Challenges and Opportunities in Developing Forest Carbon Accounting Approaches for Use in Regulatory and

Financial Trading Schemes

Biometrics Working GroupNew Orleans, March 2009

Alan A. Lucier, Ph.D.Senior Vice President, NCASI

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Acronyms & Definitions

• GHG : Greenhouse Gas

• ERRs: GHG emission reductions and removals

• cap: Upper limit on GHG emissions in a “cap and trade” program.

• Offsets: ERRs affecting sources and sinks of GHGs that are not subject to a cap.

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History • 1980s: “Forest offsets” identified as cost-

effective approach to GHG mitigation.

• 1990s: Intense international discussions of forest offsets in context of Kyoto Protocol negotiations.

• Post-Kyoto: Ongoing discussions and limited implementation of forest offsets in many contexts (CCAR, WCI, RGGI, CCX, etc.).

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What do we know about forestry and greenhouse gases?

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Sustainable Forest Management (SFM) is a cost-effective strategy for GHG control.

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• GHG benefits of SFM are associated with:

forest regrowth after harvest;

lower risk of wildfire;

production of energy-efficient materials and biomass energy;

carbon sequestration in forests & in wood products.

So, what’s the problem?

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Barriers to Forest Offsets

• Political

• Technical

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Political Barriers to Forest Offsets • Strongly held differences among stakeholders

regarding desired effects of offsets on forest management and climate policy.

SFM vs. forest preservation

“minimize cost of GHG mitigation” vs.

“reduce fossil fuel consumption as soon as possible”

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Technical Barriers to Forest Offsets

• Uncertainties about real GHG benefits

• Concern that supply of forest offsets will “flood the market”

• Cost of producing offsets – Transaction costs – Opportunity costs

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Leading Conceptual Approach to Forest Offset Accounting

GHG mitigation benefits of a forest offset project must be:

• Real Additional (Beyond Business as Usual) Measured Verified

• Discounted or insured because benefits are not permanent and subject to leakage.

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Problems with Leading Approach• Political & technical barriers have not been overcome.

• Complex discussions of “additionality, leakage & permanence” can obfuscate the barriers.

• “Additionality” raises equity issues – e.g., granting offsets only to “new” tree planters seems unfair

to those who plant trees routinely.

• Measurement and verification of forest C stocks: – Increase transaction costs – Do not substantially reduce overall uncertainty about real

GHG benefits 12

Alternative Conceptual Approach to Forest Offset Accounting

• Offsets are created by implementing forestry activities with acknowledged GHG benefits.

• GHG benefits per ha of activity are determined a priori by regional authorities.– Lower transaction costs– Greater transparency in models of offset production costs and

GHG benefits

• Offset project proponents report and verify implementation of activities.

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Which Forestry Activities Provide GHG Benefits ?

Recommended reading

The Effects of Forest Management on Carbon Storage in Ontario’s Forests

Climate Change Research Report 03Ontario Ministry of Natural Resourcesby S.J. Colombo et al.

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Forestry Activities with GHG Benefits(from Colombo et al.)

• Growth Enhancement– Planting and Competition Control – Genetic Improvement – Fertilization – Thinning ? – Site Preparation ?

• Forest Protection – Forest Fire Management– Insect & Disease Management – Minimize Area in Roads and Landings – Reduce Disturbance / Harvest 15

Key Technical Issue for Leading & Alternative Approaches

• GHG mitigation benefits of forest offset projects cannot be measured directly.

Important benefits occur offsite and in the future.

Carbon storage in harvested wood

Substitution effects

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17 www.corrim.org

Selected Components of GHG Profile of Canadian Forest Products Industry

Component Mt CO2 eq per year in 2005

Direct and Indirect Emissions 53

Sequestration - Forests ?

Sequestration – Products in Use - 39.8

Sequestration – Products in Landfills -40.6

Avoided Emissions – CHP & Substitution Effects for Building Products Only - 10

NCASI Special Report 07-0918

Another Key Technical Issue for Leading & Alternative Approaches

• Time horizon is an important parameter in models of GHG benefits of forest offset projects. – For example, compare GHG mitigation benefits of

two management scenarios: 1. old forest protection 2. harvest old forest & implement SFM Protection > SFM in near term SFM > Protection over the long term

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Conclusions • Opportunities for GHG mitigation exist across the

continuum of forest management styles from strict protection to short-rotation plantations.

• Nevertheless, there are large political and technical barriers to realizing the potential benefits of forest offsets.– Disagreement about objectives – Concerns about “flooding the market” – GHG mitigation benefits cannot be measured directly

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Conclusions

• The leading approach to forest offset accounting has been discussed for more than a decade but has not overcome political and technical barriers.

• Consideration should be given to alternative approaches including “activity accounting.”

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