How carbon or ecological compensation by land-based carbon

sequestration could work in practice, especially in Finnish agriculture and forestry sectors?

Pioneers into Practise Programme Final Report Climate-KIC

2019

Team: Gabriel Aranda Morales- aranda.am@gmail.com Elba Horta - elba.horta@gmail.com Niina Kylliäinen -niinajkylliainen@gmail.com Tia-Maria Virtanen- tia-maria.virtanen@helsinki.fi

Table of Contents 1.Introduction: Brief description of the assignment 3

2. Context and objective of the assignment 3

3. Methodology of data collection 4

4. Current Situation 4

4.1. Carbon and biodiversity offsetting in Finland 4

4.2. Relevant policies/strategies, companies and projects identified 5

5. Data Analysis 11

6. Recommendations 11

6.1 Image of CircuLab Board 12

Annex 1: Interviews

Annex 2: Questionnaire 1

Annex 3: Questionnaire 2

Annex 4: System Innovation tools from the Climate-KIC toolbox

Annex 5: UN Criteria for carbon offsetting projects (CDM, Clean Development Mechanism)

Annex 6: Construction Companies

1.Introduction: Brief description of the assignment This study is part of the Climate-KIC’s Pioneers into Practice Programme of Finland in 2019. The case problem was given by Ehta Raha Cooperative, which does community financing and is interested in supporting biodiversity and cultural heritage in Finland. 2. Context and objective of the assignment

The objective of the work is to find a local and comprehensive solution for carbon or ecological compensation by land-based carbon sequestration in farms and forests. The solution should take all aspects of sustainability such as economical, ecological and social sustainability into consideration, and include possible structures, business models and calculating systems. It will define ways to make sure that the organization in charge of compensation uses the funds for sustainable actions and consider the conservation of biodiversity and cultural heritage. The work will follow the steps listed below:

1. Situation analysis ● Baseline assessment: stocktaking, background research, and list of relevant policies/strategies,

companies and projects

● Collecting information from interviews and questionnaire developed.

2. Data analysis and setting strategic direction and recommendations for a business model/ carbon

offsetting scheme.

Key outputs of the assignment are:

● A study on the current situation in the areas of carbon compensation and ecological compensation in

the agriculture and forestry sectors in Finland.

● Suggestions for organizational structures, business models and calculating systems, including

recommendations on value proposition and considerations on social, economic and ecological

sustainability aspects.

3. Methodology of data collection

Three main sources of primary data and information were examined:

1. A desk-based review covering all relevant carbon sequestration, ecological compensation and ecosystems services documents.

2. Face-to-face consultations with some key experts in this area, using “semi-structured interviews”, 3. Online questionnaire for farmers, forest owners and investors with a key set of questions.

The questions asked aimed to understand the challenges of setting up a carbon offsetting scheme for the agriculture and forestry sectors.

In addition, Climate-KIC System Innovation Toolbox tools like the Pentagonal Diagram, Context Map, Visioning and Backcasting and Niche Management Tools, were used by the group members to understand the problem and set a goal for the work. The System Innovation perspective combines approaches from innovation, project management and socio-technical transitions with processes from ideation and creative thinking. It takes the best from business, government and academia to tackle system wide problems, such as the climate challenge. The CircuLab Board, based on the Business Model Canvas, was applied to develop suggestions for a business model.

4. Current Situation 4.1. Carbon and biodiversity offsetting in Finland Finland’s prime emission reduction targets for 2020 comprise a reduction of emissions outside the Emission Trading System (ETS) by 16 per cent and a 34 per cent reduction within the ETS, compared to 2005. Sector-specific targets for energy efficiency or emission reduction are set for energy production, industry, transport and buildings. LULUCF, land use, land-use change and forestry sector, does not come under the scope of the Emissions Trading System or the reduction targets under the Effort Sharing Decision. It is recently emphasised in the government programme that Finland’s long-term goal is to become a carbon neutral society by 2035. As a result of the ambitious carbon neutrality goals, it is expected that the interest towards domestic offsets in Finland is to increase. There are currently service providers that acquire and cancel emissions allowances from the EU Emissions Trading System (EU ETS), such as CO2Esto. Besides, on the voluntary carbon offsetting market, there are several operators, such as Nordic Offset and Compensate, where the compensation occurs by carbon sequestration projects. However, according to the UN, only the kind of projects that produce real, measurable and therefore genuine emissions reductions should be approved as offsets that would not be generated otherwise due to legislation, taxes, subsidies etc. These operators offset emissions via certified projects in developing countries. Biodiversity offsetting, also known as ecological compensation, could be a potential additional way of achieving carbon neutrality, as the habitats conserved or restored function as carbon sinks. Biodiversity offsetting is an approach that aims to minimize biodiversity loss associated with development, by ensuring that any damage in one place is compensated for somewhere else, accounting for longevity. The key policy documents for biodiversity offsetting in Finland are the EU Biodiversity Strategy and the National Action Plan for the Conservation and Sustainable Use of Biodiversity in Finland 2013– 2024. Both contain the target of halting biodiversity loss and safeguarding ecosystem services. So far, there is no other legislation in Finland laying down a clear obligation to implement biodiversity offsetting, but a recent study on habitat types proved that Finland has good potential. Slightly more than 41 per cent of the assessed habitat types were deemed suitable for biodiversity offsetting, while only 10 percent of the habitat type groups were found to be entirely unsuitable from the perspective of both deterioration and compensation (Ministry of the Environment, 2019).

4.2. Relevant policies/strategies, projects and companies identified

In this section we have listed different research projects, companies and nonprofit organizations that are working with the topics of carbon or biodiversity offsetting and/or carbon sequestration mainly in Finland, but also abroad (Table 1). These ongoing projects and operations give a lot of information about what is the current situation in the field and help us identify the challenges regarding carbon and biodiversity offsetting and carbon sequestration. It was highly important for us to identify the current actors and projects to be able to design a suggestion for a business model in the Finnish context, as the current actors could be potential partners.

Table 1: Relevant policies/strategies, projects and companies identified Policy/research projects

Developing Policy Instruments for Ecological Offsetting- Prime Minister's Office, 2018

This report presents international and national discussion on ecological offsetting and brings the discussion to the national arena by presenting the results of a Delphi study carried out as part of the study. The study introduces ecological offsetting regimes in certain countries in detail and makes recommendations on how ecological offsetting regime could be achieved in Finland step-by-step. Some of the recommended activities can be adopted within the current legislation, however ecological effectiveness can only be achieved through legislative amendments. https://www.sciencedirect.com/science/article/pii/S2212041617300141

InnoForESt: Smart information, governance and business innovations for sustainable supply and payment mechanisms for forest ecosystem services

InnoForESt analyses and fosters initiatives and networks in six case study regions in Europe, with an aim to explore potentials for the development of policy instruments and business models for sustainable provision of forest ecosystem services, and their up-scaling to national and EU-level. InnoForESt fosters network initiatives in six case-study-regions in Europe:

1. Austria: Furniture production value chains 2. Finland: Habitat Bank, ecological compensation 3. Germany: Carbon certificate for tourists 4. Italy: Tourism and watershed governance 5. Slovakia & Czech Republic: Collective carbon sequestration 6. Sweden: Public and youth forest relations

SYKE works together with the Finnish Forest Centre developing and analysing the innovation of ecological compensation in Finland, and in particular on raising forest owner interest in providing offsets. https://www.syke.fi/projects/innoforest

Habitat Bank of Finland The Habitat Bank of Finland, is an umbrella project analysing, developing and piloting the principles of ecological compensation in practice. The project aims to provide science based understanding and guidelines for a new market-based mechanism for biodiversity conservation, to complement the existing policy instrument mix. The new mechanism is urgently needed, as the existing instruments have not halted biodiversity loss. https://blogs.helsinki.fi/habitaattipankki/habitat-bank-research-consortium/habitat-bank/?lang=en

Suitability of habitat types for biodiversity offsetting in Finland- Ministry of the Environment, 2019

This publication investigates the applicability of biodiversity offsetting to habitat types occurring in Finland from the perspective of compensation and deterioration. Different habitat type groups were assessed to determine whether the human-induced deterioration of the habitat type in question could be compensated for through biodiversity offsetting and, if so, how the compensation could be implemented. According to the assessment of habitat types, the conditions for biodiversity offsetting in Finland are quite good when the general and specific preconditions are taken into consideration. Slightly more than 41 per cent of the assessed habitat types were deemed suitable for biodiversity offsetting, while only 10 percent of the habitat type groups were found to be entirely unsuitable from the perspective of both deterioration and compensation. https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/161580/YM_9_19_Suitability_of_habitat_types.pdf?sequence=1&isAllowed=y

Planning biodiversity offsets - Twelve operationally important decisions, Moilanen, Atte and Kotiaho, Janne S.

This publication reviews the principles of offsetting and summarizes a dozen decisions that effectively determine the credibility, feasibility and costs of offsets. These decisions cover the three major axes of ecology, biodiversity, space and time as well as additional considerations inherent to implementation of offsets via habitat restoration and protection measures. http://norden.diva-portal.org/smash/record.jsf?dswid=7659&faces-redirect=true&language=en&searchType=SIMPLE&query=&af=%5

Biodiversity offset markets: What are they really? An empirical approach to wetland mitigation banking. Vaissière Anne-Charlotte and Levrel Harold

A study of the Florida Wetland Mitigation Banking system, including institutional and business models https://www.sciencedirect.com/science/article/pii/S0921800915000130?via%3Dihub

Does organic farming reduce environmental impacts? – A meta-analysis of European research

This study showed that organic farming in Europe has generally lower environmental impacts than conventional farming but there are also challenges in organic farming. So, the level of many environmental impacts depends more on farmers’ management choices than on the general farming systems (organic or conventional). https://www.sciencedirect.com/science/article/pii/S0301479712004264

The farm of Qvidja This farm is part of a research project. Qvidja is a pilot farm in Parainen, Finland which produces food through carbon sequestration and cycling of nutrients. The aim is to protect the Baltic Sea by preventing nutrients to flow to the sea, thus curbing eutrophication. Biological cultivation allows all fields to grow grass. This helps to heal the structure of the soil. The grass is used as fodder and as an ingredient in biogas production. Pesticides are used as little as possible because the use of artificial fertilisers and artificial biocides inhibit carbon sequestration. What means that then the below-the ground biology does not work like it should and carbon escapes. Plant rotation, native species and nitrogen sequestration improve the structure of the soil, restrain the growth of invasive plants and attempt to keep the soil covered by vegetation. By avoiding tilling less carbon is released from the soil into the atmosphere and plants’ ability to sequester carbon increases. https://www.qvidja.fi/en/front-page/

Carbon Action Agricultural soil holds an enormous potential to mitigate climate change by storing carbon. Carbon Action project develops and researches ways of accelerating soil carbon sequestration and verifying the results scientifically, and introduces climate-friendly, regenerative farming practices to Finnish farms. Carbon Action brings together scientists, farmers and businesses to work together for sustainable agriculture. The project also develops models for carbon trading . https://carbonaction.org/

Finnish Natural Heritage Foundation - Luonnonperintösäätiö

The Finnish Natural Heritage Foundation is a non-governmental organization that promotes protection of old growth forests. The foundation has been active since 1995, purchasing old untouched forests with donation funds from individual or business Forest Sponsors and applying for a permanent protection for them according to the Nature Conservation Act. In order to find suitable sites, the foundation collaborates with public authorities represented by the regional environmental centres and focuses on old forests that haven’t been cut and display a high degree of biodiversity. They work with Friends of the Forest, Ikimetsän Ystävät RY, to take donations. https://www.luonnonperintosaatio.fi/

UN criteria for Clean Development Mechanism projects

Under the Clean Development Mechanism, emission-reduction projects in developing countries can earn certified emission reduction credits. These saleable credits can be used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol. Projects must be voluntary and;

- Projects must be able to show long-term climate change mitigation benefits; 　

- Projects must contribute to emissions reductions above and beyond business as usual　(so-called additionality)

https://cdm.unfccc.int/

The SOMPA research project, LUKE In this research project they are developing ecological and economic methods to manage organic soil fields and forest and simultaneously mitigate climate change. The aim is to reduce methane and carbon emissions from peatlands in an economic way. Also GHG emission scenarios will be drafted for the forest industries, peatland management and trends in the human food chain in order to be able to compare the combined mitigation effects and the sufficiency of different emissions mitigation scenarios. https://www.luke.fi/sompa/en/

The OPAL-Life project, LUKE The OPAL-Life project aims to optimize agricultural land use to mitigate GHG emissions from agriculture following the principle of sustainable intensification by combining environmental benefits, profitability of the farm and social aspects. https://www.opal.fi/en/

Companies and Non-for profits

Triodos Bank Triodos Bank is a frontrunner in responsible finance, they finance with savers loans only sustainable projects and list annually every loan they have made. In 2018 was the first UK bank to offer crowdfunding raising 20 million GBP for 8 social and environmental organizations. 985k tons of CO2 saved by bank financed projects. In Spain, they have partnered with CeroCO2 (see below) to offer compensation of carbon footprint with sustainable projects in developing countries. They have also partnered with solar panel manufacturers and renewable energy companies to help customers with their reduction of emissions. This model of partnering could be used in the Finnish context as well. https://www.triodos.com/

CeroCO2 CeroCO2 is an initiative from the Fundacion de Ecologia y Desarollo, ECODES Foundation, CeroCO2 that helps individuals, organizations and companies in Spain to calculate, reduce and compensate their carbon footprint. They apply standards of calculation like the Greenhouse Gas Protocol (GHG) PAS 2050, ISO 14064, ISO 14067. The projects are in developing countries only, as it is cheaper per CO2 ton. The projects chosen should mitigate both climate change and poverty and should protect biodiversity. All projects are verified by Gold Standard https://www.goldstandard.org/, Verified Carbon Standard https://verra.org/ , or Plan Vivo http://www.planvivo.org/ , ISO 14064:2, etc.) A company can get a CeroCO2 certification label. As compensation payments are regarded legally as donations, the individuals or entities can receive tax benefits according to Spanish law. 75% of the donation goes to the project, 25% is reinvested in ECODES. www.ceroco2.org

Joukonvoima A marketplace where projects related to the sustainable consumption and production of energy meet willing crowdfunders. Joukon Voima organizes both compensation- and loan-based crowdfunding. In compensation-based crowdfunding, you will receive a product or a service in return for your money. In loan-based crowdfunding, you will receive a bond that yields

interest on your investment. Interest and amortization are paid once a year. The interest rate payable by these bonds is linked to the profitability of the project. Total interest received by an investor is a combination of a fixed part and a variable part, with the latter dependent on the amount of energy produced or saved. As the projects are likely to be very different from each other, the interest rates they provide will also vary. When determining the interest rate, we will consider a number of factors including the profitability of the project and its overall risk level. Joukon Voima will not participate in the crowdfunding of financially unfeasible projects. Joukon Voima collaborates with the Finnish web-based banking service Fundu. When you fund a project, the money is deposited in an escrow account with Fundu. The money cannot be withdrawn from this account unless the project reaches its minimum funding goal. If the minimum goal is reached, Joukon Voima then withdraws your money from the account at the end of the funding campaign and uses it to move forward with the project as described in the project documentation. If the minimum is not reached, you will receive all your money back. https://joukonvoima.fi/

CO2Esto Ltd The service gives the possibility to acquire emission allowances from The EU Emissions Trading System (EU ETS) and to keep them off the market. First the customer selects the amount of CO2 tons to be prevented. Alternatively, the customer can choose the activity (e.g. traveling, living etc.) from which the emission impact will be prevented. The second step is to pay the service at their web store. Then the company will send you a certificate as a proof of the emission reduction. The EU ETS is the most cost-efficient and largest route to prevent CO2 emissions within the EU. It covers more than 11 000 industrial plants and around 45% of total greenhouse gas emissions from the 28 EU countries. Elimination of emissions from the EU ETS directly prevents the selected amount of emissions to be emitted by the plants in the EU ETS. It is not compensation of emissions, it is actual and proven emission preventing. Due to well established and controlled processes within EU ETS, our solution is guaranteed. https://co2esto.com/english

Puro.earth Puro is the world's first marketplace for carbon removal certificates. With a mission to scale carbon capture methods, a group of Finnish businesses has partnered with global financial solutions firm South Pole and Swedish bank SEB to create a marketplace for science-based CO2 removal certificates. Puro is a pioneering initiative making CO2 removals verified, comparable and tradable. Puro marketplace launched with 23 participants and have already had three auctions with slightly higher prices that EU ETS carbon market, signaling to demand. Puro creates verified and tradable CO2 Removal Certificates (CORCs) that represent one tonne of CO2 that has been removed or captured. Puro operates a double-blind auction system. The potential buyers submit their purchase bids, while potential sellers of certificates simultaneously submit their sales bids to the auctioneer. When prices match, a deal is made and the CO2 removal certificate (CORC) is transferred to the winning bidder. Once the CORC has been retired, it can be used e.g. in sustainability reporting. Organisations actively removing CO2 from the atmosphere can register with Puro to become verified suppliers. They currently support three long-term CO2 removal methods at an industrial scale: CO2 fixated in carbonated building elements, wooden building elements and in biochar, but they are open for more.

Farmers could become suppliers in the future. They already have received soil to carbon supplier applications. Suppliers can only be in Europe but sellers, global. Certification is verified by independent third party DNV GL https://www.dnvgl.com/ Puro takes 1.5% transaction fee for both seller and buyer. If you want to choose the specific method of carbon removal then it is 3%. https://puro.earth/

Spark Sustainability Spark Sustainability helps and inspires people to make climate-friendly choices in everyday life. They offer facts and a fun way to reduce carbon footprint. With the Spark calculator, you can calculate your own carbon footprint, the Carbon Donut, which shows the source of your emissions, so you can see where you can start making changes in order to reduce your carbon footprint. Emissions sources are divided in six categories: heat, electricity, transport, flights, food and consumption. https://sparksustainability.com/

WWF Carbon Footprint Calculator In the website people can calculate their own environmental footprint. https://footprint.wwf.org.uk

Compensate Compensate is a non-for-profit foundation that offers ways for people to live a carbon negative life. They are building a system where the emissions caused by consumption can be compensated easily with a payment at the time of the purchase. Multiple companies have started to negotiate with them about implementing compensation payments as a part of their customers’ journey. Due to uncertainties related to carbon capture they make an at least two-fold compensation. The Foundation uses the compensation payments for internationally trusted project developers' certified carbon sink projects. Project developers apply to get certified by Gold Standard or Verified Carbon Standard (VCS). Compensate foundation owns 100 % of Compensate non-profit operations Ltd which is responsible for the daily operations of the foundation. The activities of the foundation or the limited liability company are not financed with the compensation payments but with a fee from the partner companies. https://compensate.com

Kurkirahasto

Kurkirahasto is an independent fund under the Biodynamic Farming Foundation (Biodynaamisen Viljelyn Säätiö https://www.biodynsaatio.com/ ), which owns a biodynamic farm in Vesilahti, Finland. The land was purchased on the 20th February 2019 with crowdfunding and a bank loan. The participants in the crowdfunding became landowners. They enabled the land to be procured, the land was rented to farmers and are now setting up a Garden of Opportunities and creating a new kind of social inclusion network around the farm. https://www.kurkirahasto.fi/

CarbonToSoil CarbonToSoil mobile app able consumers to participate in agriculture where regenerative farming is used to draw carbon from the atmosphere into the soil. Through the app people can support farms to change their agricultural methods to regenerative farming. The app makes possible to personally participate in food production and see how food is grown. Field samples are taken to measure the amount of carbon stored in the soil and to analyse the status of key nutrients. Soil sensors also provide real time data on the soil’s temperature and moisture. http://www.carbontosoil.com/en/index.html

Nordic Offset Nordic Offset Oy offers environmental management consulting and commercial emission reductions and permanent emission removals (sink increases) from voluntary emissions trading markets, since 2008. They offer emission reduction credits under WWF Gold Standard certification and are currently developing standardized methodologies for emission reductions and permanent carbon credit removals for projects in Finland.

https://nordicoffset.fi/summary-in-english/

LendaHand Lendahand is an online impact investing platform where socially conscious investors can invest in entrepreneurs and sustainable initiatives in emerging countries, via crowdfunded loans that generate an interest return to the funders. The loans can be made directly to the entrepreneur or via a local financial institution as partner. The borrowers (issuers) pay an average interest rate of 7,35% per year to Lendahand. Lendahand pays on average 4,25% to funders. The other 3,10% is gross margin. The projects impact is measured in number of new jobs, KwH generated, people reached and tons of CO2 reduced. Once the full project amount a business is seeking has been funded by a crowd of investors, the money will then be wired to the local partner or directly to the business on the first day of the following month. At that point, the investment will begin earning interest. Lendahand works with Intersolve EGI: a Dutch financial institution that specialises in offering services in the field of payment settlement and electronic money. To be able to offer these financial services Intersolve EGI must comply with the applicable financial legislation. Intersolve EGI is therefore supervised by De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) and is in possession of a license to act as an Electronic Money Institution (and therefore also has a license as a Payment Institution). Money will be deposited on a protected and secure bank account until the project has been fully funded. Intersolve in no way has access to these funds. Once the project is fully funded, the money is transferred to the local partner or company in question. https://www.lendahand.com/en-EU

5. Data Analysis Desk-based review We did a desk-based review covering relevant carbon sequestration, biodiversity offsetting and ecosystems services documents. We found many studies and projects in the areas of carbon and biodiversity offsetting. The consumer mindset and the political will seem welcoming to the idea of compensating carbon emissions or biodiversity loss, and it seems that the governmental atmosphere is open to new initiatives such as setting up a national carbon market, which until now, has worked through the EU or UN, between developed and developing countries. We found that even though there is government investment in research and policy instruments development, like the Habitat Bank and InnoForEst projects, there is not enough experimentation and there are very pressing challenges, such as standardization of biodiversity calculating methods, long term monitoring of restorations, and the creation of an institutional or private ecosystem for a working marketplace. In other words, biodiversity offsetting is not ready yet. It is in the works, stewing and bubbling under the surface, but there is a lot to be done before it can become a real tool for safeguarding carbon sinks in Finland.

Carbon offsetting, on the other hand, is a lot more mature. Older companies, like Nordic Offset, which offers emission reduction credits, and newer entrepreneurial initiatives like Compensate.com, with whom individuals can compensate for their emissions with carbon sink projects in developing countries, and Puro.earth, a carbon removal certificate (CORC) auction marketplace, are leading the way into the public’s mindset and making tangible strides in injecting capital into carbon sequestration.

Therefore, we think there is a space in the market for an entity who could offer Finnish consumers and companies a way to compensate for their carbon footprint by sequestering carbon in a local farm or forest, combining the aspect of biodiversity preservation.

Interviews

Based on the interviews conducted, we found out that SOMPA, Habitat Bank and OPAL-Life projects are now working on the calculation systems for carbon sequestration and biodiversity offsetting, and researching how agriculture is affecting biodiversity in Finland. In spite of encouraging research findings and innovations there are still challenges related to the calculations: how to get reliable calculations of biodiversity and carbon emissions in order to compensate for correct amounts. One of the findings was that the emissions of Finnish agriculture from peatlands are significant. Therefore, preventing carbon release from peatlands is more important and practical than trying to sequestrate carbon in the fields. The potential emission reduction methods in peatlands are rewetting them and practicing paddy cultivation or lawn cultivation. One of the biggest challenges related to sustainable farming methods is that farmers need both knowledge and skills, for example to successfully use cover crops or undergrowth, and the training may need time. Despite these challenges Finnish farmers are generally highly educated and willing to work towards a more sustainable farming. The SOMPA project has produced a map of average measurements of carbon sequestration using the Gasmet device. These averages could be used to predict the carbon sequestration that will happen thanks to the financing of the compensators. They will also produce a hotspot map to show sites that are losing carbon. Farmer’s views on their role in the economy, their community and climate change, are a fundamental aspect to take into consideration when planning to use farms as carbon sinks for compensation. The pressures they deal with, including falling prices and high capital needs, may mean they are more open to offer their land as compensation land, but the issue of longevity is a risk because a farmer will not want to leave their children with a legal burden. Some farmers feel blamed for climate change. This aspect would be important to consider in communications with them and highlight they could actually be part of the solution. Birdlife is used for assessing biodiversity in agricultural environments and currently it is the only national wide data used for measuring biodiversity. This presents a quick opportunity to preserve or introduce bird species in agricultural fields or forests, as a biodiversity win, additional to the carbon sink. As more research and biodiversity calculating methods are standardized other possibilities will arise. Our interview with Kurkirahasto, a fund under the Biodynamic Farming Foundation that has purchased a farm with crowdfunders money, was very interesting as they are an example of the drive to keep the cultural heritage and the social and economic sustainability of rural areas. Questionnaires Two questionnaires, one for companies/individuals as possible compensators and the other one for farmers/forest owners were developed. 9 persons replied to the questions. All responders were worried about climate change and were interested in knowing either their company’s or farm’s/ forest area’s carbon footprint. Almost all were also interested in compensating their carbon footprint. In addition, based on the questionnaire, the farmers were generally very open with the idea of getting compensation funds and using more sustainable ways to cultivate their lands. However, the compensators were worried about longevity. If they had financially supported a farm or a forest area, how could they be sure that their action guaranteed a permanent carbon sink, where the forest would not be cut or the sink otherwise removed after the support ended. Other concerns were the way to calculate the carbon sequestration and how their money would actually be used.

6. Recommendations

What would be a viable business model for an entity like our problem owner, Ehta Raha Cooperative, to start

with? The Circulab Board was used to brainstorm and develop a potential business model.

The objective of the business model is to find a solution for carbon footprint compensation by land-based

carbon sequestration, while taking all aspects of sustainability such as economical, ecological and social

sustainability into consideration. The solution will include ways to make sure that the organization in charge of

compensation will actually use the funds received for sustainable actions and include the conservation of

biodiversity, cultural heritage and social wellbeing.

6.1

Fig. 1 The CirculLab Board

Issues

Rapid urbanization is destroying forested areas in Finland and agricultural system trends are causing emissions

from farming. Farmers and forest owners are in need of income and of safeguarding their cultural heritage.

People and companies are more aware of the climate crisis and may want to compensate for their carbon

footprint. They may place more value in tangible carbon sinks in Finland that generate other types of societal

benefits besides just reduction or sequestering of emissions.

Team and Structure

The model can be executed by a number of structures, like a foundation, a cooperative or a for profit or

non-for-profit company or a combination. A separate financial steward could be used, like a bank or trust

fund. A non-for-profit structure would be perceived by customers as more transparent.

Value Proposition

A platform that helps individuals and companies to easily calculate and compensate for their carbon footprint

by financially supporting a carbon sequestering farm or forest in Finland. Compensators could choose a

specific project or subscribe for paying a recurring fee to be matched automatically to sustainability projects

that need funding. Value is placed in more than being carbon neutral or trading in the emissions trading

markets like the EU ETS trade. Instead this model allows value to be found in the tangible features of farms

and forests and in covering other sustainability aspects like social impact in Finnish society, in the form of local

jobs, preservation of cultural heritage and of biodiversity conservation. It offers a way to optimize your

compensation.

Farmers and forest owners would earn revenue or reduce their land rent as their land or project becomes

certified in the platform. The land is managed by sustainability principles.

Clients and Contexts

The clients in the platform would be individuals and companies matched to farmers and forest owners.

The context is local and Finnish, where the countryside will benefit from the cities emissions and the

compensators will feel they are contributing to social impact, cultural heritage and biodiversity conservation

in their own country.

Key Activities

Sales and marketing efforts to acquire compensators, as well as farmers and forest owners, including content

and website development, innovative customer relationship building campaigns, ongoing social media and

events.

Onboarding of farms and forests as projects to be funded in platform.

Management of the compensation payments towards projects.

Public relations and press.

Keeping a learning environment in the website for the compensators, on topics like climate change, the

rebound effect and how to reduce their carbon footprint.

Community management. Fostering trust-based relationships between projects and compensators by creating

a connection to the land using perks like visits, exclusive events or easy access to products.

Partner management efforts.

Partners

Below is the potential partner ecosystem:

Farmers: Organizations like the Biodynamic Farming Foundation, ProAgria Rural Advisory Services, MTK help

reach and communicate with farmers

Forest owners: organizations like Luonnonperintösäätiö and Metsänhoito yhdistys help reach and

communicate with forest owners

Carbon sinks calculation services: LUKE is developing calculations for carbon sinks measurement

Carbon footprint calculation services: A carbon footprint calculator app company or public service. Spark

Sustainability has a carbon footprint calculator.

Carbon marketplaces: PURO.earth, Clean Development Mechanism, Nordic Offset, EU carbon trading

Carbon sink project advisers: University of Helsinki, SYKE, LUKE

Project certifiers: The certification of the land-based carbon sequestration and sustainability projects in farms

and forests, will likely be done by a partner. There are certification bodies like Gold Standard but in the

Finnish local context a research institution like LUKE or adapting the UN Clean Development Mechanism for

projects might be better options.

Customer companies: start targeting construction companies, see Annex

Customer citizens: target eco-aware citizens and those who care about the cultural heritage of farms and

forests

Other partners: An audit firm to review financial transparency and a legal firm as advisor

Distribution

Website - the main distribution of platform’s value proposition

Strategic alliances and joint ventures with competitors and non-competitors

Direct salesforce to find new farms and forests to join platform

Partner ecosystem

Resources

Most intensive resources needed to create and run the platform will be human and intellectual. In the carbon

sequestering projects resources will be natural, financial, technological and energetic.

Upcycling

In specific projects it may be possible to use waste as a new resource, in a carbon balancing way. For example,

biomethane from animal farms and fiber sludge from forests.

Functions

The essential functions of the value proposition are the calculation of the compensator’s carbon footprint and

the equivalency calculation of the carbon sinks.

Other functions are the ability to compensate using recurring automatic payments or by specific projects, and

the transparency given by the project certification process.

Revenue

Revenues can come from various alternatives from both compensators and the farmers and forest owners

who become project developers. Some options are: a small percentage fee of each compensation payment, a

variable fee from compensating companies depending on emissions, a fixed annual fee for individual

compensators, a fixed or variable fee per project listed in platform charged to the farmers and forest owners.

Crowdfunding could also be a way to fund a specific project or the whole model.

Funding can be sought from Business Finland, Nordic Climate Fund, angel investors, Climate-KIC contest for

startups., the Horizon2020 programmes.

Cost

Costs will come from salaries, marketing, office, legal and accounting fees.

Positive Impacts

- Offers a simple platform to compensate

- Offers people results they can see with their own eyes, happening in their own country

- Leverages the current political will to make changes and concrete actions

- Transparency helps consumers trust and be part of the solution

- Provides a way to conserve biodiversity and local farms

- Provides information to farmers about how they can sequestrate carbon in their land

- Encourages community activity

- Encourages the Circular Economy in farming and forestry

- It can become a scalable and replicable business model

Negative Impacts

- Focus on local context might turn attention away from project support in developing countries

- Might result in the rebound effect, where people “balance out” their good actions with bad actions.

For example, they compensate for flying but then fly more, as they feel they have paid for the

indulgence

- People may feel overwhelmed, feeling it is their responsibility to spend money on compensation

when they have not caused the majority of the problem.

- This model does not reduce emissions, it just compensates for the ones caused by the compensators.

- The model may have problems with longevity of the carbon sequestration if not dealt with properly in

the certification process or in the statute of the foundation or acting organization.

- The model needs a certification process that has to be closely monitored

Marketing Angles for the Value Proposition

The compensators can be convinced by a number of benefits:

local - international

easy - difficult

affordable - expensive

transparent - murky

long term - short term

grassroots - institutional

tangible - intangible

city growth - rural growth

voluntary - mandatory

factual - perceived

collective - individual

Marketing should create a Quick WIns Sustainability Guide or training for the farmers and forest owners to

quickly increase carbon sequestration in their land. Potential marketing message directed at compensators:

Conservation by Compensation. Potential marketing message directed at farmers or forest owners: Preserve

to Earn

Challenges

How to deal with the problem of additionality in Finland? The monitoring of offset projects, towards

preventing double counting of offsetting targets or that two different offset-sector operators sell the same

project to different buyers, is a challenge. To solve that, issues of double claiming and additionality should be

openly communicated and agreed upon among key stakeholders of the model in order to avoid a situation

where the voluntary emission reductions are perceived as substituting governmental actions.

One option is through certification and a formulated project development process to guarantee transparency

and uniformity of carbon capture measurements. For example, to follow the EU criteria or to create local

criteria based on the Gold Standard. Also, it would be recommended to focus on the areas of work that are

not part of the official reporting of Finland, such as consumption or, as the report by Salo 2019 suggests,

projects of CO2 sequestration in soil through soil enrichment and recovering of degraded or contaminated

land. It would also be recommended to set up an official registry for voluntary based compensations in

Finland by members of the carbon offset ecosystem.

It would be recommended to do the measurements in cooperation with universities and research institutes.

Average measurement numbers for peatland forests and farms carbon sequestration can be used from the

SOMPA project for simplicity.

From the present stepping forward towards our Vision: What are the actions we should take for our model

to come true?

A local compensating scheme based on this Climate -KIC project should be tested with pilots of farms and

forests, choosing the best habitats for compensation, and quick wins that will support the cultural heritage

and economy of the communities.

Extra Ideas

- To cooperate with SOK ( S-Market) and develop a carbon offsetting system that uses information

from their ecological footprint of consumption database.

- To use the Social Impact Canvas to measure social, economic and ecological system services impact

- To partner with a bank like Nordea or OP to get compensating customers, in the manner of Triados

Bank and CeroCO2 ( see Table 1)

- To have a bit funnier approach and develop for instance a carbon eating troll for the company to

attract more people and change the image of climate action that is only focusing on depressing

realities now

- The Habitat Bank project is piloting the first biodiversity offsetting cases in Finland. An established

place or organization where one could find information about the offset markets or available offset

credits does not yet exist and there is no process for requesting to be or becoming an intermediary.

So keeping up to date with their efforts and getting involved might bring opportunities to become an

intermediary in the new ecosystem, like an offset broker. For example, Ehta Raha could seek private

owners to put their land in reserve, then raise funds to buy the land and finally get a profit when a

construction company needs to compensate. A partner for environmental assessments would be

needed.

- To become a certifier of compensation projects in farms or forests. The projects get a carbon removal

credit to be traded at the Puro.earth marketplace.

- To start a micro-compensation marketplace where construction companies can compensate for

number of trees felled in private backyards

- The success of the Plastics initiative between countries could act as a foundation for a new support

system from businesses and governments in the area of land-based carbon sequestration.

Annex 1: Interviews OPAL-life Project Researcher Interview 1

OPTIMIZING AGRICULTURAL LAND USE TO MITIGATE CLIMATE CHANGE.

OPAL-Life started in 2015 and it aims at optimizing sustainable field use and mitigating greenhouse gas

emissions from agriculture following the principle of sustainable intensification. This means combining

environmental benefits, profitability of the farm and social aspects.

OPAL-Life project is coordinated by Natural Research Institute of Finland, LUKE, in collaboration with

University of Helsinki, The Finnish Geospatial Research Institute (FGI), The Central Union of Agricultural

Producers and Forest Owners (MTK), Nylands Svenska Lantbrukssällskap and ProAgria Rural Advisory Services.

Funded by European Commission LIFE programme https://www.opal.fi/

In the interview with the researcher we learnt that carbon cannot be sequestered in peat soils, you can only

reduce emissions releasing from the peat; however, you can reduce much more than what you can sequester

in mineral soils. Not using peat soils, by reforesting or rewetting peatland now used in agriculture, would

mitigate emissions the most, so in the compensation scheme, you should find the poorest soils to target (less

than 2% carbon) as it is much easier to sequester carbon. The project has produced weighted average carbon

data from 800 peat soil farms. Emissions from peatland soils are significant since 10% of the cultivated area in

Finland is peatland soils which accounts for over 50% of greenhouse gas emissions from agriculture. Birdlife is

used for assessing biodiversity in agricultural environment and to find out which factors affect the abundance

of bird species, the total number of pairs and community composition. Currently birdlife is the only wide

national data that can be used for measuring biodiversity. So, to be able to measure biodiversity more

extensively there is need for data of other species group.

The researcher gave us some examples of quick sustainability intensification wins for farmers, which could be

financed with compensator’s money:

- Biochar spreading in fields: as biochar does not decompose easily , it creates carbon balance in the

farm

- Use of sewage sludge: improves greatly the carbon cycle, can be obtained from municipality water

treatment plant, now it is mainly used only in landscaping

- Use of side streams from forest industry: using forest fiber sludge (residue from pulp production) that

has nitrogen, improves the soil

- Cover crops: what is left after the harvest is the carbon sequestration in a field. However, it is

complicated for farmers to keep a cover crop like grass after the cereal is harvested, as they have to

buy seeds, sow them and they may not know how to plant them efficiently, with risk of grass growing

faster than the cereal. So money could go to this activity, including training.

- Biogas digester: for high energy consumption farms, like the ones who need to heat buildings for

animals or drying grain, buying a manure anaerobic digester, will help them substitute fossil fuels. Plus

the carbon obtained is resistant to decomposition.

- Gas purification System: farms that have a biogas digester can also sell the product for profit

- Permanent cropping: farms that turn to permanent cropping, like apple trees and berries, sequester

more carbon. City dwellers/compensators could also go harvest and buy.

Biodiversity offsetting would be a good idea for fields because there are many organisms in danger, like birds,

who nest in fields. This is a result of increasing the size of land parcels and destruction of ditches.

OPAL-life Project Researcher Interview 2

We interviewed a second researcher of the OPAL-life project. We learnt about their high level findings of

surveying approximately 4,000 farmers. There is no homogeneous “all farmers” group. There are differences

in age, desire to innovate, willingness to try new methods, views on climate change, etc. Farmers are highly

educated with many having university degrees. Most farmers get subsidies, higher for organic farming, even

though they may not produce food. Many do not expect their children to continue to be farmers. The farmers

have not been surveyed on carbon sequestration or farms as carbon sinks, as the themes have not been at the

forefront of the national conversation until recently. Many farmers do not see that their work makes any

difference in terms of climate change and that agriculture does not contribute significantly to Finland’s

emissions. Emissions from agriculture has been falling since 2017.

http://tilastokeskus.fi/til/khki/2018/khki_2018_2019-05-23_tie_001_en.html

In fact, they may feel blamed for climate change. This aspect would be important to consider in

communications with farmers and highlight they could actually be part of the solution.

Various organizations could be good to partner with to approach them: ProAgria as they are a source of

education and MTK as they lobby for their interests. However, when asked “who do they trust?” other

farmers came as the answer, more than research institutions, the government or the Helsinki Sanomat.

Therefore, showcasing the results of pioneering farmers is crucial.

SOMPA Project Researcher Interviews

The SOMPA research project https://www.luke.fi/sompa/en/ will develop ecologically and economically

sound methods to manage organic soil fields and forests while simultaneously mitigating climate change.

They will produce new scientific knowledge of the mechanisms that regulate methane and carbon dioxide

emissions from peatlands with the aim of reducing the emissions in an economic way. They will also draft

greenhouse gas (GHG) emission scenarios for the forest industries, peatland management and trends in the

human food chain.

Based on the scenarios, draft and decision makers in climate politics will be able to compare the combined

mitigation effects and the sufficiency of different emission mitigation scenarios. SOMPA project is giving

teaching and workshops to organizations like TAPIO and forestry centers as well as local forest owners.

The scientific consortium consists of Natural Resources Institute Finland, the Finnish Environment Institute,

the University of Eastern Finland, the University of Helsinki and Tyrsky Consulting. The project is financed by

the Strategic Research Council of the Academy of Finland.

In the interview with the researcher we learnt that emissions are coming from drained peatlands used for

agriculture and forestry. In agriculture, peatlands cause 14% of all Finland’s greenhouse gas emissions -

carbon dioxides and nitrous oxides that is 300 times stronger than CO2 emissions. The thickness of peat is the

main factor that defines what should be done. If there is 30cm or less peat, it would be good to keep the field

covered with plants or reforest it. Instead of thick peatlands would be good to get under long-term grass

cultivation or use other crop as undersown and lighten/reduce field tillage. One possibility is also raise the

groundwater level with adjustable drainage while cultivating. Approximately 1 cm of peat decomposes per

year which generate about 20 tons of CO2 emissions and 1 tons of nitrous oxide emissions. So, preventing the

composition of peat is meaningful.

In forestry, in the long term, the growth of trees cannot compensate for the loss of carbon from the peat. The

decrease in carbon sink is of 32%. This project aims to mitigate emissions caused by detrimental

management. A comparison of even-aged forestry management, where all trees in the stand are clear-cut,

and continuous cover forestry (CCF), an approach to sustainable management of forests whereby forest

stands are maintained in a permanently irregular structure, through the selection and harvesting of individual

trees, was performed. Water table level goes up with traditional even-aged forestry management, so there

are more methane emissions. A better way to harvest and avoid emissions is using the CCF method, with only

partial harvests.

Metsänhoito yhdistys is an organization that advices forest owners on management and could be a partner in

a compensation scheme to reach the forest owners. The forest owners make the last decision on the method

used on their land, within the limits of legislation.

The project has produced a map of average measurements of carbon sequestration using the Gasmet device.

These averages could be used to predict the carbon sequestration that will happen thanks to the financing of

the compensators. They will also produce a hotspot map to show sites that are losing carbon.

Habitat Bank researcher interview The Habitat Bank is a research consortium studying and developing ecological compensations. Their objective is to create new ways of halting biodiversity loss in Finland. In Habitat Banks’s projects, they analyse the applicability of ecological compensations in Finland with research and pilot projects. The research is highly interdisciplinary: combined scientific expertise covers natural science, social science, economics and law. We were told by the researcher: The questions you asked about: Who could act as an intermediary and who would regulate it? are one of the most important questions we have been contemplating. There are no intermediaries for biodiversity offsets in Finland. In general, the intermediaries can be public or private entities or NGOs, there are examples of all of them in more mature offsetting schemes for instance in the US and Germany. Who would regulate them? It depends on whether the offsetting mechanism is added in legislation and is compulsory or if it is voluntary. So far, as we are piloting the first offsetting cases in Finland, an established place or organization where one could find information about the offset markets or available offset credits does not yet exist and there is no process for requesting to be or becoming an intermediary. There are many research projects looking into these issues right now and biodiversity offsets were also added in the recent government program so this really is a hot topic in Finland so we’ll see how things will progress in the near future. There have been vague ideas for an internet page or a platform to work as a marketplace where demanders and suppliers could meet each other but to my knowledge, no one is working on this yet. How to measure ecological losses and gains in the scheme is an essential question. We are further developing a method called ELITE index (introduced in a report by Kotiaho et al. 2015, 2016 in eng) so that it could be used as a calculation method for biodiversity offsetting. There is a lot of literature about this issue of ecological equivalence assessment methods. It is definitely preferable that there is a standardized method which is supplemented with case-specific information. For instance, in abundant, ordinary habitat types it might be sufficient to only use the standard method but in more valuable habitats, this information must be combined with more detailed ecological information. Biodiversity is such a complex phenomenon compared to carbon, for instance, so it is a much more difficult task to calculate biodiversity offsets instead of carbon offsets. There is a recent publication called “Suitability of habitat types for biodiversity offsetting in Finland” (http://urn.fi/URN:ISBN:978-952-361-012-5) related to this. Also you might find useful another publication called “Planning biodiversity offsets – Twelve operationally important decisions”: http://norden.diva-portal.org/smash/record.jsf?dswid=7659&faces-redirect=true&language=en&searchType=SIMPLE&query=&af=%5B%5D&aq=%5B%5B%5D%5D&aq2=%5B%5B%5D%5D&aqe=%5B%5D&pid=diva2%3A1201285&noOfRows=50&sortOrder=author_sort_asc&sortOrder2=title_sort_asc&onlyFullText=false&sf=all. So again, the question of who would do the assessments and evaluate the amount of credits is still open. It could be a service that the intermediary provides or a consultant or something else. Kurkirahasto interview Kurkirahasto is an independent fund under the Biodynamic Farming Foundation (Biodynaamisen Viljelyn Säätiö https://www.biodynsaatio.com/ ), which owns a biodynamic farm in Vesilahti, Finland. The land was purchased on the 20th February 2019 with crowdfunding and a bank loan. The participants in the crowdfunding became landowners. They enabled the land to be procured, the land was rented to farmers and are now setting up a Garden of Opportunities, creating a new kind of social inclusion network around the farm. https://www.kurkirahasto.fi/

The interviewee at Kurkirahasto explained that the farm purchase came from a local need to own the land together. They believe that the structure of agriculture needs to change as it is too capital consuming and revenues are not enough. The crowdfunding campaign was the official tool to keep the farm managed locally. Ehta Raha managed the marketing for the first round of crowdfunding and acted as legal consultants. In legal terms the crowdfunders became landowners but they gave the freedom to the trust fund. The Biodynamic Farming Foundation would like to multiply the idea in other locations in Finland. In order to repeat it there must be active people in a community who feel they should keep the land and own it together. With this model the family loses the farm but it is landgrabing in a positive way as it is kept off the market and the community keeps the cultural heritage. In the statute of the foundation it is stated that biodynamic methods will be used forever in the farms. This deals with the concern of longevity. The foundation is responsible to find new farmers to rent the land to and that the field is managed by knowledgeable and skilled farmers from generation to generation. The crowdfunders also get the benefits of acquiring and using a type of coupon to be used in community events and environment courses to keep the connection to the land. The farmers pay rent to pay the bank loan. At the moment the loan is quite high but the idea is to have reasonable rent that lowers in the future. It is sustainable financing that helps with the challenges of the agricultural system. ANNEX 2: Questionnaire 1 Climate KIC Pioneers in Practice Project: This survey will help us understand customer views on carbon footprint compensation. You can answer in Finnish or English. Thank you!

Top of Form 1. Are you worried about Climate Change? Yes No 2. Would you be interested in knowing your individual or company's carbon footprint? Yes No 3. Would you be interested to compensate for your carbon footprint? Yes No 4. Nature naturally retains carbon that otherwise would be free in the atmosphere. For example, farms and forests can be called carbon sinks as they sequester carbon. Would you be interested to compensate your carbon footprint by financially supporting a farm or the restoration of a forest? Yes No Feel free to also give us your comments: 5. What questions would you have from an organization that could help you compensate your carbon footprint by financially supporting a farm or by restoring a forest? 6. What concerns would you have? 7. If you compensated your carbon footprint by supporting farms or forests, would you like to get some perks or gifts like farm visits, a certificate, a thank you card, access to the forest? If yes, what kind of perks or gifts would delight you? Yes No

ANNEX 3: Questionnaire 2

Climate KIC Pioneers in Practice Project: This survey will help us understand farmers views on carbon footprint compensation.

You can answer in Finnish or English. Thank you! 1. Are you worried about Climate Change ? Yes No 2. Would you be interested in knowing your farm's carbon footprint? Yes No 3. Nature naturally retains carbon that otherwise would be free in the atmosphere. For example, farms and forests can be called carbon sinks as they sequester carbon. Would you be interested to make your farm more sustainable or decrease its carbon footprint? Yes No 4. What would you need to make your farm carbon positive right now? 5. What would you need to grow other aspects of sustainability (for example social justice, cultural heritage, biodiversity…) in your farm? 6. Some individuals and companies would like to compensate for their own carbon footprint by financially supporting farms which retain carbon. Would you be interested to get compensation money from them to help you make your farm more sustainable or decrease its carbon footprint? Yes No Feel free to also give us your comments: 7. What questions would you have for an organization that helps individuals or companies compensate their carbon footprint by financially supporting farms? 8. What concerns would you have? 9. If you got compensation money would you be ready to give some perks to the investors like farm visits, a thank you card, access to the farm, discounts on your products, etc.? If yes, what perks could you give? Yes No

Annex 4: System Innovation tools from the Climate-KIC toolbox Stating the Problem Pentagonal Problem Diagram- is a visual tool to help teams nail down the problem, identify its different components and details, getting to a common ground for future actions.

Stakeholder Analysis Actor Tree - The first step in stakeholder analysis is to identify and list any potential stakeholders affected by the challenge or with capacity to affect it. Stakeholders are depicted as the roots of a tree that will feed and carry out the process of system innovation, represented by the crown of the tree. The trunk, in turn, accounts for your challenge.

Context Map A project is not an island in an ocean. It exists in a specific location with a defined environment and within a broader system made up of stakeholders, competitors, regulations, institutions, etc. The Context map is a straightforward tool that helps you understand and analyse the external macro-environment around your project, business or challenge. Based on the well-known technique PEST1 (Aguilar, 1967), it has been adapted to the system innovation context by increasing and modifying the factors and focusing on trends as potential drivers for change. The tool provides a soft approach to the threefold layer structure that is the base for the Multi-level perspective theory of socio-technical systems.

Future Paths Visioning is about imagining the desirable future and describing what it might look like. Backcasting is a technique that makes you look back from a future scenario, identifying and assessing changes and actions for that future to come true. Our Vision

That all Finnish citizens, companies and organizations have an automatic system for compensating their

emissions with local land-based carbon sequestration, which simultaneously supports biodiversity and

cultural heritage conservation.

From our Vision stepping backward towards the Present: What major events happened for the Vision to

come true?

Former Finnish Prime Minister Juha Sipilä said in December 10th 2018 that Finland would establish a carbon

exchange during its EU presidency. “We’ll now set our sights properly on setting in motion a carbon exchange

for the EU, which would allow us to bring carbon sinks into the equation […] so that Finnish farms and forests

can generate additional revenues by functioning as carbon sinks,” he announced after a seminar on climate

actions in Helsinki. “That way all Finns can, in principle, contribute to increasing carbon sinks. But a real

marketplace is needed to accomplish this and that’s what we’ll try to set in motion,” he added. Sipilä

estimated that “establishing the exchange would require that carbon sinks are verified and the longevity of

carbon reservoirs is guaranteed, which in turn would require accurate information on forest growth and

standing timber”.

https://www.helsinkitimes.fi/finland/finland-news/domestic/16026-finland-to-work-towards-creating-carbon-

exchange-during-eu-presidency-says-sipilae.html

Finland started the EU presidency on July 1, 2019 and has the goal to be carbon neutral by 2035. So in this

report we have used the year 2035 as the year our Vision is made reality.

In 2033-The Finnish government establishes a mandatory biodiversity offsetting market for all construction

development in Finland, which stipulates geographical areas, by dividing the country into regions, where the

offset must happen close to the loss to preserve ecosystem services for citizens.

In 2030 Carbon sinks are now greater than national emissions

In 2028 The Finnish technology and calculation system of carbon capture in forests and farms is standardized

and used globally in other countries

In 2025 Umbrella compensation program for all farms and forest owners is decided by government. The press

covers public dissatisfaction with the offsetting scheme which does not regulate where the offset occurs,

leaving people in cities far away from the restored area.

In 2022 A flurry of entrepreneurship conservation initiatives occur followed by the opening of a Biodiversity

Loss Mitigation Banking system in Finland. The ecosystem includes institutional regulators, environmental

consulting firms as assessors of offset credits, intermediary offset credit banks, and construction developers

who voluntarily buy offset credits to compensate for the biodiversity loss they cause.

In 2021 The press covers the public excitement over a compensation scheme that will add and restore carbon

sinks locally. Many companies express interest in sponsoring the scheme.

In 2020 A local compensating scheme based on this Climate -KIC project starts a successful pilot with 3 farms

and 2 forests, choosing the best habitats for compensation, and farms and forests that will support the

cultural heritage and economy of a community.

In 2019 Finland sets goal to be carbon neutral by 2035

The 6-3-6 model A Niche Management tool that facilitates creative ideas on how to take a project from a niche to the mainstream. 6 elements from the project 1. What is the goal for society?

- Carbon sequestration and compensation - Preserving cultural heritage, - Make connections with farmers and people who are worried about climate change and sustainability - Challenges

- Collective work (talkoot) to invest in something that is important for people e.g. nature, biodiversity

etc. 2. What is the system the project is part of?

- The concept of emissions innovations, maanhaltija, agroforestry, permaculture, carbon sinks (UN, EU)

3. What and how are you learning and sharing? - We are learning and sharing with Kurkirahasto what is it when no official organization isinvolved, is

this a functional business model and should someone else take responsibility of this. 4. How are stakeholders involved?

- Compensators (companies or individuals) and farmers (what kind of alliance they want to create) - How farmers are supported by companies there is need a system that farmers can trust, what kind

of information can be printed on farmers products, compensators need to be supported with information

- Different stakeholders: ikimetsän ystävät vs metsäteollisuuden liitto 5. What is the project’s vision?

- To establish reliable way to preserve life, something concrete, positively affecting, own behavior related, you sustain something you like, benefits will stay in Finland

6. Do all outcomes relate to the goal? - Yes, they are.

3 perspectives from the context Broadening: Luomuliitto, Hiiliviljeijät, Biodynaaminen yhdistys, Ikimetsä Scaling up: small experiments and pilots Deepening: It needs a model that has been proven to work elsewhere or the use of a strong example in another sector to take this from a niche to the mainstream.

6 strategies for the process Shielding: Organic farmers get higher subsidies, tax reduction, local cooperative, SOK farmers could be supported by giving the bonuses to farmers Nurturing networks: Universities, Research (SYKE, LUKE etc.), social media Nurturing vision/expectations: creating FAQ. good websites Nurturing learning: All stakeholders are learning by doing

Empowering by fitting and conforming: Puro.earth, Hiilipörssi, Compensate Empowering by stretching and transforming: Create a company or a project, farmers’ organization

Annex 5: UN Criteria for carbon offsetting projects (CDM, Clean Development Mechanism):

PROJECT DESIGN TEMPLATE

I. GENERAL DESCRIPTION OF THE PROJECT

A. Title of the project

B. Project description

● What is the goal of your project? ● How does your project contribute to sustainable development for the participants? ● Project participants ● Who are the investors in this project? ● Who are the hosts of this project? ● Are there any other participants in this project? ● What is the nature of the participants above? Public entity? Private entity?

○ e) What is their function?

D. Technical description

● Location: Identify the country, region/state/province, and city/town/community of ● the project. ● What are the unique qualities of the project site?

E. Project category

Identify the project category:

Category

Type I

Renewable energy

Type II

Energy efficiency improvements

Type III

Other projects

Electricity generation by the user/household

Supply-side transmission and distribution activities

Agriculture

Mechanical energy for the user/enterprise

Supply-side generation

Switching fossil fuels

Thermal energy

Demand-side activities

Emissions reductions in transport

Electricity generation for a system

Energy efficiency and fuel switching for industrial facilities

Methane recovery

Energy efficiency and fuel switching for buildings

Part III: Annexes and Appendices

Technology

Identify what environmentally friendly technology, including know-how, will be

adopted with this project.

GHG reduction

Identify what GHG(s) will be reduced by this project. Also, include an explanation of why these reductions will be attributed to the project activities, that is, above and beyond business as usual.

Public funding

State whether public funding will be used for this project. If public funding is being used, what is its source?

II. BASELINE METHODOLOGY

Approved methodology

Identify the approved methodology you would use for this project from the list of approved baseline methodologies (see page 22 above).

Appropriateness

State why this baseline methodology is appropriate for this project.

Application

Describe how the baseline methodology will be applied in this project.

Project boundaries

Describe the project boundaries.

Flowchart

Draw a flowchart of the project with its main components and connections.

Leakage

Describe how the baseline methodology accounts for the whole project boundary.

Additionality

Explain how this project will decrease GHGs above and beyond business as usual. In other words, how will emissions decrease from the baseline you established?

III. CREDITING PERIOD

Duration of the project

When will the project start (i.e. starting date)?

What is the operational lifetime of the project (in months)?

An Implementation Guide to the Clean Development Mechanism

Crediting period

What crediting period are you choosing?

Option 1: Renewable crediting period: at most 7 years, can be renewed twice

Option 2: Fixed crediting period: at most 10 years

Why did you choose that period?

IV. MONITORING PLAN

Methodology

Identify the methodology you propose from the list of approved monitoring methodologies at http://unfccc.int/cdm/methapp.html

State why this monitoring methodology is appropriate for this project.

Describe how the monitoring methodology will be applied in this project.

Leakage

How will GHG emissions from outside the project boundary be monitored?

Quality control

How will quality control and quality assurance in this monitoring plan be ensured?

For example, consider the uncertainties associated with the data and the procedures needed to ensure the quality of the data.

CALCULATION OF GHGs

How will you calculate each GHG associated with the project?

How will you calculate and account for leakage?

Use table in annex IV.

VI. ENVIRONMENTAL IMPACTS

What environmental impacts will be reduced or mitigated by implementing this project? Provide documentation.

What environmental impacts will result from this project (if any)?

VII. STAKEHOLDER COMMENTS

Stakeholders' comments must also be submitted with the project design. Provide a list of stakeholders involved with your project.

How will you incorporate these concerns into the design of your CDM project?

ANNEX 6: Construction Companies

Construction Companies

YIT Oyj, (https://www.yitgroup.com) YIT is the largest Finnish and significant North European

construction company. We develop and build apartments, business premises and entire areas. We are also specialized in demanding infrastructure construction and paving. Vision, More life in sustainable cities. Mission, creating better living environments. Values, respect (We care about our customers and personnel / We look for environmentally sustainable solutions) , cooperation (We are open and share knowledge / We involve and partner to succeed), creativity (We trust and build a positive spirit / We empower people to innovate and challenge), passion (We aim high with quality, expertise and results / We work ethically and keep our promises).

SRV Yhtiot Oyj,(https://www.srv.fi) Sustainability is an important part of SRV’s strategy. The material sustainability themes are presented in SRV’s sustainability programme. SRV seeks to ensure that its sustainability work best supports the attainment of strategic objectives and increases businesses’ chances for success in an increasingly demanding operating environment. SRV also seeks to be an innovative and continually evolving professional in sustainability issues. SRV engages in systematic sustainability efforts on three levels: by improving performance, reporting on its achievements with interesting content and ensuring that completed work translates to business value. The goal is to create value through sustainability work, not only to SRV, but also to its stakeholders – e.g. customers, partners and investors. SRV’s communications seek to provide information about the company’s business activities and operating environment so that its various stakeholders can form a correct and justified picture of the company. In crisis situations, SRV adheres to three general principles: communications must be fast, based on facts, and seek to establish open discussion with other parties impacted by the crisis.

Kojamo housing company, (https://kojamo.fi)

The Group aims to invest heavily in increasing its housing supply by 2021 through the development of new properties and acquisition of existing properties. Urbanisation and migration to growth centres provides the Group with good growth opportunities in the Finnish rental housing market. We have an open-minded attitude towards change. We dare to look for new ideas and best practices by challenging conventional ways of working. Development includes experimentation and we are not afraid to try new things. We learn from our mistakes. We are also a pioneer in the use of new technologies. Renewal requires that we continuously learn new things.

Vision, strategy and values - We create better urban housing. Our mission - We are the property market frontrunner and the number one choice for our customers.

Our vision - Strategic focal points for 2021 - Strategic focal points for 2021 are: Generating long-term shareholder value , Delivering the best customer experience , Leading on sustainable development, Dynamic and professional place to work.

Kuopio Student housing company, (https://www.kuopas.fi)

Kuopas is a charitable company owned by the City of Kuopio. Our task is to manage student accommodation in Kuopio. The student buildings are financed by state-subsidized housing loans and the rents are calculated on a non-profit basis.

Confederation of Finnish Construction Industries, (http://www.rakennusteollisuus.fi)

CFCI focuses its activities on business and industrial affairs and labour markets.

Its aim is to firm up the cooperation of industrial players so as to promote good construction and to strengthen the supervision of the interests and importance of the construction industry both in Finland and in the strongly internationally-oriented business environment. CFCI is a central federation, through which about 2 700 companies are organised.

CFCI represents the entire construction sector including: Building Construction, Construction product industry, Infrastructure, HPAC contractors, Surface contractors.

NEAPO corporation, (http://www.neapo.com)

Provider of modular building products. The company manufactures prefabricated housing structures that can be used for residences, residential apartments and construction job shacks. The company delivers the modules to the construction sites, where it installs them in one piece. Each unit contains a pipe-cased shaft for ventilation, water, electricity and drainage. Wet rooms are tiled. The company uses a recycled metal core panel structure for the modules, which also can be reused.

Skanska Talonrakennus Oy, (https://www.skanska.fi/)

Skanska’s operations in Finland cover construction services and residential and commercial project development. Construction services include building construction, building services, and civil and environmental construction. We are an integral part of society. That is why we are developing new ways to reduce our environmental footprint, following the principles of fair and free competition, and building a better society in the communities we operate.

Synergia Finnish

Synergia is a new service that the Entrepreneurs in Finland have created to enable members to communicate with each other to a greater extent. The service also includes Yrityshaku which is aimed at everyone interested. The central services in the service for registered members are these: the opportunity to present their own company ,offer benefits to the other member companies ,shallow groups and act in groups, discussion.