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.