How China Tree Breeders Will Benefit from A Business Model Without Destroying the Environment

After doing thorough research on China’s coniferous tree, Pinus tabulaeformis. In July of last year, Chinese scientists published their study in Cell, a well-renowned global journal. In the article, they wrote about how they uncovered the genetic code and the molecular mechanisms that regulate the evolution of the said tree. Read more about the China tree breeders here.

Scientific Breakthrough

Thousands of China tree breeders hailed this study as a scientific breakthrough that will help in the cultivation of the tree native to China. The group of breeders, which included Wang Lianmau of Jiangxi Fenglin Investment, stated that this would help the trees to grow faster and more robust. Wang added that this breakthrough would make the trees less susceptible to diseases and pests. 

Wang’s company has lauded the work done by the researchers at Beijing Forestry University. The general manager of the company, Wang, also mentioned that he believed that this would pave the way for better selection and breeding of faster-growing and high-yielding trees. He added that this would produce timber with higher quality and better resistance to diseases. 

Wang also mentioned that Fenglin is in talks with the researchers to do the same for two other tree species. The company’s 23,000-hectare plantation is located in Jiangxi province in southeastern China. The uncovering of the genetic codes for Pinus elliottii and Pinus kesiya, Wang says, will boost the development of forestry as carbon goes down.

Afforestation

The process of establishing a stand of trees in a region that hasn’t been forested previously is called afforestation. In it, trees and tree seedlings are introduced either naturally or artificially. This process has confirmed that trees can absorb and store greenhouse gases like carbon dioxide.

This will provide a natural solution that will significantly help Chinese President Xi Jinping’s promise to achieve carbon neutrality by the year 2060. Plantations that can reduce their carbon emissions will earn them tradeable credits. It’s through unregulated carbon markets after verifying that they follow sustainability and management standards.

A challenge was posed to turn this concept into a business model that can make money, states professional investors. One that can combine afforestation with timber sales, by-products, and carbon credits. This, according to Chan Tak-yuen, CFGC Amital Green Fund adviser.

This fund’s objective is to raise $100 million US dollars. It aims to back companies that are sustainable, use high-yielding afforestation, create carbon storage projects, and develop the required technology. 

Harvesting Income Streams

Currently, Fenglin is already harvesting income streams from its trees, according to Wang. He also noted that more than 70% of these revenues come from the sales of turpentine, rosins, and resins from the plantation. In addition, pine trees will be sold as timber once they reach the felling age of 25 years.

The remaining income is from the carbon credits the plantation receives. Wang noted that over 60% of the plantation area is already qualified as carbon storage. This is the first-ever and most extensive commercial development since 2016.

Outside China

Afforestation has attracted professional investors mainly due to its ability to mitigate climate change. It is partly because of the hedges for the risk of the rising costs of offsetting carbon in other investments.

News then came out that JP Morgan Asset Management bought Campbell Global, a forest investment and management company, for an undisclosed amount. The latter has $5.3 billion in assets and over 680,000 hectares under management around the globe.

Furthermore, New Forests, a forestry private equity investment firm in Sydney, Australia, aims to raise $300 million to support a Southeast Asian forest fund this year. The firm manages over 1.1 million hectares with a value of $5.8 billion US dollars. This endeavor has already received commitments from investors for $120 million.

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