Additional income from carbon sequestration for forest and land owners: Arbonics and other similar companies

[uhrilahja]

We briefly looked into income opportunities for forest and landowners.
Arbonics and other companies specialized in carbon sequestration sell carbon credits to companies in the battle over emissions and against the end of the world.

The gist of it in short:
Plant trees on wasteland, take care of them, keep the trees standing for 50 years.
You receive “carbon units” which you sell to generate income.
Example estimate:
4 hectares of field land being afforested, contract period 50 years, the estimate was approx. €39,000.
This is, of course, assuming that the price of a credit is still €50 when selling.

Arbonics takes a 10% commission of the units for itself; there are no other costs for the owner.

But, can the Estonian startup Arbonics be trusted?

Kristjan Lepik and Lisett Luik founded a carbon and ecosystem platform in early 2022 that enables the development of nature-based solutions in forestry. Arbonics offers new sources of income for forest and landowners while developing the voluntary carbon market by taking the analysis and calculation of carbon sequestration potential (carbon dioxide capture from the atmosphere and storage) to a new level. The platform has already attracted a lot of interest in Estonia and Latvia, as well as elsewhere in Europe.

Vapaaehtoisuuteen perustuva hiilimarkkina uudelle tasolle – dataa ja...

Does anyone else have experiences/thoughts on carbon income for forest and landowners?

[Osakesijoittaja]

Really interesting opening! I had heard of this company before, but I haven’t had the chance to look into it yet.

In Finland, there are a few companies that sell carbon offsets to businesses in exchange for a forest owner’s planting or fertilization + extension of the rotation period.

One such company is Green Carbon (https://greencarbon.fi/), which sells carbon offsets to the customer and agrees with the forest owner on fertilization and rotation period extension (=final felling is carried out later than usual). The forest owner receives compensation for this.

A truly high-potential and large market, but there are challenges as well. I know that Finnish companies in the industry are struggling with regulation. It is very typical for Finland to grapple with regulation for so long that players from elsewhere in the world have already taken over the market. As I understand it, there is such a fear within the industry.

[uhrilahja]

Let’s post a little update on the topic. I watched a couple of lectures.
Short, messy summary:

Forest owner’s carbon evening Nov 10, 2022
MTK, field manager, Catch the Carbon (Hiilestä kiinni) project, Green Carbon forest expert
Metsänomistajan hiili-ilta - YouTube

Voluntary carbon offset market =
A way for companies, communities, and consumers to voluntarily compensate for or cancel out the emissions they produce.
Landowners can participate in the market by providing carbon sequestration services.

The market is growing; in 2021, the voluntary carbon offset market grew nearly fourfold globally compared to the previous year.

Finland’s goal 2035 – carbon neutral.

Carbon market work in Forest Management Associations (MHY)
In 2019, MTK established a carbon market working group (https://mmm.fi/hiilimarkkinat-ja-hiilikompensaatiojarjestelmat)
Experts from Finland involved
Explored the offset market
Need to find solutions with industry players for measuring carbon sinks, reporting accuracy and reliability, as well as clarity of criteria and development of the knowledge base.

Funding granted to Forest Management Associations to investigate commercialization opportunities for carbon sinks (Project is part of the Ministry of Agriculture and Forestry’s Catch the Carbon – climate action package).

For the forest owner, Green Carbon:
Carbon service – the forest owner receives compensation for increasing carbon sinks (forest fertilization service)
The compensation significantly increases the profitability of fertilization
Paid annually depending on the stand, location, and fertilizer
Green Carbon markets the additional growth achieved with fertilizer to the voluntary carbon offset markets

Hiili Plus contract: compensation €10/m3 or CO2t
Rule of thumb: Pine stand 5y €90-130/ha
Spruce stand €120-140/ha
Peatland €190-280 range 10y
Higher than Kemera subsidy, up to 4% interest because Kemera subsidy is financially smaller
No logging during the contract period?
5 & 10y contracts

MTK’s carbon sequestration seminar May 5, 2023, which can be viewed on YouTube. My own highlights from that seminar:
MTK:n hiilensidontaseminaari 5.5.2023 kello 9.00 alkaen - YouTube

At the beginning, Markku Kulmala spoke generally about carbon sequestration, its challenges, and measurement methods.
The presentation was worth watching; Kulmala seemed to really know his stuff.

St1 Mika Anttonen’s speech from the transport sector’s perspective:
The distribution obligation costs motorists 1.5 billion euros with next year’s distribution obligation at 28%.
According to Mika, this is completely useless because the obligation regarding Malaysian/Indonesian palm oil doesn’t help at all when measured by lifecycle emissions. The obligation will also cause challenges in raw material prices in the future (palm oil and similar) because demand has grown. If the oils run out, someone can’t provide biodiesel - someone pays the fine/sanctions.
Anttonen says that St1 would have rather invested in forest planting, which would have sequestered more carbon dioxide than this biodiesel distribution obligation, but because the law obligates them to provide biodiesel, they must do so. Anttonen also criticized the investment – 300 million euros went into a factory in Sweden; this investment doesn’t necessarily reduce emissions one bit.
In the end, Anttonen criticized driving factories abroad, which created a statistical illusion in Finland about emission reductions - emissions did decrease, but the same product is made with higher emissions elsewhere and flown or shipped to Finland.

Finally, Anttonen talks about the Morocco project where St1 is involved in planting forest in an arid area; progress is already visible on that plot.

Conclusion: Strong words from Anttonen, I wouldn’t have expected to hear such things from an St1 lecturer, but this was in a good way. This whole business is quite unbelievable if even the fuel producer says there’s no sense in it!
The impression left from the speech was that Finland needs to get a ton of that carbon sequestration alongside emission reductions. Before that, get the certifications in order so that units can be measured realistically.

St1’s Morocco pilot: St1:n Marokon metsityspilotin tulokset vahvistavat: hiilinieluja voidaan luoda jopa kuivissa olosuhteissa - St1

In the same seminar, Kristjan Lepik, owner/founder of Arbonics, was also a speaker; the talk was short and vague. The performance was convincing but doesn’t solely inspire trust.
I will continue investigating Arbonics later when I can dig up more history and specs on the company. I’m in a good position in that we can handle contract matters through the Forest Management Association, so I can get some direction on the company’s reliability from there. In this case, the work and forest management would remain with the Forest Management Association, so I am a paying customer for them, and I believe I’ll get an “impartial” answer.

Juhani Damski is the Permanent Secretary of the Ministry of the Environment, formerly the Director General of the Finnish Meteorological Institute:
Voluntary carbon market - Greenhouse emissions on the rise - All sectors are still increasing emissions
Voluntary climate actions can complement targets and offset emissions that cannot be reduced
Challenges – measurement / permanence
Problem in the EU process regarding the unit balance (double counting); apparently, the state calculates book accounting where the final price is not clear

MTK’s big boss?
Proposal to the government: 1. State establishes a registry for voluntary carbon removal so that the buyer dares to buy
2. Emission obligation ticket market (maybe doesn’t) work
3. EU political alignments so that there’s cross-border trade for carbon removal?

The subject was interesting enough that I had to look into it a bit more, even though I don’t know much about growing forests. Try to make sense of these illogical summaries; I am not a professional in this (either).

[Marmoset]

There are indeed surprisingly many companies already. However, it is very difficult to assess the strengths or weaknesses of different actors at this stage. For the same reason, the threshold for committing to a long-term agreement is high.

The following actors were listed in a forestry magazine:

Arbonics
Skoggi
Green Carbon
NGS Finland
Zertiforest
Hiilinielun tuottajat
Istutapuita . fi
Havulatva
Puuni
Reforest
Rakeistus

[Kelli]

We really need to get some perspective on this carbon sink, emissions trading, and biofuel discussion and focus on the essential: ending the combustion of fossil carbon and oil.

A few related points that are hardly discussed in Finland:

• Finland stopped importing electricity from Russia. Imports were about 1500 MW, or approx. 15% of Finland’s usage, i.e., approx. 12 TWh. The emissions of the Russian power grid are about 380g/kWh, and we now source it from the Scandinavian grid at about 80g/kWh.
  Our emissions thus decreased by about 3.6 million tonnes. This likely corresponds to our trucking emissions.
  Kartta | Electricity Maps

• Our undrained peatlands grow about 3-4t/ha of biomass, and this is not counted as our sink, even though it is in Sweden.

• UPM BioVerno diesel is made from tall oil, an important raw material for the adhesive industry, which is produced at a rate of about 3% during the cooking of pine pulp.
  The soap resulting from the cooking is treated with sulfuric acid, the production of which has caused CO2 emissions. Tall oil is transported by diesel trucks to Lappeenranta, where it is refined into diesel fuel in a factory made of steel, concrete, and copper, using electricity and hydrogen separated from Russian “blood gas.” The resulting diesel is transported by diesel trucks around Finland. All this increases our emissions.
  In the old days, soap was simply burned in a recovery boiler for heat and electricity. This is how it should/could be done now too, feeding the resulting electricity with low emissions and losses into the Teslas of the Helsinki metropolitan area.
  This “oil from oil” magic trick is only economically viable through massive taxpayer subsidies.
  By the same logic, the fats and palm oils used by Neste could be burned in, for example, waste boilers for electricity and heat without processing with Russian gas.

• The carbon sink of Finnish forests naturally decreased when wood imports from Russia ended. Those trees will remain there in the future to grow as carbon sinks. It doesn’t seem like the Russians process them much.

• A billion children and women suffer from malnutrition. At the same time, European taxpayers subsidize organic farming, whereby the growth capacity of fields is halved from 6-8t/ha… to 3-4t/ha of grain. Wealthy Europeans can afford to buy the missing grain from the world market, while an African father, who has no money to buy fertilizers, is left to starve his family or clear more forest into fields.
  Of course, a farmer can do whatever they want with their fields, but subsidies for organic farming must end. These farmers would get the same yield with traditional farming, and half of the fields could be afforested into sinks and raw material for essential forest industry products that replace oil.