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July 2010 - Michigan Energy Forum - Gabriel Thoumi
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July 2010 - Michigan Energy Forum - Gabriel Thoumi

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Gabriel Thoumi from Forest Carbon Offsets LLC presents: Forest Carbon Offset Assets: A New Alternative Investment Asset Class?

Gabriel Thoumi from Forest Carbon Offsets LLC presents: Forest Carbon Offset Assets: A New Alternative Investment Asset Class?

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  • 1. Forest Carbon Offset Assets: A New Alternative Investment Asset Class? Forest Carbon Offsets, LLC Gabriel Thoumi (612) 327-0189 gabrielthoumi@forestcarbonoffsets.net © Forest Carbon Offsets, LLC
  • 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
  • 6. Source: http://www.wwf.or.id/ Copyright © Mongabay.com Deforestation in Madagascar
  • 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