Markets that pay forest owners to store carbon are complex and controversial
Through photosynthesis, trees and soil capture and store carbon dioxide. It is a process as natural as sunlight.
But planting more trees or managing a forest more intensively can increase carbon storage, sequestering more harmful greenhouse gases.
This additional storage is valuable in the increasingly urgent fight to slow climate change. To recognize its value, financial markets have been formed to compensate forest owners who take long-term measures to lock in more carbon.
The markets are loosely known as forest carbon offsets. Maine, the most forested state in the country, was an early participant in carbon offset markets. Most of the projects, however, are relatively small and typically involve conservation groups and homeowners who are not focused on timber harvesting. Together, they make up a small slice of Maine’s 17.6 million acres of forest.
Maine’s large commercial forest managers, along with its approximately 86,000 family owners, have for the most part taken an approach of observing and learning in markets that can be complex, restrictive and rapidly changing. As policymakers seek ways to increase the carbon storage potential of Maine’s forests, the potential of offsetting markets remains uncertain.
At the same time, a national discussion is intensifying on whether carbon offsetting markets actually have a beneficial net impact in preventing carbon from entering the atmosphere.
COMPENSATIONS MAY BE LUCRATORY
As carbon markets come under closer scrutiny, the experience of a Maine company is instructive.
A century-old family business, Brookton-based Baskahegan Co. was in a good position in 2018 to embark on a carbon offset project. Decades of sustainable management on Baskahegan lands in Washington County have produced above-average volume of standing trees.
“We have more timber on our property than our neighbors, and we have a higher carbon value per acre,” said Kyle Burdick, forest manager for Baskahegan.
By working through a company that oversees and manages carbon market transactions, Baskahegan was able to monetize its conservation ethic on 86,000 acres. The company has agreed to manage its land using practices calculated to offset 700,000 metric tonnes of greenhouse gas emissions.
These offset credits were sold in the so-called compliance marketplace managed by the Air Resources Board of California. One aspect allows state-regulated power companies, for example, to pay to mitigate the impact of burning fossil fuels. Baskahegan credits have also been sold in a separate voluntary market that helps businesses and other employers meet their sustainability goals.
The contracts underlying these agreements are binding, complex and long-term. The market compliance commitments have a duration of 100 years; voluntary markets are set at 40 years. Each must be verified by independent inspectors. This is one of the reasons why many forest owners are reluctant to engage in carbon offsets.
Each metric ton is worth a credit. Burdick declined to discuss the financial specifics of Baskahegan, but carbon credits in 2018 cost California buyers between $ 10 and $ 15 a tonne. Thus, offsetting 700,000 tonnes of emissions would have been worth at least $ 7 million.
MANY GROUPS IN DIVING
More than 500,000 acres of forest in Maine are involved in 15 separate carbon offset projects, according to a recent presentation from Bluesource LLC, a US and Canadian company that manages carbon transactions. Bluesource has made the agreement for the Baskahegan lands.
Other offset projects include Downeast Lakes Land Trust, which in 2013 was one of the first forest management projects in the country to join the California program. His project covers 19,118 acres in the Farm Cove community forest in eastern Maine. The trust used the proceeds of this and another carbon project to purchase and protect more forest land around Grand Lake Stream.
In addition, The Nature Conservancy has a project on 124,000 acres of woodland in the St. John Valley, northern Maine, the Appalachian Mountain Club has a 10,000 acre project in the Katahdin Iron Works area, and the Passamaquoddy tribe has a project scattered over more than 98,000 acres of land in Maine.
Earlier this summer, the US subsidiary of Canadian asset manager Manulife Investment Management purchased 89,800 acres at the Quebec border in Somerset County. The company can sell carbon credits or use the deal to meet its own carbon reduction targets, according to the Toronto Star.
Carbon offset markets have caught the attention of large companies. BP, the British oil and gas multinational, bought a majority stake in Finite Carbon, a California-based carbon offsets manager, last year. The purchase may help BP’s efforts to diversify into renewables and benefit from expected growth in offsets markets, according to news reports. Finite Carbon participated in the drafting of the Downeast Lakes Land Trust agreement.
ADVANTAGE QUESTIONS REPORT
But as carbon offsets become more and more common, concerns are emerging about how climate-friendly they are. Among the questions: Does it make sense to pay conservation-conscious owners to preserve forests they never intended to exploit or develop? Do offsets discourage big carbon polluters from spending money to reduce emissions where they occur, rather than just legalizing excess emissions?
These and other questions have been examined this year by ProPublica, the nonprofit investigative journalism group. He looked at a $ 7 million deal involving offsets that the Massachusetts Audubon Society sold into the California carbon market on 9,700 acres it owns in western Massachusetts. This preserved forest is not in danger of heavy logging or development.
A key principle of carbon offsets is a concept called “additionality”. This means that the additional carbon storage must go beyond what would have happened without the market incentive.
For his part, Mass Audubon noted that he was following California rules as written and would use the money to preserve additional land.
But the blanket, which is part of a larger study by ProPublica and MIT Technology Review, prompted California lawmakers to examine the effectiveness of the state’s historic program, which aimed to help meet aggressive climate goals.
In Baskahegan, Burdick pointed out that while the land is owned by the family, it lacks conservation easements or a guarantee of who will own it in the future. But for the next century, any future buyer will have to honor the compensation agreements.
“In Maine, with the transfer of forest ownership to investor groups, this additionality is huge,” he said.
Burdick also noted that Baskahegan used the proceeds of his offsetting sale to purchase 24,000 acres alongside existing operations in Washington County. These lands will be harvested sustainably and will continue to absorb carbon.
COVID-19 vaccine recalls could mean billions for drugmakers