Green Horizons

Editors’ Note: Since our first article on carbon credits, we have come to realize that this is a rapidly evolving and ever-changing opportunity for forestland owners. While we realize that some question the ecological value of carbon trading, our intent is one of providing the latest information so our readers can make informed decisions. Starting with this issue of GH, the “Carbon Corner” will become a regular feature. We welcome specific questions from landowners wishing to learn more about becoming players in this emerging market.

The significant concern over global warming has sparked the development of many initiatives. Across the country, the federal government, state or local governments, NGOs, not-for-profit organizations and private enterprises have worked to develop various greenhouse gas registries, cap and trade programs and other market mechanisms. Without over-arching requirements such as the UN Kyoto protocol or federal regulation, most of these initiatives have been developed independently of one another, resulting in differing ideologies, policies and program requirements.

Some of the more prevalent of these initiatives include the U.S. DOE 1605b program (registry), the California Climate Action Registry (CCAR), the Regional Greenhouse Gas Initiative (RGGI) and the Chicago Climate Exchange (CCX).

Registries provide entities with the means by which to calculate, track and report changes in greenhouse gas emissions or increases in carbon storage over time. These bodies establish the technical accounting rules that standardize greenhouse gas and carbon accounting and ensure consistency in all participant accounting systems.

Carbon markets are a combination of the rules set from a registry and the platform on which carbon offset credits (usually metric tons of CO2 equivalent or “MtCO2e”) are traded, or marketed to consumers.

The Chicago Climate Exchange (CCX), www.chicagoclimatex.com, is the only open carbon credit market in North America and is currently trading emission offsets that can be gained through verified net increases in forest carbon stocks.

At the present time, only forestlands that have been planted since 1990 or reforested areas through natural regeneration qualify. But, efforts are underway to include natural forests that are being managed in a sustainable manner.

Individual forestland owners gain access to the CCX through what are called carbon aggregators. These carbon aggregators are brokers who take care of enrolling your forestland in the program, and ensure that your wooded acres conform to market standards and that you accumulate (aggregate) enough acres to trade your stored carbon in large trading blocks. The aggregator charges a service fee (usually 10 percent, but this varies among aggregators) from the annual sale proceeds to cover administrative expenses associated with managing the program.

There are currently 55 registered aggregators on the CCX and more are added each day. The entire process of finding and signing up forest carbon stocks has taken on a “land rush” mentality.

If you are looking for an aggregator, or an aggregator contacts you, first and foremost make sure they are registered with the CCX. If they are not, STOP! Do not pass “Go” because you could be entering into a legally-binding agreement with someone who has no access to the only operating carbon exchange in the U.S. This could change over time if the U.S. signs the Kyoto protocol and international carbon exchanges start operating in this country.

Of the 55 U.S. carbon aggregators, we are aware of five that are working with forestland owners either here in Missouri or nearby Midwestern states. The Delta Institute, www.p2e2center.org, is working with public and private forestland owners in Illinois and Michigan. The Iowa Farm Bureau, www.iowafarmbureau.com/carbon, is naturally helping landowners in Iowa. The North Dakota Farmers Union, http://carboncredit.ndfu.org/, is acting as the fiscal agent for sister farmer unions across the country. Forecon, www.foreconinc.com/ecomarket, has offices in New York and Michigan. Lastly, there is Tatanka Resources LLC here in Missouri. Tatanka has just recently been registered as an aggregator and is just beginning operations in the state.

Tatanka Resources has invested a significant amount of time and resources to develop an enhanced site-specific measurement system that allows forest landowners to enroll credits for the actual carbon stored for a given forest tract. This means that each landowner will earn different amounts of credits per year dependent upon the specific growth and development of that specific forest. This new measurement system is much more rigorous than the more generic tables developed by the CCX.

What happened to Dogwood Carbon?

The answer is nothing. They are still in operation (www.dogwoodcarbon.com). As we said in our opening Editors’ Note, the carbon market is an evolving beast. Since its inception, Dogwood Carbon has found it easier to partner with Tatanka Resources LLC as their aggregator on the CCX.

With both Dogwood Carbon and Tatanka Resources being Missouri-based enterprises, we have asked them to help us keep our GH readers informed and “at-the-ready” to answer specific questions. So, stay tuned for updates as they evolve and answers to your questions right here in future issues of Green Horizons.

The opportunity for harnessing market-based incentives for sustainable forestry is here.