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CARBON CREDITS FOR FORESTLAND Presented by Dean Current, PhD Center for Integrated Natural Resources and Agricultural Management (CINRAM) Department of Forest Resources University of Minnesota Sponsored by the Minnesota Wood Education Project With funding from the Northeast Minnesota Regional Sustainable Development Partnership Minnesota Wood Education Project / 26 E. Exchange Street, Suite 405 / St. Paul, MN 55101 / USA Tel +1-651-223-5629 / www.MinnesotaWoodEducationProject.com / [email protected]

Carbon Credits for Forestland

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Carbon Credits for Forestland. Presented by Dean Current, PhD Center for Integrated Natural Resources and Agricultural Management (CINRAM) Department of Forest Resources University of Minnesota Sponsored by the Minnesota Wood Education Project With funding from the - PowerPoint PPT Presentation

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Page 1: Carbon Credits for Forestland

CARBON CREDITS FOR FORESTLAND

Presented byDean Current, PhDCenter for Integrated Natural Resources and Agricultural Management (CINRAM)Department of Forest ResourcesUniversity of Minnesota

Sponsored by theMinnesota Wood Education ProjectWith funding from theNortheast Minnesota Regional Sustainable Development PartnershipMinnesota Wood Education Project / 26 E. Exchange Street, Suite 405 / St. Paul, MN 55101 / USATel +1-651-223-5629 / www.MinnesotaWoodEducationProject.com / [email protected]

Page 2: Carbon Credits for Forestland

CONTENT

Background on CO2 and carbon sequestration

Carbon credits/offsets Carbon markets past and future Options for carbon credits for forestland Current issues related to the carbon markets

Page 3: Carbon Credits for Forestland

GLOBAL CARBON CYCLE

http://www.netl.doe.gov/technologies/carbon_seq/overview/what_is_CO2.html

Page 4: Carbon Credits for Forestland

CARBON SEQUESTRATION

Carbon sequestration can be defined as the capture and secure storage of carbon that would otherwise be emitted to or remain in the atmosphere.

Growing plants sequester carbon from the atmosphere and release it when they decompose unless converted

Source: Iowa Farm Bureau, 2006

Page 5: Carbon Credits for Forestland

MECHANISMS FOR SEQUESTRATION & STORAGE Terrestrial Carbon

Sequestration Trees Perennial Grasses Conservation Tillage Methane Capture

(Digesters) Geologic Carbon

Storage Secure capture and

storage

Page 6: Carbon Credits for Forestland

TERRESTRIAL CARBON SEQUESTRATION

Trees Afforestation, Reforestation or Agroforestry Species and age dependent 5.5 mT/acre/year

Perennial Grasses Deep root systems Mix of species 1.6 mT/acre

Conservation Tillage Low-Till / No-Till .3-1 mT/Acre Controversial

Source: Minnesota Terrestrial Carbon Sequestration Initiative

Page 7: Carbon Credits for Forestland

WHAT ARE CARBON CREDITS?Carbon credits are provided for:

Prevention/reduction of carbon emissions produced by human activities from reaching the atmosphere by capturing and diverting them to secure storage.

Removal of carbon from the atmosphere by various means and securely storing it.

Page 8: Carbon Credits for Forestland

CARBON OFFSETS Carbon offsets are reductions in the

emissions of CO2, or removal of CO2 from the atmosphere, used to compensate/offset emissions occurring elsewhere often by industries.

Forestry activities that sequester carbon can receive carbon credits/offsets for the CO2 sequestered and those offsets are traded on markets

Page 9: Carbon Credits for Forestland

CREDIT/OFFSET For carbon sequestered and stored for a

defined period of time (15-100 years) Forestry credits – net sequestration

Payments based on no. of tons of CO2 equivalent per year

Carbon sequestered (tree growth, soil storage)- Carbon emitted (mortality, harvest, etc.) = Net carbon sequestration above base “business as usual” case (basis for payment)

Page 10: Carbon Credits for Forestland

OPPORTUNITIES IN FORESTRY

Climate Action Reserve (CAR)

Reforestation Improved forest

management Avoided conversion of

forest land Urban forestry

Voluntary Carbon Standard (VCS)

Afforestation, Reforestation and regeneration – ARR

Improved Forest Management - IFM

Low to high Productivity - LtHP

Page 11: Carbon Credits for Forestland

OFFSET INTEGRITY (SOURCE: CLIMATE ACTION RESERVE)• Real– Can be measured to a high degree of accuracy– Is based on an activity that has occurred, not one that isprojected to occur in the future• Additional– Occurs outside of any regulatory requirement– Would not have occurred but for the incentive provided by aGHG market• Verifiable– Can be (and has been) independently verified• Enforceable– Ownership is undisputed and enforcement mechanisms exist toensure all program rules are followed• Permanent– Is removed from the atmosphere for a minimum of 100 years

Page 12: Carbon Credits for Forestland

MARKET MECHANISMS

Leakage: Leakage may be caused by shifting harvest to

another location if harvest is reduced on one site.

Permanence: The requirement that GHGs must be

permanently reduced or removed from the atmosphere to be credited as carbon offsets. In CAR must be stored for 100 years.

Page 13: Carbon Credits for Forestland

DEALING WITH LEAKAGE FROM IMPROVED FOREST MANAGEMENT

Page 14: Carbon Credits for Forestland

DEALING WITH PERMANENCE Buffer established – Credits held back based on

established level of risk. Buffer used to offset any loss of stored carbon. Ask risk is lowered the buffer is reduced. As commitment is met, buffer funds are returned to

landowner

Page 15: Carbon Credits for Forestland

Greenhouse GasEmission Reductions

Carbon Credit Program• Eligibility Assessment • Protocol Development• Monitoring• Reporting• Verification• Registration

Carbon Credits(certified, tradable, $$)

Protocols (CCX, CAR, VCS, others)

Achieved viaqualifying GHGemission reduction projects

Sell on marketthrough an aggregator

Market Mechanism

Page 16: Carbon Credits for Forestland

AGGREGATORS The Chicago Climate Exchange (CCX), when

operating, required that credits be sold in increments of at least 12,500 mT, approx.2,500 acres

Landowners need to work with an aggregator. An aggregator combines credits to create a large

enough bundle to sell to the market. Aggregators charge a fee of between 8-10% of

gross carbon credit payments to sustain their business

Page 17: Carbon Credits for Forestland

MARKETS Compliance/Kyoto Market

Europe – higher prices Voluntary/Chicago Climate Exchange

Forestland options Global Market for Forest Based Offsets

0.3 Million Metric tonnes equivalent (MtCO2e) in 2002 to 30.1 MtCO2e in 2010. ($5-$15/tCO2e in 2010)

US Markets Lack of regulation Project based

Page 18: Carbon Credits for Forestland

• No up-front, out-of-pocket costs• Full forest + carbon inventory and assessment• 10-year FSC management plan and certification• 100% of FSC-certified wood product revenues• 50%+ of forest carbon revenues – important new source of annual cash

flow• Inclusion in landscape-scale conservation project designed by TNC

Landowner Benefits

• Focus and protect public/private investments • Active and engaged landowners• Repair degraded forests; maintain desired conditions• Keep working landscapes working and in private ownership

Public Benefits

BLUE SOURCE – NATURE CONSERVANCY ‘WORKING WOODLANDS’ PROGRAM

Page 19: Carbon Credits for Forestland

CO-BENEFITS OF CARBON SEQUESTERING LAND PRACTICES

Improved forest management

Healthier, more resilient forests

Increased and Improved Habitat

Water quality Agroforestry buffers

Page 20: Carbon Credits for Forestland

SUMMARY Forestland has potential for generating

carbon credits for landowners Growing global and US regional markets for

forestland credits Few current opportunities for Minnesota

landowners Economic conditions Lack of regulated market

A market with potential but still needing development

Page 21: Carbon Credits for Forestland

WEBSITES FOR ADDL. INFORMATION

California Climate Action Reserve (CAR) http://www.climateactionreserve.org/Voluntary Carbon Standard (VCS) http://www.v-c-s.org/

Page 22: Carbon Credits for Forestland

Dean CurrentCenter for Integrated Natural Resources and Agricultural Management (CINRAM)Dept. of Forest ResourcesUniversity of [email protected]

Thank you!