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Forest Products Extension

Carbon Credits and Cutting Timber

There is widespread and growing concern about the release of greenhouse gases and the associated global climate change. Carbon dioxide (CO 2 ) is the main greenhouse gas and the burning of coal, oil and natural gas is the reason that the concentration of CO 2 in the atmosphere is increasing rapidly.

In response to this situation, some people are suggesting the implementation of a carbon ‘cap-and-trade' system. This would be based on the technique used in the northeast United States to reduce the sulfur emissions responsible for acid rain. Under that program, sulfur emissions were capped at existing levels and the companies responsible were assigned an emissions allowance for their share of the pollution. The emissions allowance was then lowered every year to meet the eventual target. To meet the reduced emissions allowances over time, individuals companies could either reduce their own emissions to meet the new ‘cap' or ‘trade' (buy) emissions permits from other companies that had more allowances than they needed. In this way, the companies that could reduce their emissions most easily were rewarded for lowering their pollution below the targets for their company. The result was that overall emissions were lowered to the target level but at less cost to the industry than if each company had to reduce their emissions by the same amount.

A carbon (CO 2 ) cap-and-trade system might be different. In addition to capping the pollutant and allowing companies to trade any excess allowance they might have, in the carbon system it has been suggested that ‘credits' be given for activities that remove CO 2 from the atmosphere. CO 2 is absorbed by plants (including trees) when they photosynthesize, so the wood in a tree can be considered to be ‘sequestering' CO 2 . As long as the wood is intact, the CO 2 is trapped and not contributing to the greenhouse effect. One specific proposal is to pay landowners for the carbon in the trees on their forest land, because, by sequestering carbon, they provide ‘negative CO 2 pollution' that could offset the CO 2 being released by the burning of fossil fuels.

Some groups are establishing programs for determining the carbon credit that a landowner could claim, based on the inventory and projected growth rate of their trees. The Chicago Climate Exchange has been set up as a venue for selling these carbon credits to those responsible for releases of CO 2 . These programs will require inventorying the forest and following a management plan. Currently, a landowner could expect payments of about $5 per acre from such a system, depending on the stand. If trees are harvested from the stand, carbon credits would be reduced and a new inventory may be required. Carbon trading is a relatively new system and no regulations capping emissions currently exist in the United States . Any participation in carbon trading and carbon credits is voluntary at this time.

Economists generally agree that a simple tax on CO 2 release would be easier to implement and monitor than a CO 2 cap-and-trade program. However, new taxes have little political support.

A more important problem with the proposed carbon cap-and-trade concept is that providing for a ‘carbon credit' assumes that trapping CO 2 through photosynthesis offsets the effects of burning fossil fuels. This is short-sighted. All trees eventually die and when the wood burns or rots, the CO 2 is returned to the atmosphere. This is a natural and inevitable part of the ‘carbon cycle.' Thus, a tree will usually sequester carbon for only a few decades. The fossil fuel-derived CO 2 that is causing climate change is adding carbon to the carbon cycle that has been stored for hundreds of millions of years. Short-term (geologically speaking) storage of CO 2 in trees does nothing to address the inputs of new (fossil) carbon to the carbon cycle.

There are many good reasons to encourage the continued growth and development of our forests. In the face of pressures to convert forest lands for residential and commercial development, it would be good if society could provide landowners with increased incentives to retain their forested acres. However, a ‘carbon credit' payment to landowners to reduce tree cutting will do nothing to mitigate the problem of climate change.

The burning of fossil fuels is the main driver of global warming. RealClimate.org has more information about climate change science.

For more information, contact:

Adam M. Taylor
Tennessee Forest Products Center
2506 Jacob Drive
Knoxville, Tennessee 37996

Phone: 865-946-1125
Fax: 865-946-1109

Adam Taylor's email