Trading in forest-generated carbon credits—a potential new market for tree farmers—is poised to begin in the U.S. in advance of likely passage in the next few years of mandatory controls on greenhouse gas emissions.
F&W Forestry Services, Inc., of Albany, Ga., one of the nation’s oldest and largest forest consulting and management firms, announced it has been approved as a “carbon offset aggregator” by the Chicago Climate Exchange (CXX), clearing the way to begin trading on behalf of forestland owners. CXX began trading carbon credits in 2003 but until now mostly from non-forest sources.
F&W said it is working with several forestland clients to register their “managed forest projects” on the CXX as a prerequisite to marketing carbon credits from trees. As an aggregator, F&W will facilitate trading activities on behalf of forest landowners and bundle various sized projects into carbon marketing units.
The carbon credit market is now entirely voluntary in the United States, with buyers seeking credits to “offset” carbon dioxide emissions for a variety of reasons. Legislation with substantial bi-partisan backing is under consideration in Congress that would establish mandatory industrial emission limits implemented through a “cap-and-trade” system of carbon credits.
Under this system, “caps” are established for individual CO2 emitters (such as a coal burning power plant). If the emitter operates below its cap, it could sell its unneeded “credits” to another emitter that exceeds its cap, therefore establishing “trading” in carbon credits. Most “cap-and-trade” proposals would open the way for forestry participation.
Some forestland owners aren’t waiting for the government to act and are gearing up now to sell carbon credits on the voluntary market, says John F. Godbee, Jr., F&W’s director of environmental services who heads up the firm’s carbon capture activities.
Forests naturally capture and store atmospheric carbon through normal tree growth. Tree carbon can be quantified through forest management techniques and marketed in the form of carbon dioxide equivalents measured in tons on the CXX and other markets.
The progress and prospects for marketing forest-based carbon credits—presently and under the anticipated “cap-and-trade” law—are discussed in depth by Godbee in a question-and-answer interview in F&W’s spring newsletter (F&W Forestry Report). Godbee is based in F&W’s office at Statesboro, Ga.
“Any move from a purely voluntary to mandatory system—as certainly would occur under a cap-and-trade regime—would in my opinion significantly increase the emphasis on carbon sequestration from managed forests and result in dramatically higher market values for carbon credits,” Godbee said.
In mid-March, when the interview was conducted, carbon credits were trading on the Chicago Climate Exchange at about $5.30 per ton. In Europe, which operates under a mandatory cap-and-trade system, credits were trading in the same time period at $35.47 (U.S.)
Under the present voluntary market in the U.S. and existing conditions, Godbee estimated that a well-managed stand of southern loblolly pine should produce a net annual income of $10 to $15 per acre.
“Now this is under the present free-market situation,” he said. “If demand is driven up through a future government-mandated system of carbon offsets, such as a cap-and-trade program, the income would in my opinion increase significantly.”
About F&W
F&W Forestry Services, Inc., of Albany, Ga., is one of the nation’s oldest and largest forest consulting and management firms. Established in 1962, F&W operates 14 offices in 10 states comprising the Southern pine belt and the central hardwood region of the U.S. It also manages private forestlands in South America with offices in Uruguay and Brazil.
Media Contact:
Betsy Bates, 770.451.0370, bbates@batesassociates.net
