Investment Options
Afforestation Policy Analysis

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Photo: White Pine seedling

Under Canada's Greenhouse Gas Offset System, proponents of afforestation projects will have the opportunity to participate in the domestic emissions trading market. Offset Credits issued to afforestation projects registered in the Offset System could be purchased by Large Final Emitters (of greenhouse gases) who will have emission reduction targets set by federal regulation. It is also proposed that the Climate Fund (Budget 2005's Clean Fund) would purchase Offset Credits through the Offset System to help meet Canada's Kyoto Protocol commitment.

Projects will have a set of eligibility, baseline and measurement criteria to meet in order to be registered in the Offset System. Once these are met and carbon has been sequestered in the plantation proponents can apply for Offset Credits. The possibility of generating revenue through the sale of Offset Credits could have a significant impact on the profitability of afforestation projects by creating an income flow over the project lifetime.

The CFS is conducting an analysis of potential options that could encourage investment in future fast-growing tree plantations in Canada. The economic analysis of fast-growing trees has demonstrated that tree plantations can be viable in some parts of the country. The CFS is exploring ways to further facilitate private investment into fast-growing tree plantations.

To read more about the Investment Option Analysis and proposed sector structures, please follow the links below:

• Background Papers
• Current Work

Background
The CFS started this line of research by learning about other countries’ approaches to afforestation. Provided below are a selection of summary papers the CFS has put together from our findings.

• Australia’s Joint Venture arrangements
• The Danish Forestry Extension Programme
• Institutional Investment (TIMOs & FMOs)
• Coillte’s Farm Forestry Partnership Scheme in Ireland
• Japan’s Fiscal Investment & Loan Program, and Co-operative Financing Agreements
• Norway’s Forest Trust Fund
• United States Forestry Incentives Program
• World Bank Carbon Finance Funds

Current Work

Photo: One year old Hybrid Poplar leaf, BC

In March 2005, the CFS organized a Plantation Investment Experts Forum including national and international experts from a wide range of interests (i.e., timberland investment firms, foreign governments, environmental commodity brokers, forest industry and researchers). These experts presented information on the policy drivers and motivations behind plantation investment. Over thirty experts attended, including government representatives from Canada, New Zealand, United States, and Chile. Private sector representation included senior management from the Canadian forest companies, Canadian large final emitters, institutional forestland investors, environmental commodity brokers, as well as development agencies such as the World Bank.

To read more about the proceedings from this forum, please read the paper provided below:

• Plantation Investment Forum
  

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