Fact Sheet1

Carbon Sequestration: A Local Solution with Global Implications

This fact sheet is a resource to inform mine land owners, companies, and other interested
stakeholders of the opportunities to utilize reforestation to cleanup and restore former mine lands
and generate carbon sequestration credits. It is one in a series of fact sheets that describe a variety
of tools that may be used to reuse former mining sites. This fact sheet focuses on one tool, carbon
sequestration, its use on former mine lands, and the benefits of reforesting these lands. It also
examines the requirements and limitations for pursuing mine land reforestation and sequestration
projects and how reforestation projects can fit into emerging markets for carbon trading. Carbon
sequestration may be applicable to only a small percentage of former mine lands throughout the
country. However, given the number of former mine lands, that small percentage may represent
thousands of actual sites.

Introduction

While the debate over climate change continues, Federal and state agencies, industry, and other
organizations are pursuing proactive approaches to reducing atmospheric carbon, including carbon
sequestration projects. Degraded lands, including former mine lands, are being reforested across the
United States. Mine reclamation through reforestation and sustainable forest management can
provide two major benefits. Financial benefits include revenue from new forests, job creation, and
other impacts on local economies. Environmental benefits include storing carbon in the trees,
enhancing wildlife habitat, and improving air and water quality.

Efforts to increase terrestrial carbon sequestration are based
on the premise that reforestation adds to the planet's net
carbon storage and helps moderate global warming by
slowing the growth of carbon emissions in the atmosphere.
In a carbon market, each ton of carbon sequestered is called
a carbon credit. Using sequestration, companies can buy or
generate these credits, which are then sold or traded by
companies to offset their own carbon dioxide (CO,)
emissions.

Reforestation and sequestration may not be applicable for all
former mine lands. Most of the current experience with
reforestation and sequestration has come from coal-mining
sites in the Eastern U.S. and the Pacific Northwest.
However, reforestation can also be relevant to former mining

1 This document does not represent official US EPA policy or guidance. Rather this material
presents alternative approaches which may lead to environmental improvements at mining sites.

The trees planted on this Alabama mine
site have grown to 6 inches in diameter
in 10 years, (photo by Office of Surface
Mining)

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sites disturbed by hard-rock mining. For example, the state of Colorado has recently focused its
reforestation activities on abandoned hard rock mines.

In addition, current experience with mine land reforestation suggests that such projects will be more
successful in areas with sufficient moisture and where forests existed prior to mining activities.
Because of low tree survival and the high cost to plant replacement trees, arid former mining sites
may not be suitable candidates for reforestation and sequestration projects.

This fact sheet provides resources for companies and communities interested in reclaiming former
mine lands and generating carbon sequestration credits. It details the basics of terrestrial
sequestration and the benefits of reclaiming and reforesting these mine lands. This paper also
explores how mine land reforestation proj ects can relate to state and national sequestration programs
and worldwide agreements to reduce greenhouse gas emissions. It also discusses the requirements
and limitations in pursuing reforestation and sequestration projects on a former mine land.

What is Carbon Sequestration?

Carbon sequestration removes carbon, in the form of carbon
dioxide, either directly from the atmosphere or at the tail end of
combustion and industrial processes. While there are several
types of sequestration, this paper examines the long-term storage
of carbon in trees and plants (the terrestrial biosphere). C02
removed from the atmosphere is either stored in growing plants
in the form of biomass or absorbed by oceans. Sequestering
carbon helps to reduce or slow the buildup of carbon dioxide
concentrations in the atmosphere. For organizations interested
in generating carbon credits, may former mine lands provide the
land necessary to plant trees. Appendix A provides additional information on carbon sequestration
and the role that terrestrial sequestration plays in reducing or slowing the growth of C02 emissions.

Why is Carbon Sequestration Important

Greenhouse Gas Increases

Before the Industrial Revolution, the concentration of greenhouse gases (GHG) in the atmosphere
remained relatively constant. Except for slow changes on geological time scales, the absorption and
release of carbon was kept in balance. During that time, changes in biomass and soil organic carbon2
were the main sources of fluctuation in atmospheric levels of carbon.

2 Soil organic carbon is carbon residue retained by the soil in humus form. It improves soil
structure and the fertility of soil.

	

Terrestrial sequestration is a

form of indirect sequestration
whereby ecosystems (e.g., forest
and agricultural lands, wetlands)
are maintained, enhanced, or
manipulated to increase their
ability to store carbon.

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By clearing forests and burning fossil fuels more
rapidly than the carbon can be sequestered,
industrialization may have altered this equilibrium.

Currently, human activity is directly or indirectly
responsible for the release of six to seven billion
metric tons of carbon annually. Since the industrial
revolution, C02 concentrations in the atmosphere
have increased from 290 parts per million (ppm) by
volume to greater than 360 ppm. It is expected that
atmospheric CO, levels will continue to rise and may
exceed 500 ppm by 2050. (IPCC 2001)

Climate Change

A growing concern is that increases in atmospheric CO, concentration may be generating changes,
including increases in average global temperature and other climate change impacts. Although some
of the effects of increased CO, levels on the global climate are uncertain, most scienti sts agree that
doubling atmospheric CO, concentrations may cause serious environmental consequences. Rising
global temperatures could raise sea levels, change precipitation patterns, and affect both weather and
climate conditions.

In light of these potential impacts, strategies to help
reverse these emissions trends are increasing in
importance. Many state, national, and international
governments are taking steps to more effectively manage
and slow the growth of their carbon emissions. For many
of these governments, terrestrial sequestration is part of a
portfolio of approaches to inventory and reduce
greenhouse gas emissions. Their experience is
demonstrating that establishing new forests can offer cost-
effective management options for offsetting carbon
emissions, particularly in the near future.

The Opportunity for Degraded Lands: Carbon
Sequestration on Former Mine Lands

According to the U.S. Department of Energy (see http://www.fe.doe.gov/programs/sequestrationA.
there are millions of acres of land in the U.S. able to support only limited vegetative cover due to
past and present mining activities. The Appalachian coal region alone has nearly one million acres
of abandoned mine lands which could benefit from reclamation and reforestation efforts. Currently
idle or undemtilized, many of these barren or marginally reclaimed lands can provide opportunities
to sequester carbon dioxide emissions and generate other environmental benefits.



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Atmospheric C02 concentrations on a time
scale. (Source: IPCC, 2001)



With Mt Rainier in the background,
reclamation at this Washington State site
includes reforestation that restores the
pre-mining forestry land use. (photo by
Office of Surface Mining)

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Reforesting former mine lands can help increase the total number of reclaimed mine sites and
improve the quality of the site reclamation. If storing carbon in forests is cheaper than paying a
carbon tax or complying with government regulations, companies may choose to grow their own
"carbon storing" forests or invest in forests grown by others
as a means to sequester carbon or offset emissions. Given
their large number of underutilized acres, former mine lands
offer potentially significant opportunities to invest in
reforestation and accrue benefits from those activities.

Benefits of Mine Land Reclamation and Reforestation

Mine reclamation, reforestation, and forest management may
provide ecological and economic benefits. Environmental
benefits include reclamation of sites and storage of carbon in
trees and soil. Financial benefits accrue to landowners and
companies. Landowners may receive economic benefits
from timber revenues, job creation, and other local economic benefits. Companies can obtain
benefits from investing in former mine land reforestation in the form of carbon credits, waste
recycling, and public relations.

Environmental Benefits

Beyond carbon sequestration, environmental benefits also include improved of air and water quality,
enhanced of wildlife habitat, reduction in soil erosion, and increased recreational opportunities.

A ir Quality: Improvements in air quality generated by reforestation extend beyond the sequestration
of carbon dioxide. Research has shown that reforestation benefits air quality in other ways. The leaf
and needle surfaces of trees remove air pollutants such as nitrogen oxides, ammonia, and sulfur
dioxide. Trees also have a role in intercepting or filtering out particulate matter in the air. A study
of Chicago air quality concluded that the trees in that city alone produced $9.2 million (1994
dollars) worth of air quality improvements in just one year.
flittp://216.48.37.142/pubs/viewpub.isp?index=4285)

Wildlife Habitat: Reforestation of land after it has been
disturbed by surface mining can produce valuable
wildlife habitat by planting trees. This will in turn
generate forest litter, which is an important part of the
food chain and enriches the soil. The tree canopy
moderates temperatures of rivers and streams, which aids
the survival of aquatic species.

Providing habitat for endangered and threatened species
is another potential benefit. In some cases, there are

	

Texas Utilities (TXU). Energy in
Texas has established a pioneering
reforestation program to deal with its
mine lands and to help offset its
emissions. Since the program began in
1973, the company has planted over
18 million trees on 25,000 acres.

About 50 percent of TXU's reforested
area has been developed as wildlife
habitat. Habitat was established with
a mix of over 40 native hardwood and
coniferous tree species.

	

Habitat Guidelines - Some states have
established mine reclamation guidelines to
encourage the enhancement of fish and
wildlife habitat. Kentucky's new
abandoned mine land reclamation policies
discourage excessive grading and shaping
of the land and encourage planting of native
vegetation, including ground covers, that
have high food value for wildlife and are
compatible with tree growth.

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governmental incentives for landowners who restore or create habitat crucial for endangered species.
The state of Texas has partnered with the U.S. Fish and Wildlife Service to offer landowners
reimbursement for habitat restoration. In this program, landowners can be reimbursed for up to 80
percent of their costs for habitat improvements.

Recreational benefits: For local communities, reforested land may provide passive recreational
opportunities, such as hunting, hiking and birdwatching.

Erosion and water quality: Reforestation can help remediate former mine lands by improving water
quality. Tree roots stabilize mine land soil, which is susceptible to erosion. By stabilizing the soil,
trees prevent sediment and nutrients from washing into nearby streams and rivers.

Former mine lands and phytoremediation:3 Revegetating former mining sites can be viewed as
habitat improvement or the creation of a "living cap." In addition, depending on the type of
contamination present and the type of trees planted, revegetation can simultaneously provide a
phytoremediation contribution. Phytoremediation is the use of vegetation for in situ treatment of
contaminated soils, sediments, and water. Phytoremediation has an advantage of being less costly
than many remediation alternatives. However, the process requires considerable time and should
be employed at sites where remediation can
occur over a long period of time. For
mining sites, phytoremediation should
generally be viewed as part of a treatment
train, and is generally a "polishing" step.

It is important to recognize that planting
trees for carbon sequestration purposes
does not equate to phytoremediation.

Depending on the type of trees selected,
reforesting a former mine land to
generate carbon credits may do nothing
to extract or remediate any existing
contamination at the site. However, some
tree types may serve to phytostabilize the
soluble metals in the ground water or soil
as well as creating a more suitable
growth environment on a formerly
uninhabitable mine site. In such cases, there may be opportunities to pursue joint goals of carbon

3 "Phytoremediation is the use of vegetation for in situ treatment of contaminated soils,
sediments and water." See Phtoremediation, Jerald L. Schnoor,
http://www.gwrtac.org/html/tech eval.ht.ml.

5

tree roots take
in water and
pollution from
the ground

polluted soil

water table

polluted
groundwater

water enters tree
where pollution is
cleaned up

clean soil

clean

groundwater

Source: Clu-In: A Citizen's Guide to PhytoRemediation

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sequestration undertaken in conjunction with phytoremediation approaches.

Financial Benefits - Local Economic Benefits

Reforestation of former mine lands has a wide variety of anticipated economic benefits for
landowners and nearby communities. Recent research indicates that in many cases, reforestation
can be an economically beneficial post-mining land use over the long term.
(http://www.mcrcc.osmre.gov/PDF/Forums/MarketBasedReforest/l-7.prn.pdf) Local economic
benefits for communities and landowners include revenue from timber, recreational revenue,
revenue non-timber products, and tax incentives. An overview of financial benefits is below.

Recreational revenue: Landowners may receive economic benefits from recreational uses on
reforested mine lands. For instance, a landowner may collect fees for hunting, skiing, fishing,
biking, and other outdoor activities on reforested properties.

Benefits from timber harvests: A number of studies have shown that if appropriate forestry
practices are used, reclaimed mine lands can generate productive forests. Researchers from
Virginia Tech studied forests on reclaimed mine sites
in the Appalachian region and the Midwest and found
that these sites could equal or exceed the productivity
of unmined lands. The most productive sites had
commercial timber values averaging between $6,000
and $8,000 per acre, a figure comparable to timber
values on undisturbed sites. The research studied
conifers and hardwoods and concluded that the timber
value at reclaimed mine sites would be similar to that
of non-mined sites for either type of tree. In addition
to the direct economic benefits from timber, there can
be secondary benefits. Reforestation can create jobs in
forest management and other aspects of the timber
industry. Job creation and increased property taxes on
reforested land can also increase a community's tax
base.

Non-timber harvests: Landowners may generate
income by harvesting medicinal, ornamental, or edible
plants that grow in forested areas.

Tax incentives: States and the federal government offer
tax deductions or credits for reforesting land. For
example, Mississippi allows landowners to recover up

	

Federal Tax Credit: The Reforestation
Amortization and Tax Credit allows
taxpayers to deduct the costs of forestation
or reforestation of qualified timber
properties. To qualify, the reforested land
must be for the commercial production of
timber and located in the U.S. The site
must be at least one acre in size. Timber
grown for personal use does not qualify.

Landowners can deduct reforestation
expenses from their taxable income over an
eight-year period and receive a direct tax
credit of 10 percent of reforestation
expenses. Qualifying costs include direct
planting costs, site preparation, seedlings,
and depreciation on equipment. Wages
paid to oneself cannot be included, but
wages paid to others, including members of
the owner's family, can be included.

Ornamentals, Christmas trees, and nut trees
do not qualify for the tax credit.

Information about the Tax credit can be
found in the IRS Farmer's Tax Guide.
(http://www.irs.gov/pub/irs-pdf/p225.pdf)

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to half of their investment in reforestation through the Mississippi Reforestation Tax Credit. (See
Appendix C for other state programs.) The federal government also offers a tax credit for
reforestation projects; individuals can deduct investment in reforestation projects from their
federal income taxes.

Financial Benefits - Company Benefits

In addition to local benefits, reforestation and sequestration projects can provide benefits to the
companies who fund or invest in these projects. Companies are motivated to invest in reforesting
former mine lands because of an expectation that they will control or own any carbon credits
created through the reforestation. For companies with carbon intensive operations (e.g., paper
companies, electric utilities), investment in mine land reforestation projects can represent a low-
cost option for companies to hedge against an uncertain but potentially carbon-constrained
future. Benefits are detailed below.

Carbon credits: Fossil fuels are consumed in large volumes for
power generation, industrial processes, and transportation. As
large emitters of CO,, companies such as electric utilities
understand they may need to reduce greenhouse gas emissions
(GHG). Recognizing this outcome, many utilities are participating
in GHG reduction programs. Because market-based emissions
trading can offer a low-cost method for managing emissions,
companies are beginning to link sequestration projects with the
banking and trading of carbon credits.

These carbon credits provide ownership or "rental" rights to the gaseous carbon sequestered in a
forest. A company may then buy, sell, or apply the credits to offset its own emissions. Typically
ownership rights pertain to the carbon sequestered in a
tree-not the tree itself-but this should be clarified on a
site-specific basis. Through this market-based approach,
organizations can meet their own emission reduction
requirements and excess credits can be sold to companies
that find it more cost-effective to purchase credits than
reduce their own emissions.

Waste recycling: There are countless acres of former
mine lands in the U.S. in need of attention to address
acid mine drainage (AMD), to stop soil erosion, and to
restore the land to more productive use. For many sites,
reclamation and reforestation offer an opportunity for
beneficial use of coal-combustion products (CCPs), such

	

Researchers at Virginia
Tech found that by selling
carbon credits, landowners
could increase their earnings
by 10 percent over revenue
generated solely by sale of
timber products, even when
using a conservative price of
$3 per ton of carbon.

TVA's Paradise Fossil Plant tested the
application of CCP gypsum byproducts
as soil amendments to enhance the
growth of trees planted on site. (Source:
Tennessee Valley Authority)

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as fly ash. Coal-fired power plants generate over 118 million tons of fly ash, flue gas
desulfurization solids, and other byproducts each year. Only 31 percent of this ash is put to use.
The remainder ends up in landfills.

Fly ash produced during the combustion process is high in pH (alkaline) and can be used to
buffer AMD in highly acidic soils found at mine sites. The ash neutralizes the soil and provides
plant-available nutrients needed for new vegetation and to enhance tree growth. Use of fly ash
can provide companies with secondary benefits, including lower disposal costs and less landfill
spaced needed for fly ash disposal. The chemical composition of fly ash varies, depending on the
type of coal burned, the size of the ash, and the efficiency of smokestack scrubbers. Fly ash is
primarily composed of relatively insoluble silicon, aluminum, and iron oxides, but it can also
contain soluble metals and metal oxides. When
exposed to water, the metals in fly ash could leach
into the environment, polluting surface or
groundwater. As a result, some fly ash may not
suitable for all former mining sites.

Other Environmental Credits: In addition to carbon
credits, reforestation projects on former mine lands
can generate complementary ecological assets,
including water quality trading credits, wetlands
banks, and endangered species habitat credits. Credits
could be sold directly or "banked" for future use.
While these credits have ecological and societal
values, they also have monetary value for companies.
As businesses are in operation to make a profit,
reforestation and sequestration projects on former
mine lands present new opportunities that are
consistent with conventional business strategies.

Ecological assets are tradeable credits that
reflect the economic value that has been
assigned to an ecosystem "service."

Allegheny Power provides an example of
how reforestation and the development of
ecological assets can generate tax benefits.
Instead of selling 20,000 acres in West
Virginia to private developers, Allegheny
sold the property to the U.S. Fish and
Wildlife Service for conservation and habitat
purposes. By appraising the ecological asset
value of the land before the sale, Allegheny
received tax benefits based on the difference
between the sale price and the land's
appraised value.

Carbon Sequestration and Emerging Carbon Markets

There are growing signs of emerging markets for greenhouse gas emissions. An increasing number
of national and state governments, corporations, and non-governmental organizations have begun
to pioneer carbon offset markets and undertake carbon
sequestration and banking projects.

The following case studies examine how organizations
have pursued reforestation and sequestration projects
on former mine lands. recognized the potential
benefits of sequestration and are putting reforestation

In 1999, BP Amoco announced that it would
set an internal target of reducing the
company's greenhouse gas emissions 10
percent below 1990 levels by 2010. BP
Amoco intends to use a system of company-
wide emissions trading to reach its goal.

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of former mine lands and the generation of carbon credits into practice. The following Allegheny
Energy case example provides an overview of the process of reforesting an AML, from site selection
to site management.

Case Example: Allegheny Energy's Reforestation
and Sequestration Pilot

In 2001, Allegheny Energy (Allegheny), in
partnership with the U.S. Office of Surface Mining,
the U.S. Department of Energy, Pennsylvania
Department of Environmental Protection, and several
local conservation groups, undertook a reforestation
and sequestration pilot project on previously mined
land in western Pennsylvania. Allegheny's objectives
for this Limestone Run project were threefold:

•	test the effectiveness of using fly ash from a local
coal-fired power station as a soil amendment for
new vegetation;

•	test the technical feasibility of reforesting
abandoned mine lands for carbon credits; and

•	improve wildlife habitat and water quality.

In addition, Allegheny believed the project could
foster good public relations with the local community
and give the company an opportunity to show its
commitment to environmental restoration activities.
Company representatives also felt that giving local
community members ownership in the outcome of the
project, the company was able to make partners out of
stakeholders less inclined to support the project.

Site Selection

Allegheny focused its attention on sites close to one
of the company's coal-fired power stations. This
limited transportation costs for shipping fly ash to the
selected site. Abandoned mine lands are prevalent
throughout the Appalachian region, so there were
many sites from which to choose. However, the
company still faced hurdles. Allegheny wanted a site
with heavy equipment access. Having fallen into

disuse, most sites had poor access. In addition, many
sites had grass cover in place that needed to be
removed prior to planting. To avoid the problem of
dealing with additional site owners, Allegheny chose
a site already owned by the company.

The selected site, mined in the late 1970s had been
reclaimed and covered with grass pursuant to the
requirements of the Surface Mining Control and
Reclamation Act. The existing soil was similar to that
found on other mine lands that would be considered
for reforestation projects. In addition, although the
site had been reclaimed, it remained underutilized and
would benefit from reforestation

Role of Partnerships

Allegheny decided to develop partnerships with local
organizations also interested in reforesting abandoned
mine sites. To improve chances of a successful
project, the company encouraged partners to assume
some level of ownership of the project. Allegheny
distributed responsibility for project elements across
stakeholders. The company felt partners helped to
streamline project development and implementation.

Pilot Implementation

The project replanted 17 acres, with project partners
helping with some planting. Fifteen acres were
planted with pine and spruce seedlings (over 7,000
trees in total) and two acres were planted with warm
season grasses. Fruit and nut trees were planted
around the site perimeter for wildlife.

(Case continued on next page)

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Case Example: Allegheny Energy's Reforestation
and Sequestration Pilot (continued)

The entire plot was cleared with a brush hog before
planting began. Because the land had already been
reclaimed, the soil was compacted and needed to be
made more suitable for tree growth. Allegheny used
heavy-duty farm equipment to prepare the soil for
planting. The company had a consultant take soil and
fly ash samples to determine the amount of fly ash
needed to enhance tree growth. The company used a
local contractor experienced in plowing and discing
reclaimed sites. Allegheny spent approximately
$10,000 to treat the soil and plant the pines.

Students help plant trees at Allegheny's
Limestone Run site. (Photo from Edison
Electric Institute)

The site will need to be maintained for weed control
for several years until the trees are established. The
company will monitor survival rates for both
evergreen trees and warm season grasses for several
years, replanting as needed. Carbon sequestration
rates will be assessed for evergreens starting in the
fifth year after planting. The Pennsylvania
Department of Environmental Protection calculated
that at maturity, the trees at Limestone Run could
remove 64 tons of CO? per year. Allegheny intends
to register the carbon credits with the Department of
Energy's voluntary greenhouse gas registry.

Lessons Learned

The most critical issue for this project will be the
company's ability to measure and manage the carbon
credits generated from the project. It is too early for
Allegheny to measure or predict any financial benefits
from this project (e.g., carbon credits, trading
revenues). However, lessons learned to date include:

•	Cost-effective project implementation will occur
at sites with flat terrain and some soil coverage.

•	State environmental agency regulations may limit
the use of coal combustion products as soil
amendments. Due to regulatory limits on arsenic
(found in fly ash) in Pennsylvania, Allegheny
could apply only 18 tons of fly ash per acre.

Orders with nurseries for seedlings should be
made well in advance.

•	Fall may be a more optimal season for planting in
some regions. Spring planting can be complicated
by waiting for soil to thaw and drain and may not
leave enough time before the summer dry season.

Given the success of this pilot, Allegheny is
undertaking two additional projects. One project is a
few miles from the Limestone Run site. The second is
along the Cheat River in West Virginia, The project
near Limestone Run will involve reclamation of an
abandoned highwall in addition to reforestation.

The Cheat site will also remediate a highwall, but will
involve the planting of hardwoods rather than pines.
Allegheny is developing a legal agreement with the
Cheat site landowner that will put the land in a
conservation easement. This will prevent clear-
cutting of the trees, but will allow limited timber
harvesting on site. Allegheny's reforestation of the
Cheat site is linked to a larger project involving a
water quality trading program designed to clean up
acid mine drainage in the Cheat watershed.

For more information contact Allegheny Energy:
(http://www.alleghenyenergy.com/default.asp)

As seen in the Allegheny case, reclamation and reforestation of mine lands generates a wide range
of potential benefits. However, the opportunity to develop and trade carbon credits will often serve
as a key incentive for any for mine land reforestation project. Due to high costs associated with more
traditional environmental controls, interest in market-based approaches to managing environmental

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issues continues to grow. The goal of such approaches is to encourage the private sector to
undertake activities to improve environmental quality and ecosystem services such as climate
regulation. Seen in the following case example, carbon markets need not be developed on a large
scale. Trading can be simple and involve trades or agreements between two parties.

Case Example: Carbon Sequestration on Mine
Lands in the Appalachian Region

In a project begun in 2000, researchers at Stephen F.
Austin State University (SFASU) are studying the
carbon sequestration potential of reforestation of
abandoned mine lands throughout the Appalachian
region. The study, funded by the Department of
Energy, has multiple objectives:

•	to calculate the profitability of planting and
managing forests on former mine lands for both
timber production and carbon sequestration;

•	to calculate the total amount of carbon that can
be stored on these lands; and

•	to create a carbon credit market between
landowners and utility companies.

The study focuses on the Appalachian region in part
because of its potential to sequester large amounts of
carbon. The region has a good climate for tree
growth. In addition, the region contains vast mine
land acreage, acreage that provides little or no
economic, environmental, or other benefits.

Study Methodology

The SFASU research team conducted studies on
abandoned mine lands planted with northern red
oaks in Pennsylvania, West Virginia, Tennessee,
Maryland, and North Carolina. Northern red oak
was chosen because of its timber value and because
it is commonly used on reclaimed mine sites. The
research considered a number of variables such as
soil quality, cost of site preparation, the local price
for timber and pulpwood, and alternative rates of
return on timber investments.

In order to determine the optimal harvest schedule
and forestry management regimes for carbon
storage, the researchers created computer models to
evaluate millions of possible timber harvesting and
carbon trading scenarios for their potential financial
return. Two scenarios examined the profitability of
managing reforested abandoned mine lands. The
first scenario considered only the value of timber

produced on reforested mine lands. The second
scenario combined the value of timber production
and carbon credits.

The analysis used six alternative rates of return. The
model assumed the price of carbon to be $10, $50 or
$100 for each additional ton of carbon that
landowners sequester. The first scenario assumed
the price of carbon to be $0 per ton.

Hardwood reforestation project at a
mining site in Tennessee. (Photo by
Office of Surface Mining)

Profitability of Forests on Abandoned Mine Lands

The research found that the costs of sequestering
carbon on mine lands in West Virginia range from
$7.20 to $40.50 per metric ton, depending on the
cost of site preparation and the initial quality of the
soil at a site. The research found that if there are no
markets for carbon credits (i.e., price of carbon =
$0), growing and selling timber is only profitable on
sites with good soil at low anticipated return.

The research suggests that if there is no market for
carbon credits, it would cost a landowner $7 per ton
to store carbon on a site with average soil using a
return rate of 3.5 percent. However, if a land-owner
sells timber and is paid $10 for every ton of carbon,
using the same return rate he could earn $4 for every
ton stored, in net present value terms. With
estimates that a carbon credit could be worth $30
per ton, the $10 per ton figure is conservative.

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Case Example: Carbon Sequestration on Mine
Lands in the Appalachian Region (continued)

Carbon Storage Capacity of Abandoned Mine
Lands

The SFASU research found that the amount of
carbon that can be stored at reforested sites is
affected by site quality and harvesting schedules.
Storage capacity ranged from 43 tons per acre of
carbon on poor-quality sites to 58 tons on high-
quality sites. Research also suggested that the
profitability of forest management and carbon
storage varies by state. Although Pennsylvania has
higher timber prices, it is more profitable to grow
trees in Kentucky. Trees grow faster in southern
climates, thus the value of the timber increases more
rapidly in Kentucky than in Pennsylvania.

Developing a Carbon Credit Market

Lessons learned from this research will be used to
develop a carbon trading mechanism between
individual landowners and utilities. Rather than a
large-scale and formalized trading mechanism, the
SFASU research will explore how to establish a
simple carbon credit market between companies and
individual landowners. Companies can offset their
carbon emissions while landowners will get paid for
growing trees and storing carbon on their land.

Toward that end, the SFASU team is disseminating
the findings of their initial research to a variety of
audiences interested in sequestration. Specifically,
landowners and utilities will be provided with
information on which future carbon trading
decisions will be made. Information includes:

•	the profitability of forest management and
carbon sequestration (for specific tree species);

•	the financially optimal forest rotation schedule
for a particular tree species; and

•	the amount of carbon that can be stored (given a
particular tree species).

Future Work

The research will continue until 2005. With a
model in place and tested on abandoned mine lands
in West Virginia, the next step for this research is to
determine the amount of carbon that can be
sequestered and revenue earned per ton of carbon
stored on former mine sites in Appalachian states.
The research will also apply sector analysis to
evaluate and quantify the local economic impact
from reclaiming and reforesting former mine lands
throughout the Appalachian region.

For more information, contact the Stephen F. Austin
College of Forestry.

(http://www.sfasu.edu/forestrv/)

Carbon Trading and Ranking in the United States

The case examples illustrate that forest carbon storage and sequestration may provide interested
organizations with options for managing their carbon credits. Some organizations are developing
markets to trade carbon credits. Other organizations are "banking"4 their carbon credits, including
forest-based credits, while waiting for emerging markets to be tested and further developed.

State Programs In the U.S., states have taken the lead in formulating carbon policies over the past
decade. States have developed GHG registries or inventory programs that support carbon banking
or the use of trading to reduce GHG emissions within a state's boundaries.

4A carbon bank is a program that enables organizations to keep track of a stock or supply of
greenhouse gases in secure fashion for future use in a trading market.

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Minnesota's Releaf Program promotes and
funds the planting, maintenance, and
improved health of trees in the state. The
program's goal is to reduce carbon dioxide
levels and promote energy conservation.
Nebraska has tested sequestering carbon on
farmland and passed legislation to explore the
creation of carbon credits for agricultural
activities. California's Climate Action
Registry serves as a voluntary greenhouse gas
registry to encourage early actions to reduce
GHG emissions in the state. Appendix B
provides additional information on public and
private sector trading and banking programs.

Trading Carbon Credits

The success of the U.S. sulfur dioxide trading
program in reducing acid rain, as well as other
market-based approaches, has illustrated the
potential benefits of emissions trading. As a
result, support for market-based mechanisms
to reduce GHG emissions continues to grow.
In fact, the World Bank estimates that the
value of a ton of carbon sequestered could
range between $30 and $40 per ton in the
U.S.; $70 and $100 per ton in European
markets.

Landowners, GHG-emitting firms and other
organizations have all begun to test and
implement carbon offset markets. For
example, the World Bank has established a
Prototype Carbon Fund.
(http://carbonfinance.org) This Fund invests
in projects and programs designed to reduce
greenhouse gas emissions through offsets and
trading systems. Carbon trading markets are
also being developed in the United States.
The Chicago Climate Exchange is the first
operating market in the U.S. for greenhouse
gas emissions trading.

Chicago Climate Exchange (CCX)

CCX is a pilot trading program for emissions reduction
and offset projects. CCX seeks to:

•	demonstrate that greenhouse gas trading can reduce
emissions across different business sectors;
discover the price of reducing greenhouse gases; and

•	develop a standard framework for monitoring
emissions, determining offsets and conducting trades.

Building on EPA's acid rain program (SO? trading),
CCX is a regional cap and trade system. CCX's goal is
to reduce the greenhouse gas emissions of CCX
participants by five percent below a measured baseline.
The baseline for CCX projects is the average of annual
emissions during the years 1998 through 2001. Carbon
trading will apply to activities to reduce carbon
emissions undertaken between 2003 and 2006. Forestry
projects are an exception. Forest-based offset projects
are eligible for trading in CCX if they were undertaken
on or after January 1, 1990.

Tradeable credits can be generated by emission sources
such as utilities, farm and forest carbon sinks, and a
limited number of credits from renewable energy
projects. Participants can seek to meet their reduction
goals by reducing their own emissions or purchasing
emission credits generated by other participants (offset
projects or other emission reduction activities).

The Iowa farm bureau is currently developing carbon
offset projects that will generate tradeable credits for
CCX. Under this project, farmers in Iowa will undertake
activities to generate tradeable emission credits.
Activities will include conservation tillage, methane
capture, and reduced use of nitrogen fertilizer on
farmland. For example, farmers can generate offset
credits at a rate of 0.5 metric tons of CO? equivalent per
acre per year if those farmers commit to conservation
tillage on their land between 2003 and 2006. The value
of those carbon credits (a ton of C02) is determined
through CCX. In February 2004, credits were being
traded through CCX for $1.15 per ton of C02

For more information, contact the Chicago Climate
Exchange, (http://www.chicagoclimatex.com/)

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Banking Carbon Credits

Because emissions trading mechanisms for
greenhouse gases are in the early stages of
development and somewhat speculative, some
companies that are planting trees on former
mine lands are banking sequestration credits.
Banking is an alternative to directly trading
carbon on a market and recognizes that U.S.
markets for trading carbon sequestration credits
are emerging and may not develop fully for
several years. Through the banking alternative,
organizations can verify and "bank" carbon
credits with a greenhouse gas inventory.

Several states have already implemented state
carbon banks in the form of GHG registries.
For example, California's Climate Action
Registry, a public/private partnership, serves as
a voluntary greenhouse gas registry to protect,
encourage, and promote early actions to reduce
GHG emissions. Massachusetts has developed
a multi-pollutant strategy that includes C02 for
major emitting facilities in the state. The
Massachusetts rule requires applicable power
plants to achieve a 10 percent reduction from
1997-1999 C02 levels. The rule provides the
utilities an opportunity to secure credits through
verifiable reduction measures such as carbon
sequestration projects. At the federal level, the
Department of Energy (DOE) oversees the
largest greenhouse gas registry in the U.S.

Carbon Banking and Mine Land Reforestation

DOE's voluntary program, established by the Energy Policy Act of 1992, is designed to record
project accomplishments and communicate innovative carbon sequestration approaches, including
former mine land reforestation, (http://eia.doe.gov/oiaf/1605/frntend.html) Generally, the DOE
greenhouse gas reporting guidelines suggest that sequestration activities can be quantified using the
following four basic steps.

	

DOE Voluntary Reporting of Greenhouse Gases
Program

DOE's program provides organizations, in particular
private sector entities, an opportunity to create a
public record of their sequestration activities. Section
1605(b) of the Energy Policy Act, DOE's Voluntary
Reporting Program provides guidelines that permit
reporting on distinct greenhouse gas reduction
activities, including:

•	project-level emissions and reductions - emission
reduction consequences of a particular action,
such as a reforestation project.

•	entity-level emissions and reductions - emissions
and reductions of an entire organization, typically
defined as a corporation.

•	commitments to take action to reduce emissions
in the future.

Under these guidelines, companies or individuals
submit reports to DOE. The reports document the
action being taken and the amount of greenhouse
gases (reported in equivalent tons of C02) being
avoided or sequestered. During 2002, 228 U.S.
organizations reported that they had undertaken
2,027 projects to reduce or sequester greenhouse
gases. A total of 412 carbon sequestration projects
were reported for 2002, averaging 17,710 metric tons
of carbon dioxide sequestered per project.

Independent verification will be necessary if an
organization wants to trade its registered credits.

For more information contact: DOE Voluntary
Reporting of Greenhouse Gases Program.
(http://www.eia.doe.gov/oiaf/1605/frntvrgg.html)

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1.	Define the boundary of the entity or project (acres of land reforested).

2.	Estimate actual sequestration levels within a project boundary (the amount of carbon
sequestered by trees on a site).

3.	Estimate baseline sequestration levels (baseline, or reference case, sequestration levels
are levels that would have occurred without the reforestation project).

4.	Calculate the net level of sequestration (this calculation is the difference between actual
levels and reference levels).

The Piedmont Energy Association case study, adapted from the DOE Forestry Sector Guidelines for
the Voluntary Reporting of Greenhouse Gases, illustrates how a company might quantify and register
carbon sequestration credits generated through abandoned mine land reforestation.

Case: Measuring Sequestration Credits Generated on an Abandoned Mine Land

Piedmont Energy Association (PEA), a coalmining cooperative owned by local utilities and independent power
producers, wanted to reclaim an abandoned mine land with trees rather than the grasses required by the Surface
Mining Control and Reclamation Act. Because the costs of establishing forests was only slightly higher than
the costs of establishing grasslands, planting trees was a logical choice due to additional benefits of carbon
credits. The company intended to report the change as a sequestration project to the DOE 1605(b) database.

The project required PEA to address three issues: (1) identify the appropriate reference case, (2) identify the
sequestration levels of both the reference case and the project case, and (3) estimate the net sequestration
associated with the project.

For the reference case, PEA asked what would have happened had the reforestation project not taken place.
The answer for PEA was that absent the project, the land would have been grassland. One assumption was that
the reference case would sequester a relatively small amount of CO? due to the growth cycle of the grasslands.
A second assumption was that the project case would have higher levels of carbon dioxide sequestration due to
yearly tree growth. The difference between the two would be the sequestration credits PEA would register in
the DOE database.

PEA felt that the available data regarding growth rates of grasslands and forests on reclaimed mines was not
applicable to its site. As a result, the company setup a field measurement plan with grassland and forested
plots to represent its reference and project cases. The carbon uptake rates on each plot were measured each
year for the first 3 years and will continue to be measured at 5-year intervals. The results from these test plots
have allowed the company to extrapolate net sequestration levels for the larger reforestation project.

For more information, see the DOE Forestry Sector Reporting Guidelines.
(http://www.eia.doe.gov/pub/oiaf/1605/cdrom/pdf/gg-v2-5-forest.pdf)

Additional information about private and public sector organizations involved in reforestation and
carbon sequestration can be found in Appendix C.

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Does Carbon Sequestration Make Sense for My Former Mine Land?

Landowners and companies should consider a number of factors when determining whether
reforestation is feasible or suitable for particular former mine lands. Described in greater detail
below, considerations include site demands and preparation, selection of tree species, regional
variation, previous reclamation activities, economic implications, and ownership issues.

Site Demands and Site Preparation: Perhaps the most important factor affecting tree survival,
growth, and productivity is the quality of soil on a mine site. (See
http ://www.fs.fed.us/ne/global/index.html.) Some mine lands can be productive forestry sites without
significant work to prepare the site. However, mine soils maybe too harsh for tree survival. These
soils may be acidic and rocky and the sites are often steep, making tree establishment difficult.
Compared to native soils, mine soils usually have
limited organic matter content, low nutrient levels, poor
water holding capacity, low pH, and many coarse
fragments.

Compost has been shown to be a cost-effective tool for
use at both large mining site and smaller urban areas
with metal contamination from metal processing (e.g.
foundry). Applying compost and biosolids to the surface
of poor soil mine sites has at some sites shown the
ability to improve soil conditions and enable
revegetation. It can be used in a variety of situations,
including wetlands, and can help the restoration and
revegetation of sites. Composted biosolids can be
effective because they will be free of pathogens. In addition, the metals that exist in biosolids are
minuscule in concentration relative to the levels found at sites.

Selecting Tree Species: There is no universal recipe for successfully selecting and growing tree
species on former mine lands. The most effective and successful tree selection will account for site-
specific conditions. Early consideration of what tree species will be viable at a mine site will
increase the potential for tree survival.

Previous Reclamation Activities: The Surface Mining Control and Reclamation Act (SMCRA),
passed in 1977, has improved human safety and environmental quality at U.S. mine lands. The law
mandates grading and shaping, which have eliminated many safety hazards routinely left behind by
pre-SMCRA mining operations. However, mined lands reclaimed under SMCRA typically have
heavily compacted surface layers that limit natural forest succession and impede reforestation. In
most cases, post-SMCRA reclamation has resulted in the establishment of grasslands rather than
forests. While aesthetically pleasing, these grasslands are seen as land uses that may not fully utilize



Reclaimed mine land is home to Christmas
tree farms in many areas of the country.
(Photo by Office of Surface Mining)

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a site's potential to support diverse and productive forests.

To help address some of these issues in SMCRA, the
DOE's Office of Fossil Energy and the Department of the
Interior Office of Surface Mining (OSM) signed a
Memorandum of Understanding (MOU) in 2000 to
promote the reclamation of abandoned coal mine sites
through reforestation. By recognizing that there are
multiple benefits to reforesting mine lands-restoration of
clean water, recreational opportunities, commercial
forestry, sequestering carbon- this MOU establishes a
framework for cooperation between OSM and DOE.

The MOU will help promote market-based approaches to
reclaiming abandoned mine lands through reforestation.

Regional Variation: In considering reforestation efforts
across the country, it is important to recognize that there
are no universal approaches for reforesting former mine
lands or generating carbon sequestration credits on
underutilized lands. Different regions in the United States offer unique challenges and opportunities
for reclaiming and reforesting mine lands. Understanding limitations due to regional geography or
climate will help inform how to best pursue a sequestration project at a former mine site.

Financial Decisions: Reforesting former mine lands with the intent of sequestering carbon can be
expensive. However, economic returns over the long term may equal cost. For example, the cost
to plant or replace trees and shrubs in the arid West can
reach $1,000 per acre. With low survival rates for trees,
any revenue from harvesting timber or trading carbon
credits is unlikely to cover those potentially high costs. In
addition, SMCRA requires only grass cover. Therefore,
planting trees requires expenditures beyond traditional
reclamation requirements. In addition, the more site
preparation that is needed, the more financial risk is
assumed with the anticipation that carbon credits will be
profitable

Although there is little question that forests accumulate
carbon in biomass as they grow, there is considerable
uncertainty regarding the effect of forest management
(thinning or harvesting timber) on carbon sequestration. .

When trees are harvested, sequestration is affected for
several reasons: carbon in the soil, roots, and understory



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Reestablishment of rangeland after
reclamation provides forage for grazing
animals, including these antelope on a
North Dakota mine site. (Photo by Office
of Surface Mining)

Plantation Forestry - Sequestration
projects developed through intensively
managed commercial timberlands can
generate unintended consequences. If
reforestation and sequestration are
focused solely on biomass accumulation,
there may be a preference for single
specie tree plantations.

Plantations have little in common with
bio-diverse forests. Consisting of
thousands of trees of the same species
that are bred for rapid growth, and
therefore rapid carbon dioxide uptake,
these monocultures result in negative
environmental impacts. Impacts can
include loss of natural biodiversity, soil
compaction, and reduced soil fertility.

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will dissipate after harvest; and carbon in wood products may be released as those products undergo
processing, use, and disposal. When a forest is clear-cut, carbon in the soil begins to dissipate,
creating a large source of C02 emissions. While not completely eliminating these emissions, a
sustainable timber harvest can help minimize these releases while keeping carbon sequestered in the
harvested wood.

Measuring sequestration levels at former mine lands where timber is also harvested will be more
difficult than at sites reforested only to sequester carbon. Therefore, if an organization combines
timber harvesting and carbon credits at a former mine site, that organization will need to carefully
measure and verify any tradeable carbon credits.

Ownership of Former Mine Sites: Determining site ownership can be a hurdle to reclamation and
reforestation. For some former mine lands, uncovering legal ownership is straightforward, requiring
only minimal title-searching. For other sites, ownership cannot be traced through legal documents
and substantial investigation is required to locate and contact landowners or their heirs.

Once ownership is determined, other issues can complicate reforestation of former mine lands. For
example, on sites where mining has ceased and the bonds have been forfeited by the company or
owner, title to the land might belong to an original owner no longer in the area. If an organization
plants trees on a site owned by someone else, it is important to have a legal agreement in place. As
seen in the Allegheny example, having a legal agreement in place can ensure that newly planted
vegetation is protected from activities, such as harvesting, that could impact the amount of carbon
sequestered at a site. This can be critical if an organization intends to generate carbon credits on a
site. Absent a legal agreement, timber could be harvested or the land cleared for other purposes and,
sequestration benefits or credits would be more difficult to verify and might be lost completely.

Conclusion

With nearly one million acres of abandoned mine land in the Appalachian region alone, the
potential benefits that are generated through reclamation and reforestation of these sites are
significant. From supplemental timber revenues to the trading of carbon credits, reforestation of
former mine lands can accrue financial benefits to local communities, landowners, and
companies. Reforestation can also improve environmental quality locally (water quality, habitat
restoration) and globally (climate change). In addition, complementary tools such as water
quality trading, wetland banking, and land conservation could be combined with reforestation
and sequestration activities to increase opportunities to return these degraded and underutilized
lands to productive use.

While markets for carbon credit transactions exist, U.S. markets are speculative and are still
being tested on a pilot project level. Furthermore, the definition of a carbon credit is not always
consistent across markets or carbon banks. In spite of this uncertainty, public and private

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organizations are already exploring how terrestrial sequestration on degraded lands can play an
important role in dealing with C02 emissions and reducing the impacts of climate change.

Uncertainties remain. Not all former mining sites will be suitable candidates for reforestation
and sequestration projects. Regional variation, financial considerations, and site conditions will
impact the feasibility of pursuing a reforestation and sequestration project on former mine lands.
However, for many of these sites, carbon sequestration can provide an array of incentives for
encouraging the revitalization of degraded and underutilized landscapes.

Contact Information

1.	EPA's Abandoned Mine Land Team can provide communities with technical support and resources as
they explore reuse opportunities available at former mine lands. For information about EPA's AML
Team, please see the Web site at: http://www.epa.gov/superfund/programs/ami/

2.	EPA also supports the reuse of former mine lands through the Superfund Redevelopment Initiative
(SRI). For additional information see the (SRI) Web site at: www.epa.gov/superfund/programs/recvcle.
This website provides tools, case studies, and resource information on remediating and reusing
Superfund sites, including former mine lands.

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