Northern woods poised to benefit from carbon credit market. 8/18/2009by Richard Thomas
BusinessNorth.
Tom Class has 200 wooded acres in Carlton County. “My father owned it,” he said. “I’m finding extra income to keep it in the family.”
Class is one of the first forestland owners in Northeastern Minnesota to enroll his property in the carbon credit market — in essence, he’s getting paid to watch his trees grow.
Industrial companies may voluntarily agree to limit how much carbon dioxide they emit. If they decide to exceed that “cap,” they can purchase “carbon credits” — one credit for one metric ton of carbon dioxide — to offset their excess emissions.
Companies that emit less than their allowance can sell credits, as can forestland owners, since growing trees absorb carbon dioxide.
“It’s a tremendous opportunity. It could do a lot for rural economic development,” said Todd Parker, an associate with Chicago-based Delta Institute, a nonprofit that deals in carbon credits.
The market would expand enormously if “cap and trade” of carbon emissions becomes mandatory. The American Clean Energy and Security Act of 2009 narrowly passed the U.S. House of Representatives in June by a 219-212 vote and is before the Senate.
The bill aims to reduce emissions by 2050 to 20 percent below 2005 levels. Two billion tons of the required reductions may come from carbon-offset credits.
Market not dead, just sleeping
The Chicago Climate Exchange, formed in 2003, is the major U.S. market, used voluntarily by such companies as Ford, Dupont, Cargill, IBM, United Technologies and Rolls Royce.
On July 30, carbon credits traded at 50 cents on the Chicago exchange. That’s down from $2 in February and a high of $7.50 in 2008.
To be financially viable the price needs to be at least $2, said Gerald Grossman of Grossman Forestry Co., a landowner agent in Michigan. “It’s a concept, it’s there, and it can change in a hurry,” he said.
On July 30 at the European Climate Exchange, where carbon emissions have been regulated since 2005, credits traded at 14 euros each, or $19.99.
The U.S. carbon market “has not been an income generator, but it will become one,” said Kent Scheer, a Wadena tree farmer who enrolled a portion of his land in the carbon credits program in 2007.
He notes that Minnesota landowners have been slow to sign on. Those who want to get involved “should act on it sooner than later,” he said, noting procedures for such programs tend to be less complicated early on.
Scott Koerner, a logging contractor in Portage County, WI, signed up 480 acres of land for carbon credits in early 2009. “I haven’t seen an impact yet, but I think it has great potential,” he said.
Some large landowners in the region already using sustainable forestry practices have considered the market, but not yet found it worthwhile. John Rajala, president of Bigfork-based Rajala Companies, said returns are not yet worth the administrative chores.
Congress first considered “cap and trade” legislation in summer 2008. The debate raised expectations, resulting in carbon credits reaching $7.50. But their value dropped after the bill failed, and tumbled with the rest of the economy last fall.
Another factor in the drop was that speculators overloaded the market. “In the beginning it looked very attractive,” said Edwin Moberg, a board member of the Wisconsin Woodland Owners Association. “Everyone and their brother got into it.”
U.S. Rep. Henry Waxman, D-CA, chairman of the House Energy and Commerce Committee, reintroduced cap and trade legislation this year as part of HR 2454. The bill’s House passage did not spur the market from its slump because investors have been more cautious after the bill failed last year.
“People are very tentative and suspicious about taking part in the market,” said John DuPlissis of the University of Wisconsin-Extension. “It’s constantly changing and evolving.”
Climate change bill
Mandatory cap and trade is controversial, though many say it’s inevitable. U.S. Rep. Michele Bachmann, R-MN, calls it “a choice between liberty and tyranny.” Critics on the other side say the bill doesn’t go far enough, having too many loopholes and compromises.
The concept is not entirely new in the United States. The Clean Air Act of 1990 launched a similar program for sulfur emissions. Both industry and government predicted it would be expensive, but it achieved goals with costs much lower than expected.
Farmers have sold carbon credits since the early 1990s. By not tilling the soil, allowing crops to decay naturally, and changing their system of planting, farmers can reduce their carbon output. They also can get credits for converting fields back to grassland or forest.
For manufacturing industries the voluntary market “was a PR thing,” DuPlissis said, adding limited soil tillage reduced agriculture energy costs. “It was always a good deal for farmers changing over to no-till,” he said.
In 2007 both Wisconsin and Minnesota governors signed a regional agreement, the Midwest Greenhouse Gas Reduction Accord, that seeks to establish a regional cap-and-trade system along with several other states and one Canadian province.
A statewide cap and trade bill was introduced at the 2008 Minnesota legislative session, but critics, including the state Commerce Department, objected it would put the state at a competitive disadvantage and hamper efforts to establish the regional system. Eventually a different bill passed to finance studies.
Critics of the proposed national clean energy bill make a similar argument in terms of competition: Unless nations like China and India pass similar cap and trade programs, U.S, industries will have the incentive to relocate overseas.
Counties sign on
In abundantly forested northern Minnesota, a study financed by the Blandin Foundation and released last February looked at the carbon credit possibilities for Aitkin and Cass counties.
Aitkin’s land department is carrying the study further, accepting bids from firms to validate the numbers in the Blandin study. If the county board moves forward, the study will assess county forestland carbon storage capacity over the past decade, and calculate how modifying forest management practices could create additional capacity.
“This is kind of new for all of us,” said Mark Jacobs, Aitkin County land commissioner. “Every time I look at it I get more confused.”
Cass County land commissioner Joshua Stevenson said he also hopes to move forward on carbon credits, but the process is on the back burner. “We have to do a lot of homework with the county attorney to see if we can legally do it,” he said. “There are a lot of questions to be answered. But we’re 99 percent there.”
There are only three counties in the nation trading credits on the Chicago Carbon Exchange, but they’re heavy hitters: King County (Seattle); WA, Miami-Dade, FL, and Sacramento, CA.
“My understanding is that we’re one of very few looking at it at this level of detail,” Jacobs said. He has received inquiries from national energy companies asking for updates on the county’s progress.
His goal is to increase the forest’s capacity for carbon storage, but not at the expense of the timber industry. Timber still can be harvested, but to earn credits there needs to be a net gain in the amount of sequestered (captured) carbon.
This can be accomplished through various management practices:
• Increasing stocking of a long-lived shade tolerant species.
• Longer rotations: extending the life of harvestable trees.
• Increasing the proportion of harvestable products that are long-lived, for instance, construction materials, as opposed to short-lived, including paper products.
• Frequent thinning can turn trees that otherwise would die, decompose and emit carbon into products that can be harvested and manufactured as furniture, hardwood flooring, and veneer. The carbon in these wood products remains captured, and is not released back into the atmosphere as carbon dioxide.
Signing up
“Many of Minnesota’s land managers are well positioned to participate in carbon credit markets because they are already participating in third-party forest certification,” states the Blandin Foundation study. Third-party certification is an evaluation of forest management, based on internationally recognized standards and conducted by accredited organizations.
“Additional efforts, including expanded use of group certification, will be needed if Minnesota’s family forest owners are going to be able to efficiently and effectively participate in carbon and ecosystem service markets,” the report continues.
Private forestland owners may earn carbon credit money by signing on with an aggregator — a company that combines credits among groups of landowners and bundles them together to sell on the Chicago Climate Exchange.
The Delta Institute is an aggregator, working with landowners in the Lake Superior region with forest holdings ranging from 20 acres to 34,000.
Aggregators that primarily serve farmers are the National Farmers Union, working through the North Dakota branch, and AgraGate Climate Credits Corp., an affiliate of the Iowa Farm Bureau.
On July 15 Agragate temporarily suspended accepting new enrollments, partly due to the depressed market. Another reason is that the Chicago Climate Exchange enters a new phase on Jan. 1, 2010, and the farm bureau is awaiting the new rules, said Chad Martin, soil aggregation specialist.
Still the American Farm Bureau Federation opposes current cap and trade legislation, asserting as written, it would increase agribusiness production costs.
The National Farmers Union has been more supportive, but wants some conditions met, including recognition of early actors, no artificial cap on domestic offsets, and permission for producers to stack environmental benefit credits.
Farm and tree farm carbon credits are relatively simple, since the science behind them is well understood. Forestland is far more complicated, since it must be inventoried in detail by tree species and ages. Younger forests grow faster and sequester more carbon.
The expense of inventorying forestland to qualify for carbon credits currently outweighs the benefits, said Tom Wyse, forester for the Living Forest Cooperative in Ashland. “I don’t see any way to recoup costs unless credits were tremendously valuable in a year,” he said.
Back in Carlton, Class said the Minnesota Department of Natural Resources covered the cost of his initial inventory— about $1,000 on 200 acres— but he expects to pay for updates every five years.
Minnesota has a shortage of private foresters qualified to do the inventories, said Delta Institute’s Parker. “It’s been a real challenge getting foresters engaged,” he said.
Duluth forester Brian Allen, who inventoried Class’ land, said few foresters and landowners are engaged because current financial benefits are inadequate, and because of the intensive nature of the required inventory. But with enactment of federal cap and trade legislation, “there would be a lot more incentive,” he said
Friday, August 21, 2009
US Climate Plan call for Forest Expansion
By Traci Watson, USA TODAY
WASHINGTON — New forests would spread across the American landscape, replacing both pasture and farm fields, under a congressional plan to confront climate change, an Environmental Protection Agency analysis shows.
About 18 million acres of new trees — roughly the size of West Virginia — would be planted by 2020, according to an EPA analysis of a climate bill passed by the House of Representatives in June.
That's because the House bill gives financial incentives to farmers and ranchers to plant trees, which suck in large amounts of the key global-warming gas: carbon dioxide.
The forestation effort would be even larger than one carried out by the Civilian Conservation Corps during the Great Depression, says the U.S. Forest Service's Ralph Alig. The CCC, which lasted from 1933 to 1942, planted 3 billion trees, says the Civilian Conservation Corps Legacy, an alumni group for workers and family members.
The environmental benefits are clear. More trees would not only lower carbon dioxide levels, but they would improve water quality, because they need lower levels of pesticides and fertilizers, says agricultural economist Bruce McCarl of Texas A&M University, who contributed to the EPA analysis.
The plan would, however, be hard on ranchers and farmers and potentially food prices, says American Farm Bureau chief economist Bob Young.
In the Senate, which is likely to consider a similar bill this fall, there are some who worry the loss of farmland would lead to increases in food prices worse than those seen in mid-2007, when costs spiked 7% to 8% above 2006 levels.
If those food prices seemed high, "wait till you start moving agricultural acres into climate-change areas," warns Sen. Mike Johanns, R-Neb., Agriculture secretary for President George W. Bush.
McCarl says food costs would stay roughly the same.
The latest EPA analysis does not say where the farmland would be lost. However, an EPA study done in 2005 that analyzed climate-change policies similar to the House bill found that trees would overgrow farms primarily in three areas:
•Great Lake states: Michigan, Minnesota and Wisconsin.
•The Southeast: Virginia, North Carolina, South Carolina, Georgia and Florida.
•The Corn Belt: Illinois, Indiana, Iowa, Missouri and Ohio.
Forests once grew there, says study author Brian Murray of Duke University, so trees would sprout quickly in those areas if farmers got financial incentives. The House climate bill would allow landowners who reduce carbon dioxide to sell carbon permits to polluters, such as power plants.
Agriculture Secretary Tom Vilsack last week hailed the possibility that climate-change action could help forests. "We have our own deforestation problem right here in the U.S. of A," he said. "Just keeping forest as forest is a significant challenge."
Roughly 1 million acres of forests every year were flattened to make way for homes and other development in the 1990s, Alig says. Without a climate bill, a net total 26 million acres of forest will be lost to development by 2050, he says.
WASHINGTON — New forests would spread across the American landscape, replacing both pasture and farm fields, under a congressional plan to confront climate change, an Environmental Protection Agency analysis shows.
About 18 million acres of new trees — roughly the size of West Virginia — would be planted by 2020, according to an EPA analysis of a climate bill passed by the House of Representatives in June.
That's because the House bill gives financial incentives to farmers and ranchers to plant trees, which suck in large amounts of the key global-warming gas: carbon dioxide.
The forestation effort would be even larger than one carried out by the Civilian Conservation Corps during the Great Depression, says the U.S. Forest Service's Ralph Alig. The CCC, which lasted from 1933 to 1942, planted 3 billion trees, says the Civilian Conservation Corps Legacy, an alumni group for workers and family members.
The environmental benefits are clear. More trees would not only lower carbon dioxide levels, but they would improve water quality, because they need lower levels of pesticides and fertilizers, says agricultural economist Bruce McCarl of Texas A&M University, who contributed to the EPA analysis.
The plan would, however, be hard on ranchers and farmers and potentially food prices, says American Farm Bureau chief economist Bob Young.
In the Senate, which is likely to consider a similar bill this fall, there are some who worry the loss of farmland would lead to increases in food prices worse than those seen in mid-2007, when costs spiked 7% to 8% above 2006 levels.
If those food prices seemed high, "wait till you start moving agricultural acres into climate-change areas," warns Sen. Mike Johanns, R-Neb., Agriculture secretary for President George W. Bush.
McCarl says food costs would stay roughly the same.
The latest EPA analysis does not say where the farmland would be lost. However, an EPA study done in 2005 that analyzed climate-change policies similar to the House bill found that trees would overgrow farms primarily in three areas:
•Great Lake states: Michigan, Minnesota and Wisconsin.
•The Southeast: Virginia, North Carolina, South Carolina, Georgia and Florida.
•The Corn Belt: Illinois, Indiana, Iowa, Missouri and Ohio.
Forests once grew there, says study author Brian Murray of Duke University, so trees would sprout quickly in those areas if farmers got financial incentives. The House climate bill would allow landowners who reduce carbon dioxide to sell carbon permits to polluters, such as power plants.
Agriculture Secretary Tom Vilsack last week hailed the possibility that climate-change action could help forests. "We have our own deforestation problem right here in the U.S. of A," he said. "Just keeping forest as forest is a significant challenge."
Roughly 1 million acres of forests every year were flattened to make way for homes and other development in the 1990s, Alig says. Without a climate bill, a net total 26 million acres of forest will be lost to development by 2050, he says.
Thursday, August 20, 2009
Forest Carbon Incentives Program
August 07, 2009
Earlier this week, Sen. Jeanne Shaheen (D-NH) introduced legislation that would establish a system of incentive payments to qualifying forest-land owners who create permanent conservation easements or agree to undertake certain forest-management techniques to maximize the amount of carbon sequestered by their trees.
In introducing the bill, Sen. Shaheen pointed out that NH is the second most forested state in the nation (Maine is the first) and noted that while large forest owners have the opportunity to achieve carbon offset goals by participating in carbon offset markets, family and smaller landowners usually lack the efficiencies of scale to handle the substantial transactional costs that go along with market participation. (For example, the Chicago Climate Exchange requires forestry management offset projects to go through a forestry management practice certification process and to quantify annual carbon sequestration through modeling or annual inventory.)
According to Sen. Shaheen, if conserved and managed properly, our forests could capture up to 20% of US carbon emissions, so it makes sense to provide some incentives to property owners to do so. And since more than half of private forestland is privately owned in parcels of 100 acres or less, it makes sense to provide incentives to small property owners. (New Hampshire law affords a similar incentive to small renewable energy generators by allowing behind-the-meter renewable generation--and even solar hot water heaters--to generate RECs, starting in 2010.)
Whether Sen. Shaheen’s bill ultimately succeeds is anyone’s guess, though it has garnered the support of a broad spectrum of organizations, from conservation organizations like the Trust for Public Land to timber industry organizations like the New Hampshire Timberland Owners Association. But her comments suggest that carbon markets are the most effective way to provide forest management incentives, begging the question: why not propose a program that lets small forest owners aggregate their acreage and participate in the offset markets along with larger forest owners? This might save the Department of Agriculture the trouble of re-creating the wheel, since markets have already developed standards and protocols for offset projects. Turns out, in fact, the markets have already thought of that, and there are many organizations registered as aggregators of small offset (and renewable energy) projects. (An EPA report (pdf) describes how aggregators work with the Chicago Climate Exchange – see page 10 for a helpful flow-chart.) In the end, the incentives in Shaheen's legislation may actually be an attempt to address a different but related issue: carbon offset prices that are too low to adequately incentivize small forest owners to participate in the market through an aggregator.
Earlier this week, Sen. Jeanne Shaheen (D-NH) introduced legislation that would establish a system of incentive payments to qualifying forest-land owners who create permanent conservation easements or agree to undertake certain forest-management techniques to maximize the amount of carbon sequestered by their trees.
In introducing the bill, Sen. Shaheen pointed out that NH is the second most forested state in the nation (Maine is the first) and noted that while large forest owners have the opportunity to achieve carbon offset goals by participating in carbon offset markets, family and smaller landowners usually lack the efficiencies of scale to handle the substantial transactional costs that go along with market participation. (For example, the Chicago Climate Exchange requires forestry management offset projects to go through a forestry management practice certification process and to quantify annual carbon sequestration through modeling or annual inventory.)
According to Sen. Shaheen, if conserved and managed properly, our forests could capture up to 20% of US carbon emissions, so it makes sense to provide some incentives to property owners to do so. And since more than half of private forestland is privately owned in parcels of 100 acres or less, it makes sense to provide incentives to small property owners. (New Hampshire law affords a similar incentive to small renewable energy generators by allowing behind-the-meter renewable generation--and even solar hot water heaters--to generate RECs, starting in 2010.)
Whether Sen. Shaheen’s bill ultimately succeeds is anyone’s guess, though it has garnered the support of a broad spectrum of organizations, from conservation organizations like the Trust for Public Land to timber industry organizations like the New Hampshire Timberland Owners Association. But her comments suggest that carbon markets are the most effective way to provide forest management incentives, begging the question: why not propose a program that lets small forest owners aggregate their acreage and participate in the offset markets along with larger forest owners? This might save the Department of Agriculture the trouble of re-creating the wheel, since markets have already developed standards and protocols for offset projects. Turns out, in fact, the markets have already thought of that, and there are many organizations registered as aggregators of small offset (and renewable energy) projects. (An EPA report (pdf) describes how aggregators work with the Chicago Climate Exchange – see page 10 for a helpful flow-chart.) In the end, the incentives in Shaheen's legislation may actually be an attempt to address a different but related issue: carbon offset prices that are too low to adequately incentivize small forest owners to participate in the market through an aggregator.
Sustainability Index will include carbon
When Walmart made its much-ballyhooed announcement last month that it would launch a Sustainability Index, one key part of that announcement got short shrift. The retail giant also announced the creation of a Sustainability Consortium, a group of academics and others with the ambitious agenda of "establishing the scientific standards to measure the sustainability of consumer products."
With Walmart and the Index at least temporarily out of the spotlight, I decided to look into the Consortium to understand what it was all about. My interest in doing so was piqued by inquiries from sustainability executives at several large companies who wanted my take on the Consortium and whether they should join.
An initial look at the Consortium raised a number of questions. For starters, I was intrigued that major consumer product companies were paying to join a consortium whose principal purpose was to set the standards by which these companies' products would be judged. Was this some kind of fox-and-henhouse charade? Moreover, membership isn't cheap. The Consortium is asking "founding members" to pay between $50,000 and $250,000 a year for three years, with lower membership levels at $25,000 for smaller firms with fewer than 500 employees and $10,000 for government and nongovernmental organizations -- each with a three-year commitment. Each membership category offers its own combination of benefits, all contained the group's a membership application (Download - PDF).
So, what's really going on here? What do companies get for their money?
To find out, I interviewed the Consortium's co-directors, Dr. Jay S. Golden, from School of Sustainability at Arizona State University, and Dr. Jon Johnson, from the Sam M. Walton College of Business at the University of Arkansas. Their two schools are co-conveners of the Consortium.
Johnson and Golden started with a little history. The Consortium idea emerged about a year ago as Walmart gathered groups of experts to help further its own sustainability goals. "The idea of quantifying sustainability of products arose," explained Golden. "We were thinking about what kind of body could make that come to life. It became very clear to us that no one researcher, no one institution, could do that because you're dealing with geographies around the world and with various sciences -- physical, life, and engineering -- and that required a multidisciplinary approach. So we outlined a proposal to Walmart to develop a consortium of academic researchers from institutions to think through the process and try to bring it to life based on the best available sound science and engineering principles available."
It's important to note that the 15-question supplier assessment that Walmart recently introduced to evaluate companies is not part of the Consortium's work. Rather, the Consortium's mandate is to focus on how to evaluate products, which Walmart hopes will become the basis for standards, ratings, or other product-level evaluations that it would use in its stores. (The company has suggested the product ratings might hit store shelves in about five years, but it's become clear to me that no one really has a firm grip on a reliable timeline.) Walmart has stated that it is hoping other retailers will adopt the standards, and that the eventual standards be "owned" independently, at an appropriate nonprofit, university, or other entity.
To create the product standards, the Consortium is relying on lifecycle modeling, a complex and heretofore costly methodology that, as I recently wrote, seems to be undergoing a renaissance. Creating the full complement of lifecycle-based standards that address the mind-boggling array of products that Walmart and other retailers carry -- apparel, baby products, electronics, groceries, jewelry, pharmaceuticals, toys, and much more -- is the Herculean task the Consortium is undertaking. Accomplishing this will require a vast number of people ... and vast sums of money.
Which is where membership comes in. Already, more than a dozen companies have ponied up, including Cargill, Clorox, Dial, Earth Friendly Products, General Mills, Henkel, Monsanto, Pepsico, Procter & Gamble, SC Johnson, Seventh Generation, TetraPak, Tyson, Unilever, Walmart, and Waste Management.
Jay Golden explained the core of the group's activities. First, there's the foundational research. "We're trying to put the right science, the right data, and the right metrics in there," and then place the data into an open-source system for all to use. "Think of it almost as Linux," he said. The group is developing a tool called Earthster, a sophisticated open platform for making lifecycle assessment easier, faster, and cheaper, in part by pooling existing databases and models, then tapping the larger community to share data, research, and results.
Another facet of the Consortium's work involves understanding consumers and how to effectively communicate to them information about the sustainability attributes of a wide range of products and sectors. "How do you bring coherence and harmonization to these different efforts?" asks Golden.
So, will Consortium members get special access to the lifecycle databases and consumer research? No, the Consortium's work will be open to all. Johnson and Golden repeatedly emphasized that the Consortium will be fully transparent about its activities. (You already can find every presentation, white paper, and meeting summary to date on the group's website.) Says Johnson: "Transparent is a word that Jay and I use probably fifty times a day these days."
What, then, does membership in the Sustainability Consortium offer?
The best case Johnson and Golden could make was that participating companies will gain a great deal of knowledge by being at the table where the hard work of developing standards is being done. "I think it is safe to say that a company that is engaged in the process and is sponsoring research that explores lifecycles that are relevant to that company -- they are probably in a better position to learn from the process," explained Johnson. "There's a lot of benefit to being in the room and being involved in the research that goes beyond the published results." As such, he explained, participating companies will be better able to put the information and systems to use, "whereas companies that are waiting on the sidelines to see what happens are going to be on their heels."
What about some of the other membership benefits being offered, such as seats on advisory councils and sector working committees, invitations to various workshops and meetings, updates via newsletters and publications? Will nonmembers be deprived of such things?
Not really. Everything will be public, though Golden and Johnson suggested that paying members will get guaranteed slots or preferential seating at meetings, while nonmembers will have to queue up on a space-available basis.
Having delved into all this, I'm still not entirely sure I understand the real value proposition of membership in the Sustainability Consortium. The part about the learnings one might derive from being at the table is certainly valid, and that could well be worth the membership fees for some companies. Beyond that, membership seems to be primarily about supporting the Consortium's important work -- in a word: philanthropy.
And that brings us back to the question of propriety. While I don't doubt for a second the sincerity or integrity of Johnson, Golden, and their colleagues, and their stated intention of avoiding conflicts and pursuing transparency, I'm concerned about the optics of it all: the perception that major manufacturers are helping to create the methodologies or otherwise set the rules of rating products, presumably to their advantage. And I worry that this perception could undermine the reputation of the work the group will undertake.
The one thing I learned for certain about the Consortium -- and, for that matter, about all of the sustainability rating initiatives Walmart has put into play -- is that they are as amorphous as they are ambitious. That is, their design and execution, not to mention their timetables, remain very fluid. One hopes that as these initiatives take shape and gain traction, their leaders will take exceptional care to ensure that their work will be unassailable. Anything less, I'm afraid, will be seen by the public as unacceptable, or worse.
With Walmart and the Index at least temporarily out of the spotlight, I decided to look into the Consortium to understand what it was all about. My interest in doing so was piqued by inquiries from sustainability executives at several large companies who wanted my take on the Consortium and whether they should join.
An initial look at the Consortium raised a number of questions. For starters, I was intrigued that major consumer product companies were paying to join a consortium whose principal purpose was to set the standards by which these companies' products would be judged. Was this some kind of fox-and-henhouse charade? Moreover, membership isn't cheap. The Consortium is asking "founding members" to pay between $50,000 and $250,000 a year for three years, with lower membership levels at $25,000 for smaller firms with fewer than 500 employees and $10,000 for government and nongovernmental organizations -- each with a three-year commitment. Each membership category offers its own combination of benefits, all contained the group's a membership application (Download - PDF).
So, what's really going on here? What do companies get for their money?
To find out, I interviewed the Consortium's co-directors, Dr. Jay S. Golden, from School of Sustainability at Arizona State University, and Dr. Jon Johnson, from the Sam M. Walton College of Business at the University of Arkansas. Their two schools are co-conveners of the Consortium.
Johnson and Golden started with a little history. The Consortium idea emerged about a year ago as Walmart gathered groups of experts to help further its own sustainability goals. "The idea of quantifying sustainability of products arose," explained Golden. "We were thinking about what kind of body could make that come to life. It became very clear to us that no one researcher, no one institution, could do that because you're dealing with geographies around the world and with various sciences -- physical, life, and engineering -- and that required a multidisciplinary approach. So we outlined a proposal to Walmart to develop a consortium of academic researchers from institutions to think through the process and try to bring it to life based on the best available sound science and engineering principles available."
It's important to note that the 15-question supplier assessment that Walmart recently introduced to evaluate companies is not part of the Consortium's work. Rather, the Consortium's mandate is to focus on how to evaluate products, which Walmart hopes will become the basis for standards, ratings, or other product-level evaluations that it would use in its stores. (The company has suggested the product ratings might hit store shelves in about five years, but it's become clear to me that no one really has a firm grip on a reliable timeline.) Walmart has stated that it is hoping other retailers will adopt the standards, and that the eventual standards be "owned" independently, at an appropriate nonprofit, university, or other entity.
To create the product standards, the Consortium is relying on lifecycle modeling, a complex and heretofore costly methodology that, as I recently wrote, seems to be undergoing a renaissance. Creating the full complement of lifecycle-based standards that address the mind-boggling array of products that Walmart and other retailers carry -- apparel, baby products, electronics, groceries, jewelry, pharmaceuticals, toys, and much more -- is the Herculean task the Consortium is undertaking. Accomplishing this will require a vast number of people ... and vast sums of money.
Which is where membership comes in. Already, more than a dozen companies have ponied up, including Cargill, Clorox, Dial, Earth Friendly Products, General Mills, Henkel, Monsanto, Pepsico, Procter & Gamble, SC Johnson, Seventh Generation, TetraPak, Tyson, Unilever, Walmart, and Waste Management.
Jay Golden explained the core of the group's activities. First, there's the foundational research. "We're trying to put the right science, the right data, and the right metrics in there," and then place the data into an open-source system for all to use. "Think of it almost as Linux," he said. The group is developing a tool called Earthster, a sophisticated open platform for making lifecycle assessment easier, faster, and cheaper, in part by pooling existing databases and models, then tapping the larger community to share data, research, and results.
Another facet of the Consortium's work involves understanding consumers and how to effectively communicate to them information about the sustainability attributes of a wide range of products and sectors. "How do you bring coherence and harmonization to these different efforts?" asks Golden.
So, will Consortium members get special access to the lifecycle databases and consumer research? No, the Consortium's work will be open to all. Johnson and Golden repeatedly emphasized that the Consortium will be fully transparent about its activities. (You already can find every presentation, white paper, and meeting summary to date on the group's website.) Says Johnson: "Transparent is a word that Jay and I use probably fifty times a day these days."
What, then, does membership in the Sustainability Consortium offer?
The best case Johnson and Golden could make was that participating companies will gain a great deal of knowledge by being at the table where the hard work of developing standards is being done. "I think it is safe to say that a company that is engaged in the process and is sponsoring research that explores lifecycles that are relevant to that company -- they are probably in a better position to learn from the process," explained Johnson. "There's a lot of benefit to being in the room and being involved in the research that goes beyond the published results." As such, he explained, participating companies will be better able to put the information and systems to use, "whereas companies that are waiting on the sidelines to see what happens are going to be on their heels."
What about some of the other membership benefits being offered, such as seats on advisory councils and sector working committees, invitations to various workshops and meetings, updates via newsletters and publications? Will nonmembers be deprived of such things?
Not really. Everything will be public, though Golden and Johnson suggested that paying members will get guaranteed slots or preferential seating at meetings, while nonmembers will have to queue up on a space-available basis.
Having delved into all this, I'm still not entirely sure I understand the real value proposition of membership in the Sustainability Consortium. The part about the learnings one might derive from being at the table is certainly valid, and that could well be worth the membership fees for some companies. Beyond that, membership seems to be primarily about supporting the Consortium's important work -- in a word: philanthropy.
And that brings us back to the question of propriety. While I don't doubt for a second the sincerity or integrity of Johnson, Golden, and their colleagues, and their stated intention of avoiding conflicts and pursuing transparency, I'm concerned about the optics of it all: the perception that major manufacturers are helping to create the methodologies or otherwise set the rules of rating products, presumably to their advantage. And I worry that this perception could undermine the reputation of the work the group will undertake.
The one thing I learned for certain about the Consortium -- and, for that matter, about all of the sustainability rating initiatives Walmart has put into play -- is that they are as amorphous as they are ambitious. That is, their design and execution, not to mention their timetables, remain very fluid. One hopes that as these initiatives take shape and gain traction, their leaders will take exceptional care to ensure that their work will be unassailable. Anything less, I'm afraid, will be seen by the public as unacceptable, or worse.
Wednesday, August 12, 2009
VANCOUVER, Aug. 11 /PRNewswire-FirstCall/ - Carbon Friendly Solutions Inc. (TSX Venture Exchange: CFQ - News; "CFS" or the "Company") (http://www.carbonfriendly.com) is pleased to announce its wholly-owned subsidiary Global CO2 Reduction Inc. has initiated its Northern Ontario Pilot Project (the "Project"). CFS has completed planting 92,000 Jack pine seedlings on 40 hectares of land during stage one of its first North American reforestation project, in coordination with Trees for Clean Air (TFCA). The total land in the Project area is 45 hectares. CFS in cooperation with TFCA will plant the remaining 5 hectares with fast-growing willows in mid-August 2009, during stage two of the Project.
On July 24, 2009, Steve Clark, VP Operations, helped launch CFS's first forestry offset project in Kapuskasing, Ontario, Canada, during the ribbon-cutting ceremony at the Project site and later during the opening ceremony to the Kapuskasing Heritage Festival, where Steve helped kick off as an honoured guest. The Project has received remarkable community support, as well as support from Kapuskasing Mayor Alan Spacek and the Town Council. The Northern Times newspaper has published several articles about the Project. Their latest article about the Project launch is at www.kapuskasingtimes.com/ArticleDisplay.aspx?e=1687062.
Rainforest Alliance, an organization accredited to conduct audits and verifications based on the Climate, Community, and Biodiversity Alliance (CCBA) design standards, will be completing its on-site audit of the Project in mid-August 2009, and CFS is confident that the Project will be the first forestry offset project in Canada to be CCBA-accepted, as well as the first project in Canada to be successfully validated to CCBA design standards.
On July 21, 2009, CFS submitted an updated Project Design Document (PDD) to Rainforest Alliance, the independent auditor, in response to their preliminary validation assessment that was completed on July 7, 2009, in preparation for the on-site audit of the Project in mid-August 2009. By the end of August, CFS anticipates the Project will earn CCBA validation by the end of August 2009. CFS anticipates that nearly 20,000 high-quality carbon credits, validated to CCBA standards, will be generated from the Project and will be sold in the Voluntary Market by late summer.
The Project is located in the City of Kapuskasing, in northern Ontario. The land was leased by CFS from the City of Kapuskasing. In accordance to the terms of the lease agreement, the trees will continue to sequester carbon dioxide from the atmosphere in the Project area for a minimum of 100 years.
About CCBA
The Climate, Community and Biodiversity Alliance (CCBA) is a partnership between leading companies, non-governmental organizations (NGOs) and research institutions seeking to promote integrated solutions to land management around the world. With this goal in mind, the CCBA has developed voluntary standards to help design and identify land management projects that simultaneously minimize climate change, support sustainable development and conserve biodiversity. Website address http://www.climate-standards.org/index.html
About Trees for Clean Air
Trees for Clean Air Inc. (TFCA) is a reforestation and afforestation company that specializes in customized silviculture services for individuals and companies that want to offset carbon emissions. The company provides high-quality trees, expert planting, and tree cultivation services to achieve the clients target survival and growth rates. TFCA is incorporated under the laws of Ontario, Canada and is solely owned by Julie Culverhouse, a Registered Professional Engineer.
About Carbon Friendly Solutions Inc.
Carbon Friendly Solutions Inc. (CFS) is a project proponent that provides solutions for companies, organizations and individuals looking to reduce or offset their global warming impact caused by greenhouse gas emissions while including the generation of carbon credits for sale in the global Voluntary and Compliance markets. Through its wholly owned subsidiaries, Global CO2 Reduction Inc. and CO2 Reduction Poland Sp. z.o.o., CFS is focusing on removing and offsetting carbon dioxide emissions from the completion of reforestation, biomass energy and renewable energy technology projects that are independently validated and verified to globally recognized standards and methodologies.
On July 24, 2009, Steve Clark, VP Operations, helped launch CFS's first forestry offset project in Kapuskasing, Ontario, Canada, during the ribbon-cutting ceremony at the Project site and later during the opening ceremony to the Kapuskasing Heritage Festival, where Steve helped kick off as an honoured guest. The Project has received remarkable community support, as well as support from Kapuskasing Mayor Alan Spacek and the Town Council. The Northern Times newspaper has published several articles about the Project. Their latest article about the Project launch is at www.kapuskasingtimes.com/ArticleDisplay.aspx?e=1687062.
Rainforest Alliance, an organization accredited to conduct audits and verifications based on the Climate, Community, and Biodiversity Alliance (CCBA) design standards, will be completing its on-site audit of the Project in mid-August 2009, and CFS is confident that the Project will be the first forestry offset project in Canada to be CCBA-accepted, as well as the first project in Canada to be successfully validated to CCBA design standards.
On July 21, 2009, CFS submitted an updated Project Design Document (PDD) to Rainforest Alliance, the independent auditor, in response to their preliminary validation assessment that was completed on July 7, 2009, in preparation for the on-site audit of the Project in mid-August 2009. By the end of August, CFS anticipates the Project will earn CCBA validation by the end of August 2009. CFS anticipates that nearly 20,000 high-quality carbon credits, validated to CCBA standards, will be generated from the Project and will be sold in the Voluntary Market by late summer.
The Project is located in the City of Kapuskasing, in northern Ontario. The land was leased by CFS from the City of Kapuskasing. In accordance to the terms of the lease agreement, the trees will continue to sequester carbon dioxide from the atmosphere in the Project area for a minimum of 100 years.
About CCBA
The Climate, Community and Biodiversity Alliance (CCBA) is a partnership between leading companies, non-governmental organizations (NGOs) and research institutions seeking to promote integrated solutions to land management around the world. With this goal in mind, the CCBA has developed voluntary standards to help design and identify land management projects that simultaneously minimize climate change, support sustainable development and conserve biodiversity. Website address http://www.climate-standards.org/index.html
About Trees for Clean Air
Trees for Clean Air Inc. (TFCA) is a reforestation and afforestation company that specializes in customized silviculture services for individuals and companies that want to offset carbon emissions. The company provides high-quality trees, expert planting, and tree cultivation services to achieve the clients target survival and growth rates. TFCA is incorporated under the laws of Ontario, Canada and is solely owned by Julie Culverhouse, a Registered Professional Engineer.
About Carbon Friendly Solutions Inc.
Carbon Friendly Solutions Inc. (CFS) is a project proponent that provides solutions for companies, organizations and individuals looking to reduce or offset their global warming impact caused by greenhouse gas emissions while including the generation of carbon credits for sale in the global Voluntary and Compliance markets. Through its wholly owned subsidiaries, Global CO2 Reduction Inc. and CO2 Reduction Poland Sp. z.o.o., CFS is focusing on removing and offsetting carbon dioxide emissions from the completion of reforestation, biomass energy and renewable energy technology projects that are independently validated and verified to globally recognized standards and methodologies.
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