Wednesday, November 12, 2008

The COSTS and benefits of rewarding carbon stored in harvested wood products

I just read a recent article in Forest Ecology and Management that examines the optimal strategies for maximizing carbon in forests, forest products and abating emissions through product substitution. The authors present their findings as an argument for why we should include carbon stored in harvested wood products in our accounting and therefore our policies to reduce GHG emissions from forests. I see these results completely differently: to me it is a clear illustration of precisely why we should not embrace this approach.

In a previous blog post, I argued that our carbon policy objective for forests should be to maximize forest carbon as this sector’s contribution to an overall climate change mitigation plan. I argued that the pulp and paper industry is in the business of transforming forest carbon into wood product carbon and that one of the impacts of this enterprise is depleted forest carbon stocks. A value placed on forest carbon stocks would create incentives for forest managers to redress this impact while they continue to extract products from the forest.

This article illustrates my point: Managing to maximize forest carbon results in decreased harvest levels, longer harvest rotation ages and older forests. On the other hand, maximizing total carbon stocks (forest carbon + product carbon) diminishes this effect: Clearcutting increases by 40%; rotation ages decrease (though are still substantially longer than business as usual); harvest levels increase 173% compared to scenarios that maximize forest carbon.

What is the dividend for this massively increased pressure on the forest? A five percent increase in total carbon stocks. FIVE percent. And where is most of this carbon? By the end of the 200 year modeling window, 80% of it is in landfills. Even considering the benefits of abated emissions coming from substituting wood for more energy-intensive materials the carbon dividend of this strategy is only six percent.

Finally, these carbon benefits reflect the long-term result after 100 and 200 years of modeling. What if we acknowledge the importance of emission reductions now, when action on climate change is so urgent? Modeling the impact of a four percent discount, the authors find that no harvesting would take place when maximizing forest carbon and 67% less harvest would occur when maximizing total carbon (forest carbon + product carbon).

There are two take home messages for me in this paper:

  1. Mixing product carbon into markets and policies could result in a significant increase in pressure on natural forests for very little carbon dividend.
  2. There is a potential to distort climate policies to support increased wood production even if it results in increased emissions in the short-term when we most badly need mitigation.

Resources:

Hennigar, C.R., D.A. MacLean and L.J. Amos-Binks. A novel approach to optimize management strategies for carbon stored in both forests and wood products. Forest Ecology and Management 256 (2008): 786-797.

This study was carried out in a hypothetical 30,000 ha Acadian forest in New Brunswick, Canada, containing softwood, hardwood and mixed wood stands.

Photo credit: Ralph Eldridge
http://images.google.ca/imgres?imgurl=http://i.pbase.com/g4/15/654915/2/60552423.FOREST_HARVESTING_01.jpg&imgrefurl=http://www.pbase.com/lightrae/image/60552423&h=533&w=800&sz=140&hl=en&start=2&usg=__UUB8xKrAfBayuPtRwyccsqhqG2o=&tbnid=ODds3yfbid37_M:&tbnh=95&tbnw=143&prev=/images%3Fq%3Dnew%2Bbrunswick%2Bsoftwood%2Bforest%26gbv%3D2%26hl%3Den%26sa%3DG

6 comments:

Doug said...

This is an important topic ... whether and how to include forest products in the carbon accounting scheme. If they are included, their contribution must be kept in perspective. Generally, carbon stored in wood products is short-lived compared to healthy forests. And the process of making wood products involves massive transfers of carbon to the atmosphere. Here is a slide show clarifying many misconceptions about forests, logging, and carbon: http://www.slideshare.net/dougoh/forest-carbon-climate-myths-presentation/

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Anonymous said...

I would recommend all to read the article again and look at the difference between the maximum harvest scenario and the maximize forest C plus wood product C scenario.

The article suggests current harvest levels should be lowered, not increased. Remember, this is a hypothetical forest and would vary a lot from an old-growth condition in BC.

Maximizing forest C and product C together does increase harvest levels by 173% compared to considering only forest C (essentially a no harvest scenario). However, maximizing forest and product C, compared to maximizing harvest, reduces harvest by 184%!

The main purpose of the article was to show that C in forest products and landfills is increasing and has weight on our decision making relative to C stocks in the forest. The forest is a renewable resource, unlike fossil fuels, and using wood products in place of more fossil fuel intensive products such as steel and concrete can generate immediate carbon offsets to the atmosphere.

Chris Hennigar

Doug said...

Chris said, "using wood products in place of more fossil fuel intensive products such as steel and concrete can generate immediate carbon offsets to the atmosphere." There is a grain of truth to this but it is often vastly over-stated by those who cite the CORRIM.org report.

• The CORRIM analysis assumes that consumers will readily switch between wood, steel, and cement. In fact, north American consumers have a strong preference for wood houses and will not readily switch to another building method unless relative prices and consumer preferences change dramatically. In technical terms, the demand function from wood vs. steel/cement is not highly elastic.
• The substitution analysis starts with unrealistic initial conditions. The analysis fails to account for the loss of carbon from old growth forests because, they start the substitution analysis with bare ground containing little or no carbon, instead of starting with an old growth forest.
• It will take over a century for substitution to off-set the carbon deficit associated with logging mature forests. Under well-established principles of discounting, it is clear that the net present value of current carbon storage in existing mature forests exceeds the net present value of distant future benefits of substitution.
• In order to take credit for substitution the timber industry must show some form of additionality. The existing market share of wood products is part of the baseline. Credit can only be given expanded use of wood that substitutes wood for future uses of steel and concrete. Wood’s market share is unlikely to increase.
• Substitution offers no guarantees that fossil fuels will stay in the ground. Fossil fuel use associated with the manufacture of steel and concrete will not be permanently avoided, but just delayed. The longest it could be delayed will be the earlier of:
o The point in time when the rising price of fossil fuels is undercut by the declining price of renewable energy.
o The point in time when we stop using fossil fuels for making steel and cement.
o The point in time when the fossil fuels that would have been used to make steel and cement are extracted and used for some alternative activity.
• The CORRIM analysis fails to recognize that the production techniques used to make steel and concrete are continually improving leading to increased energy efficiency. For instance, steel recycling rates are always increasing, the addition of fly ash during the manufacture of concrete reduces its carbon footprint. The energy grid that powers the steel mills and concrete plants should be less carbon intensive over time.
• Building materials other than wood, steel, and cement ignored. We would be wise to adopt next-generation building methods that may be preferable to all three. For instance, if the land use impacts can be managed, putting annual plant fibers into long term storage as building materials could have a significant carbon storage and climate benefits. Another alternative other than building with wood, concrete and steel, is to build fewer, smaller, and/or longer-lasting buildings, i.e. don’t blindly accept demand for wood products as a given, but instead try to use public policy to reduce demand for wood, steel, and concrete.
• The substitution argument takes demand for granted. We need to consider public policy options for reducing demand for wood products and other building materials. For instance, low prices for wood products fail to account for the climate costs/consequences of logging. This causes industry to over-produce wood and encourages consumers to build houses that are irrationally large.
• Buildings made of steel and concrete typically last longer and have lower maintenance costs, which mitigates the initial high carbon footprint of the materials.
• A well-designed carbon tax or cap and trade system would resolve this issue by using price signals in the market to encourage people to use more climate-friendly technologies and focus on carbon mitigation that is practical, measurable, and accountable, like forest conservation.

Chris Henschel said...

Thanks to everyone for their comments.

I am especially honoured and thankful to have Mr. Hennigar add his comments on his paper to this blog.

Mr. Hennigar, I am most interested in your comment that the Total C scenario suggested a decrease in current harvest levels. Can you please clarify that you are saying that, although the Total C scenario results in a harvest level 173% higher than the Forest C scenario, this is still a reduction from current levels? I don't see that result in the paper...could you point us to it?

On your second point about wood as a renewable resource: surely it is. The point I am making is that the implicit business as usual of the forest sector is to transform forest carbon into product carbon. From a policy perspective, we shouldn't incentivize this behaviour. Rather, we should incentivize a mitigation of the resultant impact on forest carbon. This should be the contribution that the forest sector makes to climate change mitigation, especially given the co-benefits for biodiversity and potentially also ecosystem adaptation to climate change.

Doug, your comments on substitution are very interesting and compelling. I will just reflect on one of your observations: Indeed it does take time for the carbon in harvested forests to be replaced and that is why, I think, applying a discount in Mr. Hennigar's paper results in very different strategies. I think this argues very strongly for developing policies based on actual annual emissions and not focusing on long-term results or assuming carbon neutrality as is threatened in the area of bioenergy.

Chris Henschel said...

The author has just pointed out to me that I misread one of the comments in the results section. The paper says: “Similar forest management strategies resulted when the objectives were to maximize harvest (Eq. (2)) or C stored in product pools (Eq.(4))..." I had read "C stored in product pools" as the Total C pool simulation. I have corrected this mistake.

The author also points out in his posted comment that he still thinks total harvest would decrease a bit compared to business as usual when total C (forest + products) is maximized. I am still struck by the much greater pressure on forests resulting from this objective relative to maximizing forest carbon. I believe the latter is a more effective policy objective because it creates an incentive to mitigate the impact of the forest sector on forest carbon.