Carbon Marketing

• Carbon offset project development, registration and credit sales
• Carbon stock inventory and quantification
• Carbon market investment analysis

In the spring of 2008 H&H joined forces with AgraGate Climate Credits Corporation to provide Virginia and North Carolina forest landowners with access to the emerging market of carbon offset trading. As this is a complex new market, you are encouraged to review the following brief information and contact us to further discuss how you can benefit.

Background

In 2003, under the foresight and guidance of founder, chairman and CEO Dr. Richard L. Sandor, the Chicago Climate Exchange (CCX) was formed with more than 100 members, aimed at establishing the first North American cap and trade system targeted at reducing carbon dioxide emissions from the manufacturing facilities of its member companies. The voluntary program set forth that each emitting member would achieve a 6% reduction in CO2 emissions by 2010.

Cap and Trade entails establishing a “Cap” on the level of CO2 emissions for member companies (i.e. the 6% reduction) and a “Trade” platform (the CCX) on which members can buy and sell their excess reductions or credits towards needed reductions. In plain terms, if company A can reduce its emissions by more that the required amount, they can sell the excess reduction to company B which may not be able to achieve the full reduction. Company B must buy enough credits to achieve full compliance.

Recognizing that trees and other plants sequester carbon from the atmosphere through photosynthesis and bind it up in the cell structure of the plant, CCX established the Forestry Offset Program, wherein members could claim and purchase credits from forest landowner’s whose trees were in effect pulling their emissions back out of the atmosphere. Trading in forestry offsets (XFO’s) began in 2008.

The Process

H&H serves as the stepping stone for VA and NC landowners to access the CCX. Being a trading platform for financial instruments, like the New York Stock Exchange or Chicago Futures Exchange, only members and their affiliates have direct access to CCX. Through H&H and its affiliation with AgraGate Climate Credits Corp VA and NC landowners can now tap into this growing opportunity.

H&H assists landowners in the enrollment, quantification, and certification of qualifying projects. Since the goal of the XFO program is to bind CO2 long-term, the program requires a 15 year commitment to maintain the enrolled forest stand. This precludes that the program is not for everyone or every tract. Properties with near term planned clear-cut harvests or development potential should not be considered. However, for young plantations or recent cutover sites that will be reforested, the opportunities are significant.

To qualify, stands (predominately plantations) must be managed under a written management plan and have a sustainable management certification. H&H assists landowners with fulfilling these requirements prior to enrollment.

The basic enrollment process consists of the execution of the XFO contract, submission of ownership documentation and management history, and baseline carbon level determination via a timber cruise. Data from the baseline cruise is plugged into a growth and yield model, along with the intended future management regime, in order to estimate the amount of carbon that will be accumulated in the stand during the 15 year contract. This estimate is then allocated to the landowners account in 1/15ths annually throughout the contract period. At the end of each year, that year’s carbon allocation is considered to have been sequestered and becomes eligible for sale on the landowner’s behalf at the then current market rate.

The XFO program sets up an annual stream of potential income for forest landowners and makes every management treatment more valuable due to the carbon value added to their trees. This, along with numerous other examples, is one more way that H&H brings cutting edge forestry opportunities to its clients. For more information on how to take advantage of this program, contact us to discuss your project.