2. Forest Carbon
Policy Slide Offsets, LLC
Forest Carbon Offsets, LLC (FCO) assists landowners and
companies globally to document, register, and commercialize
the carbon sequestration services of their property thereby
supporting the adoption of conservation and sustainable
forestry practices. FCO has a significant team and Board
of Directors with multi-decadal experience in the timber
sector. See http://www.forestcarbonoffsets.net. Significant
partners include Virginia Tech’s Conservation Management
Institute and the Tropical Forest Foundation amongst others.
Gabriel Thoumi is a consultant with Forest
Carbon Offsets, LLC, an approved forestry
verifier under Climate Action Reserve, and co-
taught at the Ross School of Business at the
University of Michigan co-teaching Strategy
739: Impact Investing focusing on forest carbon
offsets assets. He also frequently writes, is
interviewed on, and presents on sustainability.
3. Forest Carbon Offset Assets: A New Alternative
Policy Slide
Investment Asset Class?
Conservation Finance – Forestry is 21st Century Mega-Trend
Sustainability is a mega-trend of the 21st Century
• SEC ruling that climate risk is material to investors
• EPA’s mandate that greenhouse gases be regulated as a pollutant
Sustainability imperative
• Systematize methods and models
• Align strategy and deployment
• Systematize reporting and communication
• Integrate management
Trees in forests through photosynthesis consume atmospheric CO2 resulting in mitigating climate
change easily and inexpensively
• Current US climate legislation suggests a need for up to 515 million mtCO2e in biogenic
sequestration offsets by 2020, implying 100x market growth for forest carbon offsets based on
2009 levels
4. Forest Carbon Offset Assets: A New Alternative
Policy Slide
Investment Asset Class?
Portfolio management framework
Rationale
• Investors seek green returns from future US Cap and Trade market
Risks
• Long-dated project finance risks such as currency convertibility, expropriation, political risk,
climate change risk, local community risk, model risk
Returns
• VC investments in LLCs, private stock, public stock, sovereign and municipal debt, commercial
lending, long-dated options on mtCO2e, institutional and retail sectors, compliance demand,
functions like variable rate annuity
Legal and regulatory
• Fee simple property ownership, carbon transfer becomes first lien, independent title search on
water, timber, oil and gas, mineral, and development rights, subnational / national project rights
Taxes
Time horizon
Liquidity
Unique characteristics
• Risk mitigation, masquerading, financial accounting
5. Forest Carbon Offset Assets: A New Alternative
Policy Slide
Investment Asset Class?
Supply chain
VALIDATION
and
VERIFICATION
SCS Forestry
Verified
$ mtCO2e
Raw
materials Verified Verified
mtCO2e mtCO2e
PROJECT BUYER:
LANDOWNER: BUYER:
DEVELOPER: Trading Desk
Raw materials Sales (buyside)
Generation (sellside)
BCEP NDA
FCO NDA
% of $ $ from $ from
from sale sale sale
7. Kembali ke Zamrud Khatulistiwa
http://whatismissing.net/www/#/home/unchopping_a_tree
8. Forest Carbon Offset Assets: A New Alternative
Policy Slide
Investment Asset Class? TM
Strategy
#2 Civil
Rational Convergence1 is a strategic business Society
development model we apply to forestry Communitie
projects. It assumes that forestry projects s Are
require a complex systems approach to Gatekeepers
manage, design, develop, implementation,
monitoring, and adjustment.
#1 Science #3
Land Rational Government
Dictates The Convergence Organize
Rules Rights
#4 Business
Structure
Risks
1Source: Thoumi, Emeralds on the Equator: An Avoided Deforestation Carbon Markets Strategy Manual, 2009
9. Forest Carbon Offset Assets: A New Alternative
Policy Slide
Investment Asset Class?
Market data
• 20.8 million tons since 1990 and $149 million invested in since 1990
• Minimum 61 project developers in 40 countries
• 226 projects working on 5.2 million acres in the past 20 years
• $9.43 mtCO2e avoided deforestation in 2009
• Demand increasing up to 100x in 10 years
• Department of Energy estimate 155 million to 515 million mtCO2e forest carbon offset
demand 2020 in US Cap-and-Trade (Waxman-Markey)
• Up to 128 million acres needed by 2020
10. Forest Carbon Offset Assets: A New Alternative
Policy Slide
Investment Asset Class?
Boden Creek Ecological Preserve
• 2010 to 2029
• Key in holding within 1.2 million acre conservation landscape focusing on ridge to reef strategy
• 12,876 acres of lowland broad leafed wet forest preserved
• Significant community and biodiversity co-benefits
• Average annual sequestration of 64,916 metric tons carbon dioxide
11. Thank you
Gabriel Thoumi (612) 327-0189
gabrielthoumi@forestcarbonoffsets.net
