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British Columbia’s Forest Industry: Strategies for reducing carbon emissions

FRST 523: Simulation Report

Authors: Christopher Britton-Foster, Qingcen Cai, Kathleen Coupland

A Report by Offsetters

Prepared for FRST 523

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Cover Image from: http://i.huffpost.com/gen/1231731/thumbs/o-FOREST-facebook.jpg.

Accessed on Nov 12 2014

UBC Forestry 523, Forest Policy

Authors: Christopher Britton-Foster, Qingcen Cai, Kathleen Coupland

Date: November 17th 2014

Words: 1761

1. Executive Summary

Offsetters is a private company founded in order to meet the growing demand for

information and creative solutions to reducing the environmental impact of companies [1].

Offsetters’ main goal is to promote an environmentally sustainable future by providing

information and aiding companies to offset their environmental impact [1]. Using four

criteria, three alternatives for addressing carbon in British Columbia’s forest were

examined. The four criteria were profitability, environmental impact, industry acceptability

and feasibility. These were weighted to align with Offsetters values. The three alternatives

examined are the inclusion of carbon in certification standards, government incentives to

reduce carbon emissions, and legislated requirements to reduce carbon emissions.

Offsetters recommends the incorporation of enforced, regulatory legislation that requires

the measuring, monitoring, and reduction of carbon emissions below business-as-usual

levels in the forestry industry over time, that includes the ability for companies to use

carbon offsets to meet these goals.

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2. Background and Purpose

Offsetters is the leading carbon offset project developer in Canada [1]. Together with the

subsidiary company Era Ecosystem Services, Offsetters’ mission is to promote a shift to an

environmentally sustainable future by helping clients to understand, reduce, and offset

their environmental impacts [1]. Clients are provided with greenhouse gas (GHG)

inventories, product life cycle analysis, custom software for GHG monitoring, strategies for

improving GHG efficiency, policy advisory services, corporate risk management, and carbon

offset opportunities [10]. Carbon offsets are financial credits earned by reducing or

sequestering levels of carbon beyond any regulatory requirements [13]. These credits can

be purchased by one entity from another in order to reduce their net GHG emissions.

Offsetters have developed offset projects in British Columbia, in Canada, and around the

world. These range from alternative energy projects to forest conservation, and improved

forest management [11].

Carbon accounting has been a salient issue in British Columbia during recent years due

to widespread concern about global climate change caused by GHG [6&7]. In 2012, British

Columbia’s forest industry produced an unaccounted net volume of 39.3 million tonnes of

CO2 [7]. Compared to the 61.5 million tonnes of CO2 accounted for by British Columbia, it is

evident that forestry plays an enormous role in the province’s carbon emissions [7]. Aside

from the Carbon Tax Act, there is no regulatory legislation for the forest industry’s carbon

emission levels [9&8]. Offsetters conclude that there are promising opportunities to reduce

British Columbia’s carbon emissions through regulation of carbon in the forestry sector.

Offsetters advocates for the use of emission reduction strategies and the use of offset

projects by forestry companies to decrease the net carbon added to the atmosphere by the

industry.

3. Evaluative Criteria and Scope

Offsetters is a private company that relies on revenue generation from offsets and other

carbon financing projects. Profitability is essential for Offsetters continued viability as a

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company; therefore it is the most crucial criterion when examining options for carbon

emission reduction. As a company that promotes environmental sustainability,

environmental impact is an important criterion when evaluating potential solutions to the

issue of forest carbon mitigation. Additional criteria such as industrial acceptability and

feasibility for implementation are also considered. To Offsetters, the major criteria are

company profitability and environmental impact and the minor criteria are industrial

acceptability and feasibility.

4. Assessment of Alternatives

a. Incorporate carbon into certification standards

One alternative for reducing carbon emissions produced by the forest industry is to

incorporate carbon reductions or limits on emissions into private third-party certification

schemes like the Sustainable Forestry Initiative (SFI), the Canadian Standards Association

(CSA) and the Forest Stewardship Council (FSC). The CSA already has a requirement to

“maintain the processes that take carbon from the atmosphere and store it in forest

ecosystems” [15], but there are no specifications on the amount of carbon allowed to be

emitted by certified companies [4].

Certification is pursued voluntarily by forestry companies, largely in order to satisfy

consumer expectations for sustainable practices [14]. Therefore, including GHG mitigation

in certification schemes would avoid governmental costs for developing and imposing legal

regulations that would be imposed on all forestry companies. The choice of compliance

makes this an acceptable alternative for the government and the industry in general.

However, the lengthy auditing process for certification compliance would be prolonged by

creating additional standards, making the option unfeasible for certification organizations.

All members of Forest Products Association of Canada are required to be third party

certified [12]. Smaller forest companies already struggle to justify the costs to meet

certification standards [14]. Increasing the number of standards is costly to companies and

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would eliminate the option of certification for even more forestry companies, making it an

unattractive alternative for those wishing to be certified.

The dependence on certification organizations to audit the carbon compliance

reduces Offsetters’ role in the forest carbon industry. There would be fewer opportunities

for involvement in carbon measurement, monitoring, and reduction unless Offsetters takes

steps to become an accredited certification body, under one or multiple certification

schemes. Taking these step would impose a cost to the company, however without

becoming an accredited certification body profits would be lost making it a less desirable

alternative.

Reliance on voluntary compliance as well as increased unobtainability of

certification for many smaller forestry companies means this alternative would not have a

very meaningful environmental impact in terms of net reduced GHG emissions in the

province.

b. Government incentive to reduce Carbon emissions

In order to reduce carbon emissions, the government of British Columbia could

implement incentives to promote companies to reduce their carbon emissions and to

protect forests as carbon sequestration areas.

One option would be to introduce tax incentives to companies that are

implementing carbon emission reduction strategies, including the purchase of offsets. Tax

incentives or reductions are designed to encourage behavior through fiscal gains to a

company or person through a reduction in taxation. When specific requirements or goals

are accomplished, individuals or companies are able to qualify for a reduction in taxations.

Ontario currently offers tax reductions on property tax for privately owned forest lands

when proper management strategies (including management plans) are implemented [5].

This strategy could be adopted for British Columbia’s forestry industry through offering a

tax incentive to companies that promote the retention of forests or a reduction of carbon

emissions, with offsets being included as an eligible approach for this incentive. Another

option for incentivizing the reduction of carbon could be to preferentially grant tenure to

companies that mitigate their carbon emissions.

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Allowing offsets to be used as a means of achieving these incentives would increase

forest companies’ awareness of carbon and would benefit carbon companies like Offsetters.

Since forest companies would receive direct benefits it would be easily acceptable by the

industry. However, since there would be no legal requirement to achieve these goals it is

likely that the impact on the environment would be less than if it was a legislative

requirement, but more feasible because of existing frameworks for incentive programs that

could be adopted.

c. Regulatory legislation for carbon emission limits

A final alternative to address carbon emission levels is the incorporation of

enforceable regulations into existing legal frameworks that require carbon reduction by

forest companies. Multiple policy instruments are available to achieve this, such as

reduction targets in industry legislature (e.g. the Forest and Range Practices Act or Land

and Resource Management Plans) or a cap-and-trade system. The method for regulation is

not as critical as the requirement for forest companies to reduce or offset GHG emissions.

Legal requirements for carbon reduction by forest companies would positively

impact the two major criteria that concern Offsetters. There will be a market expansion for

carbon project companies, and there will be a positive impact on the environment by

setting required, enforceable reduction goals or caps for carbon emissions.

One example of a policy instrument is the cap and trade system, which has proven to

be successful. The U.S.A implemented a cap-and-trade system in the early 1990s to reduce

pollutant emissions [2]. The program was a success, reducing the targeted pollutant

emissions to of half the levels present in the 1980s [2]. Currently the biggest GHG emission

trading scheme in the world is the European Union emissions trading system, which is also

based on the cap-and-trade system [3].

Instead of trading carbon credits, another possible policy instrument could involve

required emission reduction targets to force forestry companies to adopt internal

reduction strategies and offsets purchases to reach these goals.

The major concerns for this alternative are the feasibility for implementation and

acceptance by the forest industry. It will incur costs for the forestry industry to take steps

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for reducing or offsetting emissions. This result will not be favored by both industries and

the public. Due to the lack of previous policy framework to us as a guide, many regulations

will need to be developed [8]. Depending on the policy instrument, the process of updating

may take a long time before regulations can be implemented. That is why cooperation from

governments and shareholders is essential for creating meaningful change in industry

regulations.

5. Summary

Offsetters has evaluated three possible alternatives to address the issue of carbon

emissions by the forest industry according to four policy criteria. These criteria are

weighted based on importance to Offsetters (Table 1). The alternative with the highest

weighted total – incorporating carbon regulatory legislations – is our recommended

approach for addressing the carbon mitigation opportunities of BC’s forests.

Table 1. Evaluation of three possible strategies for forestry GHG emission reduction according to outlined

criteria. Each criterion is qualitatively scored on a scale of 1 to 3 where a score of 1 is Poor and 3 is Good. The

criteria are weighted by their importance to Offsetters. A higher weighted total represents a better alternative.

Carbon company

profitability

Positive environmental

impact

Industrial acceptability

Feasibility Weighted

total

Weights 0.5 0.35 0.05 0.1

Third-party certification

1 1 3 1 1.1

Carbon reduction incentives

2 2 3 2 2.05

Regulatory legislation

3 3 1 1 2.7

6. Recommendations and Conclusion

In order to promote a sustainable future for British Columbia, the forestry industry’s

carbon emissions need to be properly inventoried and monitored and emission levels need

to be reduced. Offsetters recommends the incorporation of carbon regulations into some

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form of industry legislation to better utilize the forest industry’s potential for aiding to

reduce provincial carbon pollution. This legislation should stipulate that:

o Carbon emissions must be actively reduced.

o Carbon must be measured and monitored according to transparent

regulations to ensure consistency when determining carbon emissions and

reductions.

o Internal reduction strategies and offsets should be considered as methods to

reduce carbon emissions.

7. Works Cited

[1] Offsetters, “Offsetters: About us,” 2013. [Online]. Available: www.offsetters.ca

[Accessed Nov 15th 2014].

[2] M. Horne, “Cap and Trade: Reducing Pollution, Inspiring Innovation”. March 2008.

[Online]. Available: http://site.ebrary.com/lib/ubc/reader.action?docID=10222551

[Accessed Nov 16th 2014]

[3] A. Ellerman and B. Buchner. “ The European Union Emissions Trading Scheme:

Origins, Allocation, and Early Results”. 2007. [Online]. Available:

http://search.proquest.com/docview/58756916?pq-origsite=summon [Accessed

Nov 16th 2014]

[4] Greig M. and Bull G. 2009. Carbon management in British Columbia’s forests:

opportunities and challenges. Forrex Forum Series 24. Accessed November 14 2014

from http://www.forrex.org/sites/default/files/forrex_series/FS24.pdf

[5] Government of Ontario, “Managed Forest Tax Incentive Program”. 2014. [Online].

Available: https://www.ontario.ca/environment-and-energy/managed-forest-tax-

incentive-program

[6 ] Parfitt, B. 2010. Managing BC’s forests for a cooler planet: carbon storage, sustainable

jobs and conservation. The Climate Justice Project. Accessed November 14 2014 from

https://www.policyalternatives.ca/coolforests

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[7] BC Ministry of Environment. 2012. British Columbia Greenhouse Gas Inventory

Report 2010. Accessed November 14 2014 from

http://www.env.gov.bc.ca/cas/mitigation/ghg_inventory/pdf/pir-2010-full-

report.pdf

[8] Ministry of Forests, Lands, and Natural Resource Operations. 2013. Climate mitigation

potential of British Columbian forests: growing carbon sinks. Accessed November 14,

2014 from

http://www.for.gov.bc.ca/het/climate/carbon/ClimateMitigationPotentialofBritishC

olumbianForests.pdf

[9] The Government of British Columbia. 2008. The Carbon Tax Act. Retrieved November

14, 2014 from http://www.bclaws.ca/Recon/document/ID/freeside/00_08040_01

[10] Offsetters, “Offsetters: Advisory Services,” 2014 [online]. Accessed November 14

2014 from http://www.offsetters.ca/advisory-services

[11] Offsetters, “Offsetters: Project Services,” 2014 [online]. Accessed November 14 2014

from http://www.offsetters.ca/project-services

[12] Forest Products Association of Canada, “FPAC: Environmental Performance,” 2014

[online]. Accessed November 16 2014 from

www.fpac.ca/index.php/en/page/environmental-progress

[13] International Organization for Standardization. 2006. ISO 14064-2: Greenhouse gase-

part 2: specification with guidance at the project level for quantification, monitoring

and reporting of greenhouse gas emission reductions or removal enhancements.

Accessed November 14 2014 from

https://www.iso.org/obp/ui/#iso:std:iso:14064:2:ed-1:v1:en

[14] Auld G., Gulbrandsen L.H., McDermott C.L. 2008. Certification schemes and the

impacts on forests and forestry. Annual Review of Environment and Resources 33:

187-211.

[15] Canadian Standards Association. 2002. Sustainable forest management: Requirements

and guidance. Mississauga, Ont. can/csa-z809-02. Accessed November 14 2014 from

http://www.csa-international.org/%5Crepository%5Cgroup%5CZ809-02EN.pdf