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HGHG
Forest Carbon MarketsForest Carbon MarketsPotential for IndonesiaPotential for Indonesia
Dr Hanafi S GucianoDr Hanafi S Guciano
March 08
HGHG
Topics CoveredTopics Covered
The marketsThe markets The voluntary (OTC and CCX) carbon market The voluntary (OTC and CCX) carbon market Voluntary vs mandatory market demand and Voluntary vs mandatory market demand and
prices for forest offsetsprices for forest offsets Forest Carbon Offset ProjectForest Carbon Offset Project CCX managed forest offset rules and costsCCX managed forest offset rules and costs 10 elements for managed forest offset policy10 elements for managed forest offset policy Drivers for demand and supply for forestry Drivers for demand and supply for forestry
offsetsoffsets
HGHG
The facts The facts
Carbon trade 10 million Metric ton 2004Carbon trade 10 million Metric ton 2004 600 million Metric ton600 million Metric ton 2007 2007
Market size $ 10 billionMarket size $ 10 billion $ 45 billionyear from 2008-2012$ 45 billionyear from 2008-2012
Investment fund for carbon market $ 22 Investment fund for carbon market $ 22 trillion (UNEP forum 21208)trillion (UNEP forum 21208)
HGHG
The Voluntary Carbon MarketThe Voluntary Carbon Market
1048708 1048708 Primarily a North American MarketPrimarily a North American Market1048708 1048708 Not Driven by Regulation eg the Kyoto Not Driven by Regulation eg the Kyoto
ProtocolProtocol1048708 1048708 Highly FragmentedHighly Fragmented1048708 1048708 Over-the-Counter vs Chicago Climate Over-the-Counter vs Chicago Climate
Exchange (CCX)Exchange (CCX)1048708 1048708 Multiple standards - all have their own forestry Multiple standards - all have their own forestry
offset projectoffset project standardsstandards
1048708 1048708 Multiple Registries and ProgramsMultiple Registries and Programs
HGHG
Voluntary Carbon MarketVoluntary Carbon Market
Over-the-Counter (OTC) Over-the-Counter (OTC) + + Chicago ClimateChicago ClimateExchange (CCX)Exchange (CCX)
2006 value = $US 91 million2006 value = $US 91 million 2006 volume = 237 million MTCO22006 volume = 237 million MTCO2
1048708 1048708 forecasted to be gt 1300 million MT globally forecasted to be gt 1300 million MT globally by 2012by 2012
US accounted for 68 of demandUS accounted for 68 of demand Businesses accounted for 80 of demandBusinesses accounted for 80 of demand Forest projects accounted for 35 of demandForest projects accounted for 35 of demand
HGHG
Voluntary Carbon Neutral MarketVoluntary Carbon Neutral Market Companiesindividuals wants to do ldquothe right thingrdquo by calculating their Companiesindividuals wants to do ldquothe right thingrdquo by calculating their
GHG footprintsGHG footprints Its becoming an environmental commodity market after they can sell Its becoming an environmental commodity market after they can sell
the offset and make the household carbon neutralthe offset and make the household carbon neutral Small payment to credit card ($100year at $10ton)Small payment to credit card ($100year at $10ton) Carbon neuttality offers ibdividuals businesses and other institutions Carbon neuttality offers ibdividuals businesses and other institutions
(govt officesuniversities) the opportunity to take personal responsibility (govt officesuniversities) the opportunity to take personal responsibility of their lifestyles The sale of carbon neutral products and services of their lifestyles The sale of carbon neutral products and services offer companies a way to develop competitive advantage with offer companies a way to develop competitive advantage with comsmerscomsmers
The retail market for voluntary carbon neutrality is moving full speed The retail market for voluntary carbon neutrality is moving full speed aheadahead
Top performing retail offset providers AgCertDrivingGreen (ireland) Top performing retail offset providers AgCertDrivingGreen (ireland) Atmosfair (Germany) CarbonNeuralCompanyClimate Atmosfair (Germany) CarbonNeuralCompanyClimate CareCO2balance (UK) Climate Trust Native Energy CareCO2balance (UK) Climate Trust Native Energy SustainableTravelMyClimate (US)SustainableTravelMyClimate (US)
HGHG
Voluntary Carbon Market SuppliersVoluntary Carbon Market Suppliers
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC)2006 value = $549 million2006 value = $549 million1048708 1048708 Project developers aggregators retailers and brokersProject developers aggregators retailers and brokers
- Conservation Fund Pacific Forest Trust Ducks- Conservation Fund Pacific Forest Trust DucksUnlimited Climate Trust Terrapass New ForestsUnlimited Climate Trust Terrapass New Forests
1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX)2006 value = $361 million2006 value = $361 million1048708 1048708 Aggregators and project developersAggregators and project developers
- Forecon EcoMarket Solutions National Carbon - Forecon EcoMarket Solutions National Carbon Offset Coalition Sustainable Forestry Offset Coalition Sustainable Forestry Management LTD Eco-Securities NatsourceManagement LTD Eco-Securities Natsource
HGHG
CCX and OTCCCX and OTCDemand and Prices for CO2Demand and Prices for CO2
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC) Demand and prices are determined by offset project Demand and prices are determined by offset project quality quality
characteristicscharacteristics that include project design elements for that include project design elements for conservation conservation co-benefitsco-benefits
Buyers are not driven by compliance requirementsBuyers are not driven by compliance requirements1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX) Demand and prices are established by the CCX rules and the demand Demand and prices are established by the CCX rules and the demand
for a fungible commodityfor a fungible commodity1048708 1048708 quality characteristics are already built into the rules andquality characteristics are already built into the rules and are not distinguished from other offset projectsare not distinguished from other offset projects1048708 1048708 fungible commodity ndash ldquoa ton is a tonrdquofungible commodity ndash ldquoa ton is a tonrdquo
Buyer are CCX members driven by emission reduction compliance Buyer are CCX members driven by emission reduction compliance requirementsrequirements
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Topics CoveredTopics Covered
The marketsThe markets The voluntary (OTC and CCX) carbon market The voluntary (OTC and CCX) carbon market Voluntary vs mandatory market demand and Voluntary vs mandatory market demand and
prices for forest offsetsprices for forest offsets Forest Carbon Offset ProjectForest Carbon Offset Project CCX managed forest offset rules and costsCCX managed forest offset rules and costs 10 elements for managed forest offset policy10 elements for managed forest offset policy Drivers for demand and supply for forestry Drivers for demand and supply for forestry
offsetsoffsets
HGHG
The facts The facts
Carbon trade 10 million Metric ton 2004Carbon trade 10 million Metric ton 2004 600 million Metric ton600 million Metric ton 2007 2007
Market size $ 10 billionMarket size $ 10 billion $ 45 billionyear from 2008-2012$ 45 billionyear from 2008-2012
Investment fund for carbon market $ 22 Investment fund for carbon market $ 22 trillion (UNEP forum 21208)trillion (UNEP forum 21208)
HGHG
The Voluntary Carbon MarketThe Voluntary Carbon Market
1048708 1048708 Primarily a North American MarketPrimarily a North American Market1048708 1048708 Not Driven by Regulation eg the Kyoto Not Driven by Regulation eg the Kyoto
ProtocolProtocol1048708 1048708 Highly FragmentedHighly Fragmented1048708 1048708 Over-the-Counter vs Chicago Climate Over-the-Counter vs Chicago Climate
Exchange (CCX)Exchange (CCX)1048708 1048708 Multiple standards - all have their own forestry Multiple standards - all have their own forestry
offset projectoffset project standardsstandards
1048708 1048708 Multiple Registries and ProgramsMultiple Registries and Programs
HGHG
Voluntary Carbon MarketVoluntary Carbon Market
Over-the-Counter (OTC) Over-the-Counter (OTC) + + Chicago ClimateChicago ClimateExchange (CCX)Exchange (CCX)
2006 value = $US 91 million2006 value = $US 91 million 2006 volume = 237 million MTCO22006 volume = 237 million MTCO2
1048708 1048708 forecasted to be gt 1300 million MT globally forecasted to be gt 1300 million MT globally by 2012by 2012
US accounted for 68 of demandUS accounted for 68 of demand Businesses accounted for 80 of demandBusinesses accounted for 80 of demand Forest projects accounted for 35 of demandForest projects accounted for 35 of demand
HGHG
Voluntary Carbon Neutral MarketVoluntary Carbon Neutral Market Companiesindividuals wants to do ldquothe right thingrdquo by calculating their Companiesindividuals wants to do ldquothe right thingrdquo by calculating their
GHG footprintsGHG footprints Its becoming an environmental commodity market after they can sell Its becoming an environmental commodity market after they can sell
the offset and make the household carbon neutralthe offset and make the household carbon neutral Small payment to credit card ($100year at $10ton)Small payment to credit card ($100year at $10ton) Carbon neuttality offers ibdividuals businesses and other institutions Carbon neuttality offers ibdividuals businesses and other institutions
(govt officesuniversities) the opportunity to take personal responsibility (govt officesuniversities) the opportunity to take personal responsibility of their lifestyles The sale of carbon neutral products and services of their lifestyles The sale of carbon neutral products and services offer companies a way to develop competitive advantage with offer companies a way to develop competitive advantage with comsmerscomsmers
The retail market for voluntary carbon neutrality is moving full speed The retail market for voluntary carbon neutrality is moving full speed aheadahead
Top performing retail offset providers AgCertDrivingGreen (ireland) Top performing retail offset providers AgCertDrivingGreen (ireland) Atmosfair (Germany) CarbonNeuralCompanyClimate Atmosfair (Germany) CarbonNeuralCompanyClimate CareCO2balance (UK) Climate Trust Native Energy CareCO2balance (UK) Climate Trust Native Energy SustainableTravelMyClimate (US)SustainableTravelMyClimate (US)
HGHG
Voluntary Carbon Market SuppliersVoluntary Carbon Market Suppliers
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC)2006 value = $549 million2006 value = $549 million1048708 1048708 Project developers aggregators retailers and brokersProject developers aggregators retailers and brokers
- Conservation Fund Pacific Forest Trust Ducks- Conservation Fund Pacific Forest Trust DucksUnlimited Climate Trust Terrapass New ForestsUnlimited Climate Trust Terrapass New Forests
1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX)2006 value = $361 million2006 value = $361 million1048708 1048708 Aggregators and project developersAggregators and project developers
- Forecon EcoMarket Solutions National Carbon - Forecon EcoMarket Solutions National Carbon Offset Coalition Sustainable Forestry Offset Coalition Sustainable Forestry Management LTD Eco-Securities NatsourceManagement LTD Eco-Securities Natsource
HGHG
CCX and OTCCCX and OTCDemand and Prices for CO2Demand and Prices for CO2
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC) Demand and prices are determined by offset project Demand and prices are determined by offset project quality quality
characteristicscharacteristics that include project design elements for that include project design elements for conservation conservation co-benefitsco-benefits
Buyers are not driven by compliance requirementsBuyers are not driven by compliance requirements1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX) Demand and prices are established by the CCX rules and the demand Demand and prices are established by the CCX rules and the demand
for a fungible commodityfor a fungible commodity1048708 1048708 quality characteristics are already built into the rules andquality characteristics are already built into the rules and are not distinguished from other offset projectsare not distinguished from other offset projects1048708 1048708 fungible commodity ndash ldquoa ton is a tonrdquofungible commodity ndash ldquoa ton is a tonrdquo
Buyer are CCX members driven by emission reduction compliance Buyer are CCX members driven by emission reduction compliance requirementsrequirements
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
The facts The facts
Carbon trade 10 million Metric ton 2004Carbon trade 10 million Metric ton 2004 600 million Metric ton600 million Metric ton 2007 2007
Market size $ 10 billionMarket size $ 10 billion $ 45 billionyear from 2008-2012$ 45 billionyear from 2008-2012
Investment fund for carbon market $ 22 Investment fund for carbon market $ 22 trillion (UNEP forum 21208)trillion (UNEP forum 21208)
HGHG
The Voluntary Carbon MarketThe Voluntary Carbon Market
1048708 1048708 Primarily a North American MarketPrimarily a North American Market1048708 1048708 Not Driven by Regulation eg the Kyoto Not Driven by Regulation eg the Kyoto
ProtocolProtocol1048708 1048708 Highly FragmentedHighly Fragmented1048708 1048708 Over-the-Counter vs Chicago Climate Over-the-Counter vs Chicago Climate
Exchange (CCX)Exchange (CCX)1048708 1048708 Multiple standards - all have their own forestry Multiple standards - all have their own forestry
offset projectoffset project standardsstandards
1048708 1048708 Multiple Registries and ProgramsMultiple Registries and Programs
HGHG
Voluntary Carbon MarketVoluntary Carbon Market
Over-the-Counter (OTC) Over-the-Counter (OTC) + + Chicago ClimateChicago ClimateExchange (CCX)Exchange (CCX)
2006 value = $US 91 million2006 value = $US 91 million 2006 volume = 237 million MTCO22006 volume = 237 million MTCO2
1048708 1048708 forecasted to be gt 1300 million MT globally forecasted to be gt 1300 million MT globally by 2012by 2012
US accounted for 68 of demandUS accounted for 68 of demand Businesses accounted for 80 of demandBusinesses accounted for 80 of demand Forest projects accounted for 35 of demandForest projects accounted for 35 of demand
HGHG
Voluntary Carbon Neutral MarketVoluntary Carbon Neutral Market Companiesindividuals wants to do ldquothe right thingrdquo by calculating their Companiesindividuals wants to do ldquothe right thingrdquo by calculating their
GHG footprintsGHG footprints Its becoming an environmental commodity market after they can sell Its becoming an environmental commodity market after they can sell
the offset and make the household carbon neutralthe offset and make the household carbon neutral Small payment to credit card ($100year at $10ton)Small payment to credit card ($100year at $10ton) Carbon neuttality offers ibdividuals businesses and other institutions Carbon neuttality offers ibdividuals businesses and other institutions
(govt officesuniversities) the opportunity to take personal responsibility (govt officesuniversities) the opportunity to take personal responsibility of their lifestyles The sale of carbon neutral products and services of their lifestyles The sale of carbon neutral products and services offer companies a way to develop competitive advantage with offer companies a way to develop competitive advantage with comsmerscomsmers
The retail market for voluntary carbon neutrality is moving full speed The retail market for voluntary carbon neutrality is moving full speed aheadahead
Top performing retail offset providers AgCertDrivingGreen (ireland) Top performing retail offset providers AgCertDrivingGreen (ireland) Atmosfair (Germany) CarbonNeuralCompanyClimate Atmosfair (Germany) CarbonNeuralCompanyClimate CareCO2balance (UK) Climate Trust Native Energy CareCO2balance (UK) Climate Trust Native Energy SustainableTravelMyClimate (US)SustainableTravelMyClimate (US)
HGHG
Voluntary Carbon Market SuppliersVoluntary Carbon Market Suppliers
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC)2006 value = $549 million2006 value = $549 million1048708 1048708 Project developers aggregators retailers and brokersProject developers aggregators retailers and brokers
- Conservation Fund Pacific Forest Trust Ducks- Conservation Fund Pacific Forest Trust DucksUnlimited Climate Trust Terrapass New ForestsUnlimited Climate Trust Terrapass New Forests
1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX)2006 value = $361 million2006 value = $361 million1048708 1048708 Aggregators and project developersAggregators and project developers
- Forecon EcoMarket Solutions National Carbon - Forecon EcoMarket Solutions National Carbon Offset Coalition Sustainable Forestry Offset Coalition Sustainable Forestry Management LTD Eco-Securities NatsourceManagement LTD Eco-Securities Natsource
HGHG
CCX and OTCCCX and OTCDemand and Prices for CO2Demand and Prices for CO2
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC) Demand and prices are determined by offset project Demand and prices are determined by offset project quality quality
characteristicscharacteristics that include project design elements for that include project design elements for conservation conservation co-benefitsco-benefits
Buyers are not driven by compliance requirementsBuyers are not driven by compliance requirements1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX) Demand and prices are established by the CCX rules and the demand Demand and prices are established by the CCX rules and the demand
for a fungible commodityfor a fungible commodity1048708 1048708 quality characteristics are already built into the rules andquality characteristics are already built into the rules and are not distinguished from other offset projectsare not distinguished from other offset projects1048708 1048708 fungible commodity ndash ldquoa ton is a tonrdquofungible commodity ndash ldquoa ton is a tonrdquo
Buyer are CCX members driven by emission reduction compliance Buyer are CCX members driven by emission reduction compliance requirementsrequirements
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
The Voluntary Carbon MarketThe Voluntary Carbon Market
1048708 1048708 Primarily a North American MarketPrimarily a North American Market1048708 1048708 Not Driven by Regulation eg the Kyoto Not Driven by Regulation eg the Kyoto
ProtocolProtocol1048708 1048708 Highly FragmentedHighly Fragmented1048708 1048708 Over-the-Counter vs Chicago Climate Over-the-Counter vs Chicago Climate
Exchange (CCX)Exchange (CCX)1048708 1048708 Multiple standards - all have their own forestry Multiple standards - all have their own forestry
offset projectoffset project standardsstandards
1048708 1048708 Multiple Registries and ProgramsMultiple Registries and Programs
HGHG
Voluntary Carbon MarketVoluntary Carbon Market
Over-the-Counter (OTC) Over-the-Counter (OTC) + + Chicago ClimateChicago ClimateExchange (CCX)Exchange (CCX)
2006 value = $US 91 million2006 value = $US 91 million 2006 volume = 237 million MTCO22006 volume = 237 million MTCO2
1048708 1048708 forecasted to be gt 1300 million MT globally forecasted to be gt 1300 million MT globally by 2012by 2012
US accounted for 68 of demandUS accounted for 68 of demand Businesses accounted for 80 of demandBusinesses accounted for 80 of demand Forest projects accounted for 35 of demandForest projects accounted for 35 of demand
HGHG
Voluntary Carbon Neutral MarketVoluntary Carbon Neutral Market Companiesindividuals wants to do ldquothe right thingrdquo by calculating their Companiesindividuals wants to do ldquothe right thingrdquo by calculating their
GHG footprintsGHG footprints Its becoming an environmental commodity market after they can sell Its becoming an environmental commodity market after they can sell
the offset and make the household carbon neutralthe offset and make the household carbon neutral Small payment to credit card ($100year at $10ton)Small payment to credit card ($100year at $10ton) Carbon neuttality offers ibdividuals businesses and other institutions Carbon neuttality offers ibdividuals businesses and other institutions
(govt officesuniversities) the opportunity to take personal responsibility (govt officesuniversities) the opportunity to take personal responsibility of their lifestyles The sale of carbon neutral products and services of their lifestyles The sale of carbon neutral products and services offer companies a way to develop competitive advantage with offer companies a way to develop competitive advantage with comsmerscomsmers
The retail market for voluntary carbon neutrality is moving full speed The retail market for voluntary carbon neutrality is moving full speed aheadahead
Top performing retail offset providers AgCertDrivingGreen (ireland) Top performing retail offset providers AgCertDrivingGreen (ireland) Atmosfair (Germany) CarbonNeuralCompanyClimate Atmosfair (Germany) CarbonNeuralCompanyClimate CareCO2balance (UK) Climate Trust Native Energy CareCO2balance (UK) Climate Trust Native Energy SustainableTravelMyClimate (US)SustainableTravelMyClimate (US)
HGHG
Voluntary Carbon Market SuppliersVoluntary Carbon Market Suppliers
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC)2006 value = $549 million2006 value = $549 million1048708 1048708 Project developers aggregators retailers and brokersProject developers aggregators retailers and brokers
- Conservation Fund Pacific Forest Trust Ducks- Conservation Fund Pacific Forest Trust DucksUnlimited Climate Trust Terrapass New ForestsUnlimited Climate Trust Terrapass New Forests
1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX)2006 value = $361 million2006 value = $361 million1048708 1048708 Aggregators and project developersAggregators and project developers
- Forecon EcoMarket Solutions National Carbon - Forecon EcoMarket Solutions National Carbon Offset Coalition Sustainable Forestry Offset Coalition Sustainable Forestry Management LTD Eco-Securities NatsourceManagement LTD Eco-Securities Natsource
HGHG
CCX and OTCCCX and OTCDemand and Prices for CO2Demand and Prices for CO2
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC) Demand and prices are determined by offset project Demand and prices are determined by offset project quality quality
characteristicscharacteristics that include project design elements for that include project design elements for conservation conservation co-benefitsco-benefits
Buyers are not driven by compliance requirementsBuyers are not driven by compliance requirements1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX) Demand and prices are established by the CCX rules and the demand Demand and prices are established by the CCX rules and the demand
for a fungible commodityfor a fungible commodity1048708 1048708 quality characteristics are already built into the rules andquality characteristics are already built into the rules and are not distinguished from other offset projectsare not distinguished from other offset projects1048708 1048708 fungible commodity ndash ldquoa ton is a tonrdquofungible commodity ndash ldquoa ton is a tonrdquo
Buyer are CCX members driven by emission reduction compliance Buyer are CCX members driven by emission reduction compliance requirementsrequirements
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Voluntary Carbon MarketVoluntary Carbon Market
Over-the-Counter (OTC) Over-the-Counter (OTC) + + Chicago ClimateChicago ClimateExchange (CCX)Exchange (CCX)
2006 value = $US 91 million2006 value = $US 91 million 2006 volume = 237 million MTCO22006 volume = 237 million MTCO2
1048708 1048708 forecasted to be gt 1300 million MT globally forecasted to be gt 1300 million MT globally by 2012by 2012
US accounted for 68 of demandUS accounted for 68 of demand Businesses accounted for 80 of demandBusinesses accounted for 80 of demand Forest projects accounted for 35 of demandForest projects accounted for 35 of demand
HGHG
Voluntary Carbon Neutral MarketVoluntary Carbon Neutral Market Companiesindividuals wants to do ldquothe right thingrdquo by calculating their Companiesindividuals wants to do ldquothe right thingrdquo by calculating their
GHG footprintsGHG footprints Its becoming an environmental commodity market after they can sell Its becoming an environmental commodity market after they can sell
the offset and make the household carbon neutralthe offset and make the household carbon neutral Small payment to credit card ($100year at $10ton)Small payment to credit card ($100year at $10ton) Carbon neuttality offers ibdividuals businesses and other institutions Carbon neuttality offers ibdividuals businesses and other institutions
(govt officesuniversities) the opportunity to take personal responsibility (govt officesuniversities) the opportunity to take personal responsibility of their lifestyles The sale of carbon neutral products and services of their lifestyles The sale of carbon neutral products and services offer companies a way to develop competitive advantage with offer companies a way to develop competitive advantage with comsmerscomsmers
The retail market for voluntary carbon neutrality is moving full speed The retail market for voluntary carbon neutrality is moving full speed aheadahead
Top performing retail offset providers AgCertDrivingGreen (ireland) Top performing retail offset providers AgCertDrivingGreen (ireland) Atmosfair (Germany) CarbonNeuralCompanyClimate Atmosfair (Germany) CarbonNeuralCompanyClimate CareCO2balance (UK) Climate Trust Native Energy CareCO2balance (UK) Climate Trust Native Energy SustainableTravelMyClimate (US)SustainableTravelMyClimate (US)
HGHG
Voluntary Carbon Market SuppliersVoluntary Carbon Market Suppliers
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC)2006 value = $549 million2006 value = $549 million1048708 1048708 Project developers aggregators retailers and brokersProject developers aggregators retailers and brokers
- Conservation Fund Pacific Forest Trust Ducks- Conservation Fund Pacific Forest Trust DucksUnlimited Climate Trust Terrapass New ForestsUnlimited Climate Trust Terrapass New Forests
1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX)2006 value = $361 million2006 value = $361 million1048708 1048708 Aggregators and project developersAggregators and project developers
- Forecon EcoMarket Solutions National Carbon - Forecon EcoMarket Solutions National Carbon Offset Coalition Sustainable Forestry Offset Coalition Sustainable Forestry Management LTD Eco-Securities NatsourceManagement LTD Eco-Securities Natsource
HGHG
CCX and OTCCCX and OTCDemand and Prices for CO2Demand and Prices for CO2
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC) Demand and prices are determined by offset project Demand and prices are determined by offset project quality quality
characteristicscharacteristics that include project design elements for that include project design elements for conservation conservation co-benefitsco-benefits
Buyers are not driven by compliance requirementsBuyers are not driven by compliance requirements1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX) Demand and prices are established by the CCX rules and the demand Demand and prices are established by the CCX rules and the demand
for a fungible commodityfor a fungible commodity1048708 1048708 quality characteristics are already built into the rules andquality characteristics are already built into the rules and are not distinguished from other offset projectsare not distinguished from other offset projects1048708 1048708 fungible commodity ndash ldquoa ton is a tonrdquofungible commodity ndash ldquoa ton is a tonrdquo
Buyer are CCX members driven by emission reduction compliance Buyer are CCX members driven by emission reduction compliance requirementsrequirements
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Voluntary Carbon Neutral MarketVoluntary Carbon Neutral Market Companiesindividuals wants to do ldquothe right thingrdquo by calculating their Companiesindividuals wants to do ldquothe right thingrdquo by calculating their
GHG footprintsGHG footprints Its becoming an environmental commodity market after they can sell Its becoming an environmental commodity market after they can sell
the offset and make the household carbon neutralthe offset and make the household carbon neutral Small payment to credit card ($100year at $10ton)Small payment to credit card ($100year at $10ton) Carbon neuttality offers ibdividuals businesses and other institutions Carbon neuttality offers ibdividuals businesses and other institutions
(govt officesuniversities) the opportunity to take personal responsibility (govt officesuniversities) the opportunity to take personal responsibility of their lifestyles The sale of carbon neutral products and services of their lifestyles The sale of carbon neutral products and services offer companies a way to develop competitive advantage with offer companies a way to develop competitive advantage with comsmerscomsmers
The retail market for voluntary carbon neutrality is moving full speed The retail market for voluntary carbon neutrality is moving full speed aheadahead
Top performing retail offset providers AgCertDrivingGreen (ireland) Top performing retail offset providers AgCertDrivingGreen (ireland) Atmosfair (Germany) CarbonNeuralCompanyClimate Atmosfair (Germany) CarbonNeuralCompanyClimate CareCO2balance (UK) Climate Trust Native Energy CareCO2balance (UK) Climate Trust Native Energy SustainableTravelMyClimate (US)SustainableTravelMyClimate (US)
HGHG
Voluntary Carbon Market SuppliersVoluntary Carbon Market Suppliers
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC)2006 value = $549 million2006 value = $549 million1048708 1048708 Project developers aggregators retailers and brokersProject developers aggregators retailers and brokers
- Conservation Fund Pacific Forest Trust Ducks- Conservation Fund Pacific Forest Trust DucksUnlimited Climate Trust Terrapass New ForestsUnlimited Climate Trust Terrapass New Forests
1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX)2006 value = $361 million2006 value = $361 million1048708 1048708 Aggregators and project developersAggregators and project developers
- Forecon EcoMarket Solutions National Carbon - Forecon EcoMarket Solutions National Carbon Offset Coalition Sustainable Forestry Offset Coalition Sustainable Forestry Management LTD Eco-Securities NatsourceManagement LTD Eco-Securities Natsource
HGHG
CCX and OTCCCX and OTCDemand and Prices for CO2Demand and Prices for CO2
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC) Demand and prices are determined by offset project Demand and prices are determined by offset project quality quality
characteristicscharacteristics that include project design elements for that include project design elements for conservation conservation co-benefitsco-benefits
Buyers are not driven by compliance requirementsBuyers are not driven by compliance requirements1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX) Demand and prices are established by the CCX rules and the demand Demand and prices are established by the CCX rules and the demand
for a fungible commodityfor a fungible commodity1048708 1048708 quality characteristics are already built into the rules andquality characteristics are already built into the rules and are not distinguished from other offset projectsare not distinguished from other offset projects1048708 1048708 fungible commodity ndash ldquoa ton is a tonrdquofungible commodity ndash ldquoa ton is a tonrdquo
Buyer are CCX members driven by emission reduction compliance Buyer are CCX members driven by emission reduction compliance requirementsrequirements
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Voluntary Carbon Market SuppliersVoluntary Carbon Market Suppliers
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC)2006 value = $549 million2006 value = $549 million1048708 1048708 Project developers aggregators retailers and brokersProject developers aggregators retailers and brokers
- Conservation Fund Pacific Forest Trust Ducks- Conservation Fund Pacific Forest Trust DucksUnlimited Climate Trust Terrapass New ForestsUnlimited Climate Trust Terrapass New Forests
1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX)2006 value = $361 million2006 value = $361 million1048708 1048708 Aggregators and project developersAggregators and project developers
- Forecon EcoMarket Solutions National Carbon - Forecon EcoMarket Solutions National Carbon Offset Coalition Sustainable Forestry Offset Coalition Sustainable Forestry Management LTD Eco-Securities NatsourceManagement LTD Eco-Securities Natsource
HGHG
CCX and OTCCCX and OTCDemand and Prices for CO2Demand and Prices for CO2
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC) Demand and prices are determined by offset project Demand and prices are determined by offset project quality quality
characteristicscharacteristics that include project design elements for that include project design elements for conservation conservation co-benefitsco-benefits
Buyers are not driven by compliance requirementsBuyers are not driven by compliance requirements1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX) Demand and prices are established by the CCX rules and the demand Demand and prices are established by the CCX rules and the demand
for a fungible commodityfor a fungible commodity1048708 1048708 quality characteristics are already built into the rules andquality characteristics are already built into the rules and are not distinguished from other offset projectsare not distinguished from other offset projects1048708 1048708 fungible commodity ndash ldquoa ton is a tonrdquofungible commodity ndash ldquoa ton is a tonrdquo
Buyer are CCX members driven by emission reduction compliance Buyer are CCX members driven by emission reduction compliance requirementsrequirements
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
CCX and OTCCCX and OTCDemand and Prices for CO2Demand and Prices for CO2
1048708 1048708 Over-the-Counter (OTC)Over-the-Counter (OTC) Demand and prices are determined by offset project Demand and prices are determined by offset project quality quality
characteristicscharacteristics that include project design elements for that include project design elements for conservation conservation co-benefitsco-benefits
Buyers are not driven by compliance requirementsBuyers are not driven by compliance requirements1048708 1048708 Chicago Climate Exchange (CCX)Chicago Climate Exchange (CCX) Demand and prices are established by the CCX rules and the demand Demand and prices are established by the CCX rules and the demand
for a fungible commodityfor a fungible commodity1048708 1048708 quality characteristics are already built into the rules andquality characteristics are already built into the rules and are not distinguished from other offset projectsare not distinguished from other offset projects1048708 1048708 fungible commodity ndash ldquoa ton is a tonrdquofungible commodity ndash ldquoa ton is a tonrdquo
Buyer are CCX members driven by emission reduction compliance Buyer are CCX members driven by emission reduction compliance requirementsrequirements
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Voluntary vs MandatoryVoluntary vs MandatoryMarket Forest Offset PricesMarket Forest Offset Prices
Voluntary Market 2006 value = $91 millionVoluntary Market 2006 value = $91 million1048708 1048708 OTC Prices in US for Forestry OffsetsOTC Prices in US for Forestry Offsets
$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)$4 - $13 per MTCO2e (Clean Air - Cool Planet December 2006)
$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)$10 - $18 per MTCO2e (Ecosystem Marketplace July 2007)
1048708 1048708 CCX Prices for Offsets (fungible commodity)CCX Prices for Offsets (fungible commodity)$2 per MTCO2e in October 2007 (CCX)$2 per MTCO2e in October 2007 (CCX)
Mandatory (Kyoto) Market 2006 value = $30 billionMandatory (Kyoto) Market 2006 value = $30 billion1048708 1048708 EU ETS Prices for Offsets (fungible commodity)EU ETS Prices for Offsets (fungible commodity)
$35 per MTCO2e in October 2007 (Point Carbon)$35 per MTCO2e in October 2007 (Point Carbon)
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Consideration in developing forest Consideration in developing forest offset projects Accounting Issuesoffset projects Accounting Issues
1 1 AdditionalityAdditionality the net additional carbon that is removed from the atmosphere as a result of the carbon the net additional carbon that is removed from the atmosphere as a result of the carbon transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written transaction (Additionality is a big challenge for forest offset projects and the rule book isnrsquot written yet Best practice yet Best practice projects that are good for the climate good for biodiversity and good for local projects that are good for the climate good for biodiversity and good for local communitiescommunities))
2 2 BaselineBaseline the net amount of carbon that would be captured in the absence of the carbon transaction the net amount of carbon that would be captured in the absence of the carbon transaction
3 3 PermanencePermanence the time period that the carbon stays sequestered the time period that the carbon stays sequestered
3 3 LeakageLeakage carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be carbon that is wittingly or unwittingly lost to the atmosphere but was supposed to be sequestered by the offset projectsequestered by the offset project
4 4 MonitoringMonitoring measurement of the additional carbon sequestered (instantly or over time depending on the measurement of the additional carbon sequestered (instantly or over time depending on the type of project)type of project)
5 5 RegistrationRegistration measurement of the additional carbon sequestered (instantly or over time depending on measurement of the additional carbon sequestered (instantly or over time depending on the type of project)the type of project)
6 6 VerificationVerification an independent entity verifies that the carbon calculations are correct (akin to sustainable an independent entity verifies that the carbon calculations are correct (akin to sustainable forestry certification)forestry certification)
7 7 CobenefitCobenefit additional societal benefits provided by the offset project additional societal benefits provided by the offset project
88 Cost Cost the cost to the landowner for doing the offset project the cost to the landowner for doing the offset project
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Basic Types of Forest Carbon Basic Types of Forest Carbon Offset ProjectsOffset Projects
(1) (1) AfforestationAfforestation planting trees where trees are not now planting trees where trees are not nowgrowinggrowing
(2) (2) Avoided deforestationAvoided deforestation preventing emissions of CO2 as preventing emissions of CO2 as a result of converting forest to some other land use eg a result of converting forest to some other land use eg pastureland ag land housing developmentpastureland ag land housing development
a) Forest might be designated as reserve or for activea) Forest might be designated as reserve or for activeforest managementforest management
(3) (3) Active forest managementActive forest managementa) Reforestation (accelerating regeneration)a) Reforestation (accelerating regeneration)b) Enhanced growth (through silviculture)b) Enhanced growth (through silviculture)c) Enhanced product storage (eg lumber) and productc) Enhanced product storage (eg lumber) and productenergy substitutionenergy substitution
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
CCXCCX gt Of the three markets available the only one for trading forestry offset credits is the CCX
gt 350 members ndash the largest emissions trading market globally surpassed Germany in October 2007 Located in Chicago Montreal (2007) New York (RGGI-
2009) LondonAmsterdam (ECX2005) California (AB32 ndash 2012)
gt Forest management organizations can be aggregatedTIMOrsquos NIPFrsquos Tree farm groups FSC groups Land trusts
Those who reduce below the targets have surplus allowances to sell or bank
gt Those who emit above the targets comply by purchasingCCX offset contracts called Carbon FinancialInstrumenttrade (CFI) such as forest offset projects
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
CCX Forest Offset Rules UpdateCCX Forest Offset Rules Update
Managed forest rules were developed in SeptemberManaged forest rules were developed in September 2007 ndash and 6 projects approved2007 ndash and 6 projects approvedndash Harvested wood products rules for managed forest offsets and Harvested wood products rules for managed forest offsets and
products from millsproducts from mills Afforestation rules were revised in August 2007Afforestation rules were revised in August 2007 Forest Conservation and Protection (avoidedForest Conservation and Protection (avoided
deforestation) rules are being refineddeforestation) rules are being refined Verification protocols and auditor qualification rulesVerification protocols and auditor qualification rules
are being refinedare being refined
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Managed Forest OffsetsManaged Forest Offsetswithin the CCXwithin the CCX
Commitment Period Commitment Period Through Phase II - 2010Through Phase II - 2010 Accounting and Reporting Accounting and Reporting Annually for project ownerAnnually for project owner Carbon Pools Carbon Pools Above and below groundAbove and below ground Baseline Setting Baseline Setting Base-year approachBase-year approach Discount Discount based on inventory precision based on inventory precision
and errorand error Sustainable Forestry Sustainable Forestry FSC PEFC endorsed standard like FSC PEFC endorsed standard like
SFI CSA ATF Group or other SFI CSA ATF Group or other approvedapproved
Market Access Market Access Trading for compliance as member Trading for compliance as member or aggregated as a project or poolor aggregated as a project or pool
Insurance Reserve Level Insurance Reserve Level 20 of annual net change20 of annual net change Harvested Wood Products Harvested Wood Products Long-lived for 100 yearsLong-lived for 100 years Verification Verification AnnuallyAnnually Payback Provision Payback Provision Within the commitment periodWithin the commitment period QuantificationQuantification Growth models Growth models
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Sustainably Managed ForestsSustainably Managed Forests
1048708 1048708 Restricted opportunity globally new and evolving Restricted opportunity globally new and evolving opportunity in the USopportunity in the US
1048708 1048708 Not currently accepted by some buyers and in Not currently accepted by some buyers and in some registries ie RGGIsome registries ie RGGI
1048708 1048708 Offsets may not work well for all working forestsOffsets may not work well for all working forests1048708 1048708 May provide modest revenues with low added May provide modest revenues with low added
costs to existing management programscosts to existing management programs1048708 1048708 Economics favor large projects or aggregation ofEconomics favor large projects or aggregation of
many landownersmany landowners1048708 1048708 Requires a robust inventory system and a carbon Requires a robust inventory system and a carbon
accounting systemaccounting system
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
ProjectProject Project owners must understand and be willing to assume the risks associated with Project owners must understand and be willing to assume the risks associated with
entering the carbon marketentering the carbon market Project owner must have sufficient ownership control to have influence over carbon Project owner must have sufficient ownership control to have influence over carbon
stocks and sequestration levels for the futurestocks and sequestration levels for the future Project must be capable of sequestering levels of carbon capable of generating Project must be capable of sequestering levels of carbon capable of generating
gross revenues in excess of market start up and participation costsgross revenues in excess of market start up and participation costs Project owner must be willing to commit to maintaining carbon stocks for the Project owner must be willing to commit to maintaining carbon stocks for the
commitment period associated with the CCX market (to end of current pilot period)commitment period associated with the CCX market (to end of current pilot period) Project must have been certified as sustainable by an independent third partyProject must have been certified as sustainable by an independent third party Project owner must be able to track and report on carbon stocks annually in Project owner must be able to track and report on carbon stocks annually in
conformance with market rules This includes the use of a CCX approved growth conformance with market rules This includes the use of a CCX approved growth modelmodel
Project owner must disclose any significant emissions sources under their Project owner must disclose any significant emissions sources under their influence ownership or controlinfluence ownership or control
Carbon stocks and net sequestration must be disclosed on all interests associated Carbon stocks and net sequestration must be disclosed on all interests associated with the project owner For instance all lands owned must be accounted for and with the project owner For instance all lands owned must be accounted for and disclosed to the marketdisclosed to the market
Project baselines must be developed using a site specific inventory with statistical Project baselines must be developed using a site specific inventory with statistical standards of +- 10 at 95 confidence for total tree volumestandards of +- 10 at 95 confidence for total tree volume
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Project developmentProject development
Step 1Step 1ndash Fase 1 Penetapan Basline Karbon dan tingkat sekuestrasiFase 1 Penetapan Basline Karbon dan tingkat sekuestrasindash Fase 2 Analisa EkonomiFase 2 Analisa Ekonomi
Step 2 Forest Offset Project Development Verification Step 2 Forest Offset Project Development Verification Registration TradingMarketing of Forest Carbon CreditsRegistration TradingMarketing of Forest Carbon Creditsndash Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)Fase 3 Project Proposal (Dev Ver Agg Trade amp marketing)ndash Fase 4 Project Commitment ndash CCX Aggregation contractFase 4 Project Commitment ndash CCX Aggregation contractndash Fase 5 Baseline Calculation amp Devt of Carbon Accounting SystemFase 5 Baseline Calculation amp Devt of Carbon Accounting Systemndash Project VerificationProject Verificationndash Project Aggregation Baseline Registration and TradingProject Aggregation Baseline Registration and Trading
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
CostCost
Start Up Cost
Inventory Certification
Project PreparationProposal
Accounting Modelling
ParticipationCost
Annual ReportAnd
VerificationAggregator Fees Transaction Fees
bull Result Annual costs per forested acre1048708 Start Up (Fixed) costs $028 per forested acre1048708 Participation (Variable) costs $126 per forested acre
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Fee structuresFee structures
Consulting services provided in phases I through Consulting services provided in phases I through IV are either on a cost not to exceed or hourly rate IV are either on a cost not to exceed or hourly rate schedule Phases V through VII are a blend of schedule Phases V through VII are a blend of hourly rates for some items and an aggregation hourly rates for some items and an aggregation rate or commission fee for others rate or commission fee for others
Each project presents a unique set of Each project presents a unique set of circumstances For some projects all of Phase V circumstances For some projects all of Phase V through VII can be covered under a flat through VII can be covered under a flat aggregation fee based on the market value of aggregation fee based on the market value of carbon credits as they are registered annually carbon credits as they are registered annually
Other projects may require a different mix of Other projects may require a different mix of hourly fees and a commission for aggregationhourly fees and a commission for aggregation
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Six Requirements of any HighSix Requirements of any HighQuality Offset StandardQuality Offset Standard
1048708 1048708 RealReal 1048708 1048708 MeasurableMeasurable 1048708 1048708 PermanentPermanent 1048708 1048708 AdditionalAdditional 1048708 1048708 Independently verifiedIndependently verified 1048708 1048708 Unique (no double counting)Unique (no double counting)
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
10 Elements for10 Elements forManaged Forest Offset PolicyManaged Forest Offset Policy
1048708 1048708 Project EligibilityProject Eligibility 1048708 1048708 SustainabilitySustainability 1048708 1048708 Inclusion of Forest Carbon PoolsInclusion of Forest Carbon Pools 1048708 1048708 Harvested Wood ProductsHarvested Wood Products 1048708 1048708 Measuring and MonitoringMeasuring and Monitoring 1048708 1048708 ReportingReporting 1048708 1048708 Baselines and AdditionalityBaselines and Additionality 1048708 1048708 LeakageLeakage 1048708 1048708 PermanencePermanence 1048708 1048708 EquivalenceEquivalence
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
Demand and supply of forestDemand and supply of forestcarbon credits will be driven bycarbon credits will be driven by
1 The level to which all forest offset projects 1 The level to which all forest offset projects participate including managed forestsparticipate including managed forests
2 The level of standardization of rules in 2 The level of standardization of rules in voluntary and mandatory (compliance) marketsvoluntary and mandatory (compliance) markets
3 The level of risk assuredness amp equivalence3 The level of risk assuredness amp equivalence
4 US legislation (if Democrat wins will 4 US legislation (if Democrat wins will voluntary become mandatory)voluntary become mandatory)
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
The messageshellipThe messageshellip
1048708 1048708 The rule book isnrsquot written yet (or too many books The rule book isnrsquot written yet (or too many books are written) about what kinds of forest projects can are written) about what kinds of forest projects can be used to offset carbonbe used to offset carbon
1048708 1048708 Now is the time to get it right Its up to us to Now is the time to get it right Its up to us to participateparticipate
1048708 1048708 Carbon offset projects are a matter of both Carbon offset projects are a matter of both technical and social legitimacytechnical and social legitimacy
1048708 1048708 If the net reduction to the atmosphere is not realIf the net reduction to the atmosphere is not real
will forest offset projects be socially legitimatewill forest offset projects be socially legitimate
HGHG
THANK YOU
HGHG
THANK YOU
