Impacts on Forest Integrity of Harvested Wood Products as Carbon Sinks

A lot of thought and effort is going into the design of forest offset protocols that could be fed into regulatory carbon markets. A number of crucial decisions will determine the environmental integrity of this policy effort: how to deal with the relative impermanence of reduced forestry emissions; how to safeguard other ecological and social values from the impacts of commoditizing biological carbon; and, as for all offsets, how to maximize additionality of emission reductions.

On top of all these fundamental issues is the question of how to treat wood products. If achievement of environmental integrity is an objective, wood products should be excluded from forest carbon markets.

The approach developed by the Intergovernmental Panel on Climate Change and in use for the first commitment period of the Kyoto Protocol (2008-2012) assumes instant oxidation of carbon stored in wood when it is harvested. This assumption offends many would-be project proponents because it is untrue. In its submissions to the UN Climate Change Secretariat, the government of Canada has highlighted the need to change this approach and more accurately account for emissions from forest management.

But this approach actually has a lot of practical public policy value. First, it avoids all the particular difficulties of measuring changes in the size of this carbon pool, for example, the crude estimates of carbon stored in landfills and the difficulty of measuring the fate of wood product carbon storage in other countries.

Second, it avoids the possibility of all sorts of poor formulations that lead to bad environmental outcomes. For example, the government of New Zealand consistently argues within the UN climate negotiations on forest management accounting that only carbon in new products should be counted, ignoring the emissions coming from the existing wood product carbon pool. Another example is that a poorly set baseline would give windfall carbon credits to forest managers for simply producing wood.

Finally, assuming instant oxidation of wood upon forest harvest has the helpful effect of focusing attention on remediating a problem that has contributed to climate change: the reduction of forest carbon stocks through commercial resource extraction. This is a much more environmentally appropriate goal than the increasing wood product carbon stocks, which is proposed by some as an appropriate offset activity. Even worse, some propose that wood product carbon in landfills should be included in the accounting: this could mean using climate change mitigation dollars to cut wood and bury it.

One of the environmental costs of supplying society with wood and paper products is that managed forests are maintained at a younger age and their carbon stocks at a lower level than would naturally occur.

Sufficient incentive already exists from the marketplace for the wood and paper industry to transform trees into products. What the industry needs is a financial incentive to reduce the impact of this activity on forest carbon stocks, while continuing to meet the societal product demand. In developing carbon market incentives for forest management, we should therefore focus on maintaining or increasing forest carbon stocks, not harvested wood product stocks. There is no inherent benefit of transferring carbon from the forest pool to the product pool. In fact, there are ecological costs to this transformation. A study published last year in Forest Ecology and Management showed that a price on forest carbon would have the effect of decreasing harvest levels, increasing rotation ages, and increasing the number of old forests. The inclusion of wood product carbon in accounting significantly diminished this effect.

Some argue that wood product carbon should be included because of the environmentally positive effects of substituting wood for products like cement and steel, which have higher embodied greenhouse gas emissions. This is a specious argument. The incentive to use wood over more greenhouse gas-intensive materials will result from a carbon price being placed on energy use by manufacturers and does not depend at all upon the inclusion of wood product carbon in forest offset projects. In fact, the forest manager can make no claim on the emission reduction achieved by someone switching from steel to wood.

Once there is a price on carbon, the substitution effect should increase the demand for wood. Having forest offset systems focused on maintaining or increasing forest carbon will help ensure that this demand is not met at the cost-lowered forest carbon stocks. These two forces pulling in different directions (price on carbon demanding more wood and an offset system rewarding more carbon in the forest) could help us find a more environmentally optimal solution. Including carbon in harvested wood products in forest offset systems will reduce the impact of incentives to maintain or increase forest carbon stocks.

For anyone concerned with environmental integrity that can’t shake the idea of including wood products in carbon markets, a middle road might be to put a safeguard in place: projects must not reduce forest carbon below baseline levels. This would allow projects involving wood product carbon management without increasing downward pressure on forest carbon stocks. But the effectiveness of this approach would depend on the quality of the baseline and wood product data.

While forest offsets present the opportunity of incentives for some improved carbon management, there are many decisions to come that could severely undermine environmental outcomes. Including wood products is one such decision. Policy makers, protocol developers and project proponents should focus offsets on the real environmental problem that forest carbon stocks have been reduced by our demand for wood. Excluding wood products from forest offsets could lead to a more optimal solution - producing wood while maintaining forest carbon stocks as high as possible.

Chris Henschel is National Manager of Domestic and International Policy at the Canadian Parks and Wilderness Society (www.cpaws.org). He blogs at www.climateforests.blogspot.com.