Forests Alive: A case study on Protection and Avoided Emission Projects

By Lawrence Rimmer and Beatriz Garcia

INTRODUCTION

Forests Alive is an Australian owned private company established in 2008 (formerly known as Redd Forests) with the objective of providing the most secure and effective emissions avoidance projects by protecting native forests. We aim to demonstrate the carbon and biodiversity value of protecting and restoring natural forests and other ecosystems. Our goals include: providing an economic alternative to local communities that protects natural ecosystems and improves livelihoods; and promoting understanding and education on the role of natural ecosystems in the carbon cycle.

Forests Alive pilot project was the first in the world to validate avoided emissions projects under the Verified Carbon Standard (VCS) and Climate, Community and Biodiversity Standard (CCBS, soon to be verified). Forests Alive implemented the first VCS Grouped Project to be validated and verified globally.

Today, Forests Alive represents 13 landowners, protecting 36,000 ha of native forest in . Our projects help avoid over 260,000 tonnes of carbon emissions each year, and generate over 220,000 carbon credits, which provide landowners with an alternative source of income for protecting their forest.

Forests Alive focus on projects rather than planting for the following reasons;

Native Forest Protection Forest Planting Carbon Dual benefit; Avoiding emissions from and continued carbon sequestration Biodiversity Protects the biodiversity in the Little biodiversity benefit arises native forests, in Tasmania this from planting forest for the includes endangered Wedge- ecosystem requires time to Tailed Eagles, Tasmanian establish Spotted Quolls and the iconic Tasmanian Devil Risks Australian native forest There is increasing risk for fire ecosystems are resilient and and drought due to climate relatively low risk having change that challenges the evolved to cope with fire, success of young reaching drought, pests and disease maturity. The system takes time to become robust to high levels of disturbance

THE PILOT PROJECT

Forests Alive’ pilot project is located in the Northern Midlands of Tasmania with a total area of 865 ha of native forest. Land use in the region is primarily agriculture (grazing and cropping) with some . The project is on private land of a family who have owned and logged the land for over hundred years. The site was therefore under threat of continued selective logging which prevents natural regeneration of degraded forest. Some of the dominant species are among the tallest hardwood trees in the world. The project site also has a rich biodiversity, including 29 endangered species on site and/or within a 5km radius. The project uses the VCS- approved VM0010 Methodology and was estimated to produce 4,956 voluntary carbon units a year for the 25-year duration of the project. After initial assessment, Forests Alive signed an agreement with the project proponent in March 2010, which is the start date of the project. The first validation event occurred in March 2011 and 7,500 VCUs were then issued.

THE GROUPED PROJECT

The “Grouped Project” was first validated in July 2011, and verified in September of the same year. The structure of a grouped project allows for new instances to enter the project after the project has officially started. A crediting period is implemented at the start of the grouped project, which runs the length of the project, and the additional instances added after the start of the project would claim credits for the remainder of that project crediting period. A crediting period must have a minimum of 20 years1, which limits the time in which instances can be added into the grouped project. The instances have monitoring events at the same time and all costs from monitoring are subsequently shared; a major benefit for landowners within a grouped project.

In the first round of Validation, three instances were added to the project. The following year, a further five instances were added into the project, totaling 8 overall instances. The grouped project now protects almost 21,000 ha of native forest in Tasmania, and the project avoids an average 169,103 tCO2-e of emissions annually.

1 http://v-c-s.org/faqs/what-project-crediting-period-under-vcs-program HOW FOREST PROTECTION PROJECTS WORK

Forests Alive implements the VCS-IFM methodology VM0010, “Methodology for Improved : Conversion of Logged to Protected Forest” which was first approved on the 11th February 20122. Forests Alive have validated three projects which use this methodology, the Pilot Project, our second project (the “Grouped Project”), and a third landowner project3.

Before a project starts, a feasibility study is undertaken to determine whether the land put forward is eligible. There are several pre-requisites, including the requirement for a minimum area of native forest, that there is a legal intent to harvest the forests within the project area, that the intent is not to convert the native forest to (the methodology only addresses the plan to log native forest and reseed with native seed stock), and that the land is not considered to be protected from harvesting activities (e.g. by a logging covenant).

Typically, the feasibility study involves landowner interviews, site visits, and a desktop analysis using Geographical Information Software (GIS). Once a project area has been defined and considered to be eligible, the technical specialist will begin to stratify the forest area for sampling purposes. The stratification process is essential for identifying potential causes of variability that will be discovered by sampling. Sources of variation include the mix of different species, when the areas were last logged, and the density of the forest. The stratification process reduces sampling error.

Once stratification is complete, a fieldwork sampling strategy is created by randomly assigning plots to different strata and a team is sent out to take tree measurements. Plot sizes are 2,025 m2 (0.2025 ha). The number of plots required for each strata is determined by Winrock International Sampling Calculator4, which analysis the mean and standard deviation value of carbon in all plots for each strata. An error level of 15%, and a confidence level of 95% determine the number of plots required.

The standard for measuring trees includes taking the Diameter at Breast Height (DBH) and tree height. A merchantable volume of timber is calculated for each plot using the data gathered which is processed in the Farm Forestry Toolbox5, and then the plots are converted into tonnes of Carbon per hectare (tC/ha) for each strata. These values then contribute to the modeling and calculation phase of the projects where carbon removed in projected harvesting events can be calculated and these emissions are converted into VCUs. Sequestration of CO2 is included in the modeling process, which simulates forest growth. The Australian Governments’ ‘Full Carbon Accounting Model’6 (FullCAM) is used to simulate forest growth over the project period.

2 http://v-c-s.org/methodologies/VM0010 3https://vcsprojectdatabase2.apx.com/myModule/Interactive.asp?Tab=Projects&a=1&t=1 4 http://www.winrock.org/ecosystems/tools.asp 5 http://www.privateforests.tas.gov.au/products/farm_forestry_toolbox 6 http://www.climatechange.gov.au/government/initiatives/ncat/ncat-toolbox-cd.aspx

A non permanence risk buffer is determined using VCS guidelines for removing a certain percentage of credits for project insurance purposes. “Non-permanence” is the way of calculating the risk of the project (or carbon stocks) not to remain intact until the end of the project period. For example; the buffer takes into consideration changes in the credit market, the timber market, leakage, natural disturbance, and political uncertainty. The risk is described as a percentage of credits held back in case the carbon stock is lost. If an unforeseen event does occur, such as a bush fire, the credits held back in the buffer can be used to offset the loss of carbon as a result. Currently, the risk buffer for the Tasmanian projects is reasonably low compared to other forest projects. The buffer has been calculated to be 14.5% of the annual issuance of credits.

Once the project calculations are complete, independent validators must examine the whole process. This ensures any errors in the process can be identified and adds an extra layer of certainty to the final value produced. On top of this, the projects undergo a monitoring event every year (to check the project is still being correctly implemented by the landowner), and fieldwork is conducted every five years to validate the model outputs.

The process for implementing these projects can take time, as the fieldwork, calculations, and validation processes are quite lengthy. Typically, a landowner would have to wait up to 12 months before the first VCUs are issued.

THE STANDARDS

The principle standard of our IFM projects in Tasmania is the Verified Carbon Standard7. This is an internationally recognised standard for carbon offsets. The Pilot project is validated under an additional standard - the Climate, Community and Biodiversity Standard (CCB)8. This standard recognises the benefits our projects provide to biodiversity and rural communities in Tasmania. The pilot project is being submitted for verification and after this, these credits will hold both VCS and CCB standard labels.

The Australian Government introduced a National Carbon Offset Standard (NCOS), to “provide national consistency and consumer confidence in the voluntary carbon market”9. The Tasmanian projects are the only NCOS credits generated in Australia with the exception of those credits generated for the Australian domestic market under the Carbon Farming Initiative (CFI).

7 http://v-c-s.org/ 8 http://www.climate-standards.org/ 9 http://www.climatechange.gov.au/ncos THE BENEFITS

Despite credits being used to offset a company’s emissions, these projects have greater, far-reaching benefits that are not limited to climate change.

The protection of native forest in Tasmania has a huge biodiversity benefit. Native forests in Tasmania are primary habitat for the endangered iconic Tasmanian Devil (Sarcophilus harrisii). Other endangered species in the project areas include the Tasmanian Wedge-Tail Eagle (Aquila audax fleayi, a sub species to the Wedge-Tail Eagle, Aquila audax), and the Spotted Quoll (Dasyurus maculates). The protection of native forest habitats will assist with the conservation of these species and ensure they can maintain healthy populations free from disturbance that harvesting can cause.

The opportunity to develop Group Projects has greatly increased the benefits to biodiversity. The grouped project incorporates landowners from the same locality within Tasmania. This network of protected forest promotes habitat connectivity, allowing endangered species to move freely across the midlands of Tasmania and increased the diversity of the genetic pool.

In recent times, forestry in Tasmania has suffered from a decreasing value of products, leading to concerns of the viability of rural industry in the area. For landowners, forestry was a major source of revenue. The opportunity for landowners to benefit from protecting the forest on their land through the sales of carbon credits are two-fold. The first being agricultural families adopt forest protection as a legitimate and viable source of revenue allowing them to not only stay on their land, but also conserve it for their future offspring. The second, local communities could benefit from the enhancement of local natural beauty through tourism and education.

DOMESTIC OPPORTUNITIES THROUGH THE CARBON FARMING INIATIVE (CFI) AND KYOTO PROTOCOL

One of the underlying principles of the Australian Government’s Clean Energy Future package is that the coverage of market mechanisms should be as broad as possible to lower abatement costs. This is reflected in the structure of the Clean Energy Act 2011, which extends the carbon pricing scheme to selected emissions from the energy, industrial processes and waste sectors. To fill gaps left by the CE Act in the energy and industrial processes sectors, equivalent carbon prices are imposed on certain emissions from these sectors via the fuel tax system and ozone and synthetic greenhouse gas regime. By and large, the remaining gaps in the coverage of Australia’s emissions and removals from the agriculture, waste and LULUCF sectors are intended to be filled by the Carbon Farming Initiative (CFI).

As part of this package, nominated polluting companies will be liable to pay a carbon price for emissions above a certain level. These companies are allowed to offset 5% of their emissions through the purchase of approved offsets. The major program for the generation of offsets is for land-based projects through the CFI. The intention of the CFI is to generate credits for a range of land based projects that increase carbon stored in the landscape, or reduce emissions by changing practices. CFI projects will generate credits known as Australian Carbon Credit Units (ACCUs).

The decision made by the Australian government in November 2012, to enter a second Kyoto commitment period will have implications for the CFI that may necessitate some legislative change if the CFI is to reflect the now mandatory ‘Forest Management’ rules under the KP.

It seems likely that a path will open up through the CFI for ‘Forest Protection’ projects albeit with possibly different rules and requirements to current voluntary schemes.

The credits generated in Tasmania are currently traded on the international voluntary market. In the medium term it seems likely that these projects could be eligible for CFI ACCU’s, provided they satisfy the still evolving domestic rules.

Credits generated under the CFI that are recognized for Australia’s obligations under the Kyoto Protocol can be sold to companies with liabilities under the Carbon Pricing Mechanism. This includes credits earned from activities such as , savanna fire management and reductions in emissions from livestock and fertilizer use.

Credits generated under the CFI that are recognized for Australia’s obligations under the Kyoto Protocol can be sold to companies with liabilities under the Carbon Pricing Mechanism. This currently includes credits earned from activities such as reforestation, savanna fire management and reductions in emissions from livestock and fertilizer use.

USING OUR EXPERTISE IN THE FUTURE

Forests Alive is currently working on the design of a REDD-VCS project in the state of Amazonas, Brazil in collaboration with the state government, a local NGO, the United Nations Conference on Trade and Development and the Latin American Development Bank. The aim is to protect native forests, reduce emissions and create an alternative source of revenue to the families within the project areas. The project will combine REDD+ and BioTrade activities and will be the first to build a methodology that takes into account carbon and the sustainable use of biodiversity.

Amazonas is the largest State in the Brazilian Amazon, with 157 million hectares, and plays a key role in regulating rainfall regimes and the global climate.10 It has the largest in Brazil, approximately 98% of forestlands over an area of 1.46 million square kilometers, equivalent to 43% of the total remaining Amazon forest in

10 This description and figures are found in: Government of the State of Amazonas, Secretariat for Environment and Sustainable Development (SDS), Amazonas Initiative on Climate Change, Forest Conservation and Sustainable Development (2006). Brazil. It contains nearly 50% of the carbon stock in the Brazilian Amazon.

The state government has taken a series of measures to create market incentives to protect native forests. In 2003, the government began to seriously invest in the forest sector, with the announcement of a sustainable development plan known as the Green Free Trade Zone. At the center of this initiative was the Secretariat for Environment and Sustainable Development created by Law 2.783/2003. Another step forward was taken in 2007 with the adoption of the State Climate Change Policy (Law 3.135/2007), which is the first of its kind in Brazil, introducing market incentives for reducing emissions from . In line with national policies to curb deforestation, in 2008 the state introduced a Plan to Prevent and Combat Deforestation in the State of Amazonas). Under the Plan, the government committed to reducing 38% of deforestation until 2010 based on the 1996-2005 average deforestation levels. This policy complements Brazil’s National Policy on Climate Change created by Law 12.187/2009.

The emission reductions achieved under the project will generate commercial carbon credits that can be traded in the international carbon market. By providing income to the families in excess of the income they would derive from logging or other unsustainable activities, the project will safeguard native forests from deforestation and/or degradation. Another revenue stream would come from BioTrade activities, which intend to select products and services with trade potential within the project site, strengthen their value chains and support commercialization.

Additional environmental and social benefits derived from the project include biodiversity and watershed preservation and enhancement, creation of job opportunities, and community engagement. Local families will receive training to be engaged in fieldwork and monitoring, and will be supported to develop other environmental services, such as those related to the sustainable use of biodiversity.

The technical expertise gained from Tasmanian projects provide a strong basis for implementing REDD projects in Brazil. Forests Alive is currently seeking co-funding to cover the initial project costs and expects to start project implementation next year with a feasibility study and initial fieldwork.