Forest Carbon Pioneers: Lessons from Lompico

The year was 2007. California was awash in green hope. A year earlier, then-Gov. Arnold Schwarzenegger had signed the Global Warming Solutions Act into state law, establishing a comprehensive program to reduce greenhouse gas emissions from all sources throughout the state.

Sempervirens Fund launched the Lompico Forest Carbon Project to produce a new source of revenue for future land acquisitions through the sale of forest carbon offsets – or carbon credits.

At the time, few organizations in the world had attempted anything similar. Although permitted under the international Kyoto Protocol agreement, only one forest offset project had managed to generate sellable credits in early 2007. Sempervirens Fund was heading into uncharted territory.

“We took a big risk for such a small organization. We wanted to gain experience and find an additional source of revenue for protecting redwoods. We also wanted to help shape the practice of forest carbon projects and demonstrate it could be done in the Santa Cruz Mountains,” said Sempervirens Fund Director of Land Conservation Laura McLendon. “We made many upfront assumptions that guided our early progress, some of which were incorrect.”

When Sempervirens Fund succeeded in verifying its first batch of carbon offsets and selling those credits to Pacific Gas and Electric’s ClimateSmart program, it created the world’s first official forest carbon offsets from a forest preservation project.

But it wasn’t easy. Of course, innovation is often painful, but the Lompico Forest Carbon Project also proved to be highly instructive.

“Lompico didn’t pay off the way we thought it would,” said McLendon. “But it paved the way for more ambitious projects like the Santa Cruz Mountains Carbon Cooperative.”

What’s a forest carbon project?

A forest carbon project is designed to remove, reduce or prevent emissions of CO2 into the atmosphere by increasing and conserving forest carbon stocks that sequester these emissions.

Consisting of 285 forested acres, the Lompico Forest Carbon Project was identified by an early iteration of the Climate Action Reserve as capable of reducing and removing greenhouse gas emissions on an annual basis by increasing forest carbon stocks. The reductions are generated by preserving trees otherwise destined for harvest in former landowner Redwood Empire’s timber harvest plan.

“By creating this forest project, Sempervirens Fund permanently changed the prior management practices of the Lompico forest and facilitated the increase of the forest’s carbon stocks, a long-term carbon sink,” said McLendon.

Forest carbon pioneers

In June 2006, Sempervirens purchased the Lompico property for $3.6 million from Redwood Empire, extinguishing a pending timber harvest plan that would have led to the harvest of 60 percent of all redwood and Douglas fir, which measured 18 inches thick or more.

From the outset, Sempervirens Fund recognized the project presented greater risk than any of its traditional land deals, due to all the unknowns – the total project development costs, the total carbon stock of Lompico, the total carbon offsets that could be generated by the project, and the total revenue that could be predictably forecasted.

“At best, we assumed this project would create new revenue for land acquisitions; at worst, we would simply break even, but learn how to do these projects better next time,” said McLendon.

In addition to any monetary rewards, the organization saw an opportunity to educate its members and the public about the important role redwoods play in mitigating climate change.

Key to the launch of the project was the fact that Sempervirens Fund had a credible potential buyer, PG&E, who was actively seeking to purchase credits from forest projects for its newly launched ClimateSmart program. PG&E was willing to pay roughly $10 per credit.

One carbon credit equals one metric ton of carbon dioxide, or CO2, that is not released into the atmosphere.

“Without having conducted an inventory of the carbon stock existing on the property, we estimated the number of credits we could generate could be about a quarter of a million dollars,” said McLendon.

Yet at this early stage in the carbon game, third-party verification had yet to be clearly standardized and Sempervirens Fund was informed that the methodology used by their contractor did not meet state requirements.

“The entire industry was so new that there was some confusion regarding the verification standards. Ultimately, we had to resurvey the entire forest,” said McLendon.

The Co-op model

The experience of creating and maintaining the Lompico Forest Carbon Project, provided Sempervirens Fund with a wealth of key insights it has carried over to its next project – the Santa Cruz Mountains Carbon Cooperative.

So how is the Santa Cruz Mountains Carbon Cooperative different from the Lompico Forest Carbon Project? First, it aims to reduce costs significantly by aggregating individual properties using a cooperative model. In other words, landowners in the Santa Cruz Mountains will join a co-op and be paid to implement sustainable forest practices that increase carbon sequestration and reduce wildfire risk. In exchange for joining the cooperative, participating landowners develop a management plan, sign a long-term participant contract and receive payments for their credits.

“Despite some hard lessons learned in Lompico, we still have hope that forest carbon projects are a viable avenue to the protection of redwoods. The next step in this experiment is the Santa Cruz Mountains Carbon Cooperative,” said McLendon.

Second, the Santa Cruz Mountains Carbon Cooperative aspires to leverage new, increasingly efficient inventory and monitoring tools to optimize returns on landowners’ investments. A pilot project is planned for the summer of 2018. Sempervirens Fund anticipates two to five landowners and one credit buyer participating in the pilot. Sempervirens Fund is currently defining the rules of the program, identifying strategic partnerships, and collecting information from interested landowner and credit buyers.

For more information about the Santa Cruz Mountains Carbon Cooperative, click here or contact Sempervirens Fund Director of Land Conservation Laura McLendon at 650-949-1453, ext 206 or lmclendon@sempervirens.org.