BIOMASS examines carbon cap and trade

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Issues surrounding biomass-related greenhouse gas reduction opportunities and cap and trade systems were the topic of discussion during the second general session at the 2009 BIOMASS Conference & Expo in Portland, Ore.

The session, which investigated possible issues surrounding carbon capture and trade in the U.S., included speakers Rena Gelb, vice president of Carbon Credit Capital; Bill Holmes, Stoel Rives LLP partner; and Peter Weisberg, offset project analyst of Onsite Power Systems.

During her presentation, Gelb emphasized that although the U.S. market for carbon credits is in an early stage, numerous initiatives currently underway could affect project development according to type and location. “Regionally, cap and trade schemes create current demand for carbon credits, and a federal scheme is under discussion,” she said. “Eligible projects, with respect to types and locations will vary with the different regional schemes, and hopefully a federal scheme will help this.”

The voluntary carbon markets create demand for a wider variety of projects, however voluntary carbon markets have limited liquidity and less developed financing structures. “Carbon finance have been used successfully in international compliance markets to assist with project financing, and this can serve as a model for the U.S. compliance models,” Gelb said.

Holmes steered the panel toward legalities involved with carbon cap and trade. “These credits have value, and this is an initial point you need to keep in mind—whether in a voluntary market, or a regional compliance market, or under some sort of a federal cap and trade system,” he said. “It’s going to have greater value under a federal cap and trade system, but from a lawyer who sees a fair number of project documents, if this thing has value, everyone involved in the project needs to give very careful thought about who actually owns the carbon offset. It is by no means obvious, and that can create problems.”

Holmes pointed out that if carbon credits become extremely valuable at some point, ownership will become something worth fighting over. “Is it the developer? Is the lessor, or is it some other party? Don’t assume the answer to that question,” he said. “The need to communicate that effectively in agreements is essential.”

A complete 2009 BIOMASS Conference & Expo review, including general sessions and track sessions, will be published in the June issue of Biomass Magazine.