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American Forest Foundation Forest Climate Opportunities for Family Forest Owners Robert S. Simpson

American Forest Foundation Forest Climate Opportunities for Family Forest Owners Robert S. Simpson Senior Vice President Center for Family Forests

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American Forest Foundation Forest Climate Opportunities for Family Forest Owners Robert S. Simpson

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  1. American Forest Foundation Forest Climate Opportunities for Family Forest Owners Robert S. Simpson Senior Vice President Center for Family Forests October 17, 2008

  2. How can family forest owners help address climate change? • Voluntary markets • Cap and Trade Legislation • Mitigation under the Cap • Programmatic Opportunities Outside the Cap

  3. AFF’s Strategy for Family Forests • Boots on the ground • Loafers on the Hill

  4. AFF Boots on the Ground • Three Pilot Projects for Carbon Aggregation • New York • Oregon • Louisiana, Mississippi, Arkansas • Goal: To establish a new opportunity for Tree Farmers to participate in emerging carbon markets for: • New income opportunities for family forests • Added incentives for long-term sustainable management • To help keep forests in forest management

  5. Role of Aggregators • Maintain a database of all projects at the stand level that reflects management activities, growth and yield, and other forest details. • Arrange for verification of project records and lands. • Manage the Reserve Accounts for Projects • Obtain CCX-required reports from landowners; submit summary reports to CCX. • Assure CCX that all projects continue to meet CCX rules. • Trade offset pools on the CCX trading floor; pay net receipts to project owners.

  6. CCX - Sustainable Forest Management • Forests must be certified through American Tree Farm System ATFS, SFI, PEFC or FSC. • Earn credits on the basis of verified annual increases in above- and below-ground portions of live trees. • Baseline is December 31 of the year prior to project initiation, based on current forest inventory. • Model can be used to project growth from inventory year. Model results are discounted 20%. No discount for projects with annual inventory.

  7. CCX - Sustainable Forest Management • Projects must place 20% in Reserve Pool. • If subsequent inventory reveals a decrease in forest carbon stock, project must provide additional credits to cover the loss, or use their Reserve Account in the Reserve Pool. • In the event of catastrophic loss, owners liability is limited to the credits in the Reserve Pool. • If forest land is sold or purchased, the allowable carbon stocks will be adjusted to the new land area. • Landowner agrees to maintain forest certification for 15 years and keep forest stocks in the project beyond the contract period.

  8. ATFS Certified Forest Example • 110 Acres – managed plantation • Actual inventory and growth model (Oregon) • Started CCX Accounting in 2008 • Plans a 9 acre second thinning in 2010, all sawtimber • Plans a 40 acre first thinning in 2014, half pulp, half sawtimber

  9. Project Accounting – 110 Ac.

  10. Project Accounting – 110 Ac.

  11. Optional Plan – Split the Removal

  12. What Happened? • The Carbon Credit Sales are highest in the years when there is no timber harvest. • Harvested Wood Products Credits help smooth out the accounting. • This Tree Farm got about 3.5 tons/acre CO2 in the high years. • If carbon prices are high enough, the harvest plan might be changed to keep removals below predicted growth.

  13. The Summary • Carbon Credits can provide an additional source of income for Family Forest Owners. • Transactions costs are a concern. Extra expenses and contractual obligations are involved. It is not free money. • Professional foresters will help most forest owners with inventories, and provide model results to predict yields. New opportunity for consultants. • Working through an aggregator helps Family Forest owners sell carbon credits.

  14. AFF on the Hill • FCWG meeting with Senate Ag Committee and Ag LAs as I speak. • How Forest Carbon Offsets Can Work Under a Cap • Beyond Offsets • Programmatic Approaches • Reducing Transaction Costs • Adaptation Challenges

  15. Questions? Thank You! bsimpson@forestfoundation.org 001-202-463-2458 www.treefarmsystem.org

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