Carbon traders bet on California redwoods

GARCIA RIVER FOREST, California: A stand of young redwoods, survivors in what was once a magnificent forest of towering giants, could play a small part of the battle to slow global warming - and form part of an emerging market.

The trees, which trap quantities of the carbon dioxide that is warming the planet, are sold as living carbon traps or "sinks" rather than cut for timber, a model that could go global. But the prospect of a worldwide market could also attract hustlers eager to make a quick buck without making a difference to the planet.

"It's easy to game it," said forest owner Chris Kelly of the developing forest carbon market. "We just have to figure out how to do it right."

Deforestation accounts for a fifth of greenhouse gas emissions that are heating up the earth, so slowing its pace is a relatively cheap way to limit global warming. That's why preserving forests is a top agenda item of international climate change talks scheduled for December.

But devising a fair way to reward those who own and control forests for their true contribution to the atmosphere has proved difficult and complicated.

The United States, which has lagged in addressing global warming, leads the world in developing a market for forests that soak up carbon dioxide emissions. The Garcia forest presents a test case of how the system could work - or fail.

"When we talk about deforestation, we've already done it here," said Louis Blumberg of the Nature Conservancy, which helped plan carbon sales at the Garcia project. Some 95 percent of old-growth redwoods are already gone in California, and the state must better manage what has grown back.

"We moved carbon out of the ground and the trees into the air. We need to hit the reset button," said Blumberg, who directs the environmental group's California Climate Change project.

With its towering redwoods and gurgling streams, the Garcia forest looks wild and healthy - but it's a shadow of what it once was. Two-meter-wide stumps hint at its former grandeur a century or two ago.

Ninety percent of the wood it once held is already gone. If managed like most commercial forests, it would probably stay at roughly its current size. However, the non-profit owners have sharply reduced timber harvesting and are making some of their profits by selling carbon credits, so the forest may recover, at least partially.

Climate change can be slowed in two ways:

*Cutting emissions from industry, automobiles, airplanes and other tools of industrial society, or

*Soaking up more emissions once they are in the air.

For forest projects to succeed, the world must find a way to stop emerging economies like Brazil and Indonesia from cutting down tropical jungles. US-based projects, which focus on growing bigger trees and holding more carbon, could help a little but cannot in themselves solve the problem.

But the US plan could offer a direction and an example for others to follow.

Under a cap-and-trade system, the main global mechanism for addressing climate change, polluters face limits on how much they can emit. To meet those limits, they can manage their own emissions, buy credits from companies who emit less than their cap, or buy offsets.

Forests are not part of the biggest regulated carbon market, in Europe, but California's law to open a regulated market for carbon pollution in 2012 includes them, and so does a federal plan being debated in the US Congress.

Voluntary market

A voluntary market has sprung up in the meantime.

"These projects take time. It's not the kind of thing that you can turn a switch and you've got millions of acres of forests sequestering CO2," said Eron Bloomgarden, president of environmental markets at Equator LLC, a for-profit venture creating forest carbon projects.

California forest projects fetch $5 to $12 a CO2 ton, more than in other parts of the world and other types of sequestration, because they meet California's developing rules, the closest thing yet to regulations for an official forest market, said Lenny Hochschild, a managing director at environmental brokerage Evolution Markets.

For-profit forest owners increasingly are being tempted to sell carbon, joining non-profits pioneers, he said.

"If you incentivize folks to clean up the environment, they'll clean up the environment," he said.

Voluntary deals and trade on platforms like the Chicago Climate Exchange doubled last year to more than $700 million, according to Ecosystem Marketplace and New Carbon Finance.

Reuters

(China Daily 08/24/2009 page11)