Emissions offset incentives, carbon storage and profit optimization for Australian timber plantations

Li Luo, Yuan Gao, Courtney M. Regan, David M. Summers, Jeffery D. Connor, Jim O'Hehir, Li Meng and Christopher W.K. Chow

Forest Policy and Economics, 2024, vol. 159, issue C

Abstract: This article evaluates additional carbon storage that becomes profitable over a range of carbon credit prices through Australian Emissions Reduction Fund (ERF) methods introduced in 2017 for timber plantations. We found prices of $20 and $50 CO2-eq t−1 motivated switching 4% and 29% of southern Australian case study estate stands from short-rotation E. globulus to long-rotation P. radiata, resulting in 10% and 48% more estate carbon storage. We found no uptake of not for harvest environmental plantings to be profitable, even at carbon prices of $100 CO2-eq t−1. This appears to be because of the relatively faster initial growth and carbon gain for long-rotation timber as compared to environmental planting species and the detail of baseline and comparison scenario definitions used in credit calculations. We also evaluated carbon storage versus profit trade-offs over the full set of technically possible and efficient estate management options to achieve abatement, greater than levels that maximize profit. Key conclusions from this analysis were that significant carbon storage increases even beyond what is profitable are possible for the case study estate at relatively little reduced profit opportunity cost for carbon prices of $20 CO2-eq t−1 and less. In contrast, managing all stands in the estate for the sole objective of improving carbon storage could nearly double carbon storage but result in a significant 27% profit reduction under a $20 CO2-eq t−1 carbon price scenario.

Keywords: Carbon pricing policy; Forest management; Australian Carbon Credit Unit; Bi-objective optimization model (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:159:y:2024:i:c:s1389934123002204

DOI: 10.1016/j.forpol.2023.103125

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