Landowner FAQ

What is a managed forest carbon offset?

When you retire one carbon offset, that is equal to the reduction of one metric ton of carbon dioxide or its equivalent for another greenhouse gas from the atmosphere.

 

A managed forest carbon offset represents an agreement between someone who emits carbon dioxide and someone who stores carbon dioxide. In this case, the person who is providing the storage is a forest landowner who has committed to long-term sustainable forest management. The emitter is a person, group of people or business who wishes to balance out all or part of its emissions with carbon that has been stored in sustainably managed forestland.

 

As trees grow, they take in carbon dioxide, which is one part carbon and two parts oxygen. They use the carbon to build new wood and release the oxygen back into the air. Through the managed forest carbon offsets market, landowners are paid for the amount of carbon dioxide that is removed from the atmosphere by their forests and stored as the building block of new wood.

What is the Chicago Climate Exchange?

"The Chicago Climate Exchange (CCX) is North America’s only cap and trade system for all six greenhouse gases, with global affiliates and projects worldwide.” For more information about the CCX click here. MACED is a participant member of the CCX, in the Offset Aggregator category. All of our projects conform to the CCX standards for Sustainable Managed Forest Projects.

What do I have to do to enroll?

Landowners interested in generating carbon offsets through the Appalachian Carbon Partnership must submit all required documentation to their local office for review. Click here to learn more about the program requirements.

How much money will I get?

The amount of money you can earn is based on several factors including:

 

The size and growing conditions of your forest. We use a forest inventory, conducted by a professional forester, to determine how much carbon is stored in your trees as they grow. This is called the sequestration rate. The average sequestration rate for a mixed hardwood forest in Central Appalachia is 3.3 metric tons per acre per year.

 

The price of carbon. The price on the Chicago Climate Exchange and in other market outlets changes every day based on supply and demand. Through the Appalachian Carbon Partnership, people, groups and businesses can retire Appalachian Forest Offsets for $15/metric ton. Prices may also be negotiated for bulk sales. Contact MACED for more information about special pricing for large quantities of offsets.

 

On a case-by-case basis, we can use our carbon calculator tool to estimate potential income to landowners. Give us a call if you want us to estimate the potential for your forested property.

 

How often do I get paid?

The timing and date of payments largely depends on the market.

How much does the inventory cost?

The cost of the inventory will vary depending on the size and condition of the property. Because there are a lot of variables that go into the cost, you must contact a consulting forester to get an estimate for your property. If you need help with this expense, MACED offers loans to cover the cost of the inventory, management planning and certification.

 

How do the loans work?

MACED provides loans to cover the cost of professional forestry services related to the Managed Forest Carbon Offset Program. The interest on these loans is 5% per annum (simple interest) and all the loans reach maturity five years after the date the loan paperwork is signed. Loan payments are deducted from the net value of the landowner’s carbon offsets at the time sale occurs. This way the landowner does not have to provide any upfront money to participate in the program. There is no penalty for partial or full early repayment of the loan.

 

How long is the contract?

The contract and commitment to maintain your forest certification is for 15 years from the date of enrollment.

How often does somebody come to my land?

Every year a third-party auditor verifies carbon offsets generated on all aggregated properties for that year. The verifier will randomly select a certain number of properties to be visited. Your property has a chance of being selected every year, but there is no guarantee that it will be chosen. The verification usually occurs within the first few months of the new year.

What happens if I sell my land?

The contract runs with the land, so future owners of the land will either have to abide by the program rules or pay back the offsets that were sold on the property at the current market value.

What happens if I cut trees below my baseline?

You must pay back any offsets lost at the current market value.

What happens if trees are lost on my property due to fire or natural disaster?

The CCX requires that 20% of all carbon offsets generated be held in a Carbon Reserve Pool. The CCX rules for the Reserve Pool follow:

 

Each CCX Afforestation / Reforestation and Sustainably Managed Forest project shall be required to place 20 percent of the Exchange Offsets it earns into a CCX Forest Carbon Reserve Pool. Such Exchange Offsets shall remain the property of the Member and Exchange Offsets that remain in the Forest Carbon Reserve Pool shall be released to the Member near the end of the CCX Market period.

 

Exchange Offsets in the Forest Carbon Reserve Pool will be used to compensate for any catastrophic losses that arise from non-management activity. Examples of catastrophic events may include hurricanes, fires, pests, or floods. In the event of a loss of Forest Carbon, the amount of Exchange Offsets in the Forest Carbon Reserve Pool equal to the amount of the carbon released by the catastrophic event will be canceled. The maximum amount of such carbon loss to be recognized by CCX for catastrophic losses shall be no more than the total quantity of Offsets available in the Forest Carbon Reserve Pool. This provision applies to project Aggregators at the aggregated pool level.

Aggregated projects may represent Pooled Participants from geographically diverse regions, where a catastrophic event that impacts one Pooled Participant may not impact the other Pooled Participants in the pool. Due to geographic diversification, a catastrophic loss impacting one Pooled Participant of an aggregated project will not imply that other Pooled Participant in the pool will be systematically impacted. Therefore, a Carbon Reserve Pool of 20% for the aggregated project provides assurance that there will be a sufficient reserve of Exchange Offsets to compensate for any individual catastrophic loss that a particular Pooled Participant may experience.

 

In cases of catastrophic weather events or outbreaks of fire and pest damage that reduce the quantity of Carbon Stocks on a parcel of forested land to levels below those documented for baseline, the Member shall document the quantity of timber destroyed by the fire, pest or adverse weather event. Those stands shall be excluded from future projections of annual changes in Carbon Stocks until the quantity of Carbon Stocks in those stands reaches the reported quantities for baseline. All reports of significant damage caused by pest, fire and adverse weather events shall be subject to audit by a CCX-Approved Verifier.

 

The registered CFI’s attributed to Long-Lived Wood Products are not required to maintain an escrow in the Forest Carbon Reserve Pool.

Can I opt-out of the program before the contract period ends?

Yes. You can either do a full or partial opt-out.

 

The full opt out applies if you no longer wish to participate in the program and do not want to maintain your certification for the length of the contract. To fully opt out of the program you must pay MACED back for all of your offsets that were sold. When you pay MACED back, you must pay back at the current market value at the time you are opting out.

 

If you do not want to participate in the program anymore, but do not want to pay back any offsets you have already sold, then you must maintain your forest certification for the full 15-year commitment and cooperate with MACED to verify that your property continues to be maintained under certified management for the full contract length.

 

What is cap and trade?

According to the United States Environmental Protection Agency, “Cap and trade is an environmental policy tool that delivers results with a mandatory cap on emissions while providing sources flexibility in how they comply. Successful cap and trade programs reward innovation, efficiency, and early action and provide strict environmental accountability without inhibiting economic growth.” To learn more visit: www.epa.gov/captrade

What are the tax implications for my participation in the carbon credits program?

Carbon offset income is considered taxable income by the IRS. If you have sold carbon offsets for a given year, MACED will send you form 1099-B for you to include in your taxable income.

What is certification?

Certification refers to the process of getting your management plan or stewardship plan certified by a third party. This means that a third-party certifier will periodically check to make sure you are following your management plan.

 

All forested properties owned by the landowner must obtain certification of sustainable forest management from a PEFC (Program for the Endorsement of Forest Certifications) recognized program, such as the American Tree Farm system, or through the Forest Stewardship Council. This includes all eligible forestlands owned.

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