South American Environmental Trusts Join Columbia Center to Create Amazon Forest Carbon Credits

Five environmental trust funds in Bolivia, Brazil, Colombia, Ecuador and Peru have joined with Columbia University’s Center for Environment, Economy, and Society to establish the Amazon Forest Carbon Partnership, a collaboration to reduce carbon emissions and provide an economic alternative for forest dwelling communities and commercial enterprises in the Amazon. The issue of forest carbon credit, in which wealthy countries offset their emissions by compensating land holders for preserving forests, was a core point of negotiations at the global climate summit in Copenhagen.

Amazonian rainforest, upper Amazon basin, Loreto region, Peru

Worldwide, more than 12 million hectares of tropical forest—roughly the size of Pennsylvania—are cleared every year. Forests act as carbon sinks by storing carbon dioxide. According to experts, deforestation is responsible for 12 to 15 percent of global annual CO₂ emissions. If the rate of tropical deforestation continues, the resulting emissions have the potential to single-handedly negate all the emissions reductions gained by adherence to the Kyoto Protocol, a global agreement to combat global warming. Forest-based carbon credit is being considered as a way for countries, companies and individuals to offset their emissions by preventing deforestation and the release of stored carbon dioxide.

Thanks in part to a $3 million grant from Cargill, the Amazon Forest Carbon Partnership (AFCP) is working to develop and implement the practical means for bringing tropical forest carbon credits to market.

The primary goal of the AFCP is to ensure that the necessary elements are in place to generate carbon credits for avoided deforestation in the Amazon. Such credits are based on what is known as reduced emissions from deforestation and degradation, or REDD, and are included in proposed U.S. legislation on energy security under the Waxman-Markey and Kerry-Boxer Bills.

There is criticism of using forests as a carbon offset mechanism, primarily due to the lack of effective monitoring to ensure that logging elsewhere is not negating saved forests. Another criticism is that forests could be cleared once substantial payments for the offset have been made. Additionally, these agreements will not benefit the communities that have traditionally held rights over the lands in question. The failure to deal equitably with local owners is viewed as a threat to permanence, since the local owners would have no incentives to protect the forests.

As part of the AFCP, the Center for Environment, Economy, and Society, or CEES, has organized technical experts to advise on all aspects of the effort, including the development of a platinum standard to validate, verify and monitor carbon credits generated from avoided deforestation activities and to develop the curriculum to train individuals for implementation. Once the platinum standard is created and experts are trained to apply the standard, it will be essential to develop an institutional structure to ensure that the standard is properly applied. The AFCP will lay the groundwork for the creation of such a structure.

CEES and each of the five environmental trust funds, or ETFs, which serve as stewards of conservation and protection in their countries, will work with corporate, individual, community and indigenous forest holders on the supply side, and corporations, traders and private equity investors on the demand side.

Currently, the Kyoto Protocol excludes carbon emissions credits from avoided deforestation, when a forest is completely and permanently cleared, and degradation, when it is damaged by burning, pollution or excessive removal of flora and fauna. If the successor to the Kyoto Protocol allows for REDD, then forest carbon can be monetized, and emissions reductions from avoided deforestation can be traded in carbon markets. If REDD is not included in an international agreement, it is likely to still be included in domestic legislation of the U.S. and other nations.

“The AFCP’s efforts are aimed at getting all aspects of REDD projects ready for implementation on the ground, in anticipation of accepted legislation and bilateral agreements,” said Don Melnick, director of CEES and Thomas Hunt Morgan Professor of Conservation Biology in the Department of Ecology, Evolution and Environmental Biology. “The AFCP will then be ready to help forest holders generate credits and get them to market.”

Organizations involved in the Amazon Forest Carbon Partnership expect to begin rolling out their plan in the summer of 2010 and to complete the initiative in 2011.

The South American ETF partners include: Bolivia’s PUMA (Fundación Protección y Uso Sostenible del Medio Ambiente or Foundation for the Protection and Sustainable Use of the Environment), Brazil’s Funbio (Fundo Brasileiro para a Biodiversidade or Brazilian Fund for Biodiversity), Colombia’s Fondo para la Acción Ambiental y la Niñez (or Fund for Environmental Action and Childhood), Ecuador’s FAN (Fondo Ambiental Nacional or National Environmental Fund), and Peru’s PROFONANPE (Fondo de Promoción para las Areas Naturales Protegidas del Perú or Peruvian Trust Fund for National Parks and Protected Areas).

The Amazon Forest Carbon Partnership is supported technically by a group of experts from Columbia, Duke and Stanford Universities, as well as Covington & Burling, an international law firm with specific expertise in U.S. and international carbon emissions policy

New Zealand Land lies idle as foresters fear conversion

Friday 26 Mar 10 10:00am

Thousands of hectares of recently deforested land is lying fallow because under the emissions trading scheme owners can’t afford to convert it to other uses.

The latest Ministry of Agriculture and Forestry deforestation survey shows that more than 5000ha of the plantation forests that were harvested in the past two years have not been replanted.

The report also shows that without the ETS, the level of likely deforestation between 2008 and 2020 would treble, from 31,000ha to 101,000ha.

The report’s author, Dr Bruce Manley of Canterbury University’s School of Forestry, says that many owners want to change the use of their land from plantation forestry to things like farming and lifestyle blocks, but say they can’t afford to because of their carbon liability under the ETS.

The scheme requires anyone who changes the land use of pre-1990 forests to account for the carbon lost when the trees are harvested and not replanted.

New Zealand forest owners have been lobbying to have an offsets provision – under which they’re not penalised for land use change if they plant an equivalent amount of forest somewhere else – included in the scheme, but the Government says that it will not do it unless offsetting is included in international carbon accounting rules.

Manley asked major forest owners what their land-use intentions were for the period from 2008 to 2020 under three scenarios – the current ETS, no ETS, and an ETS with offsetting provisions.

Results show that with the ETS, major forest owners will deforest 19,000ha, compared to the 76,000ha they would deforest if there was no ETS. Under an ETS that allowed offsetting, they would deforest 48,000ha.

Manley says that when small forest-owners are included, the likely deforestation figures jump to 31,000ha under the ETS, 101ha without the ETS, and 67,000ha with offsetting.

He told Carbon News that many landowners are waiting to see what happens to international carbon rules and prices before making decisions on replanting or land-use changes.

Meanwhile, Climate Change Issues Minister Nick Smith says the report shows that land owners are starting to replant.

"New Zealand lost a net area of 30,500 hectares in the years from 2005 to 2008, while last year there was a small gain of 500 hectares," he said in a statement.

"I am encouraged that the survey of forest intentions is indicating net growth of 4700 hectares this year, 5700 hectares in 2011 and 7700 hectares in 2012.

"This turnaround has been driven by both reduced deforestation and new planting. This trend is positive and shows confidence is coming back into the forest sector.

"The report is very clear that New Zealand would be losing significant forest area without the ETS legislation," Smith said.

"The survey indicates deforestation rates would be more than three times higher or about 8000 hectares per year as compared to 2300 hectares per year.

"The Government has gone to considerable effort in it's moderation of the ETS to more than half the cost for consumers and industry, but to retain the full price signals to the forest sector, and this latest data on forest intentions is showing the positive results from this policy.

"This turnaround is good news for the forest sector and the environment. Every new hectare of forest absorbs in time more than 800 tonnes of CO2 as well as assisting with soil retention. The Government will be working with the forest sector on enhancing the environmental benefits from forestry."

Business should get credit for saving forests, coalition says

By Ben Geman - 03/22/10 09:59 AM ET

Power companies should get credit under a climate change bill for forest conservation, a coalition of groups said Monday.

Companies also should get credit for supporting farming activites that reduce greenhouse gas emissions, the groups said.

They argue American farms can play a “major role” in sequestering carbon and reducing emissions.

Senators writing climate legislation should allow companies to offset their carbon emissions through forest conservation or green farming techniques, the coalition of energy companies, environmentalists, and farm and timber groups said.

A letter Monday from 31 parties including utility giant American Electric Power, the American Forest and Paper Association, the National Farmers Union and the Sierra Club calls for incentives for conserving forests in both the U.S. and tropical nations.

“We strongly believe that any successful comprehensive energy and climate change legislation must include forests and farms as a significant part of the solution,” states the letter, which was sent to Sens. John Kerry (D-Mass.), Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.). “By providing an affordable means to address climate change, public and private incentives (such as offsets) for forests and farms can help Americans save money while leading the way to a low carbon economy.”

The various groups want to ensure that industries — including power companies — facing emissions reduction mandates could meet them in part with actions such as rainforest conservation (deforestation is a major cause of greenhouse gas emissions).

Climate legislation approved in the House last year allows widespread use of "offsets" to help companies meet their emissions requirements. The new letter signals an effort by energy companies and forest preservation advocates to keep such policies in the mix as a competing Senate climate bill takes shape.

The letter argues that this kind of policy helps American timber, meat and other interests, because illegal logging of tropical forests undercuts U.S. goods.

“By providing public and private incentives for Reducing Emissions from Deforestation and Degradation activities (REDD), we can address the 15 percent of greenhouse gas emissions that come from tropical deforestation while helping keep energy costs affordable for U.S. agriculture, forest products industries, and consumers,” states the letter, which is also backed by Duke Energy, Conservation International, the National Alliance of Forest Owners, among other signers.

“Protecting these forests will also help level the playing field for U.S. agriculture and forest products industries by reducing illegal logging and forest conversion in tropical countries, ensuring fair competition in wood, pulp, beef, leather, soybeans, and other global markets,” it adds.

Here's the whole letter:

American Bird Conservancy * American Electric Power
American Forest and Paper Association * American Forest Foundation
Avoided Deforestation Partners * Coalition for Emission Reduction Projects
Conservation Forestry * Conservation International * Dominion * Duke Energy
Environmental Defense Fund * Green Diamond Resource Company
Hardwood Federation * Maine Forest Service * Marriott International
National Alliance of Forest Owners * National Association of State Foresters
National Farmers Union * National Wildlife Federation * New Forests
NorthWestern Energy * Ohio Corn Growers Association * Pacific Forest Trust
PG&E Corporation * Pinchot Institute * Sierra Club * Society of American Foresters
The Nature Conservancy * Trust for Public Land * Union of Concerned Scientists
Wildlife Conservation Society

The Honorable John Kerry
218 Russell Senate Office Building
Washington, DC 20510

The Honorable Lindsey Graham
290 Russell Senate Office Building
Washington, DC 20510

The Honorable Joseph Lieberman
706 Hart Senate Office Building
Washington, DC 20510

March 22, 2010

Dear Senators Kerry, Graham, and Lieberman,

Thank you for all your hard work to secure action on energy and climate change.
We strongly believe that any successful comprehensive energy and climate change legislation
must include forests and farms as a significant part of the solution. By providing an
affordable means to address climate change, public and private incentives (such as offsets)
for forests and farms can help Americans save money while leading the way to a low carbon
economy.

American agriculture can play a major role in sequestering carbon and reducing greenhouse
gas emissions. Providing strong incentives to American farms and ranches can help feed
and fuel the world and do it in a way that involves American agriculture in the energy and
climate solution – while bringing increased prosperity to rural America.

American forests, including working forests and wood, already sequester about one eighth of
U.S. carbon emissions, with the potential for much more. Strong incentives for
reforestation, sustainable forest management, and forest conservation will create jobs and
safeguard America’s energy future.

Conservation, restoration, and sustainable management of tropical forests must also play a
significant role. By providing public and private incentives for Reducing Emissions from
Deforestation and Degradation activities (REDD), we can address the 15 percent of
greenhouse gas emissions that come from tropical deforestation while helping keep energy
costs affordable for U.S. agriculture, forest products industries, and consumers. Protecting
these forests will also help level the playing field for U.S. agriculture and forest products
industries by reducing illegal logging and forest conversion in tropical countries, ensuring fair
competition in wood, pulp, beef, leather, soybeans, and other global markets.

We look forward to working with you to ensure that forests, farms and ranches help deliver
an effective and affordable solution to climate change and a new energy future.

Sincerely,

American Bird Conservancy
American Electric Power
American Forest and Paper Association
American Forest Foundation
Avoided Deforestation Partners
Coalition for Emission Reduction Projects
Conservation Forestry
Conservation International
Dominion
Duke Energy
Environmental Defense Fund
Green Diamond Resource Company
Hardwood Federation
Maine Forest Service
Marriott International
National Alliance of Forest Owners
National Association of State Foresters
National Farmers Union
National Wildlife Federation
New Forests
NorthWestern Energy
Ohio Corn Growers Association
Pacific Forest Trust
PG&E Corporation
Pinchot Institute
Sierra Club
Society of American Foresters
The Nature Conservancy
Trust for Public Land
Union of Concerned Scientists
Wildlife Conservation Society

CC: Senator Harry Reid
Senator Debbie Stabenow
Senator Maria Cantwell
Senator Susan Collins
Senator Michael Bennet
Senator Jeanne Shaheen

Portland based Ecotrust unveils carbon credits from Olympic forest

By Scott Learn, The Oregonian

March 18, 2010, 6:30PM

Courtesy of EcotrustEcotrust’s 3,276-acre Sooes property in the Olympic Peninsula had been managed with clear cuts and replantings, leading to trees of similar size and age before the Portland nonprofit bought it in 2005. Grant Munro, a former Ecotrust consultant, surveys trees on the property shortly after the purchase.A for-profit subsidiary of Portland-based Ecotrust has signed its first deal to sell carbon credits from forest land it owns, putting 3,276 acres on Washington's Olympic Peninsula into the market for credits designed to offset business and government greenhouse gas emissions.

The deal, to be announced today, is a milestone in Ecotrust Forest Management's long-term plan to purchase hundreds of thousands of formerly clear-cut acres from Alaska through Northern California using revenue from carbon credits and timber sales.

Ecotrust aims to improve habitat in its forests, which total 13,000 acres now, and increase carbon storage to combat climate change. Carbon-saving steps include logging less, allowing trees to grow older before cutting and expanding logging-free buffers around streams and on steep slopes.

It also plans to maintain steady wood supplies to local mills through "patch cuts" and thinning. Jobs on its forest lands should eventually double the work created by industrial-style clear-cuts, said Bettina von Hagen, CEO of the forest management group.

Northwest forests "are a tremendous and unique carbon store" said von Hagen, a former banker. "We also believe very strongly that the Pacific Northwest is a great place to grow trees, and that wood is a great material for housing relative to other building materials like concrete or steel."

The Eco Products Fund, a private-equity group managed by Equator LLC and New Forests, will buy the credits from the Olympic Peninsula land, which EcoTrust purchased in 2005 from bankrupt Crown Pacific's lenders. Eco Products will sell the credits to businesses and government agencies trying to offset the carbon emissions generated by their operations.

Today, that market is voluntary, driven by buyers trying to burnish a green image and by utilities and factories looking to stockpile high-quality credits in anticipation of possible federal and regional caps on carbon emissions.

Critics of carbon credits question whether they're truly adding to global carbon stores or merely giving polluters an easy alternative to cutting emissions. But if carbon emissions are regulated, big emitters from coal plants to paper mills would likely be allowed to offset a portion of their emissions by buying credits.

The going rate for credits under Europe's "cap-and-trade" carbon regulation ranges from $20 to $30 per metric ton of carbon dioxide equivalent, von Hagen said. In the voluntary U.S. market, prices generally range from $5 to $12.

Von Hagen said she can't disclose the contract price Ecotrust is getting for the credits. But the deal is expected to generate hundreds of thousand of credits over 100 years, she said.

In typical commercial logging, trees are logged every 40 years and lands replanted, typically with Douglas fir or Western hemlock. Ecotrust varies the ages and types of trees in its forests.


--Scott Learn

Investor groups call for more transparency from oil & gas sector

London, 18 March: Oil and gas companies need to provide investors with better information on how they are managing climate change risks, according to three leading institutional investor groups. “Information provided by most companies remains inadequate to fully gauge the exposure of companies to evolving climate change-related pressures,” according to the Global Climate Disclosure Framework for Oil & Gas Companies, from the Institutional Investors Group on Climate Change (IIGCC), Ceres and the Investor Group on Climate Change (IGCC). The framework sets out exactly what information companies should be disclosing. “Investors need to know how new regulations are likely to impact oil and gas companies through the impact on their own operations but also through changing demand for their end-products,” said Eric Borremans, vice-chairman of the IIGCC and head of sustainability investments at BNP Paribas Investment Partners. “We therefore look for greater transparency from these companies on how they are managing the shift away from fossil fuels to less carbon-intensive forms of energy.” The disclosure standards call for oil and gas companies to disclose: The financial implications of climate change policy; Targets for reducing greenhouse gas emissions; Greenhouse gas emissions data by value chain stage; Production, reserves and carbon intensity of production by hydrocarbon type; The financial contribution of renewable and clean energy technologies; and The value of net asset exposure to extreme weather events. The European IIGCC represents investors managing €4 trillion ($5.4 trillion) in assets, Ceres, based in the US, represents $8 trillion of investments, while the Australasian IGCC represents A$500 billion ($460 billion). The framework is the third from these three groups, following one for the electric utilities industry and one for the automotive sector.

Updated 18 March 2010

USDA Opens Office of Environmental Markets (OEM)

Agriculture Secretary Tom Vilsack, right, today announced new details about the functions and objectives of USDA's Office of Environmental Markets (OEM). OEM, now part of USDA's Natural Resources and Environment mission area, will work to carry out USDA's climate and rural revitalization goals by supporting the development of emerging markets for carbon, water quality, wetlands and biodiversity.

Environmental markets leverage private investments that result in cleaner air, improved water quality, restored wetlands, and enhanced wildlife habitat. These markets have the potential to become a new economic driver for rural America, exactly what we need to support a bold, creative future for America's farmers, ranchers and rural communities.

The 2008 Farm Bill's Conservation Title directs the Secretary to facilitate the development of environmental markets and ensure the participation of America's farmers, ranchers, and forest landowners. As set forth by Congress in the Farm Bill, OEM will work across government and in consultation with experts and stakeholders to build a market-based system for quantifying, registering, and verifying environmental benefits produced by land management activities.

In addition to OEM, USDA oversees the USDA Forest Service and the Natural Resources Conservation Service. (USDA)

SECRETARY VILSACK ANNOUNCES DETAILS AND OBJECTIVES OF USDA’S OFFICE OF ENVIRONMENTAL MARKETS

WASHINGTON, March 10, 2010--Agriculture Secretary Tom Vilsack today announced new details about the functions and objectives of USDA’s Office of Environmental Markets (OEM). OEM, now part of USDA’s Natural Resources and Environment mission area, will work to carry out USDA’s climate and rural revitalization goals by supporting the development of emerging markets for carbon, water quality, wetlands and biodiversity.

“Environmental markets leverage private investments that result in cleaner air, improved water quality, restored wetlands, and enhanced wildlife habitat,” said Vilsack. “These markets have the potential to become a new economic driver for rural America, exactly what we need to support a bold, creative future for America’s farmers, ranchers and rural communities.”

The 2008 Farm Bill’s Conservation Title directs the Secretary to facilitate the development of environmental markets and ensure the participation of America’s farmers, ranchers, and forest landowners. As set forth by Congress in the Farm Bill, OEM will work across government and in consultation with experts and stakeholders to build a market-based system for quantifying, registering, and verifying environmental benefits produced by land management activities.

“Over the past several years, USDA has seen great advances in ecosystem services research and market potential,” said Harris Sherman, Under Secretary for Natural Resources and Environment. “We will build on this innovation and coordinate across USDA and with our partners to develop these promising new markets."

In addition to OEM, USDA’s NRE mission area oversees the USDA Forest Service and the Natural Resources Conservation Service.

New Zealand leads on forest carbon

New Zealand leads on forest carbon

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Forest carbon & sustainability

Thursday, 25 February 2010

While cap-and-trade legislation stalls in the US and Australia, Copenhagen’s limited progress holds back REDD, and the inflexibilities of the Kyoto Protocol’s CDM keeps a lid on reforestation activity, New Zealand is in many ways leading the world in the use of forestry for compliance-based carbon markets. Forestry and land-use projects have largely been led by the voluntary carbon market internationally. But now a Kyoto-linked market for forest carbon offsets under New Zealand’s emissions trading scheme (NZ-ETS) is off and running, albeit at a modest pace so far.

The NZ-ETS has a significant place for forestry, which became the scheme’s first covered sector back in 2008. But the focus is not solely on domestic offsetting. Under the New Zealand government’s unique application of Kyoto rules, forest owners are taking advantage of its offer to convert domestic carbon credits, NZUs, to internationally tradable AAUs. These Assigned Amount Units are the UN carbon allowances allocated to Annex 1 developed countries and through which emissions trading is carried out at the government-to-government level under Kyoto.

AAUs are also flowing to Kiwi foresters under the Permanent Forests Sink Initiative (PFSI), a dedicated forest carbon scheme that pre-dates the NZ-ETS. Under the PFSI, land reforested after 1989 and subject to a long-term conservation covenant earns AAUs for carbon stored from 2008. Only limited harvesting is possible. Together, the ETS and PFSI make New Zealand the only place forest carbon sequestration can be turned into permanent UN carbon credits, making this a more attractive option internationally for carbon forestry investors than the UN schemes CDM and JI.

Under NZ-ETS rules, forests planted post 1989 on land cleared before that time can qualify for NZUs, and in turn AAUs. Credits are issued only on the carbon sequestered since 2008. But this still creates a sizeable potential pipeline of carbon credits if landowners and foresters decide to take advantage. According to government estimates, there are about 600,000 hectares of eligible post-1989 forest land holding up to 90 million tonnes (Mt) of potential NZU carbon up to 2012. But only around 700,000 forest-related NZUs are estimated to have been issued last year, the bulk of which were converted to AAUs. Uncertainties and risks attached for both buyers and sellers are as yet holding back the forest carbon market somewhat.

Chief among those are harvest liabilities for sellers. Practically all the ETS-eligible forest has been grown for harvest. While allowed under the NZ-ETS, cutting down trees incurs carbon liabilities and introduces significant business risks and planning questions for owners, says Richard Hayes, a director of project developer and investor EITG. NZUs have to be surrendered to cover the associated carbon losses. In cases where forests were planted between 1990 and 2008, the liability questions are significant. Credits can’t be claimed for carbon stored before 2008, but harvest liabilities extend over all the carbon, right back to planting. While liabilities can't exceed credits earned, consideration still has to be given to accruing a reserve of credits or buying NZUs on the market to cover obligations, with inevitable timing decisions around those options.

Nelson Forests is one company proceeding cautiously over realising the carbon credit benefits of its forests, lying on owned and leased land on the South Island. While registered to receive credits for the carbon stored since 2008, things get more complicated in future years when harvest liabilities arise for forests planted between 1990 and 2008 which could see liabilities cancel out credits. “We’re not going to be making any speedy decisions,” said Andrew Karalus, Nelson Forests’ forestry manager. Political uncertainty also remains an issue given the chopping and changing in government policy in recent years. Forestry interests have little confidence that things won’t change again, while the weak Copenhagen climate conference outcomes introduce further doubts over the future for the carbon market, Karalus said.

A lack of clear price signals for AAUs and NZUs also makes forest owners hesitant. As with most fledgling carbon markets, buyers and sellers have been loathe to share pricing details. The small number of forestry credit sales made since mid-2009 are thought to range between €8 and €10 per tonne - below secondary CER prices on European markets of €11 to €13.50 over that time. In the biggest of the deals, the Norwegian government bought 520,000 AAUs from South Island forestry company Ernslaw One last July, at a price believed to be around $NZ20 (€10, $US14) a tonne. City Forests, owned by Dunedin Council, this year sold 150,000 tonnes to a big emitter at a similar price. And generator Mighty River Power has made a forward purchase agreement for NZUs to flow from a 2400-hectare reforestation project on the shores of Lake Taupo on the North Island. The deal with a Maori group comes with social and environmental benefits which is believed to have seen a premium paid above the $20 price mark.

Local players are talking up the AAU market to potential government buyers and carbon traders in Europe and other Annex 1 countries. They emphasise the unique ability to access permanent Kyoto carbon credits from forestry, cheaper prices than CERs, and all underwritten by a developed-world government with robust land ownership system. Permanent Forests International (PFI) in Christchurch says most of the forest eligible for carbon credits is in the hands of small landowners. The company is aggregating their small parcels into marketable AAU pools and expects to have 50,000 tCO2 ready for sale in coming months. “There is an opportunity for overseas buyers to come in and buy Kyoto credits at lower than the prevailing international prices,” said PFI’s Ollie Belton. But that could mean the supply of forest credits available to domestic emitters in NZ-ETS may dry up. “Local emitters could see lots of NZ offset credits go offshore this year,” Belton says.

PFI estimates NZ-ETS emitters will have an NZU shortfall of around 40Mt overall across the Kyoto first commitment period to 2012, which would have to be met by either paying the fixed price, buying CERs or buying local forestry offsets. Much of this year’s supply will emerge over the next month or two as foresters register their 2009 credit claims by a March 31 deadline. But others doubt there will be much domestic demand for forest credits this year. While the settings are largely in place for the start of the of the ETS in earnest this July, market uncertainties and transition arrangements have limited NZU demand. There is little incentive yet for emitters to jump in and buy forest credits to offset emissions. Those high-emitting sectors that are covered this year – power generation, industrial processes and transport - are only liable for 50 per cent of their emissions until 2013. This, and a fixed carbon price of $NZ25 per tonne initially, makes it easier for emitters to plan their obligation with certainty and not worry too much about chasing cheaper offsets.

Emitters’ real focus is on how to best to minimise their emissions liabilities by “intelligent use of the rules” and lobbying for generous permit allocations, Hayes says. Another market observer says that at best there may be modest domestic demand this year for forest credits as emitters try to bargain prices down far enough below $25 to make offsetting worthwhile.


Ian Hamilton
Carbon Positive

Carbon Counting Project Enlists SAP, Microsoft and Accenture

| Sourced From ITBusinessedge.com |

The folks behind the Carbon Disclosure Project (CDP) have created an alliance with Accenture, SAP and Microsoft to create a new system for distributing reports containing data that outlines how much carbon is being emitted by corporations.

Under the terms of what CDP executives refer to as a consortium, CDP will be using SAP Business Objects BI OnDemand software-as-a-service hosted by Accenture to distribute analysis of carbon emissions across the globe. Microsoft’s role in the effort will consist of helping to create a neutral framework for collecting that data in a way that will allow any company to use their existing applications to participate in the project.

Right now, roughly 2,500 companies report carbon emission data to the CDP. The CDP has concentrated on recruiting large corporations, so the companies participating in the project account for about half the carbon emissions in the world. By creating a process that now only makes it easier to distribute carbon emissions data, but also verifies its accuracy, CDP is hoping to entice millions of other companies to participate in the project.

To that end, CDP has also enlisted the aid of more than 475 institutional investors with combined assets of over $55 trillion, national governments and companies such as Wal-Mart to pressure companies to cooperate with CDP. The CDP is a registered philanthropy that as a non-profit draws funds from both philanthropists and private corporations. CDP executives described the funding for this project and the business relationship between the CDP, Accenture, Microsoft and SAP as being “complex.”

SAP executives, however, did indicate that it is probable they would incorporate CDP data directly into various sustainability applications and that “carbon management” represents roughly a $10 billion business opportunity. An important subset of that opportunity will be carbon trading systems that will allow companies to buy and sell carbon credits on a global market once regulations for such a system are set up. Proponents of these systems are hoping that such a framework will be ironed out during upcoming meetings in Copenhagen that are expected to extend international environmental Kyoto accords that were originally set up in 1997.

A key underpinning of those systems would a CDP database that corporations could view as a trusted source of data on which carbon trading could be based.
According to SAP officials, the first dashboards based on the data that CDP collects should be ready by February 2010. CDP executives did stress, however, that no one IT vendor would have more access to its data than any other, but the non-profit does plan to generate revenue at some point by selling analysis of its data.

Whether you believe in global warming or not almost doesn’t seem to matter at this juncture. What we’re witnessing is nothing short of the unprecedented creation of an entire new “clean” industry that is almost entirely driven by IT. And that spells IT opportunity for everybody.

ETS will stoke inflation

BusinessWire

Last updated 12:10 11/03/2010

Fairfax Media

INLFLATION PRESSURE: The Reserve Bank has warned that the amended Emissions Trading Scheme could stoke inflation.

New Zealand’s amended Emissions Trading Scheme will stoke inflation starting next year, driving up prices of petrol and electricity, Reserve Bank Governor Alan Bollard says.

In the central bank’s first assessment of the ETS impact, it predicts the first-round impact of the policy will add 0.4 per cent to headline inflation in the year ending June 2011, as higher production costs are passed through to retail prices.

The changes are also expected to have an indirect impact, via prices of goods and services in energy-intensive industries such as transport.

ETS energy charges will be increased further in 2013, though the central bank didn’t attempt to gauge the impact, saying it is beyond its published forecast horizon.

In Bollard’s review of monetary conditions, released today, he said monetary policy won’t attempt to offset the first-round effects of the ETS.

Still, some second-round impacts of the ETS could occur, “if these relatively higher prices cause consumers and businesses to reassess their beliefs on underlying aggregate inflationary pressure, and therefore change their wage and price setting behaviours,” Bollard said.

The central bank today lifted its track for quarterly inflation, compared to its December MPS, forecasting consumer prices will rise 0.9 per cent in the second quarter from the 0.4 per cent pace it predicted in December.

Bollard cited the amended ETS and rising ACC charges for the short-term pickup.

Japan Cap-and-Trade Bill Approved by Cabinet, Heads for Diet

March 11, 2010, 7:20 PM EST

March 12 (Bloomberg) -- Japan’s Cabinet has endorsed a climate-protection draft law today that would cap industrial emissions for the first time and thrust the second-biggest economy into the $125 billion market for trading carbon credits.By Shigeru Sato and Takashi Hirokawa

A group of unspecified polluters could buy and sell permits for releasing greenhouse gases under the plan, to be submitted to the current session of parliament, Trade Minister Masayuki Naoshima told reporters in Tokyo. Some polluters will get a flat ceiling on all emissions, and others will have a limit per unit of production, he said.

Prime Minister Yukio Hatoyama set a goal for Japan to cut emissions 25 percent by 2020 and may pursue a European-style carbon trading system. Power utilities, steelmakers and seven other industry groups have said now isn’t the time to pass a law they claim will hurt Japanese business as it competes with peers in China and India who won’t face the same pollution limits.

“Industrial groups have more reason than ever to oppose emissions cap as companies struggle to stay competitive and capture bigger shares of overseas markets as local demand shrinks” because of the declining population, said Kuniyuki Nishimura, director of the global-warming division of Mitsubishi Research Institute Inc. in Tokyo, an industry think tank.

The government, which needs parliamentary approval, will complete designing the cap-and-trade program within a year from the date when the bill becomes law, Environment Minister Sakihito Ozawa said yesterday. By that time the government also will determine the start date for proposed carbon trading as well as emissions-limit levels for industries.

The draft calls for a possible carbon tax from the year starting April 2011, the construction of more nuclear reactors and the expansion of premium “feed-in” power rates to cover all renewable energy, including hydropower, solar, wind and geothermal power and generation from biofuels, Ozawa said last night.

--With assistance from Tsuyoshi Inajima and Yuji Okada in Tokyo. Editors: Alex Devine, Ang Bee Lin

Western U.S., Canada go own way on carbon trading

Thu Mar 11, 2010 7:13pm EST

trade would start Jan 1, 2012

By Peter Henderson

SAN FRANCISCO, March 11 (Reuters) - As U.S. prospects for a national climate change bill fade, five U.S. states and Canadian provinces are on track to start a cap-and-trade market for carbon dioxide in 2012, say officials who see fading federal momentum boosting regional efforts.

California, the keystone market with the eighth-largest economy in the world, New Mexico, and the Canadian provinces of Ontario, British Columbia and Quebec all plan to join the system meant to combat climate change and boost economies by creating green jobs such as for workers who build alternative energy equipment.

There is already a working U.S. cap-and-trade system in the Northeast, although the five Western partners' market would be roughly four times bigger when fully implemented.

Cap-and-trade systems put limits on pollution -- in this case, gases that suck up heat and warm the planet -- which are decreased year by year. Polluters must acquire emissions credits, which can be bought and sold. If a factory can make changes to cut pollution for less than the price of a credit, it is likely to do so, then sell unneeded credits at a profit.

Many members would prefer strong national systems, but at the moment they are not getting them.

"If things continue to stall in Washington D.C., then I think there's some renewed energy around getting the authority to do this at the state level," said California Environmental Protection Agency's Michael Gibbs.

The 11-member Western Climate Initiative had planned a bigger effort to cover most Western U.S. states and four of the 10 Canadian provinces, but Arizona says it won't join cap-and-trade, and states like Washington and Montana have failed to get necessary legislative approval so far.

The contention that green policies like cap-and-trade are good for jobs is still a source of debate. Many businesses concerned with costs are mounting an effort to reverse the plan, and Republican candidates for California governor agree.

Such a move could roil the entire system, since smaller players can't make an efficient market on their own.

CRITICAL MASS NEEDED

"The governor and many others believe that the future of New Mexico's economy is in green jobs and renewable energy and clean-tech, and so we think that cap-and-trade will only support those types of companies," said Sarah Cottrell, adviser to Democratic Governor Bill Richardson.

But the state may put conditions in its plan to make sure there is a critical mass for a robust market. "New Mexico does not want to be trading on its own," she said.

If the current five stay on track, emissions from power plants and other big stationary sources will be traded in 2012, with transportation included in 2015 to cover up to 90 percent of their greenhouse gas emissions. The market for the five would be equal in size to roughly a tenth of U.S. emissions.

"The economic bulk is going to be in it," said Paul Cartwright, senior energy analyst and adviser to the governor in Montana -- which has not received legislative approval for cap-and-trade and won't make the 2012 start.

California's Gibbs said the five states and provinces in January had said they were ready to go and accounted for some two-thirds of WCI emissions. Other states and provinces unlikely to join the first cap-and-trade round are Manitoba, Oregon, and Utah.

British Columbia already has a carbon tax that must be harmonized with the cap-and-trade system.

California has come a long way but has yet to make key decisions such as how to apportion the allowances to pollute. A panel recently recommend that all allowances be auctioned -- as opposed to giving some to power plants and other emitters -- and that most of the proceeds be given back to households.

A big key is the price of carbon. The Regional Greenhouse Gas Initiative in the northeastern United States is trading carbon at low prices around $2 per ton -- about a tenth of what prices in Europe have been at times.

A 2008 analysis estimated the western U.S. could produce a price of $24 per ton for a system with a broad scope and the use of credits for projects that soak up greenhouse gases, offsetting pollution. A revised version of the economic analysis is due soon. (Additional reporting by Allan Dowd in Vancouver; Editing by Cynthia Osterman)

Finite Carbon Signs Agreement with Lyme Timber’s Forest Fund Subsidiary for Improved Forest Management Project in Tennessee

Only the second such project with a Climate Action Reserve listing outside of California, it could generate hundreds of thousands in carbon offsets

WAYNE, Pa.--(BUSINESS WIRE)--Finite Carbon Corporation has signed an agreement with Lyme Brimstone Forest Company – a subsidiary of The Lyme Forest Fund, the forestland investment arm of The Lyme Timber Company – to develop an Improved Forest Management (IFM) project in Tennessee under the updated Climate Action Reserve (CAR) Forest Project Protocol.

The project – only the second IFM project outside of California and the first in the eastern part of the country to be listed under the new protocol – involves more than 4,300 acres of Brimstone Forest lands located in eastern Tennessee in the Cumberland Mountains near Oak Ridge. It is expected to generate several hundred thousand carbon offsets over the next 100 years.Finite Carbon, which provides landowners with a single-source, end-to-end solution to create and monetize carbon offsets, submitted the project to CAR, which listed it on March 5.

“This is a great example of how institutional timberland owners can utilize carbon markets to meet their land management objectives,” said Finite Carbon President Scott Nissenbaum, who noted that “it is especially appropriate that The Lyme Timber Company, an innovator in conservation investment, is one of the first timberland owners outside of California to list an Improved Forest Management project with CAR.”

Said Thomas Morrow, managing director of The Lyme Forest Fund L.P.: “Finite Carbon’s experienced team are fully conversant with the protocols and process for development of forest carbon assets. In working with them, we expect this project to demonstrate that generating carbon offsets is a profitable addition to our land management strategy.”

While landowners in California have been eligible to receive carbon offsets for several years, CAR only recently completed a two-year public stakeholder process that enabled other U.S. landowners to participate.

“Before joining Finite Carbon,” explained Sterling Griffin, who is the company’s vice president of project development, “I was on the verification team for the first three projects listed in California, and was a member of the CAR workgroup tasked with expanding the eligibility of the protocol and lowering participation costs for landowners.

“After many months of dedicated work by CAR and all the members of the workgroup, I believe we successfully achieved those goals and the new protocol was adopted last fall,” Griffin continued. “With its expanded scope, we expect that more forest managers will recognize the opportunity to enroll their forestlands in projects that store and sequester atmospheric carbon through sustainable forestry practices.

“It’s very rewarding now to be on this side of the equation,” he added, “being able to help landowners such as Lyme to participate in the emerging forest carbon market.”

About Finite Carbon Corporation

Forestry and finance experts established Finite Carbon in 2009 to facilitate U.S. landowners’ participation in carbon offset markets. The company, which is solely focused on forest carbon and offers the most comprehensive forest carbon project development and commercialization service in the country, provides a single-source, end-to-end solution that includes all the in-house expertise and capital needed to take a landowner from a forest carbon inventory to selling offsets. The company is headquartered in Wayne, Pa., and has offices in San Francisco, Calif.; Lebanon, Ore.; and Cherry Creek, N.Y. For more information, please visit www.finitecarbon.com

About The Lyme Timber Company LP

The Lyme Timber Company LP is a private investment company dedicated to making high-quality timberland investments for institutional investors, families and individuals. Lyme has been investing in timberland for more than 30 years and is a leader in conservation investment, specializing in the acquisition and sustainable management of large forestland tracts. It is responsible for the management of some 446,000 acres located throughout the eastern United States, including the Northeast and the Appalachian region.

Notes: Finite Carbon is a trademark of Finite Carbon Corporation. The names of other actual companies, organizations and/or products/services mentioned herein may be the trademarks of their respective owners.