Turning
trees' carbon into silver
Aug 27 - McClatchy-Tribune Regional
News - Diane Mastrull The Philadelphia
Scott
Nissenbaum doesn't consider himself a tree hugger.
But his appreciation for a leafy canopy goes well beyond shade.
Not
in helping landowners cut trees down for sale as lumber. But in helping them continue to nurture their woods and make money off the
carbon sequestered there -- the carbon dioxide taken up through photosynthesis
and stored in the trees' trunks, branches, foliage, and roots.
The
national push for climate-change initiatives, coupled with falling timber
prices and a growing demand for protecting and regenerating forests for the
good of the environment, has helped create "a tidal wave of momentum"
in the forest-carbon market, Nissenbaum said.
He
hopes to ride that wave to profitability while doing something good for the
environment through Finite Carbon, the Wayne company Nissenbaum,
formerly with Novitas Capital, founded in February
with another venture capitalist, Robert Verratti.
Until
April 2007, Verratti headed Wayne-based Traffic.com
Inc., a commercial supplier of digitally gathered traffic data. He is Finite
Carbon's chief executive officer; Nissenbaum is its
president.
The
company helps owners of forestland determine the carbon-capture value, if any,
of their towering assets and provides the capital to finance the expensive,
complex, and time-consuming process of evaluating, registering, marketing, and
selling those carbon offsets.
That
cost is typically close to $200,000, but could exceed $1 million on tracts of
more than 100,000 acres, Nissenbaum said.
Largely
untested in the
There
is also concern that trading carbon credits will supplant what
environmentalists really want -- a full-scale assault on greenhouse-gas
emissions.
"It
can't be looked at as a silver bullet," said Nathan Willcox,
an energy and clean-air expert for PennEnvironment,
a nonprofit advocacy group. "We need to be cutting global-warming
pollution at its source, versus just finding new places to put the pollution
once it's created."
Finite
Carbon is believed to be the first company of its kind, in that it offers
one-stop forest-carbon shopping -- from conducting property inventories,
project design, and verification management to funding tree measuring and
carbon modeling; paying transfer, registration, and brokerage fees; and hiring
any other experts needed to convert captured carbon into revenue for the
property owner.
Not
that forest carbon is a monster-size industry.
In
the carbon-offset market, forestry "is either small or, in people's minds,
doesn't exist," Nissenbaum said. So far, Finite
Carbon reports having evaluated nearly two million acres for "several
dozen" owners throughout the
A few
years from now, Nissenbaum said, forest-carbon
trading could reach more than $1 trillion -- especially if
In a
cap-and-trade system, government sets a limit on the release of certain
pollutants, allowing companies that would have difficulty reducing emissions to
buy credits from those that can.
Citing
confidentiality provisions, Finite Carbon would not disclose whether its work
had resulted in sales of carbon credits.
Sequestration
is considered among the least expensive ways of limiting carbon dioxide in the
atmosphere. That, along with weak demand for timber, has prompted owners to
pursue monetizing their forestland's carbon-sequestration value, especially in
the
The
European carbon market "has really ignored forestry," Nissenbaum said.
At
least 1,000 acres, preferably more than 5,000, are considered necessary to make
carbon sequestration "financially feasible," he said.
Tree
sizes and types also are factors.
On
Finite Carbon's staff of seven is Matt Delaney, a 10-year veteran of
forest-carbon monitoring, who "spends a lot of time . . . measuring the
trees," Nissenbaum said. The data are fed to
Sterling Griffin, a professional forester, who creates models of the land's
carbon-sequestration potential for third-party verification and regulatory
approval.
Large
utilities are often buyers, looking to snap up carbon credits in anticipation
of cap-and-trade legislation's passage and a rise in the cost of credits, said
Sean Carney, Finite Carbon's vice president of project development.
Hedge
funds and multinational firms also view carbon credits as promising
investments, he said.
What's
missing is a national market that would put a price on carbon. The American
Clean Energy and Security Act, which the U.S. House passed in June and is awaiting Senate action, would do that.
Currently,
prices on voluntary-compliance markets such as the national Climate Action
Reserve and regional markets such as the Regional Greenhouse Gas Initiative
vary widely, from 40 cents per ton of carbon offsets to nearly $6.50 per ton.
"While
the presence of a mandatory national market would create the greatest
opportunity for Finite Carbon, the company's success is not dependent on
it," Nissenbaum said.
Worth
noting, he said, is that the interests of Finite Carbon and its clients are
aligned. Rather than charge a fee, the company gets a percentage of the
forest-carbon offsets after a project is registered and approved. The cut is
based on such things as the number of acres and their location, the carbon
stocks, and the type and number of landowners.
"Not
only do we have a vested interest in the success of the project, our
compensation comes from monetization at the end," Nissenbaum
said.
In
the environmental community, meaningful payoff is reducing global warming. At PennEnvironment, Willcox's
reaction to credits granted in any cap-and-trade system is decidedly mixed.
"How
do you ensure that the forest-carbon industry doesn't become another Wall
Street, whereby forest owners are getting credit for pollution reductions not
actually achieved, due to loopholes in the system?" he asked.
Carney,
a former broker at CantorCO2e, an emissions-brokerage subsidiary of Cantor
Fitzgerald L.P., insisted Finite Carbon's motives are as much about protecting
the environment as they are about making money.
"We're
here to do well, by doing good," he said.
Contact
staff writer Diane Mastrull at 215-854-2466 or
dmastrull@phillynews.com.
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