Paper prepared for FAO by Reid Miner and Alan Lucier, NCASI
In at least one important respect, the forest products industry is unique among industries: the industry, more than any other, is in the business of managing stocks of sequestered atmospheric carbon, and as a result, our effect on the global carbon cycle are closely tied to how sequestered atmospheric carbon moves through our value chain.
This paper focuses on only one part of this value chain: the use and disposal of harvested wood products (HWP). The term HWP encompasses all forest products including paper, paperboard, and wood products. The following discussion is intended to provide a very general understanding of how carbon moves through this part of the forest products value chain, the methods used to estimate the amounts of carbon, and the accounting frameworks being used to inventory carbon in HWP.
Are HWP carbon stocks important to the forest products industry's carbon balance?
Using FAO statistics, it was recently estimated that HWP produced by the global forest products industry in 1990 contained 346 million metric tonnes of carbon (Winjum et. al. 1998). More importantly, the analysis indicated that the stocks of sequestered carbon in HWP (products in use and in landfills) were increasing at a rate of 139 million metric tonnes carbon per year in 1990 (Winjum et. al. 1998). This annual increase in sequestered HWP carbon represents an equivalent net removal of carbon from the atmosphere that is substantially more than the annual direct greenhouse gas emissions from the global forest products industry - perhaps more than twice the global industry's emissions. The importance of HWP to the industry's carbon balance is clear.
The current Intergovernmental Panel on Climate Change (IPCC) default method for HWP accounting in national inventories is to assume that all carbon in HWP returns to the atmosphere in the year the tree is harvested, an assumption that fails to reflect the climate benefits of sequestering carbon in HWP during use and in landfills. Countries are free, however, to account for carbon sequestration in HWP where data are available, and indeed, the inventories of several countries now include estimates of annual increases in carbon sequestered in HWP. IPCC is currently considering new guidelines for addressing HWP carbon stocks in national inventories.
The fate of carbon in HWP
While HWP are being used, the carbon they contain is sequestered from the atmosphere, but the time in use varies considerably from one type of product to the next. In some cases, the products remain in use for very long periods of time. Many building materials are in this category. In other cases, tissue paper for instance, the time spent in the use phase of the life cycle is very short. The time in use for some products, archival paper for instance, is so long that the carbon can be considered to be permanently sequestered from the atmosphere.
Recycling affects the length of time carbon remains in the use phase. The higher the utilization rate (the fraction of the product reused to make new product), the longer the carbon remains in use. The relationship is often described using the following equation (Row and Phelps 1996):
time in use with recycling = time in use without recycling/(1-utilization rate) (Eq. 1)
Accordingly, recycling 20 percent of a product back into a new product increases its time in use by 25 percent and recycling 50 percent back into a new product doubles the time in use.
After use, some of the discarded paper, paperboard, and wood products are disposed of in landfills. Over time, a portion of the carbon in the HWP in landfills is converted into carbon dioxide and methane, with methane being important because it is 21 times more potent as a greenhouse gas than carbon dioxide13.
The rate at which carbon in products is converted into these gases varies considerably depending on the type of product as well as the design and operation of the landfill. A fraction of the carbon in landfilled HWP is, for all intents and purposes, permanently sequestered, with lignin-containing products permanently storing more carbon than products that are low in lignin (Barlaz et. al. 1989). In addition, only a fraction of the methane generated in the landfill escapes to the atmosphere, especially in modern landfills with gas collection systems.
The diagram in Figure 1 illustrates key components of the use and disposal phases of the HWP value chain and the fate of carbon during product use and disposal.
In the context of the climate change issue, the carbon in HWP is important for at least three reasons. First, the carbon in HWP is sequestered from the atmosphere while the products are being used. Second, after use, a certain fraction of HWP is disposed of in landfills where it continues to sequester carbon. Third, methane released to the atmosphere from HWP in landfills adds to the greenhouse gas levels in the atmosphere14. The methods used to characterize these three phenomena are described below.
Estimating changes in the amounts of carbon sequestered in HWP during use
There are three basic methods for analyzing carbon sequestration in HWP during use. The first, which is the IPCC default method, assumes that the sequestration in HWP is zero - all carbon is recycled to the atmosphere in the same year the tree is harvested.
The second method is based on changes in the quantity of carbon contained in HWP currently in use. If the amount of carbon contained in HWP in use is larger this year than last, it represents a removal of carbon from the atmosphere. If the amount is smaller, it represents a net addition. Thus, this method can yield positive or negative values for annual changes to sequestered carbon in HWP in use. It is the method most commonly used to develop HWP sequestration estimates for national inventories but is far less useful at the company level because of the difficulty in estimating how much of the current stock of HWP carbon is attributable to a specific company.
Method two requires that the analyst estimate the size of the current pool of HWP in use and the amounts of carbon entering and leaving it on an annual basis. The size of the current pool can be estimated based on an inventory, a reconstruction of the HWP pool from a point in history, or both. In many cases, the current HWP pool is reconstructed by going back to a point in time predating most of the current stock and then developing a year-by-year reconstruction up to the present time. Annual additions and removals are often estimated using data on housing starts, wood furniture production and other production data. Removals from the pool of carbon in HWP in current use are estimated from information on expected time-in-use for various types of products, from waste management data, or other sources.
The second method can be illustrated using data from the United States. There are approximately 1.3 billion tonnes of carbon sequestered in HWP in use in the United States (USEPA 2002). Using data from several sources, we estimate that the difference between additions and losses from this pool to be about 25 million metric tonnes of carbon per year, representing a net annual removal of the same amount carbon from the atmosphere15. This amount exceeds the estimated direct greenhouse gas emissions from the United States forest products industry by 5 million tonnes of carbon or more.
The third method ignores the changes in current stocks and focuses instead on the expected fate, during use, of carbon in HWP being produced today. Using this approach, carbon that will remain sequestered is included in the inventory as a removal from the atmosphere in the year the HWP is produced. With this method, it is not possible to obtain negative values for the annual changes to sequestered carbon in HWP in use. Method three may be especially appropriate for HWP carbon accounting at the corporate level because it is based only on the company's current production and does not require the company to estimate how its past production impacted current stocks of HWP carbon.
Method three is based on estimated long-term carbon sequestration attributable to current production. The only information required is (a) the expected half-life in use for the product in question and (b) a definition of what constitutes `long-term' sequestration. If, for instance, if is decided that a one hundred-year period is appropriate for defining sequestration, one can calculate that, during its use, a product with a 35-year half-life will sequester 13.8 tonnes of carbon for every 100 tonnes of carbon in the product. These tonnes would be included in the inventory for the year the product was made.
Estimating changes in the amounts of carbon sequestered in HWP in landfills
In some ways, the analysis of HWP in landfills is similar to the analysis of HWP in use. There are three main methods. The first, the IPCC default, assumes zero additions to sequestered carbon in landfills. The second method is based on the year-to-year change in the size of the pool of carbon sequestered in landfills, and is the method most commonly used in national inventories. The third method is based on projected long-term landfill sequestration of carbon in products currently being manufactured, and may be particularly suited to carbon accounting at the corporate level.
The second method requires an estimate of (a) the size of the current stock of carbon sequestered in landfilled HWP, (b) the annual additions to that stock, and (c) the annual releases. The current pool of HWP carbon sequestered in landfills can be estimated using the same basic approach as used to estimate HWP in use. Starting at a point in the past, each year's contribution of HWP to landfills is added and an estimate is made of the amounts of carbon converted to gas and released to the atmosphere in that year. The difference represents the net growth or shrinkage of the pool of carbon sequestered in the landfill. This process is repeated until the current pool is reconstructed.
The additions of HWP carbon to the landfill can be estimated from solid waste management data or general information on the time-in-use of various products and how they are handled after use. Estimating the annual losses of carbon from landfills to the atmosphere, however, is more complicated because of the many factors that influence the fate of HWP carbon in a landfill environment. Among the most important factors are;
• the type of landfill, especially whether it is aerobic or anaerobic (because lignin generally degrades only under aerobic conditions);
• the type of HWP involved, in particular their lignin content and physical form.
To address these factors, analysts generally divide landfills into aerobic and anaerobic categories. For each category, the degradation of HWP carbon into gas is described by a rate function. Often the rates are different for different HWP. In the case of anaerobic landfills, a fraction of the carbon may be permanently sequestered in landfills16. In method two, this information is used to reconstruct the current pool of HWP landfill carbon and to estimate the annual change in the size of the current pool.
The third method uses the same information but instead of using it to estimate losses from the current landfill carbon pool, it uses it to estimate the amount of carbon in current HWP production that will be stored in landfills in the long term. One option is to limit `long term' sequestration to the fraction of the carbon that is sequestered permanently but it is also possible to define `long term' so as to include slowly degrading material, some of which may remain in landfills for centuries.
Methane produced from HWP in landfills
A certain fraction of harvested wood products end their life cycle in landfills, and if the landfill is anaerobic, some of the carbon in the HWP is converted to methane. Although the carbon in this methane is of biological origin, it is re-entering the atmosphere in a form that has more potential to cause global warming (CH4). Therefore, methane from landfills is included in many greenhouse gas inventories and in many studies of the effects of HWP on greenhouse gases in the atmosphere.
In national inventories, estimates of methane emissions from landfills are usually developed independently from estimates of HWP carbon storage in landfills. In large part this is because, at the national level, the inventory needs to include all of the methane being released to the atmosphere from landfills, not just that fraction that is from degrading HWP. In developing a national greenhouse gas inventory, there is usually no need to separately account for that fraction of the landfill methane generated specifically from HWP degradation.
Although nations seldom need to separately examine the impact of HWP-derived methane, forest product companies or sectors may want to determine the extent to which methane emissions affect the overall climate profile of HWP. The methods for conducting this analysis are similar to those described above for assessing sequestered HWP carbon in landfills, except that additional consideration is given to the composition and fate of the gas that is generated. Specifically, the analyst must be able to estimate (a) how much methane is in the landfill gas, (b) how many of the landfills are capped to prevent methane release, (c) the effectiveness of the caps and methane combustion systems, and (d) how much `natural' oxidation of methane occurs in landfill cover systems. IPCC provides default values for these parameters, and countries often have data that are appropriate for local conditions.
There are two primary options for estimating the impact of methane emissions from decomposing HWP and they are matched to the corresponding methods for estimating HWP carbon sequestration in landfills (described above). The first is to estimate the emissions from the current HWP landfill pool and show the amount as a debit against the additions to sequestered HWP carbon in the current landfill pool.
The second method is to project, over the long term, how much methane will be released from HWP now being produced so that you can debit this against the amount of long-term carbon sequestration expected in the landfill from currently produced HWP.
Accounting approaches for HWP carbon - stock vs flow
There are two general approaches for accounting for sequestered carbon in inventories: stock change and atmospheric flow. Stock and flow approaches give the same results for estimated impacts on the atmosphere, but they differ in how the analysis is conducted. The differences have several important implications for the forest products industry, with the most important being in the areas of (a) accounting for biomass carbon emissions and (b) carbon in imports and exports.
With flow accounting, sequestration occurs only when and where carbon is removed from the atmosphere (i.e. in the forest). After the tree is harvested, any return of the carbon to the atmosphere is considered an emission and is included in the accounting. This includes emissions of CO2 from biomass energy and CO2 returned to the atmosphere as a result of the natural degradation of forest litter, HWP, and all other types of biomass. There is no `biomass neutrality' in flow accounting. Emissions from biomass are included in emissions inventories when and where they occur. In addition, with flow accounting, there is no carbon sequestration in products - only emissions from products.
With stock accounting, sequestration occurs as the result of carbon being added to the stocks of sequestered carbon. If these stocks increase, a corresponding amount of carbon has been removed from the atmosphere. If the stocks of sequestered carbon decrease, the loss is considered an emission. The individual flows of carbon that return to the atmosphere are not addressed in stock accounting. Consequently, emissions of CO2 from biomass energy and the CO2 generated as products naturally degrade are not included in the inventory. With stock accounting, sequestration can occur anywhere that stocks of sequestered carbon are increasing - both in the forest and in products.
IPCC's Revised 1996 Guidelines for National Greenhouse Gas Inventories are based on stock accounting concepts. In addition, forest products industry associations in New Zealand, Canada, Japan, Europe, and the United States have collectively stated that a "carbon stock approach based on full carbon accounting should be adopted" (CEPI et. al. 2000).
Imports and exports and other ownership issues
In certain contexts, it becomes important to assign ownership to sequestered carbon and thereby assign credit for the benefits (and risks) associated with carbon sequestration. This is a complicated and politically difficult process because sequestered carbon is distributed along the value chain and often moves from one `owner' to another.
At the national level, ownership issues arise when accounting for carbon in imports and exports. The benefits and risks associated with HWP carbon can either go with the exported product or remain in the producing country. The choice is reflected in the options IPCC offers for stock accounting (i.e. `regular' stock change accounting and production stock change accounting).
In `regular' stock change accounting, the HWP carbon sequestration reported by a country is equal to the change in stocks of sequestered HWP carbon that occur within the country's national boundaries, regardless of whether the stock was produced domestically or imported. In production stock change accounting, the HWP carbon sequestration reported by a country is equal to the changes in carbon stock that can be attributed to domestic HWP production. Under production stock change accounting, HWP stock changes due to imports are not counted in a country's national inventory, but HWP stock changes in other countries due to HWP exports are included.
Ownership issues arise in many situations besides national accounting for imports and exports. As carbon reduction and trading schemes are taking shape around the globe, national and international authorities, industry sectors, NGOs, and individual companies are working through the ownership issues associated with sequestered carbon. In the next few years, accounting rules will be developed around many of these schemes. It is too early in the process to speculate about how these rules will work, but it is clear that the most difficult issues surrounding the process are political rather than technical.
Other climate benefits of HWP
Although this paper is focused on the significance of carbon sequestration in HWP, it is important to recognize that forest products have other important climate benefits. For instance, forest products often have lower inherent carbon intensities than competing products serving the same function. Also, non-recyclable wood and paper products represent a potential source of biomass energy that can displace fossil fuels. A complete analysis of HWP reveals that the climate benefits of HWP go far beyond carbon sequestration. This analysis, however, has been limited to the carbon sequestration accomplished by HWP.
The carbon sequestered in harvested wood products (paper, paperboard and wood products) is clearly an important part of the industry's impact on the global carbon balance. The amount of carbon sequestered annually in HWP is as large as or larger than the amount emitted by the industry's manufacturing facilities. Methods have been developed to estimate the amounts of carbon sequestered in harvested wood products (HWP) during use and in landfills. A number of national inventories already include this carbon and IPCC is developing guidelines to assist in the analysis.
Carbon reduction and trading schemes are taking shape involving sequestered carbon. As these schemes develop, ownership rules will emerge that determine how the risks and benefits associated with sequestered carbon, including HWP carbon, are distributed along the value chain. In developing these rules, a range of issues will be confronted, the most challenging of which will be political rather than technical. Regardless of how they are resolved, it will remain true that "if atmospheric carbon is the problem, forests and forest products are an important part of the solution."
CEPI, et. al. 2000. Climate Change - Meeting the challenge of global climate change - Views of the forest and paper industry in New Zealand, Canada, Japan, the US and Europe. Available on the internet sites of several of the sponsoring associations, including CEPI at http://www.cepi.org/files/pub_a4-181045A.pdf.
Row, C. and Phelps, R.B. 1996. Wood and carbon flows and storage after timber harvest. Chapter 2 of Forests and Global Change, Volume 2: Forest Management Opportunities for Mitigating Carbon Emissions. Edited by Sampson and Hair. Published by American Forests. Washington DC.
United States Environmental Protection Agency (USEPA). 2002. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2000.
Winjum, J.K., Brown, S. & Schlamadinger, B. 1998. Forest Harvests and Wood Products: Sources and Sinks of Atmospheric Carbon Dioxide. Forest Science, Vol. 44, No.2, May 1998, pp 272-284.
13 Carbon dioxide from landfills is derived from biomass carbon and is, therefore, considered part of the natural carbon cycle and climate neutral. Methane formed from biomass carbon is not considered to be climate neutral because methane is a more potent greenhouse gas than carbon dioxide.
14 When non-recyclable paper is burned for energy and displaces fossil fuel, it also affects the global carbon cycle, but this aspect of HWP management is not dealt with in this paper.
15 The official US inventory only reports the additions to HWP carbon stocks that can be attributed to domestic production. In 2000, this amounted to about 18 million metric tonnes of carbon added to HWP in use.
16 In fact, one of the options that has been proposed for accounting for carbon sequestration in HWP ignores all sequestration except that attributable to carbon stored permanently in landfills.