• Open Access

Accounting for Algae

Authors


Correspondence: David N. Bird, tel. + 43 316 876 1423, fax + 43 316 876 91423, e-mail: neil.bird@joanneum.at

Abstract

Interest and research in the use of algae for energy is growing but an analysis of the different methods for the accounting for the carbon dioxide (CO 2) emissions that result, is lacking. In this article, four accounting systems are evaluated for their completeness, simplicity, sectoral accuracy, and scale-independence. Two options under the Kyoto Protocol (KP), a value-chain (end-user responsibility) approach, and Point of Uptake and Release (POUR) are evaluated.

Algal material is used in biofuels, animal feeds, human foods, and food supplements, and a range of products such as paints, cosmetics, and plastics. There are also proposals for using algae as a soil amendment. This variety of uses for algal material together with the fact that it will probably contain carbon of fossil origin presents accounting challenges and reveals inconsistencies that have lain in the KPs treatment of biomass emissions. Furthermore, a key conclusion of the article is that neither proposed KP accounting approach for algae leads to correct accounting of emissions for all uses. Both value chain and POUR approaches more correctly and consistently account for algal emissions across uses. POUR offers the potential to provide comprehensive, consistent emission accounting across all uses of biomass, which represents a major step forward in accounting for CO 2 emissions due to use of biomass.

Introduction

There is considerable interest in using algal material to meet energy demand, for animal or human food supplements, and as feedstock for a variety of products (Sheehan et al., 1998; FAO, 2010; Benemann, 2011). Algal material could also be turned into soil amendments (Bird et al., 2011a b) or buried as a method of reducing carbon dioxide (CO2) emissions to the atmosphere. However, production of algae at high enough rates to be of interest in many of these applications requires a source of carbon (C) or CO2 at higher concentrations than are found in the atmosphere. In these cases, algae will be grown using CO2 from exhaust streams of fossil fuel power plants or industrial processes, or using municipal or animal waste water streams.

It is often thought that growing algae using CO2 where the carbon is of fossil origin and then using the algae for energy is advantageous from a greenhouse gas (GHG) perspective. The thought is that a benefit accrues because one is using fossil carbon twice before releasing it to the atmosphere. However, as shown in Fig. 1, the atmospheric impact of growing algae from exhaust CO2 and then combusting it, is identical with growing algae from CO2 that is already in the atmosphere. Growing any other type of plants supplemental to those already being cultivated and sufficient to absorb the same amount of CO2 would have the same result.

Figure 1.

Carbon flows in possible algae production systems. The atmosphere does not recognize the difference between the case when CO 2 is pumped directly to the algae (Case A) or when the CO 2 is absorbed by the algae from the atmosphere (Case B). One should note in Case B, algae can be substituted by any other type of biomass.

Generally, from an atmospheric perspective, use of biomass to replace fossil fuels is advantageous if net emissions from production, transportation, and preparation of the biomass, including net changes of carbon stocks in forests and agricultural soils, are lower than those that would result from use of fossil fuels. Use of biomass that meets the above conditions enables, e.g., more miles to be driven or electricity provided per CO2 equivalent emitted. One advantage enjoyed by algae compared to other biomass is that algae production is unlikely to result in carbon stock losses.

In spite of the similarity of algae to other biomass from the perspective of impact on the atmosphere, where algae is grown using exhaust CO2 an accounting issue arises. Should the release of fossil carbon be accounted for when the carbon is first used or at the point of actual emission? After providing a methodology for evaluation of alternative accounting approaches, the article considers implications of four accounting options:

  • 1.Two options under the KP;
  •  Source Reduction; and
  •  No Source Reduction (Sink Enhancement),
  • 2.Value chain or end-user responsibility accounting, and
  • 3.POUR (Point of Uptake and Release) accounting.

Kyoto Protocol (KP) options

Two accounting options under the KP are considered in this article because no decision has been taken as to which option will be applied where CO2 emissions are captured and stored in deep geological formations (CCS). Two approaches have been proposed and reviewed in the IPCC Special Report on Carbon Capture and Sequestration (IPCC, 2005). As referred to in that report, the two options are: Source Reduction and Sink Enhancement.

Under Source Reduction, if carbon capture and sequestration (CCS) technologies are employed, captured CO2 emissions are not counted where CO2 is created but instead if and when it enters the atmosphere. An industrial emitter capturing and transferring some of his waste-stream CO2 to a geological formation would only report that portion of CO2 caused by his operation that did not get captured and stored. Responsibility for escape of CO2 during transport, injection and subsequent storage would depend on responsibilities for these stages. Thus, the industrial entity reports less than it would if no emissions were captured (hence the title). For example, if 80% of each 100 t CO2 of a power plant's exhaust stream is captured and sequestered, the plant would only report, or need permits to emit to cover, 20 t CO2 per 100 t exhaust stream CO2.

Under Sink Enhancement there is no difference in the amount of emissions reported by the industrial emitter regardless of whether CCS is employed or not. The entity reports the total emissions that would have occurred based on the amount of fuel used or, e.g., cement or fertilizers produced. Any CO2 stored in geological formations would be counted through some mechanism similar to that used for removals of CO2 from the atmosphere by plants, creating, in effect, ‘negative emissions’. Thus, under Sink Enhancement all CO2 in the exhaust stream would be reported by the industrial emitter. The 80t CO2 per 100 t CO2 sequestered would somehow be converted to negative emissions. It is not clear who would be entitled to use these in the accounting system.

The IPCC Special report used Source Reduction as the basis for its analysis of CCS accounting apparently because, unlike Sink Enhancement, Source Reduction

…appears fully transparent and consistent with earlier UNFCCC agreements…

In this article, the term ‘no source reduction’ is used instead of the IPCC Special Report term ‘sink enhancement’ to describe the alternative to ‘source reduction’. We believe this clarifies the key difference from the point of view of reporting entities.

Under Source Reduction an entity reports fewer emissions if CCS is in use, whereas under ‘No Source Reduction’ the entity reports the same emissions as if CCS were not adopted.

If CO2 emissions from combustion of fossil fuels are captured and stored in algae rather than, for example, through chemical adsorption, atmospheric impacts will, in some cases, be similar to those under traditional CCS. If the algal material is turned into recalcitrant chars, the carbon may remain out of the atmosphere for centuries or longer. Where algae use results in near-term CO2 releases, e.g., if used to produce biofuels, it is still the case that the carbon would not be released to the atmosphere by the entity combusting the fossil fuel. Thus, the same question arises in the case of capture of CO2 by algae as by chemical or physical technologies: should a Source Reduction or No Source Reduction accounting approach be used?

Value chain or end-user responsibility

Value chain approaches apply simplified versions of LCA methodologies. In the context of climate change value chains consider cradle-to-grave GHG emissions whereas a full LCA considers energy balances as well as all inputs and outputs along a cradle-to-grave system. Value chain approaches are already in use for biofuels in both the United States and the EU. They may also be adopted more broadly for bioenergy. The EU Commission has stated:

The LCA methodology for biofuels and bioliquids laid down in the Renewable Energy Directive was based on a careful analysis and has been endorsed by the legislator. For consistency it would make sense to use the same methodology for all types of bio-energy (EC (European Commission), 2010).

Under the value chain approaches used for biofuels, emissions caused by production of the biomass, its conversion to a liquid fuel, and the transportation of biomass and fuels to a point of fuel distribution are summed. The sum is taken into consideration when determining whether a biofuel can be used to meet a renewable fuel mandate. In neither the U.S. Renewable Fuel Standard (RFS2) nor the EU Renewable Energy Directive (EU RED) is the sum used as part of an accounting system. However, the results of such calculations can be converted to factors that would determine the number of permits required per litre of fuel sold or used (DeCicco, 2009).

The U.S. Environmental Protection Agency (US EPA) has recently released a document describing how CO2 emissions resulting from combustion of biomass at stationary sources are to be calculated for purposes of regulation under the US Clean Air Act (U.S. EPA, 2011). The proposed system can be considered a type of value-chain approach. However, it does not consider emissions due, for example, to use of fossil fuels to produce fertilizers, transport, or prepare biomass for energy use. Only emissions due to carbon stock changes are included along the biomass growth-harvest-transportation and preparation chain.

POUR (Point of Uptake and Release)

POUR (Point of Uptake and Release) represents the basic alternative to the KP approach. It differs from KP accounting in two significant ways:

  • 1.All emissions of CO2 due to use of biomass – combustion as well as decay after useful life – are counted when they occur. They are multiplied by ‘1’, CO2's Global Warming Potential.

Under the KP these emissions are not included in accounting. In effect, they are multiplied by ‘0’ for accounting purposes.

  • 2.All uptake of atmospheric CO2 by biomass is counted as negative emissions. Thus, carbon in wood, for example, is counted as a negative emission regardless of whether it remains in the forest or in a product. Under a POUR system CO2 removed by annual crops would also be counted.

Under KP-type approaches, only changes in carbon stocks on the landscape are counted. Reductions in these stocks result in positive emissions, and increases produce negative emissions. No emissions are counted in the case of annual crops.

To illustrate POUR accounting, consider the following example. Carbon stocks in forests are measured to have increased by 30tC between the start and end of an accounting period and 50tC have been harvested. Under POUR accounting, -80tC emissions will be recorded, rather than the −30tC that would be recorded under the KP approach. If 10tC of the 50tC harvested is combusted and another 15tC in biomass is released to the atmosphere due to decay of products, POUR will also record +25tC emissions. The net result will be −55tC emissions (−80 + 25).

Unlike under the KP, a POUR system automatically accounts for increases in harvested wood product pools because the negative emissions embodied in harvested wood products (−25tC in the example above) remain on the books until they are released to the atmosphere through decay. More complete explanations of POUR and its differences from KP systems can be found in Bird et al. (2011a, b).

The proposed U.S. system also has features of a POUR-type system since only emissions due to carbon stock changes are considered; CO2 emissions at the point of combustion are counted; carbon in biomass removed from the landscape is counted; and no emissions are attributed to the carbon in biomass until it is combusted or decays. As in a POUR system, the combined effect of these procedures is to distinguish between different biomass production-and-use situations. In neither system does a transfer of carbon in the forest to carbon in a product register as an emission.

It should be noted that the proposed U.S. system to regulate CO2 emissions from use of biomass at stationary sources and the EU and U.S. value-chain approaches used for biofuel operate at the entity-level, rather than at the national level. However, a POUR system is designed to operate at the national level. While presenting challenges, value chain systems could also be adapted to operate on the national level (Pena et al., 2011).

Methodology

Each accounting approach is evaluated against four criteria: completeness, simplicity, sectoral accuracy, and scale independence. These differ somewhat from the five principles considered in the seminal paper on evaluation of biomass accounting system ‘A statement from Edmonton’: accuracy, simplicity, scale-independence, precedence, and incentives (Apps et al., 1997). We use the term completeness to focus on the ability of a system to count all CO2 emissions and removals once but only once. Accuracy over space and time is covered in this article under the concept sectoral accuracy. Furthermore, in this article the simplicity criterion includes the concept of precedence – the degree to which a system uses accepted procedures. Scale independence is much the same here as reported in an earlier article and covered for the same reason: the importance of evaluating how an accounting system operates at both national and entity levels. Systematic valuation of the accounting systems against the criteria of incentives is beyond the scope of the article. Completeness receives most attention in large part due to the complexity of this issue given the range of potential uses of algae.

Groups of algal material fates

To simplify and organize the analysis, potential uses of algal material are categorized into four groups or fates.

  1. Fate A: Combustion. This encompasses algal material combusted for heat or power or used for transportation fuels.
  2. Fate B: Food and Feeds. Algal material used for animal feeds, in human foods or as food supplements are grouped together here.
  3. Fate C: Disposal. This covers algal material that is used for soil amendments including recalcitrant chars and/or is buried below the measured soil horizon. In both cases, carbon may remain out of the atmosphere for centuries.1
  4. Fate D: Long-lived products. Algae used for all other products are included here. Examples of such products are paints, plastics and cosmetics. These products clearly have a wide range of useful lifetimes. The category is called ‘long-lived’ partly because the carbon will, in many cases, remain out of the atmosphere for longer than in Fates A and B partly because many of the products will eventually end up in landfills.

In addition to considering the fate of algal material, the fate of the carbon in the algal material is also important for GHG accounting. Carbon in fate A will return to the atmosphere in the form of CO2. The article assumes that under Fate C, Disposal, the carbon will remain out of the atmosphere for periods relevant to current accounting systems. Carbon from fates B and D can return to the atmosphere either as CO2 or CH4. Our assessments are undertaken from the perspective of the carbon atoms not the Global Warming Potential of the gases. However, if, for example, CH4 emissions are counted but CO2 emissions are not, this will impact the completeness of an accounting system.

Two-letter positional system for fossil-carbon emissions

As mentioned in the introduction, algal material will often contain carbon of fossil origin. By this we mean carbon that is re-entering the active carbon cycle for the first time in millennia. To be complete, a GHG accounting system must count emissions of such carbon to the atmosphere. To assist in this evaluation, this article uses a two-letter, positional system.

The letters Y and N are used to indicate whether carbon emissions are counted at a given point. The letter in the first position indicates whether fossil carbon incorporated into algae is accounted for at its first use, e.g., when a power plant or industrial operation uses fossil carbon to produce e.g., electricity, cement or fertilizer. The letter in the second position indicates whether emissions are counted at a subsequent use, e.g., when algal material is combusted or decomposes. In this system, four basic outcomes are possible:

  1. Option YN – the carbon is accounted at first use only;
  2. Option NY – the carbon is accounted at subsequent use only;
  3. Option YY – the carbon is accounted at first and subsequent uses; and
  4. Option NN – the carbon is not accounted for at all.

In the second position, not only emissions to the atmosphere but increases in carbon stocks can occur and be counted. In such cases Y is used to indicate carbon stocks increases that are counted. Although we primarily use this two-positional system for the discussion of the KP options, it can also be used for POUR. POUR is a system that focuses on biomass and always includes uptake of CO2 from the atmosphere as part of the first step. Therefore, if the two-position system is used for POUR, Y will also occur in the first position in case an uptake of CO2 from the atmosphere occurs (i.e., not in the case of fossil-based algae). As will be seen, in the discussions, counting the net flow of carbon to the atmosphere once and only once can require any of the above combinations.

Figure 2 shows, schematically, how the two-letter system would, ideally, operate for emissions due to use of algae produced from exhaust stream CO2, i.e., where its carbon is of fossil origin. In Case A the carbon is counted at first use (under the KP no source reduction), whereas in Case B it is accounted for at a subsequent use (under the KP source reduction).

Figure 2.

Schematic diagrams of the YN (left) and NY (right) accounting situations.

Algae characteristics and terminology

Due to their short growth cycle, algae are more similar to annual crops than forests. Therefore, they are treated as annual crops for the purpose of examining how accounting systems such as the KP, which treats forests and annual crops differently, will account for algae.

To distinguish between carbon that has been in the active carbon cycle and carbon that is entering the active cycle for the first time in millennia, we use the following terminology:

  1. Fossil carbon: carbon released from fossil reservoirs for the first time in millennia as occurs in waste streams from combustion of fossil fuels and production of cement and fertilizers; and
  2. Biogenic carbon: carbon that has been participating in the short term carbon cycle, e.g., carbon from human and animal wastes or the atmosphere.

Using these terms one can also speak of fossil-carbon-based algae, i.e., algae whose carbon is of fossil origin, and biogenic-carbon-based algae (or biogenic algae), i.e., algae whose carbon is of biogenic origin.

Evaluation of accounting approaches

In the following discussion, the completeness of each accounting system is evaluated prior to evaluations of simplicity, sectoral accuracy and scale independence. The Kyoto Protocol's No Source Reduction approach is discussed first, partly because it seems to offer a simple solution and partly because a significant number of bioenergy experts and stakeholders consider this the clear answer to the question of how to account for emissions when algae are grown using exhaust stream CO2 from industrial sources (19th European Biomass Conference & Exhibition (EBCE) (2011). After evaluating the two KP options, value chain and POUR accounting approaches are evaluated.

Kyoto Protocol and its options

The discussions of No Source Reduction and Source reduction focus on algae that contain fossil carbon. This is because the focus of both of these options is on the treatment of fossil-origin CO2 emissions at large point sources. As previously mentioned, emissions of fossil carbon to the atmosphere need to be counted somewhere for a GHG accounting system to be complete.

Since algal material is biomass, throughout this discussion it is assumed that algae will be handled as any other biomass regardless of the type of carbon it contains – fossil or biogenic. However, the KP's approach to accounting for biomass contains inconsistencies. For example, if biomass is used for energy, no emissions are counted. If the same crops are used for feed for animals the resulting methane (CH4) will be counted. In short, under the KP:

  • 1.No CO2 will be counted:
  • At the point of combustion if algal material is used for energy
  • From respiration by humans and animals; and
  • Where the carbon in products decays to CO2
  • 2.CH4 will be counted if the algal material is incorporated in:
  • Animal feeds (e.g., ruminants);
  • Products that decay in landfills; and
  • Products that enter other waste treatment systems (e.g., industrial composting)

No source reduction

Figure 3 illustrates the KP accounting system under No Source Reduction. As indicated in Fig. 3, under a No Source Reduction approach CO2 emissions due to combustion of a fossil fuel are counted at the facility initially using the fossil carbon. These emissions will be counted at the initial facility even if the CO2 is captured and stored underground or transferred to products and not emitted until those products release the carbon to the atmosphere. This approach appears to have the advantage of simplicity because there is no need to count emissions due to use of algae biomass that incorporates the fossil carbon. The emissions have already been counted.

Figure 3.

Schematic diagram of accounting under the KP: No Source Reduction option.

Completeness

As indicated in Fig. 3, No Source Reduction is not an ideal system because some uses of algae result in flows of carbon to the atmosphere being counted twice (CH4 from animal digestion, human wastes entering waste-water treatment systems, and products entering landfills). These flows are shown as light blue arrows. It is also not ideal because carbon disposed of in such a way that the carbon is stored away from the atmosphere indefinitely may be counted as emitted, although this does not occur.

No Source Reduction results in correct accounting for Fate A (Combustion). Since, the focus of discussions of algae accounting have generally taken place in the context of use of algae for transportation fuels, No Source Reduction has appeared to be the path of choice. However, for other fates of algae, No Source Reduction does not always result in correct accounting.

Emissions of CH4 from digestion of algae in feeds (a B Fate) will be counted in the agricultural and waste sectors, resulting in a YY situation, counting the emissions both at the source and subsequently. Since use of algae for animal feeds is one of the more promising near-term options this is of some concern (Lundquist et al., 2010; Benemann, 2011). As stated above, CO2 from digestion or respiration by humans and animals would not be accounted, thus leading to correct accounting under a No Source Reduction system.

Turning to the C Fates (disposal), a No Source Reduction approach will not correctly account for emissions for any algae buried below the level of measured soil carbon, nor for recalcitrant chars applied in nations that have not adopted agricultural management. In these cases, a YN will result in the system, recording emissions where none occur. In these cases – i.e., where emissions are counted at the source but no emissions actually occur, a YY, with the ‘Y’ standing for negative emissions – i.e., increased carbon stocks in the earth system – is needed to correctly count emissions. The Y would cancel out the initial counting of emissions, resulting in no emissions being counted and would be correct where no emissions have occurred.

In the case of nations that do count agricultural carbon stocks, a YY will result where chars are incorporated into the measured soil horizon because the increase in soil carbon will be counted. Thus, accounting will be correct. However, it is important to note that use of this accounting procedure within the KP ‘…would require adoption of new definitions not available in the UNFCCC’ (IPCC, 2005). Under the KP, increases in carbon stocks (i.e., sinks) are defined as mechanisms that remove CO2 from the atmosphere. This will not have occurred in the case of chars made from fossil carbon.

In the case of D Fates (long-lived products), No Source Reduction only accounts for emissions correctly if the carbon decays to CO2. If the carbon decays to CH4, over-counting will occur because a YY results. If products are landfilled, there will also be over-counting for any portion of the carbon that does not decay. A YN will be recorded because under current KP rules there is no mechanism to count increases in carbon stocks except in soils and living plants (i.e., currently a Y is only available in these two cases) and under the new rules agreed to in Durban, increases in the products pool are only covered for products made from domestically grown wood (UNFCCC, 2012). The YN will, however, not represent correct accounting because the carbon will have been moved from one long-term pool (fossil material) to another (indefinitely land-filled), and no emissions will actually have occurred. Table 1 summarizes the above discussion.

Table 1. Assessment of Kyoto Protocol - No Source Reduction option. The Y represents situations where negative emissions (or an increase in carbon stocks) are accounted for
Algae FateCompleteness
 Accounting situationCorrect accounting
  1. a

    Assumes country includes agricultural and grassland management.

A. Combustion  
Heat & PowerYN
B. Food or feed  
CH4 YYYN
CO2 YN
C. Disposal  
Chara YY
Deep burialYNYY
D. Long-lived products  
Decay to CH4 YYYN
Decay to CO2 YN
No decayYNYY

Simplicity

Although the No Source Reduction option may be considered simple, the KP's lack of mechanisms to provide negative emissions where no emissions actually occur complicates its implementation. Such mechanisms are lacking where fossil carbon is incorporated into soils (except for accounted soil layers under agricultural management) and where fossil carbon has simply moved to any other long-term carbon pool. While the KP now has a mechanism to count increases in the harvested wood product (HWP) pool, it does not have a general mechanism for counting increases in carbon stocks in products.

At COP 17, in Durban, an agreement was reached on how to account for increases in HWP pools (UNFCCC, 2012). However, to enable the No Source Reduction approach to correctly account for Fates C and D, a mechanism that allowed counting increases in carbon pools would have to be more broadly conceived. It would have to allow for increases in non-atmospheric carbon pools even if the carbon stored was fossil carbon, not just in the case of wood. Reaching agreement on a mechanism that supplied negative emissions in the needed cases would likely be challenging.

Sectoral accuracy

The No Source Reduction approach works poorly if accurate sectoral accounting is desired. Emissions taking place in the transportation, agricultural, or waste sectors would be reported in the energy or industrial sector. In the case of chars, the stock increases, i.e., sinks, reported in the land-use sector would be in violation of the current meaning of sinks because the term is defined as removals of GHGs from the atmosphere (IPCC, 2005).

Scale-independence

A No Source Reduction approach is likely to result in problems when applied in connection with the EU Emission Trading Scheme (EU-ETS). The EU-ETS can be viewed both as a sub-national system and as a system in which accounting responsibility occurs at the entity level. The EU-ETS imposes obligations on entities in the energy and industrial sectors but it does not include the land-use or transportation sectors. A first consequence is that entities with EU-ETS obligations that employ CCS could not receive compensating ‘negative emissions’ to use under the EU-ETS if algae were used for chars even if the nation included agricultural soils in its accounting. Given the lack of a mechanism for other types of negative emissions, they could also not receive negative emissions for deep burial of algae or if algae were used for products that did not decay in landfills.

The fact that the transportation sector is not included in the EU-ETS may be more problematic. Under No Source Reduction, entities that supply CO2 to grow algae that is converted to transportation fuels will be required to hold permits for their full CO2 emissions. If CO2 is separated from exhaust streams using technologies – as opposed to the algae itself accomplishing the separation – additional energy is needed. To the extent that this energy comes from fossil fuels, emission permits needed by the entity and within the EU-ETS as a whole will rise. Thus, even if national emissions remain steady or fall due to the use of algae for transportation fuels, the accounting system is not scale-independent. Emission accounts of individual entities and some sectors will rise. This problem is, clearly, closely related to the lack of accuracy over space.

Timing of emissions is likely to be fairly accurate in the case of fates A and B since it is unlikely that more than a year would elapse between the emissions recorded by the large point source and those resulting from combustion of the algae for heat, power or transportation fuels, or digestion of the material in food and feeds. In the case of use for other products, accuracy will depend heavily on the useful life span of the products in question as well as on whether they are landfilled after use. In some cases the discrepancy is likely to be large and in others not.

Source Reduction

The following paragraphs examine accounting consequences when CO2 emissions captured by algae are not counted by the facility initially using fossil carbon. This can be thought of as a perspective that corresponds to the entity providing the CO2. The CO2 is not released into the atmosphere ‘on their watch’, so they are not responsible for the emissions. Fig. 4 illustrates a Source Reduction approach.

Figure 4.

Schematic diagram of accounting under the KP: Source Reduction option.

Completeness

Under Source Reduction, since algal material is biomass, no emissions will be counted under Fate A, Combustion. This results in a NN account, and therefore undercounting.

For B fates (food or feed), a Source Reduction approach correctly counts emissions (NY) insofar as feeds are used for ruminants and to the extent that the carbon ends up in human or animal wastes, where the CH4 emissions are also counted. However, a significant use for algae is for fish feeds. In this case, the system will not correctly count emissions because emissions from fish ponds are not included in agricultural emissions. In addition, part of the emissions will be CO2 (e.g., respiration) rather than CH4 and will not be counted. Therefore a NN will result, again undercounting emissions.

A Source Reduction approach correctly accounts for deep burial because no emissions occur and none are reported (NN). For nations that do not include agricultural soil management systems, correct accounting will also result from storage of chars in upper soil layers because no emissions will have occurred and none will be counted. For nations that include agricultural and grassland management, such chars would result in negative emissions, thus a NY will be registered. This can be considered as over counting negative emissions.

In the case of long-lived products (Fate D), to the extent that the carbon decays to CH4, accounting will be correct (NY). Accounting will also be correct for any carbon that remains in landfills (NN). However, if products decay to CO2, emissions would not be counted (NN) resulting in under-counting. Table 2 summarizes the above discussion.

Table 2. Assessment of Kyoto Protocol - Source Reduction option. The Y represents situations where negative emissions (or an increase in carbon stocks) are accounted for
Algae FateCompleteness
 Accounting situationCorrect accounting
  1. a

    Assumes country includes agricultural and grassland management.

A. Combustion  
Heat & PowerNNNY
B. Food or feed  
CH4 NY
CO2 NNNY
C. Disposal  
Chara NY NN
Deep burialNN
D. Long-lived products  
Decay to CH4 NY
Decay to CO2 NNNY
No decayNN

Simplicity

To achieve completeness under Source Reduction it would be necessary to apply fossil fuel rules to fossil-carbon based algae when it is combusted or decays to CO2. This would require a tracking system to establish the origin of the carbon in algae-based transportation fuels or products. Although such tracking would be a normal part of value-chain approaches, as discussed in the following subsection, it would constitute a considerable complication of the KP system. The other accuracy issue, from the perspective of the KP arises in the case of chars. Developing a mechanism that could avoid over-counting in this case could be challenging.

Sectoral accuracy

Insofar as emissions are counted, the Source Reduction approach is reasonably accurate from a sectoral perspective. The main problem is that no emissions would be counted in the transportation sector or in the heat, power and industrial sectors although they are occurring in these sectors. A secondary problem is that no CO2 would be counted in the waste sector when it occurs. However, those emissions that are counted are counted when they occur.

Scale independence

Under Source Reduction, entities under the EU-ETS would not be required to hold permits for the CO2 incorporated in the algae but would be required to hold permits for any extra fossil energy required to separate the CO2. This would certainly reduce, although possibly not eliminate, the scale problem from the perspective of entities.

Discussion: KP accounting systems

As can be seen by reviewing Table 1 and Table 2, neither No Source Reduction nor Source Reduction approaches will result in correct accounting across all foreseeable fates of algae. This is largely a result of four features of the KP.

  1. The KP has no tracking system that would enable a user of algae to distinguish between fossil-carbon and biogenic-based algae;
  2. Biomass CO2 combustion emissions are not counted;
  3. There is no mechanism to count increases in carbon stocks except where the carbon has been removed from the atmosphere or, under the new Durban rules, products from domestically grown wood are in use; and
  4. Emissions due to use of biomass are not treated consistently. Specifically CH4 emissions from ruminant respiration and animal and human wastes and decay of products are counted while CO2 emissions are not.

As a result of points 1 and 2, Source Reduction is incomplete for combustion of algae. No Source Reduction is incomplete for disposal options and products that do not decay because of point 3. Finally, as a result of point 4, neither KP option can correctly account for both the CO2 and CH4 emissions that occur when algae is used as animal feed, human food supplements and products that decay to either CO2 or CH4.

Although many factors determine what entities do, an accounting system that fails to count emissions for specific uses of algae provides a stimulus for those uses. Thus, Source Reduction provides a stimulus to use of algae for energy, feed supplements for fish or humans, and products that decay to CO2. Similarly, the failure to record stock increases under No Source Reduction will discourage use of algae for deep burial and in products that do not decay at all. Such differential impacts are summarized in Table 3.

Table 3. Assessment of the incentives caused by the Kyoto Protocol options. ‘−’ end use is discouraged. ‘+’ end use is encouraged
Algae FateNo Source ReductionSource Reduction
  1. a

    Assumes country includes agricultural and grassland management.

A. Combustion  
Heat & Power  +
B. Food or feed  
CH4  
CO2   +
C. Disposal  
Chara   
Deep burial  
D. Long-lived products  
Decay to CH4  
Decay to CO2   +
No decay  

The No Source Reduction approach has the result that capture of CO2 through technological means – e.g., through chemical adsorption – will be discouraged since technological capture requires energy with attendant increased GHG emissions. Thus, under No Source Reduction an entity would have to receive compensation for technological capture of CO2. Compensation could occur if the entity itself produces algae and finds sufficiently profitable markets for the algae or through payments from another entity. In contrast, under a GHG limitation regime, Source Reduction provides the entity first releasing fossil carbon with a powerful incentive to use the CO2 for algae production.

Value chain approaches

Value chain approaches are used in both the EU and U.S. in connection with biofuel mandates. The difference between accounting for emissions from biomass under the KP and a value chain approach is illustrated in Figs. 5 and 6.

Figure 5.

Location of where emissions are accounted for in a Kyoto Protocol approach.

Figure 6.

Location of where emissions are accounted for in a value-chain approach.

Under value-chain approaches, accounting is never done by an initial entity but always by the ultimate user. Therefore, the positional ‘YN’ system applied under the KP is not applicable here. Tracking all emissions associated with a product and placing responsibility for these emissions on the end-user has considerable advantages over the KP approach. First, emissions connected with production, transportation and conversion of biomass, for example, are included regardless of whether these emissions occur in a nation with emission obligations under the KP or not. Emissions embodied in traded products already constitute 23% of global emissions and are increasing. Moreover, KP-compliant nations generally are net importers of emissions embodied in traded products (Davis et al., 2011). In fact, it has been estimated that:

The net emission transfers via international trade from developing to developed countries increased from 0.4 Gt CO2 in 1990 to 1.6 Gt CO2 in 2008, which exceeds the Kyoto Protocol emission reductions (Peters et al., 2011)

Under a value-chain approach emissions that are transferred from developing countries to KP-compliant nations in the sense that they are caused by production and transportation of products used in KP-compliant nations would be included in the KP accounts. Consequently, value-chain accounting is worth considering as a general alternative or supplement to the KP.

A second advantage is that a tracking system can distinguish between fossil-based and biogenic-based carbon and base estimates of net emissions attributable to a product on this distinction. The proposed U.S. system for regulation of stationary sources, for example, distinguishes not only between fossil fuels and biomass but among biomass sources based on their production-harvest-transportation-storage-processing histories.

Completeness

In principal, value chain approaches are complete regardless of the end use of the algae. If applied across all biomass products, emissions from all Fate categories would be covered, with end users reporting the emissions. To date, however, value chain approaches have been restricted to biomass used for energy, relying on other components of the accounting or regulatory system for emissions from Fates B-D.

The EU Renewable Energy Directive (EU-RED) and US Renewable Fuel Standard (US RFS2) estimate emissions caused by production of biofuels. Emissions due to: cultivation of crops, including those resulting from direct land-use change and production and use of fertilizers; conversion of biomass to a fuel; and transport to conversion facilities and distributors are included in both systems. (EU (European Union), 2009; Federal Register, 2010). In fact, neither the EU-RED nor US RFS2 uses the estimated emissions in an accounting system. Both only use the results of summing emissions along the value chain to determine the eligibility of a biofuel to meet a mandate. However, value-chain calculations of this type can be used in a national cap-and-trade accounting system (DeCicco, 2009). To do this, the biomass value-chain starts by attributing a credit to the biogenic carbon in biomass. Where the carbon is not biogenic, no credit would be granted. All subsequent emissions along the value chain that are not accounted for elsewhere in a national accounting system are deducted from this credit. Where there is, at the end of the summation, no remaining credit, a user of the biomass accounts for the emissions as if they were fossil fuel emissions. To the extent that there is some credit left, this is converted into a reduction in the emissions counted.

The proposed U.S. system that would apply to combustion of biomass at stationary sources differs from the value chain approaches of the EU-RED and US RFS2 insofar as only CO2 emissions resulting from carbon stock changes are included. A biogenic adjustment factor (BAF) is applied to CO2 emissions resulting from combustion of biomass. The factor indicates the extent to which, for a particular batch of biomass, CO2 has been removed from the atmosphere to compensate for emissions when the biomass is combusted.

In calculating the biogenic adjustment factor (BAF), carbon stock changes in the area from which the biomass comes as well as carbon losses due to transportation, storage and processing of the biomass are taken into account. A BAF of 1 indicates that as much biomass carbon was lost to the atmosphere as is emitted through its combustion. In this case the CO2 emissions from combustion of biomass are regulated exactly as if they resulted from combustion of fossil fuels. A BAF of zero indicates that the net amount of CO2 removed from the atmosphere by plants – taking losses due to carbon stock reductions both in the region from which the biomass comes and those that occur during transportation, storage and preparation into account – equals the amount returned to the atmosphere through combustion. In such cases CO2 emissions under the U.S. system would be treated as under the KP, i.e., not counted. Where the BAF falls between 0 and 1, the BAF indicates the proportion of CO2 emissions that will be counted for regulatory purposes. A BAF of 0.2, for example, indicates that net removals of CO2 from atmosphere cover 80% of the emissions. Therefore, 20% of the CO2 emissions from combustion of biomass are counted for regulatory purposes. Carbon that ends up in products does not contribute to regulated emissions.

Simplicity

Value-chain approaches are not inherently simple due to their information demands. They require either collection of data along specific value chains, default values or modelling of emissions for classes of products. Use of value-chains in the case of long-lived products might be particularly challenging since the information would have to accompany the product until the end of its useful life. Furthermore, if a product is ultimately placed in a land fill, who is the end user? The emissions would not occur until decay, but presumably the user of the product, not the owner of the landfill should account for the emissions caused along the value chain. Moreover, to be complete, value-chain accounting would have to be used across biomass uses, and agreement on this is likely to prove challenging.

Use of value chain accounting for biogenic algae would be simpler than its application to other biomass sources in one respect. It is unlikely that land-use change will be involved in production of algae. Attribution of emissions due to land use change, particularly indirect land use change, is one of the most challenging aspects of use of value chain approaches applied to biofuels and bioenergy to date (Pena et al., 2011; DiLucia et al., 2012).

Sectoral accuracy

Whether or not value-chain systems are considered accurate by sector depends on one's perspective. They are not accurate by sector in the sense of reporting emissions when and where they occur. Thus, emissions that would be reported in a number of different sectors under the KP – e.g., land use change emissions would be reported in the land-use sector and transport emissions under Energy – would all be reported in the sector of the user of the algae.

However, value chain systems are sectorally and temporally accurate in the sense that, by reporting emissions at end use, emissions are reported in the sector and geographic region responsible for creating the entire stream of emissions embodied in a product. An analogy is that it can be considered correct to attribute electricity emissions to the building or industrial sectors, where the electricity is used, rather than in the power sector where they physically occur.

Scale independence

Value chain systems, in contrast to the KP approach, were originally intended to count the emissions of a product, not national emissions. Therefore, although they tend to be well-adapted to entity and project-level accounting, how well they would function at the national level is open to question. For application at the national level, modelling and use of sectoral or national averages would probably be needed. Such modelling has been used in the US Renewable Fuel Standard, but the inputs and results remain open to discussion.

Point of Uptake and Release (POUR) accounting

POUR accounting, unlike the three systems considered above, was specifically designed to apply to biomass. It can, however, be used as a complete GHG accounting system. Figure 7 illustrates how a POUR system operates.

Figure 7.

Location of where emissions are accounted for in a POUR approach.

As suggested by Fig. 7, where biomass is involved, removal of CO2 from the atmosphere is counted. Such removals provide negative emissions. If no such removals occur, no negative emissions are counted. Therefore, a POUR system will, like value chain systems distinguish between fossil-carbon and biogenic-carbon based algae. Biogenic-carbon emissions will have associated negative emissions; no other emissions, including those from fossil-based algae, will have associated negative emissions. All CO2 emissions, both those from combustion of biomass and those from combustion of fossil fuels are counted.

For the following analysis it is important to note the difference in how carbon stocks are measured under the KP and POUR. Under the KP, the net uptake of CO2 is measured as the change in carbon stocks over a commitment period. This approach is used in conjunction with not counting CO2 emissions where biomass is combusted for energy. Under POUR, in contrast to the KP approach, CO2 emissions from biomass combustion are counted. Therefore, in addition to the net change in carbon stocks, the CO2 removed from the atmosphere that is embodied in the biomass as carbon is counted. The ‘negative’ emissions embedded in the biomass are then balanced – or cancelled out – by the positive emissions when the biomass is combusted or decays. This can be considered analogous to a standard accounting procedure in which all income (all removals of CO2) from the atmosphere as well as all expenditures (return of CO2 to the atmosphere) are tracked.

Completeness

The POUR accounting approach was designed for biomass and three aspects of its potential for completeness render it worthy of serious consideration. First, POUR can be used to cover emissions from all uses of biomass. It has been demonstrated, for example, that data are available that enables counting and tracking uptake of CO2 by all food and feed crops and the subsequent GHG emissions from humans and animals, including CO2 due to respiration (West et al., 2011). Since POUR is not, in contrast to the KP approach, based on defining activities, it provides landscape-wide coverage of CO2 uptake by plants and its release. Under POUR, all uptake of CO2 from the atmosphere by algae would be recorded, as well as its release, regardless of end use.

A second feature that contributes to greater completeness is the greater international coverage it could incentivize. The negative emissions assigned for carbon embodied in biomass opens the possibility of granting credits to countries that have not undertaken overall GHG limitation obligations. Credits could be granted for net negative emissions, i.e., carbon in harvested wood and other plants minus losses of carbon stocks in the landscape. These credits could be sold to buyers of the biomass or on an open GHG credit market. To the extent that such credits induced developing countries to move to sustainable forest and land management and account for carbon stock changes it would extend coverage of biomass contribution within GHG accounting systems (Di Lucia et al., 2012). Algae grown in nations without GHG obligations would share this benefit.

A final important completeness feature of the POUR system is its automatic inclusion of increases in all carbon stock pools. Under POUR the carbon embedded in biogenic carbon-based products has been counted as a negative emission. The positive emissions are counted when they occur. Therefore, the negative emissions embodied in products remain ‘on the books’ until the products are combusted or decay. Thus, unlike under the KP, biogenic carbon-based algae converted to long-lived products would be correctly accounted for.

Table 4 illustrates how fossil-based and biogenic-based algae would be accounted under POUR. In this Table the first position of the two-positional system is used to indicate whether an uptake of CO2 has occurred. Consequently, the first letter in the fossil-based algae column is always ‘N’. Similarly, since all uptake of carbon from the atmosphere by plants is counted, the first letter in the biogenic-based column is always Y. The second position indicates the accounting that occurs at the end use.

Table 4. Assessment of the POUR accounting approach. The Y represents situations where negative emissions (or an increase in carbon stocks) are accounted for
Completeness
Fossil-basedBiogenic-based
Algae FateAccounting situationCorrect accountingAccounting situationCorrect accounting
  1. a

    Assumes nation includes agricultural and grassland management and that it will not, in general, be possible to distinguish between fossil- and biogenic-carbon-based algae after it is turned into char. Under value chain approaches, however, this would be possible.

A. Combustion
Heat & PowerNYYY
B. Food or feed
CH4 NYYY
CO2 NYYY
C. Disposal
Chara NY NNYY
Deep burialNNYN
D. Long-lived products
Decay to CH4 NYYY
Decay to CO2 NYYY
No decayNNYN

Simplicity

A POUR approach may be the simplest way to achieve complete accounting across algae Fates and to avoid the inconsistencies that characterize the KP. To do this, however, POUR needs to be applied across all uses of biomass. To date no accounting system includes CO2 exhaled by humans or non-ruminants in general. However, West et al. (2011) have demonstrated the feasibility of doing so.

Sectoral accuracy

Emissions are counted when and where they occur. If no emissions occur, none are reported. This results in accuracy across both space and time.

Scale independence

Like the KP, POUR was designed to operate at the national level. Although application of POUR at the entity level can be problematic in the case of forests, these problems are connected to forests’ long growth cycles (Di Lucia et al., 2012). The very short algal growth cycle means that these problems would not arise for algae. If POUR is applied at the entity or project-level, tracking or connecting biomass production to biomass user is needed. The proposed U.S. Accounting Framework for biogenic CO2 emissions from stationary sources in fact uses a tracking system. Whether similar tracking would be feasible for small mobile sources, including both transportation and human and animals, or for long-lived products is more questionable.

Discussion: Value chain and POUR accounting systems

Value chain approaches provide incentives for products with the lowest GHG emissions along their entire value chain. Therefore, uses of algae will be incentivized where their value chain emissions are lower than those of alternative products that provide the same service or meet the same need. Analysis of cases in which this would occur is beyond the scope of this article. Due to its generally complete accounting POUR should neither encourage nor discourage any use of algae. The exception is that there would be an incentive to convert fossil-based algae to chars since a ‘false’ negative emission is registered.

Since value chain approaches place responsibility for all emissions on the end user, the entities producing fossil CO2 will have a strong incentive to capture the CO2 and convert it to algae to the extent that there is a market for the algae. Under POUR, separation of CO2 through technological mechanisms will be discouraged relative to separation by algae since the additional fossil fuel emissions from increased energy consumption will remain the responsibility of entity.

Both value chain and POUR approaches have the potential to be considerably more complete than the KP approaches. Although accomplished in different ways, both have the potential to bring more emissions from developing countries within the responsibility of nations with GHG control systems. Value chain approaches will do this for any imported products subject to end user responsibility whereas POUR could do this through credits to developing nations. However, value-chain systems are not easy to apply due to data needs and their application at the national level requires modelling or aggregation of data that is also likely to be problematic. Although it is feasible to apply POUR at the entity level in the case of large stationary sources, it may be considerably more challenging to do so in the case of other algae Fates.

Conclusions

The analysis reveals inconsistencies in treatment of biomass under the KP approach. These inconsistencies have lain in the KP approach all along but consideration of KP approaches in the context of the diverse fates of algae brings this issue to the fore. The inconsistencies contribute to incomplete accounting under both Source Reduction and No Source Reduction. Under these circumstances, which KP approach might be considered preferable from a completeness perspective depends on whether one believes that, at least in the foreseeable future, algae will be primarily used for animal feeds, food supplements or for energy. A No Source Reduction gives more complete coverage if energy, including transportation fuels, is the primary use of algae whereas a Source Reduction approach will be more complete if the primary use of algae is for feeds and food supplements.

No Source Reduction presents a hurdle to technological separation of CO2 from exhaust streams for the purpose of growing algae. Technological separation will only be undertaken were the market for the CO2 for algae is sufficiently profitable to compensate for the extra costs, including the extra emissions due to use of additional energy, entailed. Thus, under No Source Reduction it may only be realistic to produce algae where the algae are used as the separation mechanism. Source Reduction removes this hurdle, encouraging the CO2 sources to convert it to algae.

Both POUR and value-chain approaches tend to be more complete than the KP approaches, providing consistent treatment of biomass across uses. To the extent that Annex-1 countries tend to be net importers of GHG emissions value chain approaches will raise the fraction of global emissions that will fall under nations with GHG control regulations. Value chain approaches also have the advantage that they provide end users an incentive to seek the lowest GHG pathways to satisfy demand. However, a move to value-chain accounting would require reconsideration of national targets. A POUR approach would enable moving to comprehensive accounting for emissions across all biomass uses, a significant improvement over the situation under the KP. It would also resolve the issue of accounting for increases in the biomass product pool as changes in this entire pool would be automatically registered. Finally POUR could be used to encourage developing countries to move to sustainable land management and track carbon stock changes nationally.

The analysis suggests that accounting systems can support or discourage particular uses of algae. They can also either encourage or discourage emitters of fossil-origin CO2 to use the CO2 to create algae. Separation of CO2 through technological mechanisms is particularly vulnerable to the accounting approach. While ultimately the market will determine whether it is sufficiently profitable to produce algae under a given accounting system, systems other than No Source Reduction have advantages that render them worthy of consideration.

Acknowledgements

This article and the underlying research were partly funded by IEA Bioenergy Task 38 and the EC project, Climate Change: Terrestrial Adaptation& Mitigation in Europe (CC-TAME) FP7–ENV-2007-1 Grant #212535. CC-TAME's primary objective is to bring land-use modelling to the level of sophistication available in energy modelling and thereby support policy makers and other stakeholders in evaluations of the impacts, efficiency and effectiveness of land-use options, including production of biomass for energy.

We would also like to thank Gregg Marland and Kyriakos Maniatis for their guidance during early stages of our thinking through this issue.

Disclaimer

The views expressed herein are those of the authors only. They should in no way be taken to reflect the official opinion of the institutions for which the authors work or organizations with which the authors may be affiliated.

  1. 1

    It is recognized that research on chars shows wide ranges of retention time depending on char and soil characteristics and that there are no current plans to bury algal material deep underground. The assumption is used to illustrate accounting issues that could arise.