All organisations and individuals in a modern society produce carbon emissions and other green house gases.
It is generally accepted that carbon emissions have and are contributing to global warming which inturn is to the detriment of the environment.
International concern with the level of carbon emissions led to the establishment of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992. The aim of UNFCCC is the stabilization CF carbon emissions levels before they reach dangerous levels.
The Kyoto Protocol was adopted in December 1997 and sets legal and binding emission carbon targets for developed countries. Australia's target under the protocol is to limit greenhouse gas emissions (includes carbon emissions) to 108% of 1990 levels by 2012, with measurement beginning in 2008.
Formal trading of carbon credits commences in 2008.
While the Australian federal government has not signed the Kyoto Protocol, many Australian companies (e.g. BHP Billiton) are already actively involved in carbon trading. The Federal government says that it is on track to reach its admissions target. Signatory countries to the Kyoto Protocol are urging Australia and the USA to sign the protocol. France has gone further, by stating that it is likely to place tariffs on imports from countries that have not signed up.
There appears to be wide spread community support for change in order to negate global warming.
Many organisations are considering how they might reduce or offset their contribution to global warming through efficiency gains, improved technologies and through the acquisition of carbon credits.
THE ROLE OF FORESTS
Trees are an obvious source of carbon credits. Trees suck in carbon and emit oxygen. This is known as carbon sequestration. The rate at which trees store carbon varies according to species and by other variables. One broad rule of thumb is that one hectare of forest can absorb 7.5 tonnes of carbon per year.
Organisations can offset their carbon emissions by:
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purchasing carbon credits on the open market;or
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by growing or acquiring existing forests.
Option (a) has the advantage of being quick, but the disadvantage of having a variable capital value over time. That is the price of carbon credits is likely to rise and fall overtime.
Option (b) takes a little longer, but offers capital appreciation and increasing carbon credits (as trees get bigger they suck in more carbon), presenting the possibility that the growing forest could offset the growing carbon admissions that come from the natural expansion of an organisation's activities.
In response to Kyoto and the limitations being placed on native forests, the Australian Federal government has created Vision 2020, which supports and encourages the increase in forestry. It aims to increase the area of Australian forests from 1,000,000 hectares (in 1996) to 3,000,000 hectares to by 2020.
The Federal government continues to provide incentives to plant forests.
THE OPPORTUNITY
Plantation Timbers has been growing and managing forests for more than 10 years for both corporations and private investors. It has recently received an investment mandate from a specialist timber investment fund for $30m, taking Plantation Timbers timberland management to more than $100m.
Plantation Timbers has identified additional forestry investment opportunities suitable for organisations wishing to acquire existing and / or establish new forests in order to offset their carbon emissions. A sophisticated financial model has been produced that can be demonstrated on request.
NEXT STEPS
We are seeking to identify organisations wishing to offet their carbon emissions and willing to consider forestry investment as a way of achieving this goal.
