Tierra Resources

By Mark Schleifstein, NOLA.com | The Times-Picayune

Louisiana could earn up to $1.6 billion for coastal restoration projects over the next 50 years by selling credits for storing carbon in wetland plants and soils, according to a new study by New Orleans-based Tierra Resources, Entergy Corp. and the ClimateTrust.

The credits could be sold by private landowners and businesses in Louisiana that create their own restoration projects or participate in publicly-financed projects. Buyers would include businesses that must reduce carbon emissions in California under the nation’s first “cap and trade” program aimed at reducing greenhouse gases, said Tierra Resources president and chief executive Sarah Mack.

The credits could also be sold in an existing voluntary market to businesses or individuals looking to offset their carbon “footprint,” Mack said.

The result would be an increase in the dollars available for at least some parts of the state’s $50 billion, 50-year coastal Master Plan, which has about half of its cost allocated to coastal restoration projects, the study says.

The carbon credit program, mandatory in California and voluntary in the rest of the nation, seeks to reduce the amount of gases that scientists say are causing long-term changes in the world’s climate. In Louisiana, those changes have brought more rapid sea level rise, which is one of the causes of coastal erosion.

California’s regulatory program is the first in the nation, but a similar program has been adopted by countries in the European Union.

Efforts to adopt a mandatory cap-and-trade program nationwide have failed in Congress, although President Barack Obama has implemented a number of regulatory changes in recent years aimed at reducing carbon emissions by utilities and other major industries.

The study estimated Louisiana could earn from $550 million to $1.6 billion for coastal restoration in the next 50 years.

Mack said Tierra Resources hopes to have the California Air Resources Board approve the first “blue carbon” credits — based on wetland restoration efforts — for storage of carbon in a test project in Luling by the end of the year, said Tierra president and chief executive Sarah Mack. It would be the first time wetland-related carbon credits had been approved for the California program.

The Luling Oxidation Pond Wetlands Assimilation System project is a partnership effort with Tierra Resources, Entergy and St. Charles Parish. Treated wastewater from the parish sewage treatment plant adds freshwater and nutrients to an adjacent 950-acre coastal swamp wetland forest, where carbon is incorporated into the soil as wetland plants die or into cypress and tupelo trees as they grow.

Tierra won approval of its methodology for measuring carbon offset credits in wetlands from the American Carbon Registry, the first private greenhouse gas registry, in 2012. California also has approved American Carbon Registry as a registry under its compliance program.

Mack said her organization also is attempting to gain approval of credits for keeping existing wetlands from eroding and losing their carbon, which represents between $140 million and $630 million of the estimated 50-year value of the carbon offsets in Louisiana.

Under the California cap and trade program, industries must reduce carbon emissions to 1990 levels by 2020, with dropping limits set on greenhouse gas emissions from carbon sources each year. That is the cap portion of the program.

The industries can buy carbon offset credits from projects that remove and store carbon or other greenhouse gases from the atmosphere to offset part of that required reduction, which constitute the trade portion of the program.

The emissions reduction program is being phased in, and since the beginning of this year, covers 85 percent of California’s greenhouse gas emissions.

Industries covered by the California law include investor-owned and publicly-owned utilities, producers and importers of gasoline, diesel and other transportation fuels, and natural gas producers. Those companies represent more than 25,000 metric tones of carbon dioxide and carbon dioxide equivalent emissions each year.

The new study finds that four major types of restoration projects in Louisiana could produce more than 1.8 million carbon equivalent offset tons a year, and close to 92 million over 50 years.

River diversions, which send sediment and freshwater into open water areas to rebuild wetland soils and plant life, and major efforts to plant mangrove trees in coastal areas each could produce the bulk of the carbon sequestration — 40 million tons each over 50 years.

Wetland assimilation, which creates and improves freshwater wetlands using wastewater treatment discharge, could create about 10 million credits over 50 years. Hydrologic restoration, which restores the flow of freshwater through wetlands to help reduce salt water intrusion, would produce less than 5 million credits.

The study eliminated marsh creation, or using sediment dredged directly from the Mississippi River and piped overland to rebuild wetlands, as a potential credit source for a variety of reasons: a lack of modeling data on the method’s ability to store carbon, concerns about how long such projects last, and the need to deduct the use of fossil fuel emissions that occur when the sediment is pumped through pipelines.

However, California has yet to approve the use of so-called “blue carbon” offset credits that would be created by the removal of carbon from the atmosphere by wetland plants, mangroves or trees, with the storage of the carbon in the plants or within the new soils created by the projects.

Entergy, which has no power plants in California, has been a partner with Tierra since 2009, as part of its own voluntary efforts to reduce greenhouse gas emissions, said Steve Tullos, manager of environmental initiatives for the company.

Tullos said the sale of carbon credits could be a financial game-changer for the state’s coastal restoration efforts, by providing opportunities for private landowners and businesses to earn money from what could be expensive restoration efforts.

“Right now, it’s an upside-down business case. When you’re spending $3 for $1 of benefit, its not that much money,” he said. “But if you can generate a revenue stream, you’re adding that to storm surge protection and natural resources and socioeconomic impacts that the projects can provide.”

The report says surveys in 2012 and 2013 identified 50 wetland landowners in Louisiana who control more than 2.3 million acres. Meetings with landowners who own more than half of those wetlands showed interest in participating in the wetlands carbon efforts, including through public-private partnerships, through dedicating acreage to restoration projects, and as potential locations for restoration sites.

The report points out that work remains on how to coordinate the rules of the regulatory and voluntary carbon credit programs with the regulations that will govern financing of individual projects.

“The majority of our wetlands are privately owned, so this presents an incredible opportunity to create more revenue and more wealth for the owners,” said Robin Barnes, executive vice president of Greater New Orleans Inc.

Barnes said the carbon credit programs increases the chances that coastal restoration will create jobs in southeast Louisiana, too.

“To the extent we can identify new financing strategies, we can implement the coastal Master Plan and be able to put our local residents and local companies to work,” she said. “This is another innovation happening in Louisiana that further illustrates how we are becoming a leader in resilience.”

Participation in the California market also increases the financial value of the credits, said Dick Kempka, vice president of business development for the Climate Trust, a non-profigt that matches businesses and potential carbon projects at a number of locations across the nation.

Kempka said the present California regulated market credit price is about $9 per ton, and has ranged between $8.50 and $10 over the past year. The voluntary market produces a smaller return, about $4 to $6 per ton this year, he said.

But Kempka said his organization also is interested in the potential of what he calls “stackable” credits. Some projects may be able to receive money for carbon credits, while at the same time be eligible for producing credit dollars for similar voluntary water pollution reductions.

An example, he said, would be a Midwest ranch that agrees to allow land to revert to pristine grasslands, rather than be converted into farmland. Such a conversion might result in greater carbon storage, but also a reduction in nutrient runoff that might be eligible for financial credits.

The state of Louisiana has proposed a similar strategy, without the dollars, as part of its long-term plan to offset nutrients on state farmland with the nutrients that will be captured in wetlands, once major sediment diversions are building new land.

Louisiana State University researchers John Day and Rob Lane also participated in the study.

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