- Option 1 - The government as point of obligation
- Option 2 - Land owners as point of obligation
- Option 3 - Forestry rights owners as point of obligation
Options for a point of obligation for forestry
The point of obligation in the forestry industry would have to account for emissions from deforestation and for reductions in the carbon stocks of Kyoto forests.
- a point of obligation for Kyoto forests would need to report reductions in carbon stock over the course of the normal harvest regeneration cycle, including acts of deforestation
- a point of obligation for non-Kyoto forests would only need to report reductions in carbon stock from deforestation.
Points of obligation must have the capacity to trade emission units and must be legal entities against which sanctions (for non-compliance with reporting or other requirements) can be effective. A point of obligation could be:
Option 1 - The government as point of obligation
The Government or a government entity could be responsible for emission obligations arising from deforestation. This would be most logical if the Government retained some or all of the emission units generated from Kyoto forests, which would compensate for any costs arising from harvesting and perhaps deforestation.
This approach would have the advantage of avoiding perverse incentives for premature harvest prior to 2008. However, it would not provide any incentive against deforestation during the commitment period, and if the Government retained emission units, land/forestry rights owners would lack additional incentives for new planting. This approach would also expose the Government to fiscal liability if there were a future significant conversion of forest land to non-forest land.
Option 2 - Land owners as point of obligation
Placing emissions obligations on landowners would create a direct incentive to replant non-Kyoto forests following harvest. If emission units are allocated then landowners would also have an incentive to weigh up the benefit of emission units from a Kyoto forest on their land against the obligations that occur if and when it is eventually harvested.
For forests already planted, landowners will benefit from any emission units allocated and would be adversely affected by obligations, while forest owners would be unaffected. Consideration needs to be given to existing contractual arrangements between landowners and forestry rights owners. In some cases, contracts may require, following harvest, the return of land ready for replanting.
Any emissions obligations on forestry conversions after 1 January 2008 may create an incentive to deforest non-Kyoto forests prior to that date to avoid obligations. Premature harvest could cause disruptions to the forest products industry (this is the 'perverse incentive' referred to above).
As with Option 3 below, the nature and tenure of the legal relationship between the landowner and the forestry rights owner would need to be considered in relation to the allocation of emission units and obligations.
Option 3 - Forestry rights owners as point of obligation
Placing emissions obligations on forestry rights owners may create the most direct incentive to replant non-Kyoto forest following harvest. It would also encourage those owning Kyoto forests or contemplating planting Kyoto forests to weigh up the benefit of emission units against the obligations if and when a Kyoto forest is eventually harvested. An effective reporting, verification and audit system would be necessary to track carbon stock changes, whether positive or negative.
Because replanting does not necessarily immediately follow harvest, for non-Kyoto forests a time period would need to be specified within which replanting (or promotion of natural regeneration) must take place in order to gain exemption from emission obligations6.
As with Option 2 above, this option would also provide an incentive to harvest prior to 1 January 2008 to avoid deforestation obligations over the commitment period.
Carbon accounting and measurement methodologies
Carbon accounting methodologies and measurement would be provided in regulations.
The actual methodology for measurement and accounting may depend upon the level of devolution of emission obligations.
If emission units were fully retained by the Government, then it is possible that the methodology used could remain at a very high level, e.g.:
- modelling based on areas derived from satellite observations combined with national averaged figures for carbon accumulation in vegetation and/or a physical sampling methodology based on a randomised national sampling regime in association with areas derived from satellite.
If emission units are fully or partially devolved to land owners/forestry rights owners then the methods for accounting may need to become more site specific, e.g.:
- physical measuring of forest areas within defined legal boundaries and developing regionally specific carbon models and
- establishing an internationally acceptable auditing process
Whichever system is used there will be a need for the Government to monitor the extent
of afforestation, reforestation and deforestation. This will require the establishment of
an "inventory" to act as a repository for all information collected and to
monitor at a national level the changes in carbon sequestration as a result of Article 3.3
forest definitions.
6 Most commercial replanting takes place within 12 months of harvest, though in some cases up to 18 months is required in order to achieve sufficient control of weeds and other re-growth prior to planting.
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