Lumber, as any tree and forest lover can tell you, isn’t the only valuable thing forests produce.
They buffer noise, provide habitat for other animals, filter water, create oxygen, curb erosion, cool the earth, provide beauty, allow us to reconnect with the natural world. The list goes on. But, until now, virtually the only forest value the market acknowledges, or at least respects, is trees’ ability to produce timber.
That may be changing, thanks to climate change.
Because trees have the ability to bind up, or sequester, carbon. It’s a characteristic that’s coming to be recognized as not just a virtue, but something that has real market value.
Enter carbon “offsets,” a way to steer the capital economy into the emissions reduction future, and, perhaps, a way to finally and financially reward landowners for at least one of the many so-called “ecosystem services” their forests now provide free.
As a real world phrase, “carbon offset” has the ability to cause the eyes to glaze over and the brain to say, “Must. Go. To. Sleep. Now.”
But the concept is actually simple: it’s a way to offset pollution by reducing or containing pollution elsewhere. In this case, carbon dioxide pollution. One carbon offset is generally a metric ton of carbon dioxide. A forest, properly managed, can bind up a boatload of carbon: the U.S. Forest Service estimates that Maine’s woods are already storing almost 1.5 billion metric tons. A carbon-emitting company under the gun to cut back pollution and unable to do it can buy carbon offsets as a way to compensate.
In Maine, there are a handful of carbon offset projects covering a few hundred thousand acres of the state’s nearly 20 million acres of forestland.
In June The Nature Conservancy became the latest forest landowner in Maine to get into the carbon sequestration game with a carbon offset project on 124,000 acres of timberland in the St. John Valley in northern Maine.
The deal, which included an unusual upfront payment from a non-profit investment trust, will allow the Conservancy to depend less on harvesting for money to cover expenses and instead work on increasing the amount of standing timber on the land and managing more of the acreage as a natural area, the Conservancy said.
The project is a “great opportunity to further invest in the future of the forest” while showing that timber management can enhance its health and value, said Mark Berry, the Conservancy’s Maine forest program director. “We’re excited to show how science, good forest management and financial incentives can be combined to address climate change.”
Berry helped put together Maine’s first carbon offset project —nearly 20,000 acres of the Downeast Lakes Land Trust’s holdings in far eastern Maine — back in 2012. Since then there have been a handful of others: The Appalachian Mountain Club has a 10,000-acre project in the Katahdin Iron Works region and Maine’s Passamaquoddy Tribe registered a 98,000-acre project.
While non-profit conservation groups, and the Passamaquoddies, have led the way into the Maine woods’ payment-for-carbon sequestration future, the big question is where it all goes from here.
Carbon offsets have been around for a while, but, absent a global, or at least national, plan to promote them, they have been slow to take off.
And carbon offsets have come in for their share of skepticism and criticism, from some who question whether North American forests really do sequester that much carbon to others who say that “offsetting” carbon emissions rather than reducing them outright is just a way to assuage personal or corporate guilt while engaging in business as usual.
And putting together these carbon deals is not easy. You can’t just sign your woodland up as a carbon sink and watch the checks roll in.
The key to a carbon offset, for a forestland owner, is that you’re going to get paid for carbon you sequester over what you’re already sequestering, based on what carbon offsets are going for on the open market. Verifying the amount of carbon already bound up in your woods and the extra added over time is an exacting and expensive process, called a carbon inventory.
The Nature Conservancy partnered with the Portland, Ore.-based Climate Trust and its independent investment arm, Climate Trust Capital, to develop the St. John project.
Kristen Kleiman, the chief investment officer of The Climate Trust, said it’s part of a pilot project to test the premise that carbon offsets can be an attractive money-making investment. It’s made possible by a $5.5 million loan from the Packard Foundation. Climate Trust Capital has allocated that money to seven carbon offset projects, she said, including two biogas projects in California, a grassland protection project in Oregon, and the St. John woodlands.
“The purpose of the pilot project is not to enrich anyone. The money eventually goes back into the (Packard) endowment,” she said. “We need to educate the world about carbon offsets. We’re not in it to make money.”
The Packard Foundation loan serves a crucial function. It will allow upfront payments to jump-start the projects. That’s unusual. Normal procedure is to sell the offsets first, then collect the payments.
But the Foundation’s money — $1.6 million of it has gone to TNC —will make it possible for the Conservancy to immediately begin the shift to lighter harvesting, longer timber harvesting rotations and thinning young stands that are needed in order to store more carbon. Incidentally, growing bigger trees will also lead to production of more valuable saw timber.
The sale of carbon offsets from the St. John lands on a cap-and-trade market set up by the state of California and Canadian provinces could generate millions of dollars over the 10-year life of the offsets, said Berry. “The upfront payment is a modest proportion of the total potential revenue.”
But the Conservancy isn’t in it to make money either, said Berry. For the past 20 years of the Conservancy’s ownership of the lands, timber harvesting has covered the costs of owning and managing the land and it also contributes to northern Maine’s forest economy. The offset money will allow the organization to continue investing in the property and supporting the forest economy, while advancing conservation and tackling climate change, he added.
In essence, Climate Trust Capital’s pilot project is a bet on the future of carbon markets, including the California-Canadian provinces’ Western Climate Initiative. They’re betting that carbon offsets will increase in value over time. There’s nothing certain about that, though, they could also decrease in value.
The “carbon market” today is perhaps the quintessential example of an “emerging” market. It is imperfect, not well defined, largely voluntary and certainly not universal. Even its premise — you’re investing in something that isn’t actually produced — is tough to get your head around.
But Berry says that, despite that, it’s “one of the successful examples of payments for ecosystem services” today. And “the potential is much greater than what we have seen so far.”
“Now I think the question is whether it is the beginning of a trend in Maine and whether more landowners choose to participate,” Berry said. For-profit forest landowners have been reluctant to get in, he said. And “the jury is still out on how widespread participation could be.”
Maine’s forest already sequesters 1.47 billion metric tons of carbon, according to U.S. Forest Service estimates cited by Berry. Increasing that, even a little, would be huge. Berry calls it “one of the most important things Maine can do to tackle climate change.”
Even a 1 percent increase “in Maine’s total forest carbon would be equivalent to capturing approximately three times the total carbon dioxide emitted from fossil fuel use in Maine,” Berry noted. “So, while reducing emissions from transportation, heating and other fossil fuel use is important, so are our forest management decisions.”
Elsewhere around the country, Berry said, the Conservancy is helping private landowners access carbon revenues through a program called Working Woodlands, which uses conservation easements to guarantee the property will not be developed, forest management planning and certification through the Forest Stewardship Council, and revenue from timber management and carbon offsets sold in the voluntary market. Berry said he sees “potential for some Maine landowners to participate through the Working Woodlands program as well.”
Kleiman said there’s little question that, for some timber-growing areas of the country, say, Georgia or Oregon, “the price of timber is going to be greater than the price of carbon.”
But for other areas, perhaps where trees grow slower or timber markets are softer, growing trees for their ability to sequester carbon could be a moneymaker. “The Crown of Maine is a really good example” of one of those areas, Kleiman said.
One day, “carbon” could become a product like any other. And, she notes, it’s one that doesn’t preclude timber harvesting and a viable forest economy. In fact, they can go hand in hand.
Joe Rankin writes on forestry, nature and sustainability for websites and magazines.