A new word has emerged in the forestry lexicon: sequester or sequestrate. In legal terms sequester means "to seize and hold (a debtor's property), until legal claims are satisfied."
In like terms with forest landowners, it means seizing atmospheric carbon, then storing it in trees, and potentially earning revenue for the service.
How does it work? It works through "carbon markets" that help to fund greenhouse gas offset projects. The Chicago Climate Exchange is one example, serving as a CO emission registry.
Manufacturing firms in the U.S. that are members of the CCX make a voluntary but legally binding commitment to lower their greenhouse gas emissions. Known as "cap and trade," CCX members have a CO emission quota.
If this quota is exceeded, they must offset the excess by purchasing carbon credits from sources that sequester carbon, such as forests.
Only forestlands that have been third-party certified are eligible to participate. This requires a forest stewardship plan and third-party verification. Several third-party forest certification systems in the U.S. have been recognized as credible, most commonly: Sustainable Forestry Initiative, Forest Stewardship Council and American Tree Farm.
Landowners must work with a qualified professional forester to conduct a "carbon" inventory that establishes the baseline carbon stocks.
The data is submitted to a registered carbon aggregator who, in turn, uses a model to artificially grow the forest into the future. The model predicts the carbon sequestration rate, a figure that varies by forest and largely a function of stocking, species and site index.
Periodic payments are made to landowners based on the predicted carbon sequestration.
Landowners are required to give an annual update if any changes have been made to the forest that would alter the carbon stock (e.g., harvesting, reforestation, catastrophic events, etc.). A carbon inventory at the conclusion of the contract quantifies the actual amount of sequestered carbon and allows for final settlement.
Fees are associated with inventory development, aggregation, verifications and transactions, and in some cases, fees may exceed the carbon revenue.
Some of these fees are deducted off the gross revenue from the sale of carbon-offset credits. Other fees, such as inventories and carbon modeling are normally due up front. The registered carbon aggregator typically charges a commission, serving as a broker of accumulated sequestered carbon for a pool of landowners. Thus the highest trading price mutually benefits all parties.
Only those landowners with a serious and lasting commitment to long-term sustainable forest management should consider this program. It is a contractual agreement with initial costs that presently may not be suited for all ownerships. Landowners should understand that with participation in the program, comes an obligation that forests will remain in certified status for 15 years.
Selling timber during the contract period will greatly affect carbon sequestration rates, potentially resulting in a penalty. This program is funded by private investors, not the government, and these investors are counting on participating landowners to deliver a product: sequestered carbon.
And like the stock market, prices paid for sequestered carbon fluctuate daily with no minimum guarantee.
The program is in its infancy. Presently there are very few certified forests in Tennessee eligible to participate, and even fewer aggregators capable of marketing carbon. Participants should seek full disclosure of all potential benefits and risks prior to enrolling.
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