February 20, 2014 by CaliforniaCarbon.info
CaliforniaCarbon.info, February 20, 2014: Non-profit Sempervirens Fund has been awarded a grant of $100,000 by the California Coastal Conservancy to study the possibility of setting up a ‘carbon bank’ for landowners in the Santa Cruz Mountains, which would both help sequester carbon and generate credits that can be sold in California’s cap and trade offset market.
Under such a scheme, existing landowners would have to convert existing conservation deals into ‘projects’ that conform to the requirements of the Air Resources Board’s (ARB’s) compliance offset program. Forestry protocol offset projects need to have a 100-year husbandry plan in place, and are subject to rigorous measuring, reporting, and verification standards. In any verification exercise for a forestry project, the services of a registered forester have to be engaged, while the actual verification process has been compared by many in the market to ‘essentially doing an entire forest inventory’. It is expected that an analysis of cost and financial viability will be undertaken as part of the Sempervirens study.
The Santa Cruz mountains are home to redwood trees, which are hardier than other breeds. Slower to decompose, they are known to live and grow for over 2,000 years, making them valuable assets in the drive to keep as much carbon out of the atmosphere as possible. California’s offset program awards one offset credit for each ton of carbon that is sequestered in a forest-based project, with golden offsets (which do not carry the risk of reversal for the buyer) trading at $10.03 according to the broker prices received by CaliforniaCarbon.info.
The intricacy of the Sempervirens plan is that, through aggregating parcels of land owned by various parties and operating them as a single project, the eventual operation will be able to achieve the economies of scale regularly associated with larger forestry projects. Aside from decreasing unit costs at implementation and operation level, the project will also benefit from lower unit costs of verification, which could be performed up to a total of three times during the crediting process – once for the project to be listed, once at the desk review stage before credits are issued, and once more to bring the callback period down from eight years to three. Both end-users as well as commodity insurance providers have indicated the inclination to work exclusively with the three-year offset credit.
The largest credited project in the ARB program thus far is the Willits Woods forestry project, which is operated on over 18,000 acres of timberland. It has earned some 1,128,277 credits thus far, over a fifth of the 5,373,304 that have been issued to all projects. Forestry is the second-most productive project type so far, contributing 30.7% of the total credit volume. Its three credited projects have the highest average credit yield – 549,955 as compared to 173,356 for Ozone Depleting Substances (ODS). Forestry projects are believed to be the most potentially voluminous of the four types on offer, but the time-consuming and cost-intensive nature of operating them has meant that large economies of scale are often needed to make a project viable at present credit prices.
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