Plantations for Greenhouse (P4G)

The Plantations for Greenhouse project (2000-2005) aimed to support landholders in growing plantations for carbon sequestration in addition to all of the regular economic and environmental benefits. The project resulted in 1400 hectares of sawlog plantations, which will absorb around 500,000 tonnes of CO2 over 30 years. The landholders involved in this project retained the rights to the carbon stored in their trees, which they may be able to sell to a buyer that wishes to offset their emissions.

The project and learnings are well summarised in the following paper made to the Australian Forest Growers Conference 2006.

How can a greenhouse investor get access to carbon in new tree sinks established on farmland, without the expense of buying land and establishing the forest themselves? How can a landowner grow trees and get paid for some of the carbon? How can we design carbon sinks to deliver multiple benefits to society?

“Plantations for Greenhouse” is pilot Victorian Government project that aims to shed some light on these questions – and the practicalities of joint established carbon sinks. This Dept. Primary Industries delivered program is a $1.9M Victorian Greenhouse initiative that has seen 1350 hectares of new long term timber and carbon sink farm forests established across the state under carbon sharing agreements.

The project

Sixty-seven new carbon sink tree planting projects have been established during 2003-2005 and these trees are expected to absorb approximately 500,000 tonnes of greenhouse gases from the atmosphere over the next 30 years.

Participating landowners entered into long term carbon rights agreements utilising Victorian Forestry and Carbon Rights legislation. These agreements outlined the carbon ownership, management of the plantations to produce timber products and the agreed contractual commitments of both parties. Landowners receive a payment in return for assigning a share of the carbon sequestration rights – once they have successfully established the new plantation according to the agreement.

Species

Figure 1.

Native hardwood tree species formed the bulk of plantings with species ranging from local indigenous, non-local native species and also exotic pine. The three most common species chosen by growers were E.cladocalyx (Sugar Gum), P.radiata (Radiata Pine) and C.maculata (Spotted Gum). The average size planting was approximately 20 hectares (20,000 trees), however projects ranged from 5 to 150 hectares in size.

Planting projects were ranked according to carbon sequestration ratings and catchment benefit. Highest payments were offered for plantations located within high carbon sequestration and priority catchment zones. At the other end of the scale projects that were low sequestration and outside of priority catchment zones received the lower payments. If funding was limited the lower ranked projects were not offered to participate.

Figure 1. The Victorian DPI Plantations for Greenhouse program has established new carbon sinks via carbon sharing agreements – and will sequester 500,000 tonnes of greenhouse gases. Half of these new plantings were in priority revegetation zones.

Priority catchment zones

Catchment Management Authorities were asked “where in your catchments would you like more trees” and subsequent advice from each CMA helped establish the priority catchment zones for each region. Most CMA’s chose their salinity recharge zones as priority areas, however a range of other aspects were also considered. Areas where new plantations could replace Serrated Tussock infestations, or areas of high firewood collection/biodiveristy loss were included by some CMA’s, as was the locating of trees for water quality benefit within water supply catchments. Each CMA chose the zones and issues most important to them. An analysis of completed projects showed that around half of the new plantings were located in priority catchment zones.

Delivery aspects

Approximately 50% of the $1.9 M funding was paid direct to participating carbon sink projects whilst the remaining expenditure was for program delivery operations such as provision of field staff, arranging legal contracts and advice, detailed mapping, title information/registration and general communication/administration costs. DPI private forestry staff were responsible for program delivery and maintaining quality assurance for all projects. A total of 121 sites (2750ha of plantation applications) from across the whole of Victoria were actually visited and assessed by DPI field staff. Note that a little over half of these sites progressed to the final stage of achieving a signed carbon agreement, successfully completing plantation establishment and subsequently being paid for meeting their contract requirements.

Seeking capable growers

Further to the above sites that were assessed, many public inquiries were assisted and preliminary advice was offered. The nature of a carbon sink project such as Plantations for Greenhouse required that participating landowners were of a higher “tree-growing” capability, due mainly to the fact that carbon rights agreements and the growing of sawlogs is a more complex undertaking than simple revegetation. Applicants received limited advice from DPI staff and were encouraged to seek additional advice or support from private service providers. A final analysis showed that 79% of applicants ended up employing consultants and or contractors to oversee establishment of their new plantations.

Applicants had to demonstrate they had undertaken some sound planning and analysis of their plantation project to ensure they knew what they were embarking on. In many cases applicants were asked to seek further advice on their proposal before submitting an application or in some cases referred to other schemes that better suited their needs.

Yes - size does count

Figure 2.

An important element to consider for both prospective carbon pool proponents and tree growers alike is that the price being offered via any future carbon trading scheme may not automatically translate to a price in the field. It is important that the costs of getting the carbon from the field to the market place are considered thoroughly.

Figure 2. Integration of new carbon forestry plantings with agriculture was encouraged under Plantations for Greenhouse. It is important to consider that incorporating smaller and more complex planting projects into a broader carbon pool can lead to higher costs for prospective carbon brokers.

A subsidiary aim of Plantations for Greenhouse was to open encourage the incorporation of smaller scale and integrated farm forestry designs. While this aim has many benefits, it is important to note it can also significantly increase total project delivery costs. For example, arranging a joint project with a 5ha grower can take as much administrative effort/cost as a project twenty times the size. Herein lies the elusive question – how many hectares (or tonnes of carbon) do you have to grow to be viable for a market to deal with? In the end, carbon pooling/brokers are most likely to lead the way in answering this.

It is also important to note that should public authorities be keen to ensure carbon sink projects are located in smaller, integrated, landcare style situations -any prospective carbon pool manager may require an incentive to do this, or at least some process whereby the extra costs of arranging carbon in smaller (but well located) parcels of trees are not liabilities for the broker to share alone.

An analysis of Plantations for Greenhouse projects provides an interesting insight into the aspects of individual project size. Projects fell into the following categories:

• 26 smaller sites <10ha contributed 218ha
• 26 medium sites 10-20ha contributed 474ha
• 15 larger sites >20ha contributed 624ha
  

While each project took approximately the same amount of administrative cost, it is interesting to note that the largest 7 projects are estimated to contribute the same amount of carbon as that produced by the total from the 46 smallest projects.

An alternative to buying land for carbon production

The Plantations for Greenhouse project essentially set out to examine the scenario of how a third party carbon investor might go about buying some of the carbon contained in the forests and on the land owned by other parties. For their part, landowners committed over $2M of their own funds to establish these new commercial forests and in the process offered over $4M worth of land on which to grow these forests. If a different scenario were to eventuate where a prospective carbon investor wished to also own the trees and the land then you can see that this can drastically increase the total project costs. If prospective carbon pool managers are seeking to collaborate with landowners, rather than purchasing land they may need to engage in joint or cooperative design to ensure landowners achieve their own benefits from the new carbon sink plantings. Essentially for Plantations for Greenhouse it was the fact that landowners themselves owned the trees and sought to benefit from income derived from the plantations – that provided a clear motivation for landowner participation. Also being open to the design aspirations of landowners was also a key in improving participation rates.

Medium rainfall – high adoption

It is interesting to note that 77% of plantings were located in the 600mm-800mm rainfall zone, with only 10% of plantings in the higher rainfall areas >800mm and only 13% in areas receiving <600mm rainfall. This possibly provides some insight into the huge potential of developing new private forestry industries in medium rainfall zones, especially if new forms of collaborative investment can be fund. Such investment may be assisted via future carbon projects if and when greenhouse emissions trading becomes a reality. If this project is any indication, it is species such as Sugar Gum, Spotted Gum and Radiata Pine that are likely to feature prominently within this rainfall zone of Victoria.

Figure 3. Most of the new plantings projects (77%) occurred in the medium (600-800mm) rainfall zone. Species such as Sugar Gum, Spotted Gum and Radiata Pine were most commonly chosen by growers.

Participant survey

The project analysed participant responses to a survey on a range of aspects relating to the project. Findings from the survey include:

• 69% of participants thought that the program was a combination of a carbon rights trade and a treegrowing grant - however significantly it was larger growers who specifically saw the project as a carbon trade while smaller growers were more likely to view the project as a treegrowing grant
• 56% of growers thought the commercial return combined with the environmental benefit of their plantings were of equal value
• 26% thought the environmental value was most important whilst 18% thought that commercial returns were most important aspect of their plantings
• 59% of projects would not have been undertaken, or would have been smaller without participating in the plantations for greenhouse project
• 89% of growers stated their understanding of what is involved in a carbon rights agreement had improved
• 84% of growers indicated that their understanding of farm forestry had improved with 44% indicating their knowledge was now “a lot better”
• 85% of participants indicated they would prefer an up-front payment of $700/ha at establishment rather than an annual payment of $60/ha/year (indexed to CPI) for 30 years. In economic terms these two payments have the same value.
• 72% had previously participated in a treegrowing or farm forestry course
• 60% of growers are members of a farm forestry network or organisation
• 70% of growers are intending to establish further sawlog plantations

Staff development

DPI staff involved in delivering the program were also assessed as to their learnings from delivering the program. A significant organisational benefit of the project was that staff reported a significant increase in the level of understanding of carbon rights issues and also understanding of climate change. A further very significant outcome was that 100% of staff surveyed now believe they have much better knowledge relating to the possible impacts that climate change may have on future plantations. To this extent staff now fully appreciate that climate change implications must be considered when planning new plantations, especially with regard to careful species selection.

While DPI capabilities have been developed as a result of delivering this project, it is the intention that future carbon off-set projects in Victoria are delivered by the private sector. An important lasting element of the Plantations for Greenhouse pilot is that there is now a core experience within DPI staff that can now assist new private carbon projects to develop with access to the learnings and experiences taken from delivery of the Plantations for Greenhouse project.

Some key learnings

The Plantations for Greenhouse project provides a valuable insight into the role of a “carbon investor”. Some key learnings include:

• commercial drivers for timber production can assist in the scale and economic attractiveness of carbon sink establishment
• plantation growers and carbon owners have a mutual asset they both wish to manage, measure and protect
• plantations offer an “income producing” carbon sink that provides income options for landowners in future years (carbon rights can only be sold once, however timber income can occur from each and every harvest)
• plantation based carbon sinks allow for future regional economic and employment opportunities from future wood-flows
• well designed carbon plantations are able to deliver positive salinity and biodiversity outcomes - CMA’s can assist by clearly indicating their preferred zones
• cooperative carbon ownership can be achieved without the expense of buying land and planting it all yourself – the key is in the design of your carbon project
• there is a poor appreciation of the valuable role managed plantations can play in greenhouse mitigation. There is a public perception that once you harvest the tree all carbon gains are
  lost. Will require increased communication effort to get this message across.
• over 100 years multiple cycles of carbon can be grown and cycled through a single hectare of a plantation estate. Most focus to date revolves around the carbon story within the first rotation only – we need to broaden this view to include longer term considerations.
• there are many advantages to working with smaller scale projects, however from a carbon pool manager’s point of view this can add significant to the cost of project delivery
• while much focus of this project has been based around carbon benefits of plantations and possible carbon trading, it appears the actual risks posed to longer term forest crops via a changing climate regime need to be more widely investigated and understood
• developing and building the capability of private carbon pool service providers will be a key aspect to attracting future carbon investments into new plantation estates when greenhouse emissions trading schemes finally arrive

An income producing greenhouse mitigation measure

While greenhouse mitigation is often viewed as an “extra cost to doing business” – the delivery of Plantations for Greenhouse has indicated that investment in commercial carbon sink plantations can be an “income producing” greenhouse mitigation action -bringing carbon back down to earth to produce a range of ongoing benefits for society.