Thursday, February 26, 2009

Defining Crazy LULUCF Terms: Gross-net and Net-net

Anyone who has tried to enter and understand the world of international forest carbon accounting has come across the terms 'gross-net' and 'net-net'. Many have been totally confused; others have thought they understood but don't. Here is the simplest explanation you'll find (let's hope I'm right):

In these terms are two word positions, for example in 'gross-net', 'gross' is in the first position and 'net' in the second. Knowing what these two positions refer to is the key to understanding these two terms.

The second position refers to whether total carbon fluxes are measured, i.e. both emissions and removals. If only emissions were measured, it would be 'gross' accounting. Since in both cases, emissions and removals in the commitment period are added together to get a total carbon flux, 'net' appears in the second position of both terms.

The first position refers to whether or not the carbon flux in the commitment period is compared to the carbon flux in a base year. In this case, 'gross' means the total carbon flux is used and it is not compared to the base year carbon flux; 'net' means that the carbon flux in the commitment period is compared to the carbon flux in the base year - the base year carbon flux is subtracted from the carbon flux in the commitment period to give you a net change.


'Gross-net' = total carbon flux in the commitment period.

'Net-net' = carbon flux in the commitment period minus carbon flux in the base year.

Simple, right? :)


Florence Daviet said...

Thanks Chris!

Markus said...

Hi Chris - thanks as well - makes things see better - have a question regarding your prime LULUCF Blog:
Chris - there is one issue you might explain:
The paragraph stating:
"On the surface this idea sounds good, but because LULUCF emissions/removals simply generate credits/debits rather than being included in a country's total emissions, a country would never be required to reduce baseline emissions from LULUCF (you have to trust me on this one, or ask me to explain further). Gross-net accounting implies that no emissions from that activity are acceptable since all of the emissions in the commitment period from that activity count as a debit. This move to net-net accounting should probably only happen if this problem with net-net accounting can be fixed (e.g. through an emission reduction target for the LULUCF sector)"
is not that clear to me - any chance to get some more detailed explanation?
Cheers Markus

Chris Henschel said...

Hi Markus,

Thanks for your question. I think it's an important one. I just noticed it now at the end of Friday afternoon, so I will get to it next week.

Have a great weekend!


Markus said...

Looking forward getting an answer and beeing teached! Have a nice weekend too!

Chris Henschel said...

Hi Markus,

Here's my explanation:

LULUCF emissions are not included in the National Totals (from all other sectors) to which the emission reduction commitment applies.

Therefore there is a built in expectation of reduction from those other sectors, but not from LULUCF. Any emission reduction in LULUCF can be used to create credits that offset emission reduction in those other sectors.

The EU put forward an idea in their most recent submission that would get around this: establish a bar or threshold for LULUCF - you would only get credits if you mitigated beyond a minimum threshold. Then there would be a built in expectation for emission reductions for LULUCF too.


Markus said...

Hi Chirs,
got the point.


Andis said...


I'm just starting to deal with Kyoto reporting and this explanation seems to be fine for me, until I have to start actual calculation. Is there available any spreadsheet model, where those accounting methods are compared with formulas, including different options provided by the 'bar' system. At least, it would be very nice to have such model spreadsheet instead of several hundreds of pages of textual explanation.