CARBON RESERVE PROGRAM
Sustainable BioBrazil is working with Urban BioAlliance on a proposal being discussed with various Brazilian and US states and companies to initiate a "carbon reserve" program for preservation of jungles through the sale of carbon credits. The target of the outreach effort for sale of carbon credits is to major sectors outside of the Kyoto mechanism that are threatened with regulation such as industries like airlines and maritime shipping, states like California and countries such as the USA and China. The idea is to work directly with entities facing carbon regulation and explain the value of a program focused on preservation of jungles and then develop a hand's on program to preserve jungles that solves enforcement, benefit distribution and control issues. The net result will be a funding mechanism for ensuring that jungles have a greater value remaining uncut and intact and that there is a strong incentive for the local population to keep that jungle intact because of "dividends" provided. The core concept is to use the funds from the sale of carbon credits to set up an "Amazon Permanent Fund", manage the fund professionally and independent of the state government and then distribute earnings from the fund, half to the Amazon state governments and half to Amazon residents directly (as long as deforestation is actually stopped and with a provision to reinvest earning in the fund and temporarily withhold distributions if it does not).
The first step in the process involves setting up a pilot project in connection with a specific piece of land in Maranhao. We are in the process of suggesting just this type of pilot project in connection with a portion of the agricultural land made available to Sustainable BioBrazil for biofuel crop production. The idea is to take a portion of the 2.8 million hectares of agricultural land in the whole project (perhaps 800,000 hectares) that is selected from the land inventory and has the highest conservation value and thickest tree inventory and longest period since agricultural use. Ideally this land will be in a location with the combination of views and wildlife and rivers/lakes to make it attractive as an ecotourism location. This land would then be preserved eternally as forest and put into a carbon trading program to establish a "carbon reserve". This would allow for the generation of income from keeping the area undeveloped while also providing a natural area for promoting eco-tourism and adventure travel. The attention generated from the establishment of "carbon reserve" through a carbon trading program with airlines or auto companies would result in many wanting to visit the area to see the wildlife and scenery. Especially beautiful sites could be selected given the large inventory of land available from the state. A beautiful site for the reserve is important to insure there is strong interest in adventure travel and that ecotourism ventures are successful. The other benefit of this strategy is that it would also dispel any criticism of development of other parts of agricultural land as "destruction of the Amazon", since a large portion of the total inventory of "agricultural land" would be used in a forest preservation program and the land proposed for development already has a history of use as agricultural land.
The other advantage of the strategy is that the sale of carbon credits would provide income for setting up a pilot for the "Amazon Permanent Fund". The independent management of the fund assets by fund managers and distribution of dividends on an equal basis to the State Government and each resident in the Legal Amazon portion state would provide a large economic benefit to residents. We are estimating that if the carbon reserve is chosen with high carbon content forests (300 tons per hectare of carbon in more mature forests) then the value of sale of 800,000 hectares of carbon credits at $10 USD/ton would be approximately $2.4 billion. If professional fund management resulted in a 7% net return, this would result in $168 million annually in earnings. If 50% of the funds went to the state and 50% to Legal Amazon residents, the result would be $84 million for residents, with a population of about 1 million in the region. This would be an annual check of R$200 per person. This represents a 10% increase in annual income and is significant to a region where poverty is very common. This number could quickly be increased through the development of other carbon reserves once the concept is seen as feasible in carbon markets.
The expansion of the idea beyond the pilot project in Maranhao would be done through the "International Biofuels Conference" and Policy Roundtable that is planned starting in Tocantins in October, 2009 and again at the Conference planned in March, 2010 in Sao Luis, Maranhao. The two biofuel conferences will be used as a means to initiate outreach to all of the Governor's in the Amazon and suggest they join a multi-state program for sale of carbon credits and jungle preservation using this same model. There are various other initiatives already underway that can provide a basis for networking and generating interest in this specific proposal. The State of California recently hosted a meeting to discuss international initiatives related to climate change and deforestation. Attending the meeting were 4 Brazilian states (Amapa, Para, Amazonas, Matto Grosso). Also attending were 13 US states (California, Colorado, Florida, Illinois, Kansas, Massachusetts, Maryland, Michigan, New York, Oregon, Utah, Washington and Wisconsin), 2 Mexican states (Sonora and Baja California), 4 Canadian Provinces (British Columbia, Ontario, Manitoba, Quebec) and 2 Indonesian states (Aceh, Jakarta) as well as official observers from the UN and China. Specific accords were reached between 4 Brazilian states and California, Wisconsin and Illinois to take action to stop deforestation in the Amazon. The objective is to reach out to these Amazon states as a follow up to this meeting and then broaden it to include all of the states in the Amazon.
Sustainable BioBrazil is working with Urban Bio-Alliance to approach the 9 state governments in the Amazon to suggest a specific plan for avoided deforestation based on setting up a permanent fund and distributing dividends to the state government and residents. The "permanent fund" idea is based on a model already established by the State of Alaska where earnings from royalties on the pumping of oil from the state (12%) are put into a special fund (Alaska Permanent Fund). This fund is professionally managed independent of the state government and the fund managers distribute earnings from the fund using the on a formula of 1/3rdto the state government, 1/3rdto residents and 1/3rdto increasing the capitalization of the fund. This has insured that the "permanent fund" was never "raided" by government and provides an annual payment to residents in Alaska of $1000 to $2000 per person.
The most important aspect of this "Amazon Permanent Fund" program is that it would provide an ideal mechanism to insure that carbon reductions from avoided deforestation are real, quantifiable and permanent based on criteria established for avoided deforestation in Kyoto and REDD mechanisms. This is because the distribution of earnings could be linked to confirming that deforestation was not occurring in any of the lands where carbon rights had been sold. If there were significant deforestation of these lands, then the managers of the fund would have the option to temporarily stop distribution of earnings to the state or local residents in a given year and put all earning back into further building up the capital in the fund. This would provide an ideal control mechanism to insure deforestation stopped, since each state and every resident in the Amazon region would be hurt from not receiving earnings if a significant number of people or companies got involved in illegal deforestation. The amount of earnings distribution would depend on how well the fund was managed, sale price of carbon credits and how much of the Amazon was put into the avoided deforestation program. Some facts useful in calculating this number for understanding its economic and social impact include the following:
Total Number of hectares of land in Amazon: 360 million hectares
Total tons of carbon preserved in one hectare: approximately 300 tons/hectare
Total tons of carbon available for trading: 108 billion tons
Percent of Amazon to enter into program: 80% or 86.4 billion tons
Likely price for carbon credit sales $10 USD/ton
Total Income from carbon sales $ 864 billion
Earnings from a well managed fund (7% yield) $60.4 billion per year
Annual earnings for states $30.2 billion
Number of Amazon states, earnings/state 9 states, $3.35 billion per state
Earnings direct to residents in 9 states $30.2 billion USD
Number of residents living in 9 Amazon states 24,063,597
Annual distribution of earnings $1,255 or $R 2,789
Total Ave. income, residents in Maranhao (2005) $1000 per resident or $R 2,922
Percentage increase in annual income 145%
The other very important parallel aspect of the avoided deforestation plan is to create jobs to offset job losses from eliminating logging, charcoal production and cattle farm creation in wild jungles. There are numerous options for job creation including eco-tourism, wild harvest of fruits and nuts, intensive agriculture (fish, animals, vegetables, etc.) on already cut land and other options. However, the most compelling is biofuels, since it represents a very large new market demand and can lead to international investment in the region to export feedstock for biofuel production. In addition, biofuels is a very important industrial sector in Brazil that is having exports restricted to the EU because biofuels is incorrectly being blamed for all Amazon deforestation. Sustainable BioBrazil is developing various materials detailing how sustainability of biofuels can be improved if the industry takes a lead on efforts to develop improved yields from biofuels production and to avoid any further destruction of the Amazon by setting up carbon reserves and carbon trading programs.
The other element is to involve the industries like airline in buying carbon credits that have an interest to lower their carbon liability by keeping carbon credit costs reasonable prior to being forced to enter the European Trading Scheme (ETS) carbon trading market in Europe. Their interest would be even greater if they saw they were part of a comprehensive solution in lowering their own emissions through a program that included carbon credits and offsets, biofuel utilization and energy efficiency. This would help diffuse the claim that they were not being responsible industries and only using the Amazon as a means to avoid doing anything within their own industry. Airline companies together represent about 3% of total carbon emissions and annually consume 80 billion gallons of petroleum fuels. If they simultaneously agree to buy carbon credits and use biofuel, they can propose a plan that leads to carbon neutral growth in the short term and carbon neutral flights thereafter.
To implement a program will require developing an agreement between Brazilian states and various major fuel consumers or carbon emitters to agree to start using biofuels and efficiency measures in conjunction with buying carbon credits to achieve carbon reductions using an integrated strategy. Sustainable BioBrazil is approaching airline companies to see if they would agree to buy next generation biofuels, plant oil seed trees to obtain feedstock for biofuels and buy carbon credits for stopping deforestation. Suggestions are also being made to US states that are part of the initial Climate Change agreement to encourage cap and trade programs to include a small percent of all credits coming from avoided deforestation and reforestation. This will provide the combination of carbon buyers and a strong political justification for Brazilian states, industries and citizens to get behind stopping Amazon deforestation and gaining carbon credit income.
Carbon Credits: Oil Seed Tree Planting
Sustainable BioBrazil is working with Urban BioAlliance on a proposal being discussed with various Brazilian and US states and companies to initiate a "carbon reserve" program for preservation of jungles through the sale of carbon credits. The target of the outreach effort for sale of carbon credits is to major sectors outside of the Kyoto mechanism that are threatened with regulation such as industries like airlines and maritime shipping, states like California and countries such as the USA and China. The idea is to work directly with entities facing carbon regulation and explain the value of a program focused on preservation of jungles and then develop a hand's on program to preserve jungles that solves enforcement, benefit distribution and control issues. The net result will be a funding mechanism for ensuring that jungles have a greater value remaining uncut and intact and that there is a strong incentive for the local population to keep that jungle intact because of "dividends" provided. The core concept is to use the funds from the sale of carbon credits to set up an "Amazon Permanent Fund", manage the fund professionally and independent of the state government and then distribute earnings from the fund, half to the Amazon state governments and half to Amazon residents directly (as long as deforestation is actually stopped and with a provision to reinvest earning in the fund and temporarily withhold distributions if it does not).
The first step in the process involves setting up a pilot project in connection with a specific piece of land in Maranhao. We are in the process of suggesting just this type of pilot project in connection with a portion of the agricultural land made available to Sustainable BioBrazil for biofuel crop production. The idea is to take a portion of the 2.8 million hectares of agricultural land in the whole project (perhaps 800,000 hectares) that is selected from the land inventory and has the highest conservation value and thickest tree inventory and longest period since agricultural use. Ideally this land will be in a location with the combination of views and wildlife and rivers/lakes to make it attractive as an ecotourism location. This land would then be preserved eternally as forest and put into a carbon trading program to establish a "carbon reserve". This would allow for the generation of income from keeping the area undeveloped while also providing a natural area for promoting eco-tourism and adventure travel. The attention generated from the establishment of "carbon reserve" through a carbon trading program with airlines or auto companies would result in many wanting to visit the area to see the wildlife and scenery. Especially beautiful sites could be selected given the large inventory of land available from the state. A beautiful site for the reserve is important to insure there is strong interest in adventure travel and that ecotourism ventures are successful. The other benefit of this strategy is that it would also dispel any criticism of development of other parts of agricultural land as "destruction of the Amazon", since a large portion of the total inventory of "agricultural land" would be used in a forest preservation program and the land proposed for development already has a history of use as agricultural land.
The other advantage of the strategy is that the sale of carbon credits would provide income for setting up a pilot for the "Amazon Permanent Fund". The independent management of the fund assets by fund managers and distribution of dividends on an equal basis to the State Government and each resident in the Legal Amazon portion state would provide a large economic benefit to residents. We are estimating that if the carbon reserve is chosen with high carbon content forests (300 tons per hectare of carbon in more mature forests) then the value of sale of 800,000 hectares of carbon credits at $10 USD/ton would be approximately $2.4 billion. If professional fund management resulted in a 7% net return, this would result in $168 million annually in earnings. If 50% of the funds went to the state and 50% to Legal Amazon residents, the result would be $84 million for residents, with a population of about 1 million in the region. This would be an annual check of R$200 per person. This represents a 10% increase in annual income and is significant to a region where poverty is very common. This number could quickly be increased through the development of other carbon reserves once the concept is seen as feasible in carbon markets.
The expansion of the idea beyond the pilot project in Maranhao would be done through the "International Biofuels Conference" and Policy Roundtable that is planned starting in Tocantins in October, 2009 and again at the Conference planned in March, 2010 in Sao Luis, Maranhao. The two biofuel conferences will be used as a means to initiate outreach to all of the Governor's in the Amazon and suggest they join a multi-state program for sale of carbon credits and jungle preservation using this same model. There are various other initiatives already underway that can provide a basis for networking and generating interest in this specific proposal. The State of California recently hosted a meeting to discuss international initiatives related to climate change and deforestation. Attending the meeting were 4 Brazilian states (Amapa, Para, Amazonas, Matto Grosso). Also attending were 13 US states (California, Colorado, Florida, Illinois, Kansas, Massachusetts, Maryland, Michigan, New York, Oregon, Utah, Washington and Wisconsin), 2 Mexican states (Sonora and Baja California), 4 Canadian Provinces (British Columbia, Ontario, Manitoba, Quebec) and 2 Indonesian states (Aceh, Jakarta) as well as official observers from the UN and China. Specific accords were reached between 4 Brazilian states and California, Wisconsin and Illinois to take action to stop deforestation in the Amazon. The objective is to reach out to these Amazon states as a follow up to this meeting and then broaden it to include all of the states in the Amazon.
Sustainable BioBrazil is working with Urban Bio-Alliance to approach the 9 state governments in the Amazon to suggest a specific plan for avoided deforestation based on setting up a permanent fund and distributing dividends to the state government and residents. The "permanent fund" idea is based on a model already established by the State of Alaska where earnings from royalties on the pumping of oil from the state (12%) are put into a special fund (Alaska Permanent Fund). This fund is professionally managed independent of the state government and the fund managers distribute earnings from the fund using the on a formula of 1/3rdto the state government, 1/3rdto residents and 1/3rdto increasing the capitalization of the fund. This has insured that the "permanent fund" was never "raided" by government and provides an annual payment to residents in Alaska of $1000 to $2000 per person.
The most important aspect of this "Amazon Permanent Fund" program is that it would provide an ideal mechanism to insure that carbon reductions from avoided deforestation are real, quantifiable and permanent based on criteria established for avoided deforestation in Kyoto and REDD mechanisms. This is because the distribution of earnings could be linked to confirming that deforestation was not occurring in any of the lands where carbon rights had been sold. If there were significant deforestation of these lands, then the managers of the fund would have the option to temporarily stop distribution of earnings to the state or local residents in a given year and put all earning back into further building up the capital in the fund. This would provide an ideal control mechanism to insure deforestation stopped, since each state and every resident in the Amazon region would be hurt from not receiving earnings if a significant number of people or companies got involved in illegal deforestation. The amount of earnings distribution would depend on how well the fund was managed, sale price of carbon credits and how much of the Amazon was put into the avoided deforestation program. Some facts useful in calculating this number for understanding its economic and social impact include the following:
Total Number of hectares of land in Amazon: 360 million hectares
Total tons of carbon preserved in one hectare: approximately 300 tons/hectare
Total tons of carbon available for trading: 108 billion tons
Percent of Amazon to enter into program: 80% or 86.4 billion tons
Likely price for carbon credit sales $10 USD/ton
Total Income from carbon sales $ 864 billion
Earnings from a well managed fund (7% yield) $60.4 billion per year
Annual earnings for states $30.2 billion
Number of Amazon states, earnings/state 9 states, $3.35 billion per state
Earnings direct to residents in 9 states $30.2 billion USD
Number of residents living in 9 Amazon states 24,063,597
Annual distribution of earnings $1,255 or $R 2,789
Total Ave. income, residents in Maranhao (2005) $1000 per resident or $R 2,922
Percentage increase in annual income 145%
The other very important parallel aspect of the avoided deforestation plan is to create jobs to offset job losses from eliminating logging, charcoal production and cattle farm creation in wild jungles. There are numerous options for job creation including eco-tourism, wild harvest of fruits and nuts, intensive agriculture (fish, animals, vegetables, etc.) on already cut land and other options. However, the most compelling is biofuels, since it represents a very large new market demand and can lead to international investment in the region to export feedstock for biofuel production. In addition, biofuels is a very important industrial sector in Brazil that is having exports restricted to the EU because biofuels is incorrectly being blamed for all Amazon deforestation. Sustainable BioBrazil is developing various materials detailing how sustainability of biofuels can be improved if the industry takes a lead on efforts to develop improved yields from biofuels production and to avoid any further destruction of the Amazon by setting up carbon reserves and carbon trading programs.
The other element is to involve the industries like airline in buying carbon credits that have an interest to lower their carbon liability by keeping carbon credit costs reasonable prior to being forced to enter the European Trading Scheme (ETS) carbon trading market in Europe. Their interest would be even greater if they saw they were part of a comprehensive solution in lowering their own emissions through a program that included carbon credits and offsets, biofuel utilization and energy efficiency. This would help diffuse the claim that they were not being responsible industries and only using the Amazon as a means to avoid doing anything within their own industry. Airline companies together represent about 3% of total carbon emissions and annually consume 80 billion gallons of petroleum fuels. If they simultaneously agree to buy carbon credits and use biofuel, they can propose a plan that leads to carbon neutral growth in the short term and carbon neutral flights thereafter.
To implement a program will require developing an agreement between Brazilian states and various major fuel consumers or carbon emitters to agree to start using biofuels and efficiency measures in conjunction with buying carbon credits to achieve carbon reductions using an integrated strategy. Sustainable BioBrazil is approaching airline companies to see if they would agree to buy next generation biofuels, plant oil seed trees to obtain feedstock for biofuels and buy carbon credits for stopping deforestation. Suggestions are also being made to US states that are part of the initial Climate Change agreement to encourage cap and trade programs to include a small percent of all credits coming from avoided deforestation and reforestation. This will provide the combination of carbon buyers and a strong political justification for Brazilian states, industries and citizens to get behind stopping Amazon deforestation and gaining carbon credit income.
Carbon Credits: Oil Seed Tree Planting
California is already actively working on cap and trade programs for carbon and appears to be open to including tree planting in the protocols. Bills in the US Congress in 2009 are already planned for European style cap and trade program for carbon and the bills are likely to pass by 2010. An important strategy to promote as a part of this effort is to get a certain percent of all carbon trading in these programs to include avoided deforestation and tree planting (REED). This is of value to the industries affected by cap and trade programs because it allows them to use these carbon credit options to limit inflation in the value of carbon credits as carbon emission reductions become more difficult to accomplish. Sustainable BioBrazil is suggesting to regulators the idea of developing of cap & trade programs in California and the USA that they allow companies to earn 5% of their carbon credits by helping to preserve wild jungles and 2% of their credits by planting oil seed trees. This will help insure that remaining wild jungles remain wild and will provide future biofuel feedstock sustainably. As a part of this effort, Sustainable BioBrazil is making presentations to regulators about specific projects being developed in the Amazon to preserve jungles with carbon credit projects and parallel projects to plant oil seed trees on agricultural land in areas already cut or that have a long history of agriculture in Brazil. This provides the combination of preservation and development and insures that the carbon benefits are real from both tree planting and forest preservation.
