Subject: UFTO Note: Utilitree Carbon Co.– CO2 emissions management
Date: Tue, 27 Aug 1996 13:14:32 -0700
From: Ed Beardsworth <edbeards@batnet.com>

Interesting developments at EEI and the global climate initiatives–several of your companies are members of Utilitree. The contact points tend to be someone in environmental or communications. Let me know if you want more information.

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| *** UFTO *** Edward Beardsworth * Consultant |
| 951 Lincoln Ave. tel 415-328-5670 |
| Palo Alto CA 94301-3041 fax 415-328-5675 |
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AEP PARTICIPATES IN NEW INDUSTRY-WIDE EFFORT TO REDUCE GLOBAL WARMING, AEP’S GARY KASTER NAMED CHAIRMAN OF NEW CONSORTIUM COLUMBUS, Ohio, Aug. 7 /PRNewswire/

Gary Kaster of American Electric Power (NYSE: AEP) has been named chairman of UtiliTree Carbon Company, a new non-profit organization comprised of 40 U.S. electric utilities dedicated to providing funding and oversight for projects which capture and store carbon dioxide emissions as a cost-effective response to concerns over global climate change.

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Utility Forest Carbon Management Program/UtiliTree Carbon Company** (June 1996)

Trees are referred to as “carbon sinks,” because they take CO2 out of the air and sequester it in living plant tissue. About one-half of a tree is carbon. Carbon can be managed through many different types of forestry activities, including: forest preservation and management projects to reduce CO2 emissions and maintain carbon sequestered by reducing deforestation and harvest impacts; forest management to enhance existing carbon sinks; creation of new carbon sinks by planting on pasture, agricultural land or degraded forest sites; storing carbon in wood products; and energy conservation through shading buildings and homes.

The technical potential for forest carbon management is great, able to counteract a meaningful portion of the 3 Pg (1 Pg = 1 billion tonnes) carbon annual addition to the atmosphere. In addition, vigorous efforts to control land degradation in these areas could result in a net sequestration of up to one Pg carbon per year. Carbon offsets, properly documented and monitored, should be a major component of an international strategy to respond to GHG concerns.

The electric utility industry has a long history of involvement with traditional forest management and tree-planting programs, through preserving forest lands for both recreational use and wildlife habitat, tree maintenance around power lines, education of homeowners on tree placement around power lines, and commercial forestry on utility-owned lands. In association with events such as Earth Day and Arbor Day, many utilities supply seedlings for employees, children and others to plant. The utility industry owns a large amount of land in order to house and surround its current and future generation, transmission and distribution facilities.

Utilities have also recently initiated numerous forestry projects specifically to conserve energy and to offset CO2 emissions.6,7 A dozen or more utility companies are involved in urban forestry energy conservation programs such as American Forests’ Global ReLeaf and the DOE/American Forests’ Cool Communities. A few utility companies, such as the New England Electric System and PacifiCorp, have initiated forestry efforts targeted at managing carbon. The Southern Company is sponsoring research by the Smithsonian Tropical Research Institute to investigate carbon sequestration rates, the long-term benefits of standing tropical forests, and the role of rain forests in tropical economies. In addition, some utilities are using biomass as a fuel to produce electricity.

In early 1995, many electric utilities entered into voluntary agreements under the Climate Challenge. Numerous of these voluntary commitments included forestry activities. For example, the American Electric Power Company committed to plant 15 million trees by the year 2000.

Some specific reasons for utilities to participate in forest carbon management include:

* There is a large technical potential for forest carbon management — a project can offset millions of tons of carbon emissions.

* Forestry options to manage carbon are cost effective in many cases — e.g., a few dollars per ton of carbon offset. Forest carbon management opportunities can be among the most economical ways to address CO2 emissions.

* Forestry carbon management adds flexibility, thus expanding the utility repertoire of options.

* Experience leads to improved future projects.

* Forestry projects yield positive public relations — using forestry to manage CO2 is well received by the public and environmental groups.

* Forestry efforts have positive secondary environmental and social benefits — e.g., restoration of degraded lands and protection of biopersity.

* International projects will help to demonstrate the effectiveness of joint implementation activities with other nations, which is a critical tool for economically addressing GHG issues.

* As is the case with this initiative, joint sponsorship of projects by many utilities also means that risk is shared.

The Utility Forest Carbon Management Program (UFCMP) is an initiative developed by EEI, with support from 55 electric utilities, to expand utility industry efforts to manage CO2 via forestry projects, both domestic and international. The goals of the program are to:

* Advance the state of knowledge regarding options for managing GHG’s via forestry.

* Establish low-cost forestry options to manage GHG’s.

* Implement projects to manage GHG’s.

* Promote environmental stewardship by the utility industry, including helping to demonstrate that a voluntary approach to environmental protection can work.

The UFCMP developed criteria and a process to review proposed projects and, subsequently, a request for proposals was issued to hundreds of inpiduals and organizations in February 1995. Thirty-two proposals were received in March 1995 and reviewed by the UFCMP committees, an outside consultant and, to a limited extent, by the UFCMP Advisory Council (representatives from nine non-utility organizations — American Forests, Resources for the Future, Trees Forever, Society of American Foresters, Smithsonian Tropical Research Institute, U.S. Country Studies Program, U.S. Department of Energy, Oak Ridge National Laboratory, and USDA Forest Service). Proposed projects were located in the U.S., Central America, South America and Asia.

Technical criteria address project GHG calculations, monitoring, contingency plans, and non-GHG impacts, as well as project developer qualifications and experience. The full life cycle of project GHG emissions and emission reductions must be specified, addressing “leakage” and the fate of harvested biomass. The cost-effectiveness of the project in terms of $ per ton CO2 managed is a key project characteristic.

After technical review was completed, projects were ranked and eventually a “pool” of six projects emerged as the final product for which utility sponsorship would be sought. Subsequently, UFCMP members and non-member utilities were asked to provide cooperative funding. A new non-profit corporation called the UtiliTree Carbon Company was established by 40 utilities to sponsor the projects. The projects in the final pool represent a perse mix of rural tree planting, forest preservation, forest management and research efforts at both domestic (eastern and western U.S.) and international sites.

The UtiliTree Carbon Company has committed slightly over $2.4 million to fund the pool of projects. CO2 will be managed at a cost of under $1 per ton, including administrative expenses. Participants will share on a pro rata basis the reporting of carbon reductions into the voluntary Energy Policy Act section 1605(b) data base. In addition, a data base will be developed to report the GHG benefits of all utility forest management projects.

** excerpt from (taken from EEI web page):

“A Status Report on Climate Challenge Program’s Voluntary Initiatives to Manage U.S. Electric Utility Greenhouse Gases”; Presentation at 89th Annual Meeting & Exhibition Air & Waste Management Association Nashville, Tennessee, June 1996; John D. Kinsman, Michael McGrath, Richard McMahon, Michael Rucker, Ronald Shiflett and Richard Tempchin; Edison Electric Institute, 701 Pennsylvania Avenue, N.W., Washington, DC 20004-2696