Friday, September 17, 2021

Asset managers chase returns in tree carbon storage

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Asset managers who own forests that have been logged for timber expect a surge in revenue from the boom in sales of carbon-related units stored in trees used to meet climate change goals.

Managers such as Manulife, Gresham House, and JP Morgan are one of the people who moved this year to launch and grow their businesses around the forestry offsets sought by organizations seeking to supplement greenhouse gas emissions.

The offset is believed to represent a ton of carbon that has been permanently avoided or removed from the atmosphere.

The sale of carbon offsets could increase net nominal revenues from managed forests by about 1%, said Olly Hughes, managing director of forestry at Gresham House, Specialist Set Manager. This was “important”. He added that this income would provide an interim source of income while the young trees were growing.

JPMorgan Asset Management acquired forest investment firm Campbell Global in June for a private amount to “actively participate in the carbon offset market.” Campbell, based in Portland, had $ 5.3 billion in assets and managed approximately 700,000 hectares.

Demand could push offset prices from $ 20 to $ 50 per ton of carbon by 2030, according to forecasts by expert data group Trove Research, but today many are ordering less than $ 5. is.

Some investment managers said interest in carbon offset projects is pushing up land prices in countries such as the UK and New Zealand.

David Brand, founder of New Forests, a Sydney-based forestry investment manager, said: He said the sale of offsets generated by certain US forests could add 200-400 basis points to revenue from timber.

Entering new business areas has also caused failure. In April, Timberland owner EcoForests Asset Management began the process of registering with the certification body Gold Standard, stating that “certified carbon recovery assets will be sold by the fourth quarter.” Announced a new offset business.

“Currently, most investors are looking for carbon offsets in line with their forestry projects … We are discussing with Canadian mining companies and European airlines,” said Michael Ackerman, CEO of EcoForests. I am.

However, the Gold Standard said in June that the Financial Times had no knowledge of the plan. EcoForests’ explanation in announcing why forests are eligible to generate offsets said they misunderstood the rules of the gold standard.

EcoForests agreed that “there was a misunderstanding on our part” and was considering whether forests could generate offsets. However, the company said, “We are investing in advance in the hope that the project will be approved and offset.”

Offsets are purchased by organizations that are trying to take advantage of their net zero emissions commitments and can also be used in regulated cap-and-trade systems such as California.But critics say there are often offsets Not very beneficial to the environment Than they claim.

To produce the unit, the forest needs to absorb more carbon than it would without the scheme. For example, less forest is harvested than is legally permitted. Measuring how much carbon each tree absorbs is notoriously complex and is influenced by its age, species and size.

Gresham House plans to plant and clear more than 10,000 hectares of new forest in the UK to generate offsets. Investors can choose to take ownership of the offset or receive a portion of the profit from what was sold by Gresham House.

Newly created forests in the UK can generate offsets, but harvested trees need to be replaced — and replacement trees cannot generate additional offsets. When logged, forests rarely store the entire amount by continuing logging and reforestation, so it may be possible to request an offset of less than half the carbon that can be absorbed.

In August, Manulife Investment Management purchased approximately 90,000 acres of US woodlands for a private amount that it hopes to create offsets. Some will be sold, while others may be used to supplement the group’s own emissions.

Manulife Life said that some trees remain unharvested for 10 years more than usual in each harvest cycle and can store more carbon than they would otherwise.

Gilles Dufrasne of Carbon Market Watch, a non-profit organization, said the climate impact of the plan was “very difficult to estimate accurately.”

This made it “unsuitable” for generating offsets. “The promise of absorbing a ton of carbon and storing it permanently cannot be maintained with sufficient certainty.”

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Asset managers chase returns in tree carbon storage Source link Asset managers chase returns in tree carbon storage

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