I keep hearing how inexpensive forestry is as a mitigation strategy. Is it true?
ClimateBiz expert Dr. Mark C. Trexler tackles your questions on managing climate risk.
Mark: In the context of purely voluntary mitigation efforts we've all had a lot of latitude in quantifying mitigation costs and benefits. Take reforestation with Douglas fir in the Pacific Northwest. If you assume 600 tons of CO2 will be sequestered per acre, and $600 in planting costs, you can arrive at $1/ton. Cheap! This is how forestry has gotten a reputation as a low-cost mitigation strategy, and forestry projects continue to be promoted on this basis.
To compare forestry with other mitigation options, we need a way of leveling the playing field between projects and sectors with very different carbon timelines. Carbon discounting is an easy way to do this. By discounting the carbon and cost streams of a project, you get a $/ton figure that is much easier to use in comparing different forestry projects (e.g. fast growing vs. slow growing trees), and different sectors (e.g. reforestation vs. energy efficiency). And it's based on exactly the same premise of economic discounting, namely that the longer you have to wait for your money, the less valuable it is to you.
As we move toward emissions trading, we will likely only be able to count carbon offsets as they accrue. This clearly puts a higher value on nearer-term reductions, and virtually mandates the discounting approach I've described. And there’s another wrinkle, namely permanence (or the lack thereof). Trees might be harvested, or burn down, or die of disease, releasing much of their sequestered CO2. This is why new categories of "temporary" emissions reductions credits have been created under the Kyoto Protocol. But if you know you’ll have to replace these credits with permanent credits in the future, you’re going to be willing to pay less for the temporary credits today.
I believe forestry is an important part of climate change mitigation efforts. Forestry projects help generate public awareness and accomplish biodiversity and other aims. But in terms of evaluating the cost-effectiveness of mitigation options, we need to compare apples to apples. That $1/ton I referred to earlier? With discounting it’s closer to $10/ton, illustrating that forestry isn’t necessarily the ultra low cost strategy we might wish for.
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Dr. Mark C. Trexler has more than 25 years of energy and environmental experience, and has focused on global climate change since joining the World Resources Institute in 1988. He is now president of Trexler Climate + Energy Services, which provides strategic, market, and project services to clients around the world.
Got a question for our climate expert? Email [email protected].
To compare forestry with other mitigation options, we need a way of leveling the playing field between projects and sectors with very different carbon timelines. Carbon discounting is an easy way to do this. By discounting the carbon and cost streams of a project, you get a $/ton figure that is much easier to use in comparing different forestry projects (e.g. fast growing vs. slow growing trees), and different sectors (e.g. reforestation vs. energy efficiency). And it's based on exactly the same premise of economic discounting, namely that the longer you have to wait for your money, the less valuable it is to you.
As we move toward emissions trading, we will likely only be able to count carbon offsets as they accrue. This clearly puts a higher value on nearer-term reductions, and virtually mandates the discounting approach I've described. And there’s another wrinkle, namely permanence (or the lack thereof). Trees might be harvested, or burn down, or die of disease, releasing much of their sequestered CO2. This is why new categories of "temporary" emissions reductions credits have been created under the Kyoto Protocol. But if you know you’ll have to replace these credits with permanent credits in the future, you’re going to be willing to pay less for the temporary credits today.
I believe forestry is an important part of climate change mitigation efforts. Forestry projects help generate public awareness and accomplish biodiversity and other aims. But in terms of evaluating the cost-effectiveness of mitigation options, we need to compare apples to apples. That $1/ton I referred to earlier? With discounting it’s closer to $10/ton, illustrating that forestry isn’t necessarily the ultra low cost strategy we might wish for.
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Dr. Mark C. Trexler has more than 25 years of energy and environmental experience, and has focused on global climate change since joining the World Resources Institute in 1988. He is now president of Trexler Climate + Energy Services, which provides strategic, market, and project services to clients around the world.
Got a question for our climate expert? Email [email protected].
