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Carbon credits and trees
For us to limit practically survive climate change we will need to make sure that atmospheric carbon dioxide levels do not rise too much more than they have already. That means that we will need to change our ways so that, in particular, as far as energy use is concerned, we reduce our dependence on fossil fuels like oil and coal. But that will take time, probably too much time and that’s where growing forests come in because carbon dioxide will be extracted from the moment a new tree is planted. Reforesting as much as possible of our world land will give the human race time to think and hopefully act to save itself.
A growing tree takes in carbon dioxide, releases the oxygen and retains the carbon within its structure. The rate that carbon dioxide is extracted is pretty much proportional to how fast a tree grows while the total amount of carbon dioxide that can be stored is pretty much proportional to how large it can get. Once a forest reaches maturity it will not extract carbon dioxide any more and may even return some, particularly if it is not well maintained. This means that the income from carbon credits should be seen a way of funding the establishment of a new forest rather than a way of earning income in perpetuity.
We have been selling carbon credits for the last four years, to the point that we no longer keep any grazing stock at all. What we really sell is the ability of our forest to remove carbon from the atmosphere, so causing a “credit” of carbon. A single carbon credit describes the removal of 1 tonne of carbon dioxide.
We have about 1800 carbon credits for sale every year because our 600Ha native forest removes an average of 3 tonnes of carbon dioxide/Ha/yr. Our particular type of forest, if left to grow to maturity, has the potential to extract a total of about 600 tonnes of carbon dioxide per hectare.
| Price $tonne CO2 |
Costs $tonne CO2 |
Sequestration tonnes/Ha/yr |
Return/Ha/yr $ |
15 |
3 |
3 |
36 |
20 |
3 |
3 |
54 |
30 |
3 |
3 |
81 |
40 |
3 |
3 |
101 |
50 |
3 |
3 |
141 |
Possible return from carbon sequestration
So far our sales have been made to concerned individuals, mainly from overseas, or companies or organisations who usually wish to be both environmentally responsible and see an advantage in being able to advertise that fact within their marketing strategies. One example is one of our local wine producers the NZ Wine Company (Grove Mill). They wished to operate their business so as to not make any impact on climate change. They wished to be “carbon zero.” After much analysis and change to minimise energy usage they still had a small residual of carbon dioxide that they were unable to contain with current methods. They decided to remove that carbon dioxide by purchasing a balancing number of carbon credits. They wanted the carbon credits to be sourced from a forest like ours.
Kyoto, the main international agreement for doing something about climate change will come into effect in 2008 and this should have a major effect on the carbon credit market. If Kyoto carbon credits become the major credit traded then this business may not so much be about the simple selling of the service of absorbing carbon dioxide but the selling of the service of absorbing carbon dioxide to Kyoto standards. In the initial stages of the treaty these standards are likely to be quite restrictive. For example, at this stage, Kyoto contemplates only certifying carbon dioxide from forests established since 1990.
Trading of Kyoto carbon credits necessarily involves the added complication of government involvement because under Kyoto, business is not between individuals but between Governments. If an individual landowner wishes to trade Kyoto compliant carbon credits they will be required to agree to a formal contractual relationship with Government. This is reasonable in principle because the general public, through the Government, is in the end ultimately responsible for Kyoto compliant carbon credits. For example if a landowner was to sell Kyoto carbon credits to the Japanese government and didn’t perform in some way (chopped the trees down and went dairying) the Japanese would seek redress from the Government not the landowner. It is also entirely reasonable that the agreement be registered against a land title as the requirement to store carbon means that the obligations will effect future owners of a particular property.
Notwithstanding all this whether it is wise for an individual landowner to actually enter into such an agreement will depend on the final detail of the Government/landowner agreement. We are advised that details will be out for consultation early 2007.
As does a pastoral farmer use an agent for selling the sheep so do we use an agent for selling our carbon credits. Our agent Landcare Research (www.ebex21.co.nz) also audits and certifies our forest so that it can guarantee, say, an overseas buyer that the carbon credits that they have purchased are backed in reality. They also provide a system of insurance so that the grower can be protected from accidental misfortunes such as fire. Our relationship is the subject of a formal contract that also binds future owners of the land.
The main work involved in our type of forest is to keep
it healthy by controlling the number of introduced predators. We do not
have any grazing stock any more but if we had we would have to fence them
in so that they couldn’t eat the young seedlings that are developing
everywhere.
We have chosen to reforest with native species even though all species
will earn carbon credits and most exotics will do it much faster. One
reason that we have chosen to do that is because native forest can be
established quite cheaply through the process of natural regeneration.
To us though what is most important is the overall value of the opportunities
that our new forest might provide over time. We feel that it is likely
that there will always be more value in the inherent uniqueness of our
New Zealand forest eco-system than in one that has been imported from
overseas. We do not think of our developing forest as just a mass of wood,
rather we think of it as an eco-system of which we are a part, an eco-system
that will shelter us and feed us for eternity if we are prepared to live
with it in harmony. For that, it seems sensible to use an eco-system that
is supposed to be there rather than one that is not.
The future outlook for selling carbon credits should mainly depend on whether people wish to save their world from catastrophic climate change and how they go about it. Clearly if the problem of climate change should somehow go away there would be little demand for landowners to remove carbon dioxide from the atmosphere. One way it could go away would be if everyone were immediately to lay up their cars and aeroplanes and take to their bicycles. More likely, it looks like the problem will be with us for a long time to come.
A new era for hill country farmers has arrived where, rather ironically, landowners can be paid to restore the forests that once stood in place of the grass. We now have a way of funding forest establishment that should free us from the curse of being tied to short rotation production forestry because we can’t afford to wait.
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