Contact Us

Fill out our online form

Forest Owners Likely to Benefit from New Cap and Trade Rules Adopted to Reduce Greenhouse Emissions.

On December 16, 2010 the California Air Resources Board approved regulations governing a cap and trade system to implement reduction of greenhouse gases by carbon retention. The rules lean upon the state’s forests as the vehicle for greenhouse gas management and provide a potential financial incentive for forest owners to manage their forests on much longer rotations and to consider long term preservation

These new regulations grow out of the California Global Warming Solutions Act of 2006, popularly called “AB 32” which requires California to reduce greenhouse gas emissions to 1990 levels by 2020. The regulations create a market based solution where an industry exceeding its carbon dioxide emissions would be able to continue its emissions only if it purchased offsets. Forest owners would be able to exchange preservation of their forest and the concomitant carbon retention for cash.

Forests will play a role in the compliance in that forests absorb carbon dioxide emissions—the key ingredient of greenhouse emissions—and store such carbon dioxide for long periods.

The California Cap and Trade regulations represent a significant experiment after the collapse of cap and trade in the U.S. Congress last summer. The regulations will set in motion an effort to further define the process. Air Resources Board Chairwoman Mary Nichols said, ‘We’re inventing this. There is still going to be quite a bit of action needed before it becomes operational.”

Bob Whitney, President of the Golden State Land Conservancy, indicates that the initial value of carbon credits is being set at $10 per ton, but that E&E News reported that financial analysts have estimated that 2.7 billion allowances will ultimately be needed through the year 2020 potentially driving prices to $15-$60 per ton. A forward trade conducted last month put the price at $11.50 per ton.

Categories: Uncategorized