Carbon credit conundrum

[caziques]

Let me explain.

We have 7ha of a 180ha forestry block of pine trees, 24 years old.

We can claim carbon credits according to some growth tables - and can claim 200 tons a year for 26 years - as at today worth about 6.500 pounds a year.

All the other owners of the block (about 20) want to chop the trees down - and get about 75,000 pounds.

However, this would give us two problems.

1. We would have to repay 1400 carbon credits. We sold at 23 pounds, they are now 32 pounds. (lose 12.500 pounds).
2. Even if we replant, we cannot claim carbon credits for 10 years, ie we lose about 2000 carbon credits or 65,000 pounds.

It is very likely carbon credits will double, treble, quadruple (or more) in value over ten years.

Should we:

1. Breach a contract by refusing to allow the trees to be chopped. This would means we could be sued, but there would be no losses so I doubt a claim would succeed
2 Let the trees be chopped down, take the money and potentially lose 50,000 pounds as carbon credits keep going up in price.

[Simpo Two]

I'm confused. Do you get money for cutting trees down, or leaving them as they are?

[nikaiyo2]

Simpo Two said:

I'm confused. Do you get money for cutting trees down, or leaving them as they are?

I think he gets money via carbon credits for keeping the trees, if he cuts them down he gets more money from the timber price than he would keeping them for carbon credits.

[Sheepshanks]

3. Buy the other trees?

[Kawasicki]

caziques said:

Let me explain.

We have 7ha of a 180ha forestry block of pine trees, 24 years old.

We can claim carbon credits according to some growth tables - and can claim 200 tons a year for 26 years - as at today worth about 6.500 pounds a year.

All the other owners of the block (about 20) want to chop the trees down - and get about 75,000 pounds.

However, this would give us two problems.

1. We would have to repay 1400 carbon credits. We sold at 23 pounds, they are now 32 pounds. (lose 12.500 pounds).
2. Even if we replant, we cannot claim carbon credits for 10 years, ie we lose about 2000 carbon credits or 65,000 pounds.

It is very likely carbon credits will double, treble, quadruple (or more) in value over ten years.

Should we:

1. Breach a contract by refusing to allow the trees to be chopped. This would means we could be sued, but there would be no losses so I doubt a claim would succeed
2 Let the trees be chopped down, take the money and potentially lose 50,000 pounds as carbon credits keep going up in price.

Yep, I would bank on carbon credits increasing in price by a substantial amount.

I‘m aiming to buy a chunk of forest for exactly that purpose.

[Simpo Two]

nikaiyo2 said:

I think he gets money via carbon credits for keeping the trees, if he cuts them down he gets more money from the timber price than he would keeping them for carbon credits.

Ah, thanks. In that case

1) Cut down trees and sell the wood.

2) Get a grant/credit/yada for planting replacements.

3) Rinse and repeat.

But it does raise the intersting prospect of 'investing' in CCs, not because you have any particular interest in polar bears, but for the gain/profit...

[Kawasicki]

Simpo Two said:

But it does raise the intersting prospect of 'investing' in CCs, not because you have any particular interest in polar bears, but for the gain/profit...

I had an interesting chat with a german lady who invested a good chunk of surplus cash in a local windfarm project. She was getting about 12% roi, risk free.. She was very proud of the fact she could do something for the environment.

[Simpo Two]

Kawasicki said:

I had an interesting chat with a german lady who invested a good chunk of surplus cash in a local windfarm project. She was getting about 12% roi, risk free.. She was very proud of the fact she could do something for the environment.

Would she have been so keen to 'help the environment' if the return was only 1% I wonder?

[coetzeeh]

Carbon trading north of £50 atm.