The Downeast Lakes Land Trust has registered 19,000 acres near Grand Lake Stream, Maine, for the California cap-and-trade program. Photo courtesy of Downeast Lakes Land Trust, Assisted by Lighthawk.
Well-managed forestland provides a host of benefits to society, from flood mitigation to wildlife habitat to carbon sequestration, and there’s long been talk about finding ways to compensate landowners whose forests provide these benefits. Recent developments in California might be bringing this idea closer to reality.
Since January 1, California has operated the nation’s first cap-and-trade scheme for limiting carbon emissions. Under the scheme, which applies to a broad spectrum of California’s manufacturing economy, from cement factories to oil refineries to power plants, companies are required to either reduce their carbon emissions over time (comply with the “cap”) or else purchase pollution credits from other companies that have successfully done so (make use of the “trade”). The state plans to gradually reduce the total number of pollution credits available, with the goal of lowering California’s carbon emissions to 1990 levels by 2020 and to 80 percent below that by 2050.
Of particular relevance to us in the Northeast is a provision that allows companies to mitigate up to eight percent of their emissions by purchasing carbon offsets from anywhere in the country. A power plant near Los Angeles, for example, could purchase a conservation easement on forestland in New Hampshire with the provision that the land be managed in such a way that it will soak up and store enough carbon to offset the emissions in Los Angeles.
One such offset project is already in the works: the Downeast Lakes Land Trust in Grand Lake Stream, Maine, has certified that 19,000 of the 34,000 acres in its Farm Cove Community Forest are eligible to be used as offsets under the California program. If a sale for the carbon rights can be arranged with a California company, the group plans to use the proceeds (estimated to be in the neighborhood of $2 million) to purchase and conserve additional lands.
This is exactly what many people have long envisioned – a program where landowners are recognized and compensated for good forest management and where that compensation is then plowed back into more good forest management. But the California program is still in its infancy, and it’s far from clear that this program will succeed where previous efforts have failed. The Downeast Lakes project, should it go through, might be more of a special case than a harbinger of things to come.
Laury Saligman co-founded Conservation Collaboratives LLC in 2006, with the goal of purchasing and conserving forestland using carbon offsets, among other funding sources. At present, Conservation Collaboratives owns a 1,000-acre parcel in Vermont, and Saligman, along with the Northern Forest Center in Concord, New Hampshire, started the Northern Forest Carbon & Ecosystem Services Network.
“We were hoping to generate enough revenue through the carbon offset program to purchase a permanent easement for the property, but so far it just hasn’t worked out,” said Saligman. “A big problem is long-term uncertainty not encouraging. The Chicago Climate Exchange collapsed in 2010 after it became clear that the federal government had no immediate plans to regulate carbon emission, and the Northeast’s Regional Greenhouse Gas Initiative has defined offset projects narrowly enough (they only apply to projects that turn nonforests into forests) that no landowner has yet been able to benefit. All may not be lost. As the California program gains traction over the coming year, the longer-term price of carbon offsets will become clearer.
Meanwhile, the best approach for landowners, especially those with smaller holdings, might be to join with other landowners to aggregate their carbon offsets into larger projects, whose scale would justify the expense. Similar programs already allow landowners to work together to receive green certification from the Forest Stewardship Council, for example.
“Ultimately, aggregation is going to be essential,” Saligman said. “There’s no easy way this can work for the majority of landowners, otherwise. California has not yet adopted aggregation, but it’s not that they won’t in the future.”
Saligman concluded on an optimistic note. “When you look at the statistics, Maine, New Hampshire, and Vermont are the most forested states in the nation, and most of our land is privately held. Our forests have a huge potential for helping to address climate change. Maybe it’s not going to be through the new California market, but maybe California will spur something new to happen here.”
In Dollars and Cents
Let’s say the carbon-offset market takes off in the next few years and that small-time landowners are able to get in on the deal by aggregating their lands with those of their neighbors. How much money are we talking?
On average, an acre of middle-aged, well-stocked woodland in the Northeast contains about 90 metric tons of carbon dioxide equivalent in its trees and is capable of soaking up 1 additional metric ton per year. Right now, California carbon credits are selling for about $10 per metric ton, though they are forecasted to rise to as much as $30 per ton as the cap gets lowered. Let’s use $20 per ton as an average, and let’s say you own 100 acres.
If your 100 acres is in imminent danger of development, you can claim that the 900 metric tons (90 tons per acre x 100 acres) of carbon that your land is currently storing is going to be released into the atmosphere when the bulldozers arrive.
Put a permanent conservation easement on your land and agree to good forestry practices, and you’ll receive a one-time payment of $18,000 for your efforts (900 tons x $20 per ton.) Figure that the aggregators and third-party verifiers will take 20 percent or so, leaving you at around $15K.
If your land is in no danger of development but you want to commit to managing your forest primarily for carbon storage (which is to say, working with a certified forester on a plan for maximizing forest growth), you can make the case that your forest management will allow you to store 2 metric tons of carbon dioxide per year instead of the baseline 1 ton. You’ll receive credit for 100 tons of stored CO2 per year (2 tons stored less the 1 ton baseline x 100 acres), which at $20 per ton will earn you a payment of $2,000 per year (or more like $1,600 after everyone else gets paid.)
What does all this carbon dioxide add up to? A car driven 12,000 miles per year, the national average, will emit about 5 metric tons of carbon dioxide, so the improved forestry practices on your 100 acres will offset the equivalent of 20 average cars driving for a year. And if you protect your land from development and keep the forest intact? You’ve saved the equivalent of 200 cars driving for that year.
The fine print: actual results will vary. These numbers are generalized to cover the region. If you own very high-quality woodland that’s both well-stocked with big trees and in danger of being developed for housing, you might beat these numbers handily. If, on the other hand, you own cut-over woodland on poor soils located far from the nearest proposed subdivision, these numbers will be the stuff of fantasy. As will all of these numbers if the carbon-offset market doesn’t develop.