Isles hold allure
as environmental
investment

A forestry industry in Hawaii
could help offset global
warming, experts say

By Peter Wagner
Star-Bulletin

Eight years ago, when AES Hawaii Inc. signed a $2 million deal to plant thousands of trees in South America, there was little thought of the "carbon credits" that might accrue.

"We thought it was the right thing to do," said Kevin Pierce, president and general manager of the coal-fired power plant at Barbers Point.

But if the 143,000 trees will help save a Paraguay rain forest, they will also offset 14 million tons of carbon dioxide AES estimates it will pump into the sky during the 30-year life of its power plant.

Such credits, designed to neutralize the environmental damage of carbon gas emissions, could draw significant investment in Hawaii, proponents say. Vacant sugar and pasture lands could become forests underwritten by oil, utility, and other companies responsible for a huge output of the so-called "greenhouse" gas.

"Global warming is a global issue and people in Hawaii need to be aware of the opportunity to plant forests to offset the problem," said Michael Walsh, senior vice president of Environmental Financial Products, a Chicago investment banking firm that seeks carbon credit investments for clients.

Walsh was among speakers yesterday at a daylong conference at the State Capitol, sponsored by the U.S. Forest Service and the Hawaii Forestry and Communities Initiative. The conference probed the potential of a forestry industry in Hawaii, geared to investors wanting to offset the environmental impacts of heavy industry.

Earth's temperature has been climbing over the past 50 years along with the industrial output of carbon dioxide, blamed for global warming, scientists say.

The United Nations in 1997 adopted the Kyoto Protocol, setting targets to cut carbon emissions below 1990 levels.

Pressure to comply is driving a growing interest in the concept of trading carbon output for absorption credits.

Walsh estimated current investments in carbon credits "in the tens of millions" with a worldwide market potential of more than $30 billion .

A new science has emerged in recent years in which the amount of carbon absorbed by trees can be calculated and sold as a credit -- or an investment -- for $2 to $10 a ton. While the carbon credits currently have only a public relations value, they are soon to be listed as a security on the Sydney Futures Exchange.

David Brand, executive general manager of the State Forests of New South Wales and a featured speaker yesterday, said the credits will be traded for the first time on July 7, 2000.

Michael Buck, administrator of the state Division of Forestry and Wildlife, said thousands of acres of vacant sugar and pasture lands could be worth up to $260 million in carbon credits investments.

"Hawaii is the best place in the world to sequester carbon," he said, noting trees grow faster because of a year-round favorable climate.

A number of carbon-offsetting forestry projects have been underwritten in recent years by companies in Montana, Oregon, Arkansas, Arizona and other states.

But while large companies are spending millions of dollars to plant trees around the world, it wasn't clear yesterday how Hawaii could tap into the market.

Kevin Eckert, system forester at Hawaiian Electric Co., said it would be hard to justify a large investment in trees to the company's customers. "We're interested in doing anything we can to mitigate any environmental impacts we might have," he said. "But one of our challenges is to provide services to our customers at the lowest cost." Eckert noted Hawaiian Electric has numerous energy-saving incentive programs and last week gave away 3,000 trees in its annual Arbor Day program to promote tree planting.