CARBON CREDITS FOR FORESTLAND
Presented by
Dean Current, PhD
Center for Integrated Natural Resources and Agricultural Management
(CINRAM)
Department of Forest Resources
University of Minnesota
Sponsored by the
Minnesota Wood Education Project
With funding from the
Northeast Minnesota Regional Sustainable Development Partnership
Minnesota Wood Education Project / 26 E. Exchange Street, Suite 405 / St. Paul, MN 55101 / USA
Tel +1-651-223-5629 / www.MinnesotaWoodEducationProject.com / Info@MinnesotaWoodEducationProject.com
CONTENT

Background on CO2 and carbon sequestration

Carbon credits/offsets

Carbon markets past and future

Options for carbon credits for forestland

Current issues related to the carbon markets
GLOBAL CARBON CYCLE
http://www.netl.doe.gov/technologies/carbon_seq/overview/what_is_CO2.html
CARBON SEQUESTRATION
Carbon sequestration can be defined as the
capture and secure storage of carbon that
would otherwise be emitted to or remain in
the atmosphere.
 Growing plants sequester carbon from the
atmosphere and release it when they
decompose unless converted

Source: Iowa Farm Bureau, 2006
MECHANISMS FOR SEQUESTRATION &
STORAGE

Terrestrial Carbon
Sequestration





Trees
Perennial Grasses
Conservation Tillage
Methane Capture
(Digesters)
Geologic Carbon
Storage

Secure capture and
storage
TERRESTRIAL CARBON SEQUESTRATION



Trees

Afforestation, Reforestation or Agroforestry

Species and age dependent

5.5 mT/acre/year
Perennial Grasses

Deep root systems

Mix of species

1.6 mT/acre
Conservation Tillage

Low-Till / No-Till

.3-1 mT/Acre

Controversial
Source: Minnesota Terrestrial Carbon Sequestration Initiative
WHAT ARE CARBON CREDITS?
Carbon credits are provided for:
 Prevention/reduction
of carbon emissions
produced by human activities from reaching the
atmosphere by capturing and diverting them to
secure storage.
 Removal
of carbon from the atmosphere by various
means and securely storing it.
CARBON OFFSETS


Carbon offsets are reductions in the emissions of CO2,
or removal of CO2 from the atmosphere, used to
compensate/offset emissions occurring elsewhere
often by industries.
Forestry activities that sequester carbon can receive
carbon credits/offsets for the CO2 sequestered and
those offsets are traded on markets
CREDIT/OFFSET

For carbon sequestered and stored for a defined
period of time (15-100 years)

Forestry credits – net sequestration
Carbon sequestered (tree growth, soil storage)
-
Carbon emitted (mortality, harvest, etc.)
= Net carbon sequestration above base “business as
usual” case (basis for payment)

Payments based on no. of tons of CO2
equivalent per year
OPPORTUNITIES IN FORESTRY
Climate Action Reserve (CAR) Voluntary Carbon Standard
(VCS)




Reforestation
Improved forest management
Avoided conversion of forest
land
Urban forestry



Afforestation, Reforestation
and regeneration – ARR
Improved Forest Management
- IFM
Low to high Productivity - LtHP
OFFSET INTEGRITY (SOURCE: CLIMATE ACTION RESERVE)
• Real
– Can be measured to a high degree of accuracy
– Is based on an activity that has occurred, not one that is
projected to occur in the future
• Additional
– Occurs outside of any regulatory requirement
– Would not have occurred but for the incentive provided by a
GHG market
• Verifiable
– Can be (and has been) independently verified
• Enforceable
– Ownership is undisputed and enforcement mechanisms exist to
ensure all program rules are followed
• Permanent
– Is removed from the atmosphere for a minimum of 100 years
MARKET MECHANISMS

Leakage:


Leakage may be caused by shifting harvest to another
location if harvest is reduced on one site.
Permanence:

The requirement that GHGs must be permanently
reduced or removed from the atmosphere to be
credited as carbon offsets. In CAR must be stored for
100 years.
DEALING WITH LEAKAGE FROM IMPROVED
FOREST MANAGEMENT
DEALING WITH PERMANENCE

Buffer established – Credits held back based on established
level of risk.

Buffer used to offset any loss of stored carbon.

Ask risk is lowered the buffer is reduced.

As commitment is met, buffer funds are returned to landowner
Market Mechanism
Greenhouse Gas
Emission Reductions
Achieved via
qualifying GHG
emission reduction
projects
Carbon Credit Program
• Eligibility Assessment
• Protocol Development
• Monitoring
• Reporting
• Verification
• Registration
Carbon Credits
(certified, tradable, $$)
Protocols (CCX, CAR,
VCS, others)
Sell on market
through an aggregator
AGGREGATORS

The Chicago Climate Exchange (CCX), when operating,
required that credits be sold in increments of at least
12,500 mT, approx.2,500 acres

Landowners need to work with an aggregator.

An aggregator combines credits to create a large enough
bundle to sell to the market.

Aggregators charge a fee of between 8-10% of gross carbon
credit payments to sustain their business
MARKETS

Compliance/Kyoto Market


Voluntary/Chicago Climate Exchange


Forestland options
Global Market for Forest Based Offsets


Europe – higher prices
0.3 Million Metric tonnes equivalent (MtCO2e) in 2002
to 30.1 MtCO2e in 2010. ($5-$15/tCO2e in 2010)
US Markets
Lack of regulation
 Project based

BLUE SOURCE – NATURE CONSERVANCY
‘WORKING WOODLANDS’ PROGRAM
Landowner Benefits
• No up-front, out-of-pocket costs
• Full forest + carbon inventory and assessment
• 10-year FSC management plan and certification
• 100% of FSC-certified wood product revenues
• 50%+ of forest carbon revenues – important new source of annual cash flow
• Inclusion in landscape-scale conservation project designed by TNC
Public Benefits
• Focus and protect public/private investments
• Active and engaged landowners
• Repair degraded forests; maintain desired conditions
• Keep working landscapes working and in private ownership
CO-BENEFITS OF CARBON
SEQUESTERING LAND PRACTICES

Improved forest
management

Healthier, more resilient
forests

Increased and Improved
Habitat

Water quality

Agroforestry buffers
SUMMARY



Forestland has potential for generating carbon credits
for landowners
Growing global and US regional markets for forestland
credits
Few current opportunities for Minnesota landowners



Economic conditions
Lack of regulated market
A market with potential but still needing development
WEBSITES FOR ADDL. INFORMATION
California Climate Action Reserve (CAR)

http://www.climateactionreserve.org/
Voluntary Carbon Standard (VCS)

http://www.v-c-s.org/
Dean Current
Center for Integrated Natural Resources and
Agricultural Management (CINRAM)
Dept. of Forest Resources
University of Minnesota
curre002@umn.edu
612-624-4299
Thank you!