et al. argued the profitability of using peatlands in carbon offsetting schemes heavily depends on the price of carbon.

Land use, land-use change and forestry itself has already been improved to give more significance to peatlands, which could help such carbon stewardship projects. Volume 4 of the 2006 IPCC Guidelines refine LULUCF to include GHG emissions from agriculture, resulting in the agriculture, forestry and other land use sector. The IPCC say this change recognizes that land-use changes can involve all types of land and the new guidelines are intended to improve “consistency and completeness in the estimation and reporting of greenhouse gas emissions and removals”[60]. One of the principal changes is the recognition of GHG emissions, specifically CO₂ and ‘non-CO₂’ emissions (e.g., N₂O, from managed peatlands).

If CDM and REDD specifically take into account the role of peatlands, investment into projects in countries such as Indonesia could see areas of wetlands conserved and restored. The benefits of this may well go beyond curbing the worldwide increase in GHG emissions. Such ecosystems help clean polluted waters, stabilize water systems and support a host of unique flora and fauna, all of which may create further economic and environmental benefits [73]. If land owners can make more money from preserving an area of peatland, through a CDM or REDD project, they are less likely to develop the land for purposes such as palm oil plantations, which are major GHG emitters [74]. However, for this to become a reality, it is essential that the revenue derived from peatland management and restoration competes with activities such as palm oil agriculture. If the created credits are then tradable and incorporated into the proposed compliance markets (rather than voluntary markets) it will help ensure a stable supply of funds at higher carbon prices, and allow projects to be buffered against uncertainties and fluctuations in related markets, such as the price of palm oil [75].

As discussed, there are issues that still need to be overcome to ensure any GHG emission-reduction projects are measurable, reportable and verifiable. However, our understanding and skills for measuring the peatland carbon cycle are continuously improving, and are likely to increase dramatically if peatland restoration becomes attractive to large investors.

So how much money could the world’s peatlands be worth? A recent study by The Economics of Ecosystems and Biodiversity (TEEB) speculated the value of inland wetlands (e.g., peatlands such as bogs, fens and swamps) at between US$1,000–45,000 per ha per year [109]. If it is assumed peatlands cover an area of approximately 400 million ha [18] this equates to a total value of the world’s peatlands of between US$400,000 million–18 billion. However, TEEB did not fully take into account recent and pending UNFCCC decisions. It is highly likely that the introduction of a carbon market and accounting system involving peatlands will see this value rise even further.

Table 1.  Wetland definitions (taken from various sources).

Term	Definition
Wetland	▪ Land with the water table close to or above the surface, or which is saturated for a significant period of time. Includes most peatlands but also ecosystems or mineral substrates, flowing and shallow waters
Peatland	▪ Any ecosystem where in excess of 30–40 cm of peat has formed. Includes some wetlands but also organic soils where aquatic processes may not be operating (e.g., drained or afforested peatlands).
Mire	▪ All ecosystems described in English as swamp bog, fen, moor, muskeg and peatland, but often used synonymously with peatlands ▪ Includes all peatlands, but some mires may have mineral substrate ▪ Often used to describe an actively growing peatland.
Fen	▪ A mire, which is influenced by water from outside its own limits ▪ True fens or rich fens receive water that has passed through mineral soils and are known as minerotrophic peatlands ▪ Poor fens or transitional peatlands are known as mesotrophic peatlands and are between mineral-nourished (minerotrophic) and precipitation-dominated (ombrotrophic) peatlands
Bog	▪ A mire, which receives water solely from precipitation. Some, such as raised bogs, are referred to as ombrotrophic peatlands and have developed peat layers higher than their surroundings
Marsh	▪ Loose term usually referring to a fen with tall herbaceous vegetation often with a mineral substrate. Can also refer to saline wetlands (i.e., saltmarshes)
Swamp	▪ Lose term with very wide range of usage. Usually referring to a fen and often implying forest cover

Table 2.  UK peatland area and carbon storage.

Country	Soil depth
	Area (km^2)	0–100 cm (Mt carbon)	>100 cm (Mt carbon)	Total (Mt carbon)
Scotland	17,789	1104	516	1620
England	4246	296	123	419
Wales	732	67	52	119
Northern Ireland	1873	90	54	144
UK	24,640	1557	745	2302

Data from [23].

Table 3.  Key dates relating to peatlands in the Kyoto Protocol and climate change legislation.

Key Dates	Event
1992	Rio de Janerio, Brazil The United Nations Conference on Environmental Development (UNCED) produce the international environment treaty, the United Nations Framework on Convention on Climate Change (UNFCCC)
1994	UNFCCC treaty comes into force
1997	Kyoto, Japan Signatories of the UNFCCC devise the Kyoto Protocol, which sets out mandatory emission levels for Parties
2001	Marrakesh, Morocco Detailed rules for implementation of Kyoto Protocol discussed at the seventh UNFCCC’s COP or COP-7. Rules become known as Marrakesh Accords
2000	European Commission launches European Climate Change Programme (ECCP) to identify and develop necessary strategies to implement Kyoto Protocol
2005, January	European Union GHG Emissions Trading Scheme (EU ETS) begins operation
2005, February	Kyoto Protocol comes into force
2007	Bali, Indonesia At UNFCCC’s COP-13, Reducing Emissions from Deforestation and Forest Degradation (REDD) is proposed
2008	First commitment period of the Kyoto Protocol starts Parties to show that during this period they have reduced their GHG emissions by an agreed amount
2009	Copenhagen, Denmark At UNFCCC’s COP-15, agreement in principle that Parties can voluntarily include wetland re-wetting as a land use, land-use change and forestry (LULUCF) option in any post-2012 international climate-change protocol
2010	Cancun, Mexico At UNFCCC’s COP-16 further agreement for Parties to include any emission reductions created through peatland re-wetting (now classified as GHG sinks) in future climate legislation
2011	Durban, South Africa UNFCCC’s COP-17 to further discuss the role of peatlands in future post-2012 climate legislation
2012	First commitment period of the Kyoto Protocol ends

COP: Conference of the Parties.

Table 4.  Carbon market schemes that include biosequestration projects.

Project	Project locations	Project developers
International mandatory compliance schemes
Clean Development Mechanism	Non-Annex I countries	Mostly large carbon service companies
Mandatory cap-and-trade schemes with offsets
Regional GHG Initiative (RGGI)	Nebraska, USA	Not yet established
GHG Abatement Scheme (GGAS)	New South Wales, Australia	Carbon service companies
Voluntary cap-and-trade schemes with offsets
Chicago Climate Exchange (CCX)	Restrictions where mandatory trading occurs	Carbon service companies and NGOs
Voluntary GHG schemes
Climate Action Reserve (CAR)	California, USA	Carbon service companies and government agencies
Climate, Community and Biodiversity (CCBS)	No restrictions	NGOs
Plan Vivo	Developing countries	Local NGOs
Voluntary Carbon Standard (VCS)	Restrictions where mandatory trading occurs	Large carbon service companies
Verified emissions reductions+	No restrictions	Carbon service companies
Voluntary Offset Standard (VOS)	Restrictions where mandatory trading occurs	Carbon service companies

NGO: Non-governmental organization.

Data from [67].

Peatland

A type of wetland where in excess of 30–40 cm of peat (partial decomposed organic matter) has formed.

Kyoto Protocol

The principal protocol to the UNFCCC, which sets out binding targets for industrialized countries to cut their GHG emissions over the 5-year period of 2005–2008, compared with a specified base year.

Wetland

Land with the water table close to or above the surface, or which is saturated for a significant period of time.

UNFCCC

The United Nations Framework on Convention on Climate Change produced by the United Nations Conference on Environmental Development (UNCED) in 1992, which aims to stabilize GHG concentrations in the atmosphere.

CO₂ equivalency

The amount of CO₂ that would have the same global warming potential over a specific time period (usually 100 years) for a given amount and type of another GHG (e.g., methane). The term is often abbreviated to CO₂-e

Carbon stewardship

Management of an ecosystem to maximize carbon sequestration.

Executive summary

Peatlands

	▪ Peatlands are a type of organic wetland and are the largest terrestrial store of carbon owing to the build-up of semi-decomposed plant material.
	▪ Peatlands are estimated to contain 455 Pg of carbon – two-thirds of the amount present in the atmosphere.
	▪ It is feared that anthropogenic degradation of peatlands may switch the ecosystems from net carbon sinks to net carbon sources.
	▪ Land management practises, such as re-wetting, can reduce GHG emissions from damaged peatlands.

Current legislation

	▪ The United Nations Framework on Convention on Climate Change (UNFCCC) Kyoto Protocol aims to reduce Annex I Parties’ main GHG emissions over the first commitment period (2005-2012) by agreed amounts from base year (1990) levels.
	▪ The UNFCCC have created market-based mechanisms to help Annex I Parties achieve these targets.
	▪ Despite the amounts of labile carbon stored in peatlands, the ecosystems and their management do not feature prominently in UNFCCC accounting legislation.
	▪ Decisions at COP-15 and COP-16 raised the profile of peatlands, highlighting their importance in global GHG emissions.

Future perspective

	▪ Peatlands look set to become important factors in UNFCCC GHG inventories, reducing emissions from deforestation and forest degradation plus and agriculture, forestry and other land use sectors.
	▪ Targeted management of peatlands in both Annex I and Annex II Parties could lead to the creation of accredited carbon credits.
	▪ If profitable, carbon stewardship could help prevent the loss and destruction of peatlands.
	▪ The mandatory inclusion of peatlands in national GHG inventory schemes and accredited carbon markets could see their ecosystem value rise from the previously estimated US$18 billion.

Acknowledgements

This research was funded by the Knowledge and Economy Skills Scholarship, which is part-funded by the European Social Fund through the European Union’s Convergence programme administered by the Welsh Assembly Government. We would also like to thank George Meyrick of Energy and Environment Business Services for supporting this research.

Financial & competing interests disclosure

The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

No writing assistance was utilized in the production of this manuscript.