2. Preparing for Carbon Trading – A Tree Farmer’s Perspective Mark Nussbaum Mark Nussbaum Hickory Grove Tree Farm Photo of Matt and me walking at Sam A. Baker trail here.

3. Our Tree Farm’s Carbon Experiences to Date In September 2007 we sent our enrollment documents to an aggregator for trading on the CCX Exchange.In September 2007 we sent our enrollment documents to an aggregator for trading on the CCX Exchange. We withdrew our application in January 2009.We withdrew our application in January 2009. We are keeping detailed records to support our future application.We are keeping detailed records to support our future application.

4. CCX Carbon Prices for 2009 Vintage Carbon is trading for about $0.25/ton on CCX today. Carbon is trading for about $20/ton on the European Exchange right now.

5. Why Did We Withdraw Our Carbon Enrollment? The Obama election appeared to be a “game changer”.The Obama election appeared to be a “game changer”. US House of Representatives have passed Waxman-Markey. Senate is debating their bill, which sets a floor of $12/ton for carbon.US House of Representatives have passed Waxman-Markey. Senate is debating their bill, which sets a floor of $12/ton for carbon. We are speculating on carbon prices.We are speculating on carbon prices.

6. How Are We Preparing For the Next Carbon Enrollment Opportunity? Continuing aggressive thinning/pruning.Continuing aggressive thinning/pruning. Documenting our timber and pulp sales.Documenting our timber and pulp sales. Continuing to plant trees on our poorer agricultural fields.Continuing to plant trees on our poorer agricultural fields. Considering how $10-20/ton Carbon credits will affect our forestry management going forward.Considering how $10-20/ton Carbon credits will affect our forestry management going forward.

7. Our Forest Management YearAction 0 Autumn - timber harvest. Major timber stand improvement and Major timber stand improvement and minor pruning and planting. minor pruning and planting. 10 Minor timber stand improvement and minor pruning. minor pruning. 15 Feb./March – Prescribed burn. Autumn - timber harvest. Autumn - timber harvest.

8. Our Forest Management Our goal is to grow veneer and grade hardwood timber. We remove all trees that don’t have the potential for a “flooring grade” or better butt log. Mark beside the best single log we’ve ever sold. The “V++” log brought $2.25/bd.ft. to the owner, for a net of $432. (12/07)

9. Could Carbon Prices Exceed Timber Prices for Some Trees? About 70% of a tree’s worth is in the “butt” (first) log. Example log: 12’ long, 20” in diameter at the small end, containing 192 board feet. Value to landowner Veneer $210 Furniture Grade $115 Flooring Grade $33 Railroad Ties $23 Pallet $6 Pulp $1 Worth more as carbon?

10. Timber Stand Improvement for Carbon Sequestration for Carbon SequestrationBefore Net carbon sequestration is low. Large volume of carbon in un-salable trees.

11. Timber Stand Improvement for Carbon Sequestration for Carbon SequestrationAfter Higher carbon sequestration. Carbon inventory is in higher value trees.

12. How Could a $10-20/Ton Carbon Affect Our Management? To date, when a TSI/thinning pass has resulted in only pulp/pallet timber being cut, we left the wood in the forest. The sales value didn’t justify selling of the thinnings. The above TSI pass left about 40 tons/acre of pulpwood on the ground.

13. How Could $10-20/Ton Carbon Affect Our Management? Historical value of 40 tons of pulp/acre is about $40 net to us. One ton of pulp is equal to about 1.1 tons of carbon. At $10/ton, 40 tons of pulp is worth over $400 in carbon payments! (but check the details….)

14. Would $10-20/Ton Carbon Cause Us to Give Up Prescribed Fire? Photo of oak tree with fire burning We use fire to to kill undesirable tree species (gum, elm, maple) and stimulate growth of oak seedlings. We have not been able to consistently regenerate young oaks without fire. We are documenting our use of fire, and it’s ecological and economic benefits. We want to keep it in our management tool kit. We will give up fire if we get paid enough. Then we’ll reduce our emphasis on oaks.

15. Carbon Trading in Forest Management (It’s finally about volume) The average Missouri wooded acre sells about 110 board-feet of timber per acre per year, along with a negligible amount of pulp. Possible Carbon Credit: 0.6 tons/acre/year, or: $6-$12/acre. $6-$12/acre. Our tree farm sells about 275 board feet of timber per acre along with about 0.6 tons of pulp each year. Possible Carbon Credit: 1.97 tons/acre/year, or: $18-$38/acre. $18-$38/acre.

16. What Should Forest Landowners Do to Get Ready for Carbon Trading? Get educated in forest management! Start with a forest inventory and forest management plan. Find out how much of your forest volume is in pulp and pallet timber. Make an aggressive plan to remove these trees and start immediately. Export pulp/pallet from your property. Get involved in efforts to develop new markets for pulp. (Torrefaction, ethanol, etc.) Join the American Tree Farm organization. The educational, certification and lobbying benefits are tremendous.

17. What Should Forest Landowners Do to Get Ready for Carbon Trading? Take a serious look at reforesting your poorest cropland and pastureland. As proposed, new hardwood plantings will be credited for 1.425 tons/year of carbon.

18. Getting Ready for Carbon Trading Don’t enter into a forest management carbon contract if you have a typical overstocked/undermanaged timber stand. Pulpwood timber can hurt you in several ways: 1. It will slow your forest’s net carbon sequestration. 2. You’ll be stuck with the pulpwood timber. You can’t sell significant amounts, because you have to have more net woody biomass at the end of your contract.

19. Getting Ready for Carbon Trading In short: Thin, Thin, Thin! But get a forestry plan first, and do it right.

20. Happy Tree Planting from Hickory Grove Tree Farm Lizzie Matt Martha Kurt Sarah Mark JohnErich Kurt