A forestry carbon credits contract based on new protocols issued by the Chicago Climate Exchange (CCX) now is available to owners of sustainably managed “working” forests through AgraGate Climate Credits Corp.
AgraGate, a subsidiary of the Iowa Farm Bureau Federation, has been active in collecting carbon credits from owners of afforestation projects, or forestland planted since January 1, 1990. Afforestation projects allow no thinning or harvesting during the contract term.
“Our new Exchange Forestry Offset (XFO) contract combines both afforestation and sustainably managed provisions in a single document. The sustainably managed section is a first for private forestry owners,” notes Dave Krog, AgraGate CEO. “It establishes the conditions for forestry management practices such as thinning and harvesting that are compatible with carbon sequestration”.
Forestry Key Component In Carbon Offsets
The CCX launched trading in December 2003 in a program allowing companies to purchase carbon credits to offset a portion of their greenhouse gas emissions. Research shows that trees are very good at taking atmospheric carbon and converting it to a sequestered, stable form within the tree. AgraGate pools credits to sell on the CCX and then returns proceeds to the landowner less a service fee.
Krog explained that the new XFO contract covers a 15-year period — from 2008 through 2022 — with an option to earn carbon credits back to 2003. He said participants could initially enroll under afforestation provisions and later transition to the sustainably managed contract.
The sustainably managed provisions are based on the net change in carbon stocks created during the contract term, with the net changed defined by the CCX as the increases in carbon stocks from tree growth, minus the decrease in stocks caused by harvest, pest, fire or adverse weather events.
Landowners enrolling under the managed forest provisions will be required to have a baseline inventory established for their enrolled timber. Krog encourages landowners to download a sample forestry contract from the AgraGate Web site and to contact their forester to assist with establishing a baseline inventory. Landowners in Texas, Louisiana and Mississippi should contact one of AgraGate's associate aggregators; their contact information also is on the AgraGate Web site.
“For afforestation projects, credits earned can be calculated using either the CCX carbon accumulation tables or through direct measurement using a growth and yield model,” Krog explains. “For sustainably managed projects only the direct measurement with a growth and yield model can be used.”
A CCX-approved program must certify sustainable management processes. In the United States, the two qualifying programs are the Sustainable Forestry Initiative run by Sustainable Forestry, Inc., and the American Tree Farm System Group Certification program offered by the American Forest Foundation.
Payment Based on Carbon Sequestration
Krog says contract holders will be paid based on their projected net credit contribution to their respective forestry pool over the life of the contract. That contribution is determined by growth and yield model annual carbon sequestration projections, the landowner's estimate of thinning and harvesting during the life of the contract, and the projected disposition of harvest timber.
“Since this program is so new, we expect that true-ups will be needed at the end of contract and possibly at intermediate stages, too,” Krog says.
At the end of February a ton of carbon dioxide was selling for about $4.50 on the CCX, Krog notes.
Krog says that interested forest landowners can contact AgraGate for more information about the program. “We recommend that interested parties team up with a consulting forester who can help with paperwork and conduct the required measurement activities,” he says.
AgraGate is the leading aggregator of carbon credits from agriculture. On behalf of farmers, ranchers and private forest owners, the company has marketed carbon credits from projects in 24 states on the CCX. For more information, call AgraGate at 866-633-6758 or visit the Web site, www.agragate.com.
