Carbon Incentives for Non-industrial Forest Owners. Brian Kittler Director, PIC Western Regional Office

Transcription

1 Carbon Incentives for Non-industrial Forest Owners Brian Kittler Director, PIC Western Regional Office 1

2 Agenda 1. Background and context on forest carbon. 2. Opportunities and barriers for NIPF owners. 3. Pinchot Institute s work in this area. 2

3 Background and Context Forest Carbon in the US and PNW 3

4 Forest carbon sequestration in the US Forests store equivalent of 10% of US emission [173 million metric tons/year]. Strategies for optimizing C storage varies by each color coded area. Source: National Climate Assessment; Running et al.,2004.

5 Pacific coast C sequestration 18% of national sequestration. Over the last 25 years 13 million metric tons/yr sequestered. Deforestation = loss of 5 million metric tons/yr Public lands = 1.1 million Ha of non-stocked forestlands. Source: Wear and Coulston

6 Sink to source? Stocks have increased since 1940 but only 1/3 of our national carbon debt is paid-off. The US forest carbon sink is expected to decline significantly in coming decades. By 2050, emissions from US forests could be like adding 86, 600 MW coal plants. Loss of the US forest carbon sink may counteract about 1/3 of emission reductions being proposed by the US at the COP 21 in Paris. Why? The US is not immune to deforestation and forest degradation. Source: Ryan et al. 2010; 2010 RPA Assessment; Wear and Coulston 2015.

7 Deforestation Forest area has been stable for 100 years despite population growth. Forest area peaks around By 2060, development grows, 41 77%. Forested areas will be most impacted by this expansion, with losses ranging from 16 to 34 million acres. Record high ag. commodity prices in recent years, observed conversion. Source: Ryan et al. 2010; 2010 RPA Assessment; Wear and Coulston 2015.

8 Degradation Over last century iventory increased, peak sometime between 2020 and ~9 million metric tons of additional carbon being added unstable pools. Decreased C stocks related to increased disturbance. From , emissions from fires in the Western US cancelled out ~12% of C sequestered, 27 43% by Equivalent of 4% of total US GHG emission stored in wood products, but significant emissions from removals. Significant legacy of high-graded and understocked forests. Source: USDA Forest Service; USGS.

9 Forest C loss and NIPF land +10 million own ~49% of US forests. Varying levels of knowledge/engagement. ~70%, household income <$100,000/yr. 50%, owned by people > 65 years. Largest intergenerational land transfer the US has experienced. 9

10 NIPF lands ring urban areas in PNW. In OR, ~2 million acres of NIPF land is located within a mile of UGB. 5% forest loss since the 1970s. Motivated policy makers in both states and a clear need to address forest loss and management. In WA, 1.5 million acres lost since 1970s. 1.8 million acres projected loss for Western WA by mid-century. Losing this much stored carbon would be equivalent to increasing the current annual emissions of WA by 4x.

11 Opportunities and Barriers Forest Carbon Incentives 11

12 Opportunities No strong examples of family forest lands involved in aggregation. ~50% are at least somewhat interested (Thompson and Hansen 2013). This is consistent with PIC surveys in OR, WA, NC, PA. Additional income from carbon credits can help landowners: Modulate effects of fluctuating timber markets Decoupling (to a degree) management decisions from timber prices; Receive annual income in addition to episodic income; Maintain ownership of their property during unfavorable timber markets; Maintain ownership of the land within the family during intergenerational land transfers. A 3-tier approach: compliance (+100 yrs), voluntary (40 yrs), incentive (TBD). Source: Thompson and Hansen,

13 Improved forest management (IFM) Modifying/adapting silvicultural options to maintain/enhance carbon stocks Extended rotation length Partial retention harvests that maintain continuous forest cover Ecological restoration Leakage; due to elasticity of demand?

14 Barriers Carbon price - $2 - $8 voluntary; $10 compliance; social cost $35 Protocol requirements/terms of the deal - Landowner expectations/willingness - Reversals, contract length Transaction costs - Upfront expenses: C-inventory, verification, outreach/marketing - Out-year expenses: re-inventory, verification, operational expenses Source: Fletcher et al. 2009; Markowski-Lindsay, 2011.

15 Barriers Nature of NIPF owners. Not always responsive to markets and incentives. - Opportunity costs (e.g. log export markets) - Independent nature - Beliefs Maturity of the space - Lack of forester/tsp education and knowledge on carbon - Thin markets Thompson and Hansen [N = 435 landowners, mean acreage = acres, mean age 60] - 18% plan to manage for carbon offsets - 37% an overall positive attitude towards the idea of managing for carbon Source: Fletcher et al. 2009; Markowski-Lindsay, 2011.

16 PIC work to overcome barriers Pilot aggregation and RCPP 16

17 Phase 1 Research and Feasibility Assessment C-credit protocols, C-incentives, FCWG ( ) Next generation landowner surveys ( ) Terrestrial laser scanning (2012), subsequent evaluation of other technologies. Initial cash-flow and transaction cost analysis (2013) Funders: USFS, USDA Rural Development, KFF, and BC/BS Phase 2 Pilot Partners: ACR, WCC, etc landowners Pilot is active and will be complete in Central output is an aggregated project and a refined business model. Subsidize upfront expenses. Refine business modelling. Open source project Funders: CIG, MMT, KFF ( ) Phase 3 RCPP linking cost-share to markets Leveraging landowner financial and technical assistance programs Application of tech innovations (ForestPlanner, inventory, model assisted plans) Institutionalizing the approach as policy relevant (C-incentive, WA/OR climate policy, EO) Funders: USDA NRCS ( ) others TBD. 17

18 Strategy for reducing transaction costs 1. Transaction cost analysis & financial model 2. Assess aggregation models 3. Align cost-share programs and build institutional capacity for delivery 4. Improve management planning pathways 5. Deploy technology: low-cost C inventory + C-credit modelling & mgmt. planning 6. Refine business model and develop co-op 18

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20 Target RCPP project outputs Tangibles 60 landowners receiving preliminary carbon credit assessments 60 new forest management plans 60 carbon registry compliant forest carbon inventories 24 carbon management demonstrations Representative detailed carbon plan addenda to FMPs. Trainings on carbon inventory and carbon credit development requirements Direct technical consultations Follow up monitoring and technical consultations 4 additional carbon aggregations Intangibles A defined ultra-efficient project pipeline Increased institutional capacity A template for carbon policy 20

21 RCPP pipeline Step 1. Initial carbon assessment. Step 2. Landowners express interest in C-credits. C-inventory completed. Step 3. Update existing plan or complete new plan with carbon. Step 4. Contracts between landowner, project developer, registry and buyer. (compliance, voluntary, exit) Step 5. Project design document (GHG modelling, documentation of all project development requirements). Step 6. 3rd party verification. In steps 1 3, RCPP financial and technical assistance In steps 1 and 3 Ecotrust s Forest Planner technology is used In step 4 landowners can choose to become certified FSC and/or ATF In step 5 template PDDs will be used for an ACR programmatic approach or ARB. 21

22 Landowner options I. Voluntary - Woodland Carbon (Co-Op) (WCC) Batch verification / aggregation program, increased program flexibility, but potentially less income than compliance program. 40 yr min. Creates shared capital resources for owners and diversifies risk for investors II. Compliance - Forest Carbon Works (FCW) Stricter carbon regulations ARB, potentially greater income (+100 yr.) True batch verification w/ regional hubs. Separate from Pilot Project, managed by externally by Ecopartners III. Program Exit: Landowner exits program, $750 fee, retain carbon inventory data

23 Innovations C-project design Low cost inventory [~50% less] = variable area statistical design + FCW app + low cost labor. The plan if for the output of this inventory technology to be linked to Forest Planner C-management scenario planning. Three aggregation options (True, programmatic, batch) Limit out-year verifications & monitor remotely Co-op model RCPP pipeline (cost share + tech) Evolve FA&TA towards C-incentive Training of TA providers GHG reductions internal to Federal agencies? EO

24 Happy Holidays! Brian Kittler