EnergetixClimate news & blog

June 1, 2010

Forestry Offsets in NC and the SE

Filed under: Uncategorized — kdorion2 @ 8:43 pm

We welcome to the EnergetixClimate team Elizabeth Zander, who will be working with us during the summer.  Elizabeth will be posting information relevant to our friends and clients.  Here is her first post on a recently attended forestry offset workshop in Raleigh, NC.  The key takeaway: we need to make sure that offsets offer enough value to the landowner to preserve the forest.

Deforestation accounts for almost a fifth of global annual greenhouse gas emissions by releasing carbon dioxide that took ancient trees centuries to sequester. Also, the elimination of forests removes a sink for future carbon sequestration and destroys valuable habitat for wildlife. Any successful climate legislation will have to include incentives for landowners to conserve and replant native forests. Fortunately, the climate bills before the House and Senate, the American Clean Energy and Security Act (ACES) and the more recently proposed American Power Act include offsets generated from forestry projects.  Both pieces of legislation allow up to two billion tons of offsets, whose certification will be overseen by the USDA. Each offset project must be proven to be additional, permanent and verifiable.

One of the largest hurdles is legislative uncertainty. Blue Source and Equator LLC, offset financiers and developers, presented at the workshop and discussed the obvious difficulties of investing in such an uncertain market. When will climate legislation pass, and will there be significant funding for forestry offsets like in ACES? Or very little funding as in the American Power Act? Will the legislation include vintage offsets? Currently, projects with a start date after January 1, 2001 will be included, but that might change as the actual passing of climate legislation moves further out the into the future. Until these questions are answered, it will be very difficult to bring liquidity to the offset market.

Even after legislation is passed, there are a series of other barriers to entry in the offset market. For domestic projects, such as conservation in the Southeast, it might be expensive for businesses or private landowners considering the lost opportunity costs of lumber or fuel for the new biomass plants being built by Duke Energy–especially with offset prices likely in the seven to twelve dollar range. For international projects, forest conservation might mean less land available to local communities for needed agricultural space. For all projects, the transactions costs are high and credits may not even be received for six months to two years given the long verification process. To cover the costs, the offset developers presenting at the workshop felt that only plots of land 1,000 acres or larger could provide a large enough pay-back to make it worthwhile. Aggregation of smaller plots of land from multiple landowners might make it possible for smaller parties to participate in the offset market. Finally there is the issue of permanence, which is generally defined as 100 years of carbon sequestration or reduction – the lifespan of atmospheric carbon. It is very difficult to get landowners to commit to 100 hundred years of conserving or reforesting their land.

Despite all these barriers, projects are being successfully financed and completed. Offsets have the potential to greatly reduce the costs of climate legislation, and forestry projects are among the least expensive available. Businesses, like Google, whose shareholders want to be socially responsible tend to prefer offsets generated from conservation and reforestation due to the visually satisfying results and the co-benefits such as wildlife protection. Additionally, investors in forest conservation will receive a majority of their offset credits at the front end of projects, increasing the confidence investors have on their return.


May 19, 2010

Congratulations to Christiana

Filed under: Uncategorized — Tags: , — kdorion2 @ 4:25 pm

Today we congratulate our friend, colleague and mentor Christiana Figueres, who has been selected as the new Executive Secretary of the UNFCCC. You can read the press announcements here: http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=624&ArticleID=6568&l=en

Christiana is incredibly well qualified for this position and has been thinking of the post-Kyoto agreement since 2002, when I first started working with her. Christiana is brilliant, a superior communicator and consensus builder and very hard worker. She also has the ability to see issues from many different sides- critical for success in the next global climate treaty.

A couple of months ago, when I was wondering why we sometimes choose to dedicate our lives to such difficult and challenging matters such as climate change, I thought of the people that work in the field. I recalled Christiana, who has selflessly and passionately dedicated her life to climate change. And I was happy that she was doing this, because it meant that there are people who dedicate their lives to making this a better world for us and for our children.

We wish Christiana the best of luck.

March 17, 2010

The Big Picture

Filed under: Uncategorized — kdorion2 @ 7:20 pm

Welcome to our first Blog.  Here we will discuss issues related to climate change and businesses.  This blog is meant to be a resource for organizations that want to know more about what climate change means to them.  We will focus on what organizations want to hear, so if you or your organization have a particular issue you would like discussed, by all means, send us a note.

We began with a bang!  Last Friday I was quoted in the NY Times.  The article, written by Nate Gronewold, talks about how climate offsets are becoming unpopular and how the lack of progress in national and international climate negotiations is hurting the prospect of the CDM.  And I am then quoted as someone who believes in offsets and the CDM.  I want to explain why I believe cap and trade is a system that works and why we should be working hard towards using offsets, in addition to many other tools, to stabilize GHG emissions.

Take a step back. A big step back and look at the big picture.  We see climate change affecting us, our resources and our peace and security.  Many still don’t believe the science of climate change- and understandingly so, the science is complex at best and this last winter was very cold. It doesn’t make sense.  But one of my goals is to translate the message so it makes sense.  The science (but we will address the specifics at a later date), shows us we will get climate change or climate weirding (as Tom Friedman likes to say) with increased variability.  More on this at a later point.

Why do I believe in a cap and trade system? Because I have seen the projects that I have developed and many good things have happened from them.  Take the example of the ONIL Stove project. These projects reduce the amount of wood burned in rural Guatemalan and Mexican households, replacing open fires.  These stoves reduce indoor pollution, allow women who use them to have a healthier home, and frees money (spent on purchasing fire wood) or time (finding fire wood).  And carbon finance, within the CDM, will allow HELPS International, the non profit managing the ONIL Stove program, help more household have access to more stoves.  The benefit: healthier homes and less firewood burned.

Now, tell me the CDM and carbon finance are a bad thing, and I will disagree with you.  I will agree that it is a work in progress, that the system could be less bureaucratic.  But the principal of it – that projects that are good for environment should be rewarded – is sound.

So here is why I am remain positive.  One,  you can deny climate change all you want, if you feel like it, but it will not go away. Call me next hurricane season or next drought or next flood and we can resume the conversation.  Second, carbon finance helps good projects – we need to address the integrity of the system and make sure more good projects move forward, but overall, good projects do get funding. And third, carbon offsets is only part of the puzzle – a small part actually.  Proposed legislation allows only a percentage of caps to come from offsets; the rest of the reduction must come from changes in technology, efficiency and behavior.

So think of offsets as only part of the puzzle, this very big and confusing and now politically charged puzzle.  And if you want to invest in clean technology, go for it,  it will pay you big and we will be in a better world for it.  If you want to change behavior, by all means, turn off your lights, buy a more efficient car, put less CO2 into the air.  For me, I will continue trying very hard to develop good projects that help a large number of people live healthier lives.  And that gives me reason to be hopeful.

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