Growing trees as greenhouse sinks: An overview for landholders

8/8/2019 Growing trees as greenhouse sinks: An overview for landholders

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G R E

E N H O U S E

A C T I O N I

N R

E G I O

N A L

A U S T R A L I A

G r e

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t i o n i n R e g i o n a l A u s t r a l

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Growing trees as greenhouse sinks An overview for landholders


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Published by the Australian Greenhouse Office in the Department of theEnvironment and Heritage.

ISBN: 1 921120 78 9© Commonwealth of Australia 2006

First published in 2001Second edition 2002Third edition 2006

This work is copyright. It may be reproduced in whole or in part for study or trainingpurposes subject to the inclusion of an acknowledgment of the source, but not forcommercial usage or sale. Requests and enquiries concerning reproduction or rightsshould be addressed to:

The Communications DirectorAustralian Greenhouse OfficeDepartment of the Environment and HeritageGPO Box 787

CANBERRA ACT 2601

Email: [email protected]

This publication is available electronically at http://www.greenhouse.gov.auor by phoning 1300 130 606.

Questions or suggestions about the content of this document should be addressed to:

Greenhouse and Natural Resource Management TeamAustralian Greenhouse OfficeDepartment of the Environment and HeritageGPO Box 787CANBERRA ACT [email protected]

IMPORTANT NOTICE – PLEASE READ

This booklet has been produced for general information only and does not representa statement of policy of the Commonwealth of Australia.

This booklet has been prepared by the Australian Greenhouse Office, within theDepartment of the Environment and Heritage. It is one of a set of three booklets, with

the other two providing an overview for local government and for industry. The bookletshave been produced as part of the Greenhouse Action in Regional Australia Programme,which promotes action through investment in research, promoting partnershipsbetween agricultural and other industry sectors, supporting forest sink activities, andintegrating greenhouse issues within regional natural resource management.

While reasonable efforts have been made to ensure the contents of this publicationare factually correct, the Commonwealth does not accept responsibility for the accuracyor completeness of the contents and shall not be liable for any loss or damage that maybe occasioned, directly or indirectly, through the use of, or reliance on, the contents ofthis publication.

Cover photo: Department of the Environment and HeritageI&D 11167


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Contents

1. Purpose of this booklet.....................................................................................................1

2. What is the greenhouse effect?........................................................................................1

3. Trees as carbon sinks.......................................................................................................2

4. Benefits from establishing a forest sink ..........................................................................4

5. What can I do on my property?.........................................................................................4

6. Forest sink activities that contribute to Australia’s climate change response ..............5

7. Emissions offsets and carbon markets ...........................................................................7

8. Ways for landholders becoming involved in emissions offset initiatives........................9

9. Estimating and monitoring carbon sequestration ........................................................12

10. Further information ........................................................................................................14


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1. Purpose of this booklet

Trees can provide a practical contribution toefforts on farms and at the national level to reduce

emissions of greenhouse gases into the atmosphere,while potentially contributing to Australia’s otherenvironmental and economic goals. They also offerthe opportunity for landholders to gain benefits fromparticipating in emissions offset initiatives.

Farmers and other landholders manage existingforests and plant new ones for a range of reasons.This booklet shows how climate change can beincluded in these considerations. It providesinformation on:

• how trees can contribute to greenhouse

emissions abatement;

• actions that landholders can undertake to establishtrees as forest sinks;

• forest sink activities that will contribute to Australia’sgreenhouse gas abatement effort;

• greenhouse gas emission offsets and carbonmarkets; and

• how quantities of carbon sequestered in forestsare estimated.

2. What is the greenhouse effect?

Greenhouse gases are a natural part of theatmosphere, and maintain the Earth’s surfacetemperature at a level that can support life.Human activities are increasing the atmosphericconcentrations of greenhouse gases that trap heat,producing an enhanced greenhouse effect which iscontributing to warming of the Earth’s surface.

Australia is likely to experience increasing

temperatures, with fewer frosts and more heatwaves.Rainfall patterns are projected to change, includingreductions in water availability in southern Australiaand increases in much of the tropical north. Theintensity and frequency of droughts, bushfires, floodsand storms could increase. These changes will affectnatural ecosystems and human activities.

Addressing the challenge of climate change requiressustained international action to reduce greenhousegas emissions. Carbon dioxide emissions represent thelargest form of greenhouse gas emissions. Australia’sgreenhouse gas emissions profile is shown in Figure 1.In 2004, forest sinks contributed an 18 million tonnesoffset against Australia’s total gross greenhouseemissions profile of 582 million tonnes (Mt).

Figure 1. Australian greenhouse gas emissions, 1990 and 2004(Kyoto Protocol accounting)

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3. Trees as carbon sinks

Trees and other plants take up (sequester) carbon

dioxide (CO2) from the atmosphere as they grow,

through the process of photosynthesis. This

decreases the concentration of CO2

in the atmosphere

and helps reduce the greenhouse effect. Trees use

the sequestered carbon to grow leaves, stems,

bark and roots.

The amount of carbon in forest soils can also increase

over time. Preparing a site for planting can cause

initial soil carbon losses, after which soil carbon

slowly increases. The potential soil carbon benefits

of tree planting are greatest on sites where the soilhas been depleted of organic carbon, for example by

regular cultivation or heavy grazing.

While the forest is actively growing and sequestering

carbon, the system is termed a carbon sink.

The rate at which forests grow and sequester carbon

is influenced by site productivity characteristics such

as climate, topography and soils. Any soil carbon

emissions lessen the effectiveness of the carbon sink.

For a typical tree planting, growth tends to be slow

in the early years as the trees establish themselves.

In many areas sequestration rates peak when trees

are about 10 to 20 years old (earlier in faster-growing

species), then gradually slacken.

Carbon sequestration rates at different periods in the

life of a forest also depend on the number of trees

planted per hectare, the quality of site preparation

and management to ensure seedling survival, and

ongoing protection from fire, pests and disease.

If trees are not harvested they will continue tosequester carbon at a declining rate until reaching

maturity at around 100 or 200 years of age, when

growth is balanced by decay.

Figure 2 shows indicative examples of carbon

sequestration at a range of locations across

Australia. These examples were developed using the

National Carbon Accounting Toolbox (see section 9).

They show total (Figure 2A) and annual (Figure 2B)

carbon sequestration over time, based on carbon

sequestration potential (Figure 2C), which is derivedfrom National Carbon Accounting System site

productivity data. The examples are for mixed species

environmental plantings, and represent only thecarbon sequestered in the tree biomass component(i.e. other carbon pools such as soil and debris arenot included).

Protecting existing forests and woodlands andestablishing new ones will help Australia limitgreenhouse gas emissions and can also assistbiodiversity conservation, address issues such asland degradation and salinity, and in some casesgenerate an income.

Disturbance of forest cover, which may occurthrough intended actions such as land clearing andtimber harvesting and unintended events such asbushfire and disease, causes release of CO

2back

into the atmosphere through burning or decay. If

carbon fluxes from disturbances (or the effects ofage-related factors) exceed sequestration, the forestbecomes a net source of greenhouse gas emissions.



Figure 2. Examples of total tree carbon (t CO2-e/ha) (A) and annual carbon stock change (t CO2-e/ha/yr) (B) in mixed speciesenvironmental plantings on sites with differing carbon sequestration potential (C). Coloured lines in A and B (see numberingin B) correspond to the numbered locations in C. The examples represent modelled tree biomass estimates (and not totalonsite carbon mass) derived from the National Carbon Accounting Toolbox.

A B

C



4. Benefits from establishing a forest sink

The Australian Government promotes action acrossall sectors, including industry, communities and

households, to reduce emissions of greenhouse gases.For the land management sector, there is potentialfor positive outcomes from greenhouse emissionreduction activities. In terms of climate changebenefits, growing trees and sustaining tree growth onfarms can:

• reduce the total greenhouse emissions associatedwith all activities on the farm;

• provide an added revenue stream from marketingof forestry products; or

• enable participation in emerging schemes formarketing of carbon sinks as offsets for greenhouseemissions from industrial and other sources.

Well planned actions can also provide naturalresource management benefits including salinitymitigation, enhanced biodiversity, and improvedwater or soil quality.

5. What can I do on my property?

Various actions can be taken by land managers to

establish new forest sinks or protect existing sinks:

• establish permanent plantings of native trees;

• establish commercial farm forests or plantationsfor future harvest;

• encourage regeneration of native trees and shrubs, forexample by fencing livestock out of some areas; and

• protect existing native trees and shrubs from loss or

damage by fire, land clearing or animals.Adopting current recommended practice for forestestablishment and management is likely to providea sound basis for achieving carbon sequestrationbenefits. Good planning, including consideration offorest establishment as part of property plans, is alsoimportant for optimising climate change, naturalresource and economic benefits.

The Australian Greenhouse Office publication Planning Forest Sink Projects – A Guide to Forest Sink Planning,Management and Carbon Accounting provides detailed

information on planning, establishing and managingforests for carbonsequestrationbenefits togetherwith other benefits,as well as guidanceon estimating andmonitoring carbonsequestration.



6. Forest sink activities that

contribute to Australia’sclimate change response

Land managers looking to make a positivecontribution to Australia’s national greenhousegas emissions performance, or to have carbonsequestration in forest sinks formally recognised asoffsets, e.g. under Australian Government or stateand territory government greenhouse initiatives,will generally need to ensure carbon sink projectsare consistent with Australia’s national approach.This means that a newly established forest area

should comprise the following characteristics:

• a forest of trees with a potential height of at leasttwo metres and crown cover of at least 20%;

• in patches greater than 0.2 hectare in area, and(for reasons of detectability) a minimum widthof 10 metres;

• forest established since 1 January 1990, on landthat was clear of forest at 31 December 1989;

• established by direct human induced methods,i.e. planting, direct seeding, or human inducedpromotion of regeneration from natural seedsources; and

• occurring in Australia.

These criteria are consistent with those developedinternationally, and which apply to Australia’s Kyotoemissions target, for eligible forest sink activities.The Australian Government is committed to meetingthe agreed Kyoto target of reducing greenhouse gasemissions to 108% of the 1990 level over 2008-12,and will follow the international rules and guidelines

in measuring progress towards this target. TheAustralian Government has not ratified the KyotoProtocol because it does not provide a comprehensiveor environmentally effective long-term response toclimate change. The Government is also developingstrategies for further reducing emissions in thelonger term.

Forests for carbon sequestrationand biodiversity

Paul Strickland and Merrin Butler run a grazing

and lavender farm near Cloverlea in Gippsland,Victoria. They were successful in their tender offerunder the Victorian Government’s Carbon Tenderprogramme in 2004.

Under the CarbonTender programme bidders offera price to the Victorian Government for providingthe carbon rights from new, permanent, nativevegetation established on their property. Bids areable to offer sharing arrangements, by agreedamounts, between the landholder and the VictorianGovernment. If the tender price is accepted, growers

begin planting and receive performance basedpayments over a 5 year period.

Paul and Merrin have accepted a contract torevegetate 2.8 hectares, which is predicted toremove approximately 820 tonnes of CO

2from

the atmosphere. The site supported tall dampforest before being cleared for agriculture, and therevegetation contract specifies the use of a widerange of indigenous species, including understorey

shrubs. The new vegetation will provide buffers forexisting remnant vegetation and a stepping stonefor movement of native fauna. These functions willhelp increase the resilience of those flora and faunaspecies that may be vulnerable to the impacts ofclimate change.

CarbonTender has allowed landholders to buildcapacity as carbon growers and given the VictorianGovernment the opportunity to act as a carboninvestor in a ‘learning by doing’ exercise.

The Australian Greenhouse Office would like to thank the Victorian Department of Sustainability and Environment for providing this case study.

Case Study



Some common questions about the role of treeestablishment activities in Australia’s climate changeresponse, and the types of activities that can berecognised as sinks, are discussed below. Landholders

interested in establishing a forest sink under a particulargreenhouse gas abatement initiative should note that thespecific requirements of different initiatives may vary.

Aren’t forest sinks just a temporary way ofreducing emissions?

Forest establishment can play a valuable part within acomprehensive national approach to reducing greenhousegas emissions. Commercial forest plantations andenvironmental plantings can be managed so thatthey sequester carbon over many decades, while alsoproviding other environmental and economic benefits.

Forest sink projects designed to achieve continuedcarbon sequestration over a long period provide morerobust contributions to emissions reductions than thosewith short timeframes.

Are shrubs, grasses and other smallervegetation eligible as sinks?

Some types of shrubs may meet forest sink criteria(described in section 6). However, carbon sequestrationis likely to be low compared to trees, and would likelybe substantially diminished if the shrubs were subjectedto grazing.

Grasses and other small plants would not be eligible asforest sinks.

Are orchards and grapevines eligibleas sinks?

Orchards established since 1990, on land that was notforested on 31 December 1989, could be eligible as aforest sink if they meet all the physical criteria for a forest(height, crown cover and area).

Grapevines are unlikely to meet forest definitions. As well,carbon sequestration in grapevines is likely to be lowcompared to trees.

Is planting of oil mallees or other speciesin alleys an eligible activity?

Yes, if the planting meets all the eligibility criteria.For example, that the planting has an area greaterthan 0.2 hectare and a minimum width of 10 metres.

Can I get Kyoto emissions trading credits

for my forest sink?Australia has not ratified the Kyoto Protocol, so forestsink projects occurring in Australia cannot generate

Kyoto credits. However, there are some marketopportunities for forest carbon commodities inAustralia (see section 7 for details).

If I clear my land now and then reforestit in a few years time, would the forestbe eligible?

Only establishment of new forest on land that was notforested on 31 December 1989 counts towards Australia’sgreenhouse emissions performance (see section 6).Establishing new forests on land that has been previouslyforested (since 1990) would not be recognised as a sink.

What if areas of woody weeds are replacedwith plantations or parkland?

Managing woody weeds can improve farm productivityand provide environmental benefits. Removing standsof woody weeds that meet the definition of a forestand replacing them with new forests would not counttowards Australia’s greenhouse emissions performance.Replacing scattered woody weeds (that do not meet forestcriteria) with trees may be eligible.

Would management to encourageregeneration of native vegetationbe recognised?

Fencing out livestock, or other direct actions to encouragevegetation regeneration, may produce a forest sinkthat could be recognised as contributing to Australia’sgreenhouse emissions performance, where the criteriadescribed in section 6 are met. Regenerated areas wouldneed to be managed to maintain a long-term sink.

What about harvesting and harvestedwood products?

So as to conform with international guidelines, Australia’sgreenhouse accounting approach treats harvesting as a

source of emissions at the time of harvest, regardless ofthe end use of the timber. When a forest sink is harvested,the carbon stored in harvested material is considered tobe emitted.

Can I harvest an eligible forest?

Emissions from harvesting need to be accounted for, anda harvested forest would need to be replanted to maintaina carbon benefit. Managing an estate or pool of a numberof forest sinks can allow emissions from harvesting in onearea to be covered by sequestration in other areas.

Frequently asked questions



7. Emissions offsets and carbon markets

Investment in sequestered carbon is occurring inAustralia. Some companies with large greenhouse

emissions have invested in forest carboncommodities or in establishment of forests forcarbon sequestration. However, Australia does nothave a regulated, national market that supports thetrading of carbon commodities.

The governments of Victoria, New South Wales,South Australia, Tasmania, Western Australiaand Queensland have enacted specific legislationto recognise ownership of carbon sequestrationrights from forest sink projects separately fromownership of land and trees, as one element to

facilitate transaction of forest carbon commodities.The AustralianGreenhouseOffice publicationPlanning Forest Sink Projects: AGuide to Legal,Taxation and Contractual Issues ,provides furtherinformation onthe legislation andissues that shouldbe considered inany agreement tosell forest carboncommodities.

Forest sink projects are eligible activities undera number of national and state greenhouse gasabatement initiatives.

For example, members of the AustralianGovernment’s Greenhouse Challenge Plus

programme who undertake forest sink projects canreport these as an action to reduce their emissionsinventory. This programme also includes theGreenhouse Friendly initiative, which allows forapproval of forest sink projects as emissions offsets.The Greenhouse Friendly Guidelines (see section 10)provide further information.

Forest sink projects are also eligible activities underthe New South Wales Government’s GreenhouseGas Abatement Scheme, a mandatory programmeto abate greenhouse emissions from electricity

production and use.

Forest growers and others considering participatingin an emissions offsets market should be aware ofthe following issues.

• There is limited public information available aboutcurrent and future prices for carbon. In general,higher prices are likely for carbon commodities thatare: covered by secure ownership arrangements;derived from well-managed projects; secured in thelong term; and sold through regulatory schemes.

• To reduce transaction costs, manage risks andaccess any required technical and managementexpertise, small growers and/or individuallandholders mayfind carbon pooling

approaches auseful way toenter emergentcarbon markets.The AustralianGreenhouseOffice publicationPlanning Forest Sink Projects: A Guide to Carbon Pooling and Investment

Structures , providesfurther information.

• Legal transactions are potentially complex andcostly. Carbon brokers or other service providersmay manage such services.



Forest sinks and farm enterprisediversification

Trevor Waring is a farm forester in north centralVictoria who is a firm believer that plantations canplay an effective role in utilising low productivity farmland in a more productive and sustainable manner.He points to their ability to lower water table levelsfor salinity mitigation, provide habitat and biodiversityin the landscape, contribute to erosion control andprovide greenhouse benefits.

Trevor has participated in the Victorian Government’sPlantations for Greenhouse programme and hasestablished about 40 hectares of farm forestry near

Avoca in central Victoria. This area receives 600 mmannual rainfall and is not considered a traditionalplantation region, however carbon payments mayhelp to change this view. Plantations for Greenhouseis a pilot programme where landholders undertakecarbon sharefarming agreements and receivepayment in return for assigning a share of theircarbon to the programme. Across the state afurther 70 planting projects such as Trevor’s havehelped create 1,400 hectares of new long rotation,high quality sawlog plantations – and an up frontcarbon deal has helped landowners to get their newplantings in the ground.

Trevor has planted about 40 hectares of sugar gum,ironbark and red stringybark as part of Plantations

for Greenhouse. The trees will be managed under alonger term agreement to produce future sawlogsand to sequester carbon. Trevor has also planted a

further 10 hectares of yellow box and 18 hectareswith a mix of yellow box, red box, grey box andironbark eucalypts. These species were chosenbecause of their density, durability and ability tocoppice repeatedly – as well as being local species.The additional plantings provide Trevor with theoption of selling further carbon offsets or harvestingthe trees for an ongoing supply of renewable fencepost/firewood over a shorter 15 year rotation.

The Australian Greenhouse Office would like to thank Trevor Waring and the Victorian Department

of Primary Industries for providing this case study.

• Each greenhouse gas abatement initiative ortransaction will have specific criteria for acceptanceof forest sink projects. These specific requirementswill have their own particular implications in terms

of responsibilities and risks for sellers.

• Sequestered carbon can potentially be re-releasedto the atmosphere, due to either intendedmanagement actions or unintended events.Consequently, many greenhouse emissionsoffset initiatives have provisions addressingthe permanence or longevity of forest sinkprojects. Forest growers may be liable for lossesof sequestered carbon. Adopting good forestmanagement practices and risk management

approaches can significantly reduce the potentialfor significant losses. Risk management optionsmay include taking out insurance and entering intocarbon pooling arrangements.

• A forest sink project should comply with anyrelevant state/territory, Australian Government,and/or local government planning requirements.

• Growers intending to sell carbon should seek legaland commercial advice.

Case Study



8. Ways for landholders becoming

involved in emissions offset initiatives

There are several avenues which may trigger a land

manager to commence consideration on whether

to become involved in planting of trees as a form of

greenhouse emissions abatement.

Private forest growers and carbon brokers may

seek available land for planting. Landholders can

participate by providing the land to these other entities

to plant forests. One arrangement could be to derive

an income from renting farm land to these parties,

while leaving the risks, costs and responsibilities of

forest management and carbon commodities to the

organisation establishing the plantation.

Alternatively landholders may choose to plant their

own commercial forest or environmental planting toachieve a range of benefits, including the possibility of

gaining income from the sale of carbon commodities.

Land managers could seek to sell forest carbon

commodities to participants in emissions offset

schemes (mandatory or voluntary) or to other parties

seeking to acquire forest carbon commodities by

private contract. This could be done directly between

the parties, or landholders may wish to act through a

carbon pool or brokering service.

Integrating forest sinks with agriculture

In 2004 David Krieg, a landholder near Griffith, NewSouth Wales, agreed to participate in CO2 Australia’s

trial site programme, which is part of the company’sresearch into carbon sequestration.

Under the trial, 3 hectares of David’s land wasplanted with blue leaved mallees and a selectionof other species. David has another property southof Hay which has been evaluated for a large-scaleplanting of mallees as part of CO2 Australia’s carbonsequestration plantation programme.

David’s decision to participate in the carbonsequestration programme was influenced by the

opportunity for extra income from a low maintenanceperennial crop. David was also looking for a solutionto wind damage to his crop yields, and he believedthe mallee plantings would provide shelter for stockand crops.

Obligations between CO2 Australia and David are speltout in a straightforward contractual arrangement. AsCO2 Australia markets the carbon sequestration underthe New South Wales Greenhouse Gas AbatementScheme the plantation must remain for at least 100years. The company planted the vegetation on the

trial site and met all costs, including site preparation,planting, seed and seedlings, weed and pestmanagement, cultivation and monitoring.

The success of the trial gave David the confidenceto enter into a contract with CO2 Australia forfurther plantings.

The carbon sequestered from David’s property willbe used to create New South Wales GreenhouseGas Abatement Certificates and sold to greenhouseemitters in the New South Wales electricity retailsector. Recently, CO2 Australia entered into acontract with Country Energy to supply carbonsequestration abatement from up to 30,000 hectaresof mallee plantations. CO2 Australia is negotiatingcontracts with landowners for 100-200 hectaresized plantings.

The Australian Greenhouse Office would like to

thank CO2 Australia (a wholly owned subsidiary of CO2 Group Limited) for providing this case study.

Case Study



Frequently asked questions about legal and financialaspects of transacting forest carbon commoditiesare discussed below.

What are carbon sequestration rights?All state governments have enacted specificlegislation that allows the creation of carbonsequestration rights (CSRs), which enables carbonin trees to be transacted as a commodity separatefrom ownership of the land or the trees, and permitsregistration of the CSRs on land title1.

The legislation varies between states and establishesonly a basic framework for the creation andownership of CSRs. It does not deal with maintenanceof the sequestration, liability, the allocation of risk

between parties, or the methodology to quantify thecarbon sequestered. These matters typically are dealtwith in a contract between the buyer and seller.

Why are rights to sequestered carbonsecured on the land title?

Registering rights to sequestered carbon on the landtitle ensures the rights to that carbon commodity‘run with the land’ and bind future owners. Thismeans that if the land is sold, the new owner wouldbe aware of who owns the carbon sequestration rights

and bound not to remove the trees, and thereforethe sequestered carbon. In addition, if rights to the

1 Each state uses a different term to describe rights tosequestered carbon - in New South Wales the term ‘CarbonSequestration Right’ is used; in Victoria and South Australia

the term ‘Forest Property Agreement’ is used, in Queenslandthey are called ‘Natural Resource Products’, Western Australiauses the term ‘Carbon Right’, and Tasmania uses the term‘Forestry Right’.

P h o t o : J o

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O 2 A u s t r a l i a

Frequently asked questions

sequestered carbon have been registered onthe land title it is then easier to place covenantson the land title (e.g. for the management andmaintenance of vegetation) in some states.

Are all forest carbon offsets the same?

A range of carbon commodities are being createdand transacted from forest projects in Australia.They are not all the same, and have varyingcharacteristics depending on the reasons theforest project was established and the objectivesof the purchasing parties. Prices being paid forthese commodities vary and often reflect thespecific attributes of the product.



Carbon commodities may attract higher prices ifthe forest sink project: will contribute to Australia’sgreenhouse emissions performance (see section 6);uses carbon accounting methods consistent with the

national approach (see section 9); and is managedby entities with expertise in forestry/vegetationmanagement appropriate to the type of forest sinkproject. Carbon commodities are also likely to be moreattractive where a project demonstrates commitmentto long-term management and provides clearownership rights to the investor.

How much does sequestered carboncost per tonne?

At present, there is considerable variation in the price

paid for sequestered carbon. Prices often reflectthe specific attributes of the product and dependon factors such as project structure, motivationsbehind the purchase and the context in which thesequestered carbon is being used. The perception,allocation and management of risk are alsodetermining factors in price setting. Recent priceshave ranged from around $1 to $16 per tonne ofCO

2equivalent.

What tax treatment applies to carbonsequestration investments?

The tax implications of growing carbon sinks vary

depending on the nature of the investment combinedwith individual circumstances. The AustralianTaxation Office (ATO) has published a number of‘Interpretive Decisions’ on the relevant capital gainstax and income tax issues. These can be found at theATO Legal Database Homepage at http://law.ato.gov.au/atolaw/index.htm. The Australian GreenhouseOffice publication Planning Forest Sink Projects: A Guide to Legal, Taxation and Contractual Issues provides information on these tax issues.

What is carbon pooling?

Carbon pooling is a way of grouping individual forestsink projects and managing them on this larger‘pooled’ basis. Carbon pool managers may providetechnical and commercial management services, andsell carbon commodities from the pool to investors.

Carbon pooling generally provides economies of scaleand an effective approach to spreading risks across aportfolio of projects. Participation in carbon poolingcan allow land managers to generate an incomewithout having responsibility for all aspects

of ongoing management of their forest sink.



9. Estimating and monitoringcarbon sequestration

Where a forest sink is established for reducing farmemissions or to provide an emissions offset, theamount of carbon sequestered over time needs to beestimated. Australia’s national approach to carbonaccounting for forest sinks involves estimatingannually the amount of carbon added to, or lost from,a forest’s carbon stocks. Predictions of carbon sink

performance can be developed before a forest isestablished or while it is growing.

For forest sink projects that need to be consistentwith Australia’s national greenhouse inventoryapproach (a requirement of Australian Governmentgreenhouse abatement programmes and a numberof other initiatives), carbon sequestration will needto be estimated using the National CarbonAccounting Toolbox.

The Toolbox provides a set of tools for tracking

carbon stock changes in forests. It provides access tothe modelling and data used by the National CarbonAccounting System to construct Australia’s nationalgreenhouse gas account for land-based activities.Using the Toolbox therefore ensures project-levelcarbon accounts for forest sinks are determined on asimilar basis to Australia’s official continental-scalereporting of carbon sequestration in forest sinks.

The Toolbox has a Data Builder function fordeveloping carbon sequestration estimates. The DataBuilder can be used to generate a carbon account fora specified location by accessing national datasets forthat location. Users also have the option of enteringtheir own information, such as rainfall data.

The units in which carbon sequestration in a forestsink is described should be clearly identified.

Carbon sequestration in forest sinks isestimated in units of tonnes of carbon perhectare. The Toolbox provides estimatesin tonnes of carbon per hectare.

Discussions about carbon markets also refer toCO

2

or CO2

equivalent (CO2

-e) amounts. Nationalreporting of greenhouse gas emissions usesCO

2-e units, to allow comparison of emissions

of the different greenhouse gases, whichhave differing relative warming effects onthe atmosphere.

Describing quantities of carbon sequestrationin CO

2or CO

2-e units enables comparison against

quantities of emissions (e.g. where emissions areto be offset). To express a quantity of carbon as anamount of CO

2, the carbon value can be multiplied

by 3.67 (this is a simple conversion that does nottake into account other gases).

Procedures for monitoring carbon sequestrationover time should include field assessments such assurvival checking following tree establishment andcondition assessment after any event (e.g. fire) thatsignificantly affects a forest. As well as informingforest management, field assessments can be usedto support and revise carbon sequestration estimatesdeveloped using the Toolbox. Certain greenhousegas abatement initiatives may have particularrequirements for monitoring, reporting and verifyingcarbon sequestration.

P h o t o : G e o f f P a r k



A Data Viewer, available (on DVD) with the Toolbox,contains a visual record of landscape and vegetationchange in Australia, as seen through several nationalsnapshots of satellite data. It provides a quick means

of assessing change in forest cover over time. TheData Viewer may also be useful at the property andregional scale, to assess:

• where tree cover has changed;

• where tree planting has been most effective;

• which areas should be targeted for rehabilitation; and

• which areas have experienced drought inrecent times.

Information contained on the Data Viewer is based on

satellite imagery and data archives of the NationalCarbon Accounting System.

For more information on the Toolbox visithttp://www.greenhouse.gov.au/ncas

To request a free copy of the Toolbox and/orData Viewer email your postal details [email protected]

P h o t o : A n n e B r o w n



10. Further information

Additional information on issues discussed in this

booklet can be found in the following Australian

Greenhouse Office publications:

• Growing Trees as Greenhouse Sinks -

An Overview for Local Government (2006)

• Investing in Trees as Greenhouse Sinks -

An Overview for Industry (2006)

• Planning Forest Sink Projects - A Guide to

Forest Sink Planning, Management and

Carbon Accounting (July 2006)

• Planning Forest Sink Projects - A Guide to Legal,Taxation and Contractual Issues (March 2005)

Organisation Website Phone

Australian Greenhouse Office, Department of theEnvironment and Heritage

www.greenhouse.gov.au 1300 130 606

Department of Agriculture, Fisheries and Forestry www.daff.gov.auwww.landcare.gov.au

(02) 6272 3933

Land and Water Australia www.lwa.gov.au (02) 6263 6000

Rural Industries Research and Development Corporation www.rirdc.gov.au (02) 6272 4819

Ensis (a joint venture between CSIRO and Scion) www.ensisjv.com

Greening Australia Limited www.greeningaustralia.org.au (02) 6281 8585

• Planning Forest Sink Projects - A Guide to CarbonPooling and Investment Structures (March 2005)

• The National Carbon Accounting Toolbox and Data

Viewer (initially released in March 2005)• Greenhouse Friendly Guidelines (July 2006)

Copies of these documents may be obtained byphoning the Australian Greenhouse Office Infolineon 1300 130 606. These documents and othergreenhouse information are also available on theAustralian Greenhouse Office website:http://www.greenhouse.gov.au

State and territory government agencies, researchorganisations and industry groups may also provide

information on greenhouse and tree growingactivities. Some contact details are provided below.

© M

u r r a y - D a r l i n g B a s i n C o m m i s s i o n

P h o t o : A

r t h u r M o s t e a d , A M P

h o t o g r a p h y


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