Carbon trade fund for afforestation proposed
The State forestry company envisages direct investment in Irish forestry becoming possible through a Government-backed scheme enabling investors to trade in carbon units.
The company reports much interest in the scheme in talks it had with other organisations, including IFA, which is supportive, according to Coillte.
Enterprise development director Ciaran Black says they are trying to change the system, so that forest will still be planted for timber, but also to generate an internationally tradeable carbon unit which could be bought by the Government or national or international buyers.
The forest owner would be paid for the carbon values associated with the forest.
Forests planted after 1990 are eligible as carbon sinks in the calculation of Irish carbon emissions. Ireland’s carbon reduction strategy assumes planting of 15,000 hectares per year, but only half of that target is being achieved.
Because of the age structure of our forests, carbon sequestration will grow up to 2020.
Then it will be time to harvest much of these forests, and forest carbon value will diminish, unless sufficient forest is planted in the meantime. Ireland could be forced to buy extra high-priced carbon credits internationally.
“We have an opportunity to reduce the carbon credits purchased on international markets and divert funds flowing out of the country towards investment in Ireland,” Mr Black told the Oireachtas Committee on Climate Change and Energy Security. “There is the potential for the Government to hedge against long-term carbon prices by investing in forest units.
“There are funding opportunities available. Under the regime in place, in 2013, 50% of the EU emissions trading scheme auction revenue will be directed towards climate change activities. This represents a substantial pool of cash.”
He said one of the scheme’s key attributes is that it is market-based rather than Government-supported. It would run alongside the afforestation schemes currently available to farmers.
“The Government could increase the level of afforestation without increasing Exchequer funding,” he said.
However, the first step would be to establish a distinct carbon property right associated with carbon sequestration, which is a grey area in law.
Coillte aims to finalise a document on the scheme by the end of the year, and hopes the Government can lend its support to move it forward. New Zealand already has a forestry credit which is traded domestically.
