Preparing for Carbon Trading

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Preparing for Carbon Trading A Tree Farmers
Perspective
Photo of Matt and me walking at Sam A. Baker
trail here.
Mark Nussbaum Hickory Grove Tree Farm
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Our Tree Farms Carbon Experiences to Date

• In September 2007 we sent our enrollment
  documents to an aggregator for trading on the CCX
  Exchange.
• We withdrew our application in January 2009.
• We are keeping detailed records to support our
  future application.

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CCX Carbon Prices for 2009 Vintage
Carbon is trading for about 0.25/ton on CCX
today.
Carbon is trading for about 20/ton on the
European Exchange right now.
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Why Did We Withdraw Our Carbon Enrollment?

• The Obama election appeared to be a game
  changer.
• US House of Representatives have passed
  Waxman-Markey. Senate is debating their bill,
  which sets a floor of 12/ton for carbon.
• We are speculating on carbon prices.

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How Are We Preparing For the Next Carbon
Enrollment Opportunity?

• Continuing aggressive thinning/pruning.
• Documenting our timber and pulp sales.
• Continuing to plant trees on our poorer
  agricultural fields.
• Considering how 10-20/ton Carbon credits will
  affect our forestry management going forward.

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Our Forest Management
Year
Action
0 Autumn - timber harvest.
Major timber stand improvement and
minor pruning and planting. 10 Minor
timber stand improvement and
minor pruning. 15 Feb./March
Prescribed burn. Autumn - timber
harvest.
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Our Forest Management
Our goal is to grow veneer and grade hardwood
timber. We remove all trees that dont have the
potential for a flooring grade or better butt
log.
Mark beside the best single log weve ever
sold. The V log brought 2.25/bd.ft. to the
owner, for a net of 432. (12/07)
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Could Carbon Prices Exceed Timber Prices for Some
Trees?
About 70 of a trees worth is in the butt
(first) log. Example log 12 long, 20 in
diameter at the small end, containing 192 board
feet. Value to landowner Veneer
210 Furniture Grade 115 Flooring Grade
33 Railroad Ties 23 Pallet 6
Pulp 1
Worth more as carbon?
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Timber Stand Improvement for Carbon
Sequestration
Before
Net carbon sequestration is low. Large
volume of carbon in un-salable trees.
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Timber Stand Improvement for Carbon
Sequestration
After
Higher carbon sequestration. Carbon inventory is
in higher value trees.
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How Could a 10-20/Ton Carbon Affect Our
Management?
To date, when a TSI/thinning pass has resulted in
only pulp/pallet timber being cut, we left the
wood in the forest. The sales value didnt
justify selling of the thinnings. The above TSI
pass left about 40 tons/acre of pulpwood on the
ground.
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How Could 10-20/Ton Carbon Affect Our
Management?
Historical value of 40 tons of pulp/acre is about
40 net to us.
One ton of pulp is equal to about 1.1 tons of
carbon. At 10/ton, 40 tons of pulp is worth
over 400 in carbon payments! (but check the
details.)
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Would 10-20/Ton Carbon Cause Us to Give Up
Prescribed Fire?
We use fire to to kill undesirable tree species
(gum, elm, maple) and stimulate growth of oak
seedlings. We have not been able to consistently
regenerate young oaks without fire. We are
documenting our use of fire, and its ecological
and economic benefits. We want to keep it in our
management tool kit. We will give up fire if we
get paid enough. Then well reduce our emphasis
on oaks.
Photo of oak tree with fire burning
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Carbon Trading in Forest Management (Its finally
about volume)
The average Missouri wooded acre sells about 110
board-feet of timber per acre per year, along
with a negligible amount of pulp. Possible
Carbon Credit 0.6 tons/acre/year, or
6-12/acre.
Our tree farm sells about 275 board feet of
timber per acre along with about 0.6 tons of
pulp each year. Possible Carbon Credit 1.97
tons/acre/year, or 18-38/acre.
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What Should Forest Landowners Do to Get Ready for
Carbon Trading?
Get educated in forest management! Start with a
forest inventory and forest management plan.
Find out how much of your forest volume is in
pulp and pallet timber. Make an aggressive plan
to remove these trees and start immediately.
Export pulp/pallet from your property. Get
involved in efforts to develop new markets for
pulp. (Torrefaction, ethanol, etc.)
Join the American Tree Farm organization. The
educational, certification and lobbying benefits
are tremendous.
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What Should Forest Landowners Do to Get Ready for
Carbon Trading?
Take a serious look at reforesting your poorest
cropland and pastureland. As proposed, new
hardwood plantings will be credited for 1.425
tons/year of carbon.
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Getting Ready for Carbon Trading
Dont enter into a forest management carbon
contract if you have a typical overstocked/underma
naged timber stand. Pulpwood timber can hurt
you in several ways
1. It will slow your forests net carbon
sequestration.
2. Youll be stuck with the pulpwood timber.
You cant sell significant amounts, because you
have to have more net woody biomass at the end of
your contract.
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Getting Ready for Carbon Trading
In short
Thin, Thin, Thin!
But get a forestry plan first, and do it right.
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Happy Tree Planting from Hickory Grove Tree Farm
Lizzie
Kurt
Martha
John
Erich
Matt
Mark
Sarah
Kurt
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