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Issues in Forestry Carbon Crediting

IEA Bioenergy Task 38 WorkshopCanberra, AustraliaMarch 28-30, 2001

Doug BradleyDomtar Inc.

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Issues in Forestry Carbon Trading

• New Zealand workshop• What is in/not in Kyoto• Who is buying what credits• Trading Issues • Amortization• Example projects• Harvested Wood products• What need to move forward

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To Tai Toko Workshop- Feb 16-18

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To Tai Toko Workshop

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A sunny day in indigenous forest

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Dinner at “Lodge Ford-Robertson”

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Accommodation in “Garage Villa”

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Delegates watch river rise

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Raging To Tai Toko River

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A minor “slip”

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Escape to Freedom

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Kyoto- In vs Not yet in

IN KYOTO NOT YET IN KYOTO

_________Fossil Fuel Reduction_ ____Carbon Sequestration_____________Energy Efficiency Fuel Switching Afforest., Reforest Other Forestry, Agricultural

(Biomass for fossil fuel) Deforestation ActivitiesReduce fossil fuel Reduces fossil fuel Sequesters carbon Sequesters carbon

(defn. - Article 3.3) (negotiated- Article 3.4)Examples:-Fuel efficient motors -Wood waste cogen -Planting on poor agric. land Forestry: -Waste heat capture -Black liquor -Reducing deforestation -Pest and disease control-Prod’n enhancemt integrated gasific. -Fire control-Improved Maint. and combined cycle cogen -Commercial thinning

-Juvenile Spacing-Tree Improvment- Reduc. impact loggingAgricultural:-Reduced tillage-Manure management-Shelterbelts

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Who is buying what?

• Ontario Power Gen• BC Hydro

• Seattle City Light• TransAlta

• Gemco

• All sinks- if thru PERT• No sequestration, no

business as usual• Sequestration- Kyoto only• Sequestration- Kyoto- no

conservation or forest mgt (1.Can 2.Aus, 3.NZ 4.US…)

• Sinks including agriculture

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Trading Issues

Lack of clear guidelines is holding up action

• In Kyoto vs not• “Business as Usual”• Discounting• Harvested wood products • First commitment period

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Implications of Commitment Period

0

50

100

150

200

250

300

350

400

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Plantation 1Plantation 2Plantation 3

Kyoto Period

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100

0

20

40

60

80

100

120

0 10 20 30 40 50 60 70 80 90

Time (years)

Cum

ula

tive c

arb

on s

tock

changes

(ton

s C

/ha)

Carbon in trees

Cumulative credits

Hypothetical Managed Forest StandPossible Accounting Method

Use of Amortization

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Carbon Impacts of Sequestration Activities

Initial Long TermForestry:

Afforestation sequestr. sequestrPest spray sequestr. sequestr.Tree Improvement sequestr. sequestr. Juvenile spacing emission sequestr. Commercial thinning emission sequestr.Fertilization emission sequestr.

Other:Landfill Incineration emission sequestr.

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Pre-commercial Thinning(Juvenile Spacing)

Unthinned Thinned

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Yield Curve Natural vs Spaced

Sewell

0

50

100

150

200

250

0 20 40 60 80 100 120

Bio

mas

s (t/

ha)

Spaced Msmt

Spaced - Curve

Control - Actual

Control - Curve

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Impact of forest management

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Natural Jack Pine Forest (Baseline)Forest and Products Carbon Pools

Gorcam model

Baseline

0

50

100

150

200

250

300

350

400

450

500

2000 2020 2040 2060 2080 2100 2120 2140 2160 2180 2200

Year

Landfi ll

LLP

SLP

Other Veg.

Trees

Litter

Roots

Soil

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Juvenile Spaced Stand Forest and Products Carbon Pools

Gorcam Model

Project

0

100

200

300

400

500

600

2000 2020 2040 2060 2080 2100 2120 2140 2160 2180 2200

Year

Landfill

LLP

SLP

Other Veg

Trees

Litter

Roots

Soil

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Net Emissions Control vs Spaced Gorcam Model

Stand-level Net Biomass

-400

-300

-200

-100

0

100

200

300

400

500

2000 2020 2040 2060 2080 2100 2120 2140 2160 2180 2200

Year

Net

Bio

mas

s(t

CO

2e/ h

a)

Landfill

LLP

SLP

Other Veg.

Trees

Litter

Roots

Soil

Total (w ith landfill)

Total (no landfill)

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Stand SequestrationAnnual CreditingGorcam Model

Stand Net Sequestration- Tonnes CO2/ha

-150-100-50

050

100150200250

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2110 2120 2130

Net Biomass Net All Pools Amortized Sequestration

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Actual vs Amortized Sequestration Cumulative (tonnes CO2e/ha)

-20

-10

0

10

20

30

40

50

60

70

80

90

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

AmortizedActualActual 2Amort 2

Kyoto Period

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New Concept- Phases of Acceptance

Concept- “Give credit for long term benefit even if short term emission”

• Utterly ridiculous!• Violently opposed! • Accepted and felt to be always self-

evident

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Jack Pine Bud Worm Spray Program

• Epidemics cycle 5-7 years• Result in tree mortality, growth loss• Assumptions

– 17% outright mortality- years 2-4– 10% less growth p.a. – years 2-6– 10% mortality due to top kill- year 7

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Bud Worm Spray Program Stand Level Biomass

Yield Curves

0

20

40

60

80

100

120

140

160

180

0 10 20 30 40 50 60 70 80

Year

Bio

mas

s (t

/ha)

Treated

Infected

Gorcam Model

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Biomass with JPBW Attack

Baseline

0

50

100

150

200

250

300

350

400

450

0 10 20 30 40 50 60 70 80 90 100 110

Year

Bio

mas

s (t

/ha)

Landfill

LLP

SLP

Other Veg.

Trees

Litter

Roots

Soil

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Biomass with JPBW Suppression

Project

0

50

100

150

200

250

300

350

400

450

0 10 20 30 40 50 60 70 80 90 100 110

Year

Bio

mas

s (t

/ha)

Landfill

LLP

SLP

Other Veg

Trees

Litter

Roots

Soil

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Bud Worm Spray Program Gorcam ModelStand Level

Stand-level Net Biomass

-100

-80

-60

-40

-20

0

20

40

60

80

100

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2110

Year

Net

Bio

mas

s(t

CO

2e/ h

a)

Landfill

LLP

SLP

Other Veg.

Trees

Litter

Roots

Soil

Total (with landfill)

Total (no landfill)

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Bud Worm Spray ProgramGorcam Model

Forest-level Net Biomass

-100

-80

-60

-40

-20

0

20

40

60

80

100

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2110

Year

Bio

mas

s(t

CO

2e)

Landfill

LLP

SLP

Other Veg

Trees

Litter

Roots

Soil

Total (without Landfill)

Total (with Landfill)

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Pest Control Carbon Balance

0

200

400

600

800

1000

1200

1400

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

ActualAmort

Kyoto Period

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Combined Spray-Spacing in Carbon “Pool”

-1000000

-500000

0

500000

1000000

1500000

2000000

1993 1998 2003 2008

PestSpaceNew NetAmortized

Kyoto Period

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Domtar Wood Products Parameters

• Harvest (Domtar operations)– Biofuel 26%, short-lived 19%, long-lived 30%,

landfill <1%, on-site waste 25%

• Wood Products– Short-lived

• Avg lifetime 5 years• Biofuel 25%, compost 15%, landfill 10%, recycled

50%

– Long-lived• Avg lifetime 30 years• Biofuels 25%, landfill 10%, recycled 65%

• Landfill– Average lifetime- 42 years

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Wood Products Carbon5 yr decay

0

5

10

15

20

25

30

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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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Wood Products Carbon10 yr decay

0

10

20

30

40

50

60

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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Wood Products- Ken Skog- USDA Forestry- decay estimates

0102030405060708090

100

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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European Forest InstituteCarbon Balance Implications of ….Wood Products

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Life Cycle- NZ Plantation Forest

0

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350

0

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EnergyAvoidedProductsForest

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Existing Forest Intensively Managed

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150

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300

350

400

450

500

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150

New Energy

Energy

Avoided

Products

Incr Mgt

Forest

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Carbon Credit Market

400

450

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650

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EmissionsReductionsPresumed Target

Need reductions or creditsFirst Commitment Period

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Current Pricing

Low High Deal

Cantor Fitzgerald

$0.77 $3.09

Gemco $1.00 $1.50

SaskPower $0.83

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What do we want to happen?

• Increase use of biomass – biofuel, biochemicals….

• Increase amount of biomass– Eg. through intensive forest management

• Increase demand for wood

How can this happen?

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Incentives to promote forest carbon sequestration

• Forest management in Kyoto• Standard accounting system• Acceptance of forest measurement

methods (periodic sample plots)• Amortization methodologies• Include all carbon pools• Recognition of 1991-2007 activities