Carbon Sources, Sinks and Offsets in Global Forest Investments

Abstract

Global Forest Partners (GFP) is a forestry investment advisor that manages over 750,000 hectares of timberland around the globe on behalf of their investors. The primary objective of this analysis was to quantify GFP’s annual net carbon footprint, including both carbon sequestration occurring through their forest assets as well as the emissions that are attributable to the company. Additionally, we will provide a modeling tool with which GFP can continue to monitor their carbon impact in the coming years. We structured our carbon footprint analysis based on the methodology established by the California Air Resources Board for use in the California cap-and-trade system and the methodology used in the Verified Carbon Standard for global voluntary carbon markets. After performing our carbon accounting analysis, we sought to provide a global perspective of carbon pricing mechanisms. Due to low carbon prices, historic volatility within global carbon markets, and impending large-scale changes within international carbon trading, it does not appear to be pressing for GFP to pursue a monetization of their carbon sequestration at present. In order to properly prepare for an impending phase of expansion and interconnectedness in the global carbon marketplace, we recommend that GFP begin considering the potential carbon additionality impacts of future acquisitions. GFP should also take steps during its asset evaluation process to determine whether undertaking a forestry carbon offset project in any of its existing forests would be feasible from a regulatory and financial standpoint. Key trends to anticipate include the establishment of a Chinese emissions trading scheme by 2020, a potential increase in carbon trading within the United States, and a potential increase in international carbon trading as a result of the 2015 Conference of Parties 21 talks. As a result of this project, GFP will gain a firm foundation of knowledge regarding the methods involved in calculating forest carbon sequestration, evaluating additionality, assessing the value proposition for forestry carbon offset projects, and understanding the operation and outlooks of major global carbon markets.