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Permalink Reply by Skip Peel - Mineral Consultant on June 20, 2015 at 4:12

Carbon credits could generate $1.6 billion for Louisiana coastal restoration, study says

By Mark Schleifstein, NOLA.com | The Times-Picayune  on March 05, 2015 at 1:00 PM

Louisiana could earn up to $1.6 billion for coastal restoration projects over the next 50 years by selling credits for storing carbon in wetland plants and soils, according to a new study by New Orleans-based Tierra Resources, Entergy Corp. and the ClimateTrust.

The credits could be sold by private landowners and businesses in Louisiana that create their own restoration projects or participate in publicly-financed projects. Buyers would include businesses that must reduce carbon emissions in California under the nation's first "cap and trade" program aimed at reducing greenhouse gases, said Tierra Resources president and chief executive Sarah Mack.

The credits could also be sold in an existing voluntary market to businesses or individuals looking to offset their carbon "footprint," Mack said.

The result would be an increase in the dollars available for at least some parts of the state's $50 billion, 50-year coastal Master Plan, which has about half of its cost allocated to coastal restoration projects, the study says.

The carbon credit program, mandatory in California and voluntary in the rest of the nation, seeks to reduce the amount of gases that scientists say are causing long-term changes in the world's climate. In Louisiana, those changes have brought more rapid sea level rise, which is one of the causes of coastal erosion.

California's regulatory program is the first in the nation, but a similar program has been adopted by countries in the European Union.

Efforts to adopt a mandatory cap-and-trade program nationwide have failed in Congress, although President Barack Obama has implemented a number of regulatory changes in recent years aimed at reducing carbon emissions by utilities and other major industries.

The study estimated Louisiana could earn from $550 million to $1.6 billion for coastal restoration in the next 50 years. 

Mack said Tierra Resources hopes to have the California Air Resources Board approve the first "blue carbon" credits -- based on wetland restoration efforts -- for storage of carbon in a test project in Luling by the end of the year, said Tierra president and chief executive Sarah Mack. It would be the first time wetland-related carbon credits had been approved for the California program.

The Luling Oxidation Pond Wetlands Assimilation System project is a partnership effort with Tierra Resources, Entergy and St. Charles Parish. Treated wastewater from the parish sewage treatment plant adds freshwater and nutrients to an adjacent 950-acre coastal swamp wetland forest, where carbon is incorporated into the soil as wetland plants die or into cypress and tupelo trees as they grow.

Tierra won approval of its methodology for measuring carbon offset credits in wetlands from the American Carbon Registry, the first private greenhouse gas registry, in 2012. California also has approved American Carbon Registry as a registry under its compliance program.

Mack said her organization also is attempting to gain approval of credits for keeping existing wetlands from eroding and losing their carbon, which represents between $140 million and $630 million of the estimated 50-year value of the carbon offsets in Louisiana.

Under the California cap and trade program, industries must reduce carbon emissions to 1990 levels by 2020, with dropping limits set on greenhouse gas emissions from carbon sources each year. That is the cap portion of the program.

The industries can buy carbon offset credits from projects that remove and store carbon or other greenhouse gases from the atmosphere to offset part of that required reduction, which constitute the trade portion of the program.

The emissions reduction program is being phased in, and since the beginning of this year, covers 85 percent of California's greenhouse gas emissions.

Industries covered by the California law include investor-owned and publicly-owned utilities, producers and importers of gasoline, diesel and other transportation fuels, and natural gas producers. Those companies represent more than 25,000 metric tones of carbon dioxide and carbon dioxide equivalent emissions each year.

The new study finds that four major types of restoration projects in Louisiana could produce more than 1.8 million carbon equivalent offset tons a year, and close to 92 million over 50 years.

River diversions, which send sediment and freshwater into open water areas to rebuild wetland soils and plant life, and major efforts to plant mangrove trees in coastal areas each could produce the bulk of the carbon sequestration -- 40 million tons each over 50 years.

Wetland assimilation, which creates and improves freshwater wetlands using wastewater treatment discharge, could create about 10 million credits over 50 years. Hydrologic restoration, which restores the flow of freshwater through wetlands to help reduce salt water intrusion, would produce less than 5 million credits.

The study eliminated marsh creation, or using sediment dredged directly from the Mississippi River and piped overland to rebuild wetlands, as a potential credit source for a variety of reasons: a lack of modeling data on the method's ability to store carbon, concerns about how long such projects last, and the need to deduct the use of fossil fuel emissions that occur when the sediment is pumped through pipelines.  

However, California has yet to approve the use of so-called "blue carbon" offset credits that would be created by the removal of carbon from the atmosphere by wetland plants, mangroves or trees, with the storage of the carbon in the plants or within the new soils created by the projects.

Entergy, which has no power plants in California, has been a partner with Tierra since 2009, as part of its own voluntary efforts to reduce greenhouse gas emissions, said Steve Tullos, manager of environmental initiatives for the company.

Tullos said the sale of carbon credits could be a financial game-changer for the state's coastal restoration efforts, by providing opportunities for private landowners and businesses to earn money from what could be expensive restoration efforts.

"Right now, it's an upside-down business case. When you're spending $3 for $1 of benefit, its not that much money," he said. "But if you can generate a revenue stream, you're adding that to storm surge protection and natural resources and socioeconomic impacts that the projects can provide."

The report says surveys in 2012 and 2013 identified 50 wetland landowners in Louisiana who control more than 2.3 million acres. Meetings with landowners who own more than half of those wetlands showed interest in participating in the wetlands carbon efforts, including through public-private partnerships, through dedicating acreage to restoration projects, and as potential locations for restoration sites.

The report points out that work remains on how to coordinate the rules of the regulatory and voluntary carbon credit programs with the regulations that will govern financing of individual projects.

"The majority of our wetlands are privately owned, so this presents an incredible opportunity to create more revenue and more wealth for the owners," said Robin Barnes, executive vice president of Greater New Orleans Inc.

Barnes said the carbon credit programs increases the chances that coastal restoration will create jobs in southeast Louisiana, too.

"To the extent we can identify new financing strategies, we can implement the coastal Master Plan and be able to put our local residents and local companies to work," she said. "This is another innovation happening in Louisiana that further illustrates how we are becoming a leader in resilience."

Participation in the California market also increases the financial value of the credits, said Dick Kempka, vice president of business development for the Climate Trust, a non-profigt that matches businesses and potential carbon projects at a number of locations across the nation.

Kempka said the present California regulated market credit price is about $9 per ton, and has ranged between $8.50 and $10 over the past year. The voluntary market produces a smaller return, about $4 to $6 per ton this year, he said.

But Kempka said his organization also is interested in the potential of what he calls "stackable" credits. Some projects may be able to receive money for carbon credits, while at the same time be eligible for producing credit dollars for similar voluntary water pollution reductions.

An example, he said, would be a Midwest ranch that agrees to allow land to revert to pristine grasslands, rather than be converted into farmland. Such a conversion might result in greater carbon storage, but also a reduction in nutrient runoff that might be eligible for financial credits.

The state of Louisiana has proposed a similar strategy, without the dollars, as part of its long-term plan to offset nutrients on state farmland with the nutrients that will be captured in wetlands, once major sediment diversions are building new land.

Louisiana State University researchers John Day and Rob Lane also participated in the study.

 

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Permalink Reply by Skip Peel - Mineral Consultant on June 20, 2015 at 4:17

Louisiana landowners learn about carbon credits

(This article was published in the spring 2008 issue of Louisiana Agriculture.)

ALEXANDRIA – Louisiana landowners are showing interest in carbon trading – an emerging market that pays landowners for removing carbon dioxide from the atmosphere. More than 200 people packed the C. Woodrow Dewitt Livestock facility at the LSU AgCenter’s Dean Lee Research and Extension Center on May 14, 2008, to hear how they could benefit from selling carbon credits. In carbon trading, a carbon credit assigns a monetary value to one ton of carbon dioxide that’s removed from the atmosphere and sequestered – or tied up – in plants or in the soil, experts said. A buyer of a carbon credit is paying the seller to keep one ton of carbon dioxide out of the atmosphere. “Carbon-trading markets have evolved, and now forest and agricultural landowners can participate in these markets,” said Mike Blazier, an LSU AgCenter forestry specialist at the Hill Farm Research Station in Homer. “Carbon trading is one of the environmental service markets landowners can participate in. They’re voluntary and can fit into current management practices.” The contracts aren’t permanent but cover varying periods – usually 15 years, he said. The buyers of carbon credits are companies that emit carbon dioxide or other greenhouse gases as part of their businesses, such as power companies with coalburning facilities, Blazier said. “Because the United States currently has a voluntary market, these companies are voluntarily choosing to offset their emissions largely as a response to concerns about rising carbon dioxide levels in the atmosphere,” Blazier said. “Essentially buyers of carbon credits are doing so because they perceive it as the social cost of doing their business.” The current approach to trading in carbon credits centers around what the industry calls “cap-and-trade” programs. Companies that generate more than their cap can reduce the emissions they’re responsible for by buying credits from others that agree to tie up the material, said Michael McDaniel, a professional in residence at the LSU Center for Energy Studies. Credits take the form of “offsets” that agricultural and forest landowners can generate by agreeing to grow particular plants that take carbon dioxide out of the atmosphere and tie it up – or sequester it – within the plants, he said. “There’s a booming market right now for offsets in general,” McDaniel said. Offsets are measured in metric tons of carbon dioxide. McDaniel said a federal cap-andtrade program in carbon dioxide is likely to emerge, but none currently exists. “It’s a nascent market that still has to be worked out,” McDaniel said. “The science is still unfolding, but scientists estimate CO2 emission needs to be reduced by about 80 percent.” “It’s lagniappe,” said C.A. "Buck" Vandersteen, executive director of the Louisiana Forestry Association. “Carbon credits are an opportunity for landowners and our industry to position ourselves to take advantage of energy markets while we continue to grow the forest industry.” The leading opportunity for landowners to establish carbon credits is to plant trees on land where trees haven’t been planted, said Eric Taylor, an extension forestry specialist with Texas A&M University. Aforestation – putting new trees where none were before – creates areas where trees absorb carbon dioxide from the air and turn it into woody biomass, Taylor said. That’s the major source of carbon credit. “Carbon credit depends on doing something outside of business as usual,” he said. Once landowners establish new tracts of trees, the carbon value can be calculated and sold, Taylor said. The only U.S. market is through the Chicago Climate Exchange, where aggregators – people who acquire contracts for pools of land from various landowners – buy carbon credits from landowners and then sell the credits to individual companies. The price is established at the Chicago exchange.

 

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Permalink Reply by Skip Peel - Mineral Consultant on June 20, 2015 at 6:05

CARBON CREDITS

A Non-Traditional Source of Revenue for Mississippi Forest Landowners

Mississippi State University Extension Service (2008)

http://msucares.com/pubs/publications/p2498.pdf

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Permalink Reply by Max on June 20, 2015 at 7:01

In 2008 a friend of mine, who owned property in Texas, received a flyer in the mail offering Carbon Credits $$ for timber acreage.  The timber growing had to met requirements set up by the Chicago Climate Exchange Carbon program.

The flyer was sent out by a Timber company in Jefferson, TX looking for extra income and they were the middle man.  I contacted the timber company and they reviewed my property in Louisiana and it qualified for the program.  I received three checks before the program ended because lack of funds. 

They didn't give a good reason why the program ended but I would sigh up again if it came along.

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Permalink Reply by Skip Peel - Mineral Consultant on June 20, 2015 at 7:32

Max, do you recall the requirements to participate in the program?

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Permalink Reply by Max on June 20, 2015 at 10:06

Skip, the main requirements I remember were the trees had to planted after 1990 and had to be planted on pasture land.  I had pictures of the land before planting and records of the planting.

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Permalink Reply by full name on June 20, 2015 at 8:18

I signed up for carbon credits in 2008 with Agragate in West Des Moines, IA, I think it was part of the University of IA. It was tied to the Chicago Climate Exchange.  At the time the offsets were selling for around $7.00/ton

There were two parts available.

The first was for grass lands.  For this all you needed was a FSA report and proof that there was grass the prior year.  The three year contract specified no tilling during the period.  Carbon offset was 0.60 tons/ac.  I signed up for this and received a couple of checks before the Climate Exchange folded.

The second was for timber.  It required a managed forest.  They also required one of their foresters to make an inspection (about $5,000) and a verifier fee (0.30 ac).  Carbon offset could range between 2.7 and 4.3 tons/ac.  There were restrictions on cutting and thinning.  Market collapsed before I did this.

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Permalink Reply by Skip Peel - Mineral Consultant on June 20, 2015 at 10:24

Thanks for the details, Max and full name.  I suspect that the requirement for the trees to have been planted on land that was previously pasture would be problematic for most land owners.  Some would benefit if they could qualify by replanting after a clear cut.

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