Wisconsin Should Adopt 'Climate Exchange'
Business Journal of MilwaukeeJune 18, 2004
Posted with permission of The Business Journal Serving Greater Milwaukee. (Appeared June 18, 2004.)
A storm is brewing in Wisconsin over concerns about emissions from various coal-fired generation projects proposed to meet energy needs in the state for the coming decades. Supporters espouse the benefits of cheap and abundant coal. The environmental community opposes the projects since the carbon dioxide and other emissions are more harmful to the environment than emissions from other, more expensive, sources of fuel.
Another storm is brewing overseas by the failure of the United States to support the Kyoto Protocol, which is designed to control such greenhouse gas emissions.
These debates should help to focus public attention on encouraging programs that preserve and enhance a natural asset that is abundant in Wisconsin. Forest resources in Wisconsin serve to offset carbon emissions by capturing the carbon through photosynthesis resulting in beneficial, carbon offsetting, oxygen emissions. These benefits are referred to as carbon sequestration.
An important first step for recognition of this benefit is to have Wisconsin establish a carbon sequestration registry program. This month, Georgia adopted just such a registry that could serve as a model in Wisconsin. The Georgia registry quantifies the carbon sequestration benefits, through a standardized certification procedure, of forested tracts of land in that state. The system is designed as an objective verification system that could provide the basis for attaching value to carbon sequestration benefits.
Through legislation similar to Georgia, the Wisconsin Department of Natural Resources, or other qualified certifying agencies, could certify the oxygen-producing benefits for each acre of forested land in Wisconsin. Different classes of oxygen-producing credits could be certified, dependent upon whether the tracts are forested for lumber or left in its natural state. The availability of credits could be dependent upon the private landowner agreeing by contract to maintain the forest-related benefits for a fixed length of years. The credits could also attach to qualifying county and state-owned forested tracts.
This registry is an important first step for establishing a market that trades the resulting carbon sequestration benefits and thereby encourages preservation of forested lands.
Trading in Chicago The template for a future market method to attach monetary value to certified lands can be found as close as Chicago, where a voluntary trading scheme for carbon credits provides an opportunity to capture those credits through a private market.
Established in September 2003, the Chicago Climate Exchange is an Internet-based trading market for greenhouse gas emissions that is funded by the voluntary participation of 20 companies with substantial operations in the United States. Essentially, the member firms fund the purchase of carbon credits resulting from the measured reduction of carbon emissions. The four-year pilot project aims to reduce greenhouse gas emissions by 50 to 60 million tons by 2006 through baseload reductions from industrial processes as well as carbon sequestration.
The suggested Wisconsin certification legislation would be an important first step to place value on the carbon sequestration benefits of forested stands owned by state and local governments and private parties. At a minimum, the official recognition afforded such tracts could serve to enhance the state Stewardship Fund, by officially recognizing an environmental benefit of such tracts. It is also likely that the political pressure mounting worldwide for the Kyoto Protocol will encourage more voluntary markets for trading in carbon sequestration and reduction credits similar to the Chicago exchange.
Wisconsin should prepare by taking action to certify the carbon sequestration benefits and provide another method to encourage preservation and growth of our significant state-based forest assets.
ARTHUR HARRINGTON practices environmental/energy law at Godfrey & Kahn S.C. in Milwaukee and serves on the board of directors for Gathering Waters, Madison.