Carbon sequestration program begins

Already in Arkansas — often in conjunction with the State Acres for Wildlife Enhancement (SAFE, a CRP program offered by the Arkansas Farm Service Agency) — GreenTrees has taken another step towards its goal of reforesting 1 million acres, much of it in the Mid-South.

Run by Virginia's C2I, the GreenTrees program expects Congress will soon pass cap-and-trade legislation that will allow polluting companies to mitigate carbon dioxide emissions through the planting of CO2-sequestering trees.

In late May, North Carolina-based Duke Energy was the first big energy company to buy into the GreenTrees program. The result: a 70-year contract for more than 1 million trees planted on 1,700 east Arkansas acres. Other companies are also looking at such investments.

(For more on SAFE, see

GreenTrees is targeting the Lower Mississippi Alluvial Valley (LMAV), the nation's largest watershed which covers approximately 25 million acres in Louisiana, Mississippi, Arkansas, Tennessee, Missouri, Kentucky and Illinois.

“By many estimations it's the largest damaged watershed in America, so this project has targeted that area for obvious reasons,” said Greg Efthimiou, Duke Energy's communications manager, during a May 28 press conference announcing the GreenTrees buy. “Duke expects the federal government to implement an economy-wide carbon cap-and-trade program to control carbon dioxide emissions.”

House legislation sponsored by Henry Waxman and Edward Markey (titled the American Clean Energy and Security Act of 2009) recently moved out of the House Energy and Environment Subcommittee.

“We expect that legislation could be forthcoming later this year. That certainly factors into our decision to pursue carbon offsets as a business line. But it also provides the context for programs such as GreenTrees and how the carbon offset market may take shape.”

The carbon-sequestration effort will generate “high-quality, verifiable” carbon offsets and “a new and innovative way to address climate change” that will be good for Duke as well as “people, (the) planet, and profits,” said Efthimiou.

“In this case, people benefit because landowners get another option for using their land for productive gain. It certainly benefits the public at large with reductions and capture of additional carbon dioxide from the atmosphere. And if it turns into a good business line for Duke Energy then it's good for our shareholders, as well.”

America's Amazon

Likening the LMAV to the Amazon, Chandler Van Voorhis, GreenTrees/C2I managing partner, said, “It drains 41 percent of the United States. It's a flyway for 60 percent of all birds in North America. It's also where 20 percent of the natural gas in this country comes flowing through.”

Over the years, some of the issues and degradation in the LMAV have been “extreme. Those include flooding, hypoxia in the gulf. This investment in GreenTrees puts forests back in, helps to deal with flood attenuation, helps to deal with some of the hypoxia and, at the same time, delivers a very innovative way of absorbing carbon dioxide in the atmosphere and creates a sustainable economic model for the landowners and participants.”

Before committing, Duke looked at the program for a year. C2I has spent five or six years “looking at models, figuring it right, scratching their heads, developing the very delicate balance between landowners, regulators, environment and investors and put a package together that, bar none, I've seen nothing like,” said Donna Robichaud, Duke Energy's vice-president for commercial strategy and business origination.

“I really think it's a program where you can accentuate (that) to achieve good environmental policy that goes way beyond control of a smoke stack and can, basically, sequester the carbon being emitted in the air.”

Duke's first investment will generate 250,000 aforestation carbon offsets — or take 250,000 metric tons of carbon dioxide out of the atmosphere within the 70-year contract.

Robichaud was asked what percentage the 1,700 acres represented for Duke's offset needs. “It gives us a bite of something that could be significant to Duke's profile. It has the potential so we're starting it to see how things work out and see how it matches. Duke has an appetite — they have a lot of carbon emissions that they'll have to mitigate or do something with. They need every tool and toolbox in a big way.

“We want the offset business started. We want investments in it.”

But it doesn't represent, in and of itself, any large part of the investment you might have to make long-term?

“I wish I could say yes, but no. Our appetite for offsets is fairly enormous.”

As the goal of 1 million reforested acres nears, “that becomes a very different answer,” said Van Voorhis.

How soon?

Offsets from the trees “will start trickling in this fall since the trees (were) planted in the first quarter,” said Robichaud. “Each year, as the tree and forest grows, more and more offsets trickle in until we get to the 250,000 that we've purchased. After that, it stays sequestered in the trees.”

Any anticipation of when it'll reach that high mark? Five years?

“Much longer than (five years),” said Van Voorhis. “You'll see it start to ramp up in about five years. That's why it's so important to try and get legislation and the projects started now — the trees take five or six years before starting to pick up any speed. By the time we hope compliance legislation starts, we want to have built this pipeline of offsets. Right now, the demand is far exceeding the supply, according to our projections.”

As for whether Duke Energy is planning to invest in more GreenTree acreage, Robichaud said the company is waiting for more “clarity” before committing. “The more we know about the legislation and rules and registries that are putting out standards — if they can get them out, we can read them — go in tandem.”

Without the registries and markets and unwilling to set an initial price, Duke officials declined to say how much they'd contracted the 1,700 acres for.

Reporter: So how are you determining the price since there isn't a market now? How do you go about telling a company, ‘If you give us X number of dollars, you get 1,700 acres?’

“Without getting into the specific details of the price, because it's a forest you have to invest equity capital into the creation of it,” replied Robichaud. “There's a lot of components that go into that including the planting, how the landowner participates and all the costs associated with taking something growing in a tree and commoditizing it and bringing it into a registry.”

What registry — the American Carbon Registry or the California Climate Acts Registry (CCAR) — might verify the 1,700 acres?

California's national protocol isn't finalized, Van Voorhis pointed out. “The initial acres will go through the American Carbon Registry. That said, we're keeping our eye on how CCAR develops.”

For more on carbon trading, see

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