Legislature(2023 - 2024)BUTROVICH 205
02/20/2023 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentations: Forest Carbon Forest Offset Projects | |
| Forest Carbon 101 | |
| How Forest Carbon Offset Programs Come Together | |
| Alaska Forest Carbon Offsets | |
| Forest Offsets in a Carbon Trading System | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 20, 2023
3:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Cathy Giessel, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Scott Kawasaki
Senator James Kaufman
Senator Forrest Dunbar
Senator Matt Claman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATIONS ON FOREST CARBON OFFSET PROJECTS
FOREST CARBON 101
- HEARD
HOW FOREST CARBON OFFSET PROGRAMS COME TOGETHER
- HEARD
ALASKA FOREST CARBON OFFSETS
- HEARD
FOREST OFFSETS IN A CARBON TRADING SYSTEM
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
HELGE ENG, PhD, State Forester and Director
Division of Forestry and Fire Protection
Department of Natural Resources (DNR)
Anchorage, Alaska.
POSITION STATEMENT: Moderated the panel discussion about forest
carbon offset projects.
JOSHUA STRAUSS, Senior Vice President
Natural Climate Solutions
anew
San Francisco, California
POSITION STATEMENT: Presented Forest Carbon 101.
BRIAN KLEINHENZ, Owner and President
Terra Vera Inc.
Juneau, Alaska
POSITION STATEMENT: Presented How Forest Carbon Offset Programs
Come Together.
NATHAN LOJEWSKI, Certified Forester and Forestry Manager
Chugachmiut
Anchorage, Alaska
POSITION STATEMENT: Delivered a presentation on Alaska forest
carbon offsets.
CHRIS MAISCH, Immediate Past President
Society of American Foresters
Fairbanks, Alaska
POSITION STATEMENT: Presented Forest Offsets in a Carbon Trading
System.
ACTION NARRATIVE
3:30:38 PM
CO-CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Dunbar, Wielechowski, Kawasaki, Kaufman, Co-
Chair Bishop, and Co-Chair Giessel. Senator Claman arrived soon
thereafter.
^PRESENTATIONS: FOREST CARBON FOREST OFFSET PROJECTS
PRESENTATIONS: FOREST CARBON OFFSET PROJECTS
3:31:26 PM
CO-CHAIR GIESSEL stated that the only agenda item was the
discussion of carbon offsets, which was in preparation to hear
SB 48, the governor's carbon offset program on state land. State
Forester Dr. Helge, Eng will moderate a panel of four experts
She introduced the panel members.
3:32:49 PM
HELGE ENG, PhD, State Forester and Director, Division of
Forestry and Fire Protection, Department of Natural Resources
(DNR), Anchorage, Alaska, introduced himself and shared his more
than 30-year background in forestry. He relayed that he would
moderate a panel of four speakers who would discuss different
aspects of forest carbon offset projects.
^FOREST CARBON 101
FOREST CARBON 101
DR. ENG introduced Joshua Strauss, the primary author of the
anew report, who would present Forest Carbon 101.
3:34:39 PM
JOSHUA STRAUSS, Senior Vice President, Natural Climate
Solutions, anew, San Francisco, California, reviewed the agenda
for his presentation:
• About anew
• Compliance vs Voluntary Markets
• Components of Offset Quality
• Alaska Pilot Project Outlook
• Project Development Process
• Questions
3:35:31 PM
MR. STRAUSS stated that he had been with anew and its legacy
organization, Bluesource, for more than a decade. His background
is in forestry and the economics and policy of environmental
management. He has dedicated his career to working in the forest
carbon space. He reviewed the organization he works for speaking
to the following:
About anew
• Oldest and largest carbon offset developer in North
America (20+ years)
• Voted Environmental Finance's Best Project Developer
(North America) and Best Offset Developer
(California) for seven years running
• Dedicated forestry team: in-house finance,
marketing, and legal experts, plus 30 professional
foresters with unparalleled forest carbon experience
Projects 200+
Project types 20+
Million tonnes emission reductions 180+
Forest carbon projects under management 100+
Million acres enrolled in carbon projects 5+ A
3:37:19 PM
MR. STRAUSS displayed the anew Forestry Project Map that shows
the distribution of the projects throughout the continental US,
including six projects in Alaska. About two-thirds of the
projects are in the voluntary market and one-third in the
compliance market. He highlighted the importance of
understanding the nuanced ways each of the different types of
forest owners generate carbon credits.
He noted anew's experience working in Alaska and described
working with the state through the Department of Natural
Resources (DNR) as a specialty on its own. He displayed slide 5
that lists some of anew's notable partnerships.
• Alaska DNR
• Michigan DNR
• Ohio DNR
• 8 Wisconsin Counties
• 3 Massachusetts Townships
• 2 Pennsylvania Water Authorities
• 1 Public University
MR. STRAUSS conveyed that working with the Michigan DNR on a
forest carbon project in the Pigeon River region was a first of
a kind. It has generated more than 300,000 credits in its first
issuance and sold out all credits for the first decade.
3:39:17 PM
MR. STRAUSS advanced to slide 7 and spoke to the following:
What are forest carbon offsets?
• Forests across the US sequester substantial
amounts of carbon dioxide (CO2).
• By maintaining or increasing forest stocking,
forest landowners can generate units of CO2
emissions reductions ("Carbon Offsets").
• Companies wishing to combat climate change are
willing to pay forest owners for these Carbon
Offsets, thereby claiming credit for reducing CO2
emissions and mitigating some of the effects of
climate change.
MR. STRAUSS explained how offsets are created. If a forest would
otherwise be harvested or not continue to grow at the current
rate, the property owner can commit to increase the rate of
growth or maintain certain amounts of carbon in that forest and
in exchange, quantify those units in terms of carbon credits.
Those credits can be sold to organizations looking to reduce
their carbon footprint.
MR. STRAUSS described the two fundamental markets where carbon
credits are bought and sold. He spoke to the following on slide
8:
Forest Carbon Markets
Voluntary Market
Companies voluntarily choose to purchase offsets to
reduce their emissions
• Greater variation in pricing
• $4 to $35/ton/offset unit
• Premium value attributed to "charismatic"
projects
• Less certain demand
MR. STRAUSS said anew envisioned the state using the voluntary
carbon market. The compliance market is not a preferred option
on public lands given the rules and credit generation process.
The price range in the voluntary market is broad because there
are universes of methods of generating credits. Any legitimate
credit generally represents one metric ton of carbon dioxide
equivalents, but other attributes add charisma. Forestry is
sometimes favored because it implies a benefit to things like
erosion control, habitat, air or water quality, all of which
increase the credit value. He conveyed that anew currently was
seeing credits for their forest units selling around $17-$25.
Compliance Market
Companies purchase offsets to help meet their legally
mandated emissions targets (CA & Quebec)
• More consistent pricing
• $15 to $20/ton/offset unit
• Built-in demand through 2030
Additional Compliance Programs
• Washington
• CORSIA (international aviation)
• Canada (Federal and Provincial)
• Oregon
3:44:12 PM
MR. STRAUSS directed attention to the names and logos of nine
credit buyers that anew had worked with in the past, and
explained that the buyers generally could be anybody in the
Fortune 500. He noted that in the last year many organizations
had made substantial commitments to meeting certain emission
reductions through offsets by 2030 and 2050.
He turned his attention to the obligations and meaningful
commitments of landowners who choose to participate in forest
carbon projects. To get the credits, the commitments must be
meaningful. He directed attention to the chart of monitoring
obligations on slide 10 and explained that when he discusses
voluntary forestry programs he's primarily referring to the
American Carbon Registry (ACR) Voluntary program. The company
anew has dozens of projects registered with ACR and that's the
program anew identified in its report for DNR.
MR. STRAUSS discussed the key components of the ACR Voluntary
and ARB Compliance programs, the first of which is the length of
the project commitment. For this ACR Voluntary program, the
monitoring period is 40 years. By comparison, the California ARB
Compliance program is over 100 years. After that, the monitoring
obligations for the two programs are much more similar.
He emphasized the importance of the following landowner
obligations to ensure that sustainable forest practices are
maintained, noting that DNR's Forest Management Plan was by
nature approved by the state.
• Harvesting should not exceed growth
• Must maintain certification (FSC, SFI, ATFS) or
have state approved Forest Management Plan
MR. STRAUSS described verification, inventory, and reporting as
the pillars of maintaining an accurate accounting of the forest
carbon credits and integrity in a project. Under the ACR
voluntary program, the state will have to establish a detailed
forest carbon inventory that calculates the carbon on the
landscape. After the reports are set up and the inventory is
collected, it will be necessary to have a third-party verifier
review the work and confirm that the inventory and calculations
are correct. Verification is done every five years and the
inventory must be updated every decade. In addition there is the
annual report to the registry of the updated carbon
documentation; it tracks harvest that has occurred and updates
the models that track the carbon growth.
3:49:30 PM
SENATOR CLAMAN asked if it was fair to say that the companies
that are purchasing offsets are fuel refineries, power plants,
and factories that consume a lot of energy, whereas those
selling offsets are largely in a non-development stage.
MR. STRAUSS clarified that the companies purchasing offsets
represent all sectors of the economy. The producers of the
offsets have substantial forest or grassland assets and are
involved in the reduction of methane emissions.
3:51:03 PM
MR. STRAUSS displayed slide 11 and discussed the key components
that differentiate offsets:
Key Components of Offset Quality
similar Additionality - Does the activity that is generating the
carbon credit actually create a legitimate unit of
emissions reduction? A project whose landowner intended to
plant a forest, but without motivation in terms of the
carbon benefit would have low additionality. By comparison,
a landowner who isn't planning to plant a forest but is
motivated by the potential of generating carbon offset
credits will achieve additionality for that project.
similar Permanence - This concept looks at how long the emission
reduction or sequestration activity will go on. The
American Carbon Registry protocol has a four-year
permanence or project life. The California Compliance
Program has a 100 plus year commitment to permanence.
similar Verification and Monitoring - Without third-party
verification, there is no reason to accept the veracity of
the claimed emissions reduction. All major carbon programs
require regular verification and monitoring.
similar Registration and Serialization - Several significant bodies
manage the voluntary and compliance carbon space. These
organizations serialize the units being produced through
carbon projects and allow them to be traded, sold, and
retired. Key organizations in the US are Climate Action
Reserve (CAR), American Carbon Registry (ACR), the
Verifying Carbon Standard (VCS) and the Air Resources Board
(ARB). These platforms are essential to ensure that the
credits that are generated are carefully accounted, can be
traded, can be retired, and will never be double counted.
If credits aren't on one of these registries, there is
reason to question the legitimacy of those credits.
similar Leakage - This refers to an emissions reduction that is
shifted or leaked into another area. An example in forestry
is committing to reduce emissions on property A by not
cutting trees but increasing the harvest on property B
because of the commitment on property A.
similar Reversals - This is idea of credits that have been claimed
and emission reductions that have occurred that are then
lost, either intentionally or unintentionally.
similar A reversal is intentional if a landowner chooses to
harvest beyond the levels they committed to maintain
of the forest stocks. Under any of the major programs,
that bad actor would be obligated to pay back the
credits.
similar An unintentional reversal is anything that happens
that is outside the landowner's control. Examples are
any natural disaster such as fire, wind damage, ice
damage, or pest infestations.
similar Buffer Pool - This is where unintentional reversals are
handled. Any strong carbon program requires a pooled
insurance system. Every time credits are issued the
projects must submit a certain amount of the credits into
that insurance pool to cover catastrophic loss from natural
disasters.
3:57:17 PM
MR. STRAUSS advanced to slide 12 and discussed the Alaska DNR
Pilot Projects. The state map depicts the key areas in Tanana,
Mat-Su, and Haines. He spoke to the following points:
• Three areas were selected as pilot projects due
to their carbon stocking, accessibility, and
timber marketability
• Three projects could collectively generate ~10
million offsets over 40-year life
• >$80 million in revenue over 1st decade alone
3:58:40 PM
MR. STRAUSS directed attention to the flowchart on slide 14 that
illustrates the seven-step process to develop a carbon credit
project. He noted that as a turnkey project developer, anew
takes landowners through the following steps:
1. Project Feasibility Analysis
2. Contracting And Listing
3. Inventory
4. Modeling And Documentation
5. Verification
6. Credit Registration And Issuance
7. Credit Sale
4:00:45 PM
MR. STRAUSS displayed the Development Timeline on slide 15,
stating that while it is a detailed process, the most optimal
outcome is to get to execute contracting, registration, and
credit sale within 18 months. However, a more typical timeline
today is closer to 24 months given the constraints on the number
of verifiers in the marketplace and staff at the various
registries.
4:01:33 PM
CO-CHAIR BISHOP requested a more detailed explanation of how
anew models 100,000 acres of forest land.
MR. STRAUSS said the first step is to do an on-the-ground survey
to establish a grid network across the property, and then
measure a significant number of trees to get an idea of the
number of trees on the property. He continued to explain that if
there are 350 plots on the 100,000 acres, each might be one-
tenth of an acre in size. Every tree in that plot is measured to
the nearest tenth of an inch at breast height and to the nearest
foot for height. Each tree is identified by species; dead trees,
including the level of dead and decayed material associated with
those stems, are identified; and general decay or carbon loss is
identified in the living trees. These detail points are used to
extrapolate across the landscape what they expect to see.
4:03:30 PM
SENATOR CLAMAN asked what structure anew uses to charge for its
services.
MR. STRAUSS explained that anew is a partner with the landowner.
They do all the work to generate revenue for the landowner and
take a percentage. The percentage varies widely depending on the
size and complexity of the project and the value of the offset
that is generated. On large-scale projects, it is seldom more
than 25 percent and on very large-scale projects it can be
single digit percentages.
^HOW FOREST CARBON OFFSET PROGRAMS COME TOGETHER
HOW FOREST CARBON OFFSET PROGRAMS COME TOGETHER
4:05:32 PM
DR. ENG introduced Brian Klienhenz who is the president of the
natural resources consulting firm Terra Vera.
4:06:05 PM
BRIAN KLEINHENZ, Owner and President, Terra Vera Inc., Juneau,
Alaska, stated that Terra Vera Inc. is a consulting forestry
company that operates throughout the Pacific Northwest. They
specialize in fieldwork, putting in tens of thousands of forest
survey plots each year. They have installed thousands of the
plots in Alaska for various purposes, and are very good at
putting in plots that meet the needs of forest carbon projects.
MR. KLEINHENZ stated that he would discuss on-the-ground know-
how and the costs and revenues from a practitioner's standpoint.
He conveyed that he is a certified forester who has worked in
traditional timber markets and forest carbon markets for nearly
20 years. He has worked with a lot of landowners across the
Pacific Northwest to blend these two approaches to timber
management.
4:07:39 PM
MR. KLEINHENZ displayed slide 1 and spoke to the following:
The timeline for Alaska based projects is commonly 24
months from listing to sale of credits
• Fieldwork can only happen in the summer
• Alaska projects are always remote and logistics
are challenging
• Verification and final modeling must always be
after the field work, which can cause delays due
to weather
MR. KLEINHENZ highlighted that on average a typical Alaska
project takes two to two and one-half years from the decision to
move forward to selling the credits. He opined that the state
was still in the factfinding phase.
Size of Alaska projects
• Alaska projects are typically at least 6,000
acres in size
• Large voluntary projects are around 100,000 acres
• Compliance projects can be larger in size
• A 250,000 acre project on the voluntary project
would be considered very large
• The smallest Alaska projects are about 300,000
credits (over $3 million)
• The largest Alaska projects are over 15,000,000
credits (over $150 million)
The State of Alaska would be a very large player on
the voluntary forest offset market!
4:10:44 PM
MR. KLEINHENZ advanced to slide 2 that outlines the three major
cost centers involved in creating forest carbon offsets. He
directed attention to the pie chart that illustrates that one-
quarter of the revenue generally goes to putting the project
together. He spoke to the following cost centers:
Compliance and Contracting:
- Third party listing
- Third party verification
Forest Survey and Tree Inventory
- Mapping of Forests
- On the ground field survey
- Logistics (trucks, boats, helicopters)
He noted that plots in Alaska cost from $1,000 to $3,000 and a
single project can have several hundred plots.
Retail Sale, Computer Modeling and Calculations
- Often paid for with a commission fee per credit
- Includes management of regulation and paperwork
- Calculation of current carbon
- Long range forest growth modeling to establish
carbon over time
4:12:44 PM
MR. KLEINHENZ reviewed the common questions on forest carbon
offsets that he hears from his friends and neighbors.
similar Is the land locked up? What are the restrictions? What
about hunting, fishing, mining and subsistence?
He said there are many different kinds of offset markets, some
good and some bad. The good systems do not lock up the land;
they just sell the value of the trees without cutting them down.
similar Would the State still own the land? What about the
trees?
MR. KLEINHENZ explained that in all the different schemes, the
state would still own the land. The timber right is given up,
but not the fee title to the land.
similar What if the trees burn down?
Mr. Strauss conveyed that the insurance pool would cover the
loss of burned trees. Very fire-prone areas would change the
insurance market, but the registries are designed to cover that
type of loss.
similar Is a landowner getting paid for something they are
already doing?
MR. KLEINHENZ explained that the landowner signs a contract
stating their intention to do something. The bridge between
intention and contract is what creates the value.
similar Who is buying these credits?
MR. KLEINHENZ said Mr. Strauss thoroughly discussed who is
purchasing the credits.
similar Is there a real climate benefit, is this greenwashing?
MR. KLEINHENZ said he couldn't answer this question, but it was
changing behaviors. Companies and organizations are spending
money with the intention of addressing climate change. He
acknowledged that the programs aren't perfect but they are well-
vetted and third-party verified.
similar Why is forestry so often used to create carbon
offsets?
He said there has been a lot of traction on forest carbon in
particular because it's easy to understand and verify. A tree is
tangible.
4:17:29 PM
SENATOR DUNBAR referenced the question about whether a landowner
will get paid for something they are already doing. He said the
example Mr. Strauss cited seemed reasonable because Michigan has
such a well-developed timber market, but he wondered about that
in Alaska given that an overwhelming majority of the forest land
can never be economically harvested.
MR. KLEINHENZ said that goes to the point about the difference
between what somebody intends to do and is doing compared to
what they are promising they will not do. He said many of these
markets are a commitment to not do something in the future.
DR. ENG suggested Mr. Strauss offer his perspective and he would
weigh in after that.
4:19:11 PM
MR. STRAUSS said not every acre will generate meaningful carbon
credits but there are a lot of acres under the state's purview
that could qualify. The reason his organization was able to get
the numbers for the DNR pilot projects was because they went
through detailed analyses that looked at the distance from
infrastructure, the topography to ensure accessibility, whether
the products were high value, and how a commitment to
maintaining and increasing stocking would compare to what a
reasonable actor could do given market constraints. Take all
these things into account and then have the third-party verifier
look at how much the material would be worth, how much would it
cost to remove, and whether infrastructure was available to make
the project viable. If the project doesn't pass that test, it
won't generate credits. He said Alaska has a lot of acres where
it won't work and it has a lot of acres where it will, in the
context of the state's holdings.
4:20:55 PM
DR. ENG added that without a credible threat of timber harvest,
there isn't additionality. He relayed his belief that a
combination of the existing state forests will play a central
role in reinvigorating the timber industry. This will lead to
greater access to wood processing facilities and, over time,
develop the carbon offset market.
SENATOR DUNBAR asked if he was saying the state needs to develop
a more active timber industry to create the threat of potential
harvest in order to sell the carbon credits.
DR. ENG clarified that the concept of additionality arises from
building the inventory of carbon over time by not harvesting
trees. The bill only creates the process by which supply and
demand will determine whether projects will pencil out in
various areas of the state.
4:22:59 PM
SENATOR WIELECHOWSKI asked if a typical carbon contract would
obligate the state to expend resources to fight forest fires
that it would otherwise have let burn.
MR. STRAUSS answered no; carbon credits are contributed to the
overall insurance pool, but it is the landowner's prerogative
whether to take measures to deal with a fire that is detrimental
to the carbon stock. Landowners in fire-prone areas may take
action to reduce fire danger, and some programs award better
insurance rates for taking such measures, but there is no
obligation.
4:24:41 PM
SENATOR CLAMAN said he was challenged by the notion that there
is the potential for additionality on state forest lands. He
asked for the basis of that theory, given the current landscape.
MR. STRAUSS said the reason his organization identified three
pilot areas was to look at different regions where DNR has
holdings. The report pointed out that the best opportunity right
now is in the Haines and Southeast Alaska area. Another way of
thinking about it is that meaningful additionality is generated
when trees on a property that are growing in size and value over
time are under a 40-year commitment to not reduce that stock.
Access, infrastructure, and market availability are all
considerations for timber harvesting, but there is stronger
motivation to harvest once trees reach the next size level.
^Alaska Forest Carbon Offsets
ALASKA FOREST CARBON OFFSETS
4:27:41 PM
DR. ENG introduced Nathan Lojewski who would talk about Alaska
forest carbon offsets. He is a certified forester who holds the
Native Corporation seat on the Board of Forestry.
4:28:00 PM
NATHAN LOJEWSKI, Certified Forester and Forestry Manager,
Chugachmiut, Anchorage, Alaska, stated that Chugachmiut is a
501(c)(3) nonprofit that provides trust services on Native
allotments in Alaska. The people he works for primarily value
the land for subsistence and traditional uses. With this in
mind, he began researching carbon offsets in early 2012. It was
a "shot in the arm" in 2015 when the State of California allowed
Alaska to participate in that compliance market. Since then,
he's worked on four carbon projects, gone through six
verifications, and participated in four inventory efforts. He
stated that the picture he displayed was near Carbon Mountain on
the Chugach Alaska project.
4:29:29 PM
MR. LOJEWSKI directed attention to the numbers on next slide
that provide an idea of the scale of Alaska's participation in
carbon (CARB) markets. The numbers came from checking three main
registries: American Carbon Registry (ACR), the Climate Action
Reserve (CAR), and Terra. He spoke about:
similar Alaska's contribution to the carbon market (as of 2/8/2023)
CARB Projects - 47,942,013 offset credits issued to the
compliance market in California.
similar Voluntary Projects - 1,392,920 offsets issued in the
voluntary markets.
similar CARB total compliance issuance [by the State of California]
- 219,539,070 of which 47,942,013 are from Alaska forest
carbon projects or 22 percent of the entire market.
4:30:24 PM
MR. LOJEWSKI displayed a picture of four people from the Port
Graham Corporation running a skiff on their land, and
highlighted the following data:
similar 17 Alaskan Forest Carbon Projects Registered on ACR,
CAR, and VERRA registries
similar All are on Alaska Native Corporation lands
similar 11 CARB compliance [projects with the California
Resources Board]
similar 4 Voluntary projects
similar 2 projects are inactive
4:31:11 PM
MR. LOJEWSKI displayed a picture of three people and two snow
machines sitting in a field of grass to make the point that
climate change is real and that a forest carbon project is
something that a landowner can do to try and address climate
change.
He said the next picture is of a stream on Port Graham
Corporation land. It illustrates buffers on riparian areas.
State law requires 66 foot buffers, but Fort Graham Corporation
opted to leave 400 foot buffers on riparian areas to protect
fish and water quality. He noted that some areas on PGC land
outside the 66 foot buffer were enrolled in carbon projects. He
conveyed that some Native corporations have gotten into carbon
projects because they can generate a significant amount of
revenue and also protect subsistence resources and the
environment.
4:32:28 PM
MR. LOJEWSKI said the pictures on the next slide show PGC
shareholders being trained to do a forest inventory. This led to
seasonal employment opportunities to maintain the project. He
noted the absence of roads in the pictures; the areas are
primarily in Coastal Alaska and are difficult to access. He said
an oversight of these areas show old clearcuts, which is one way
to demonstrate the economic feasibility of harvesting. However,
the timber wasn't milled in Alaska; it was exported to other
markets.
MR. LOJEWSKI spoke to landowner obligations.
similar There is a 40-100 year commitment for the landowner to
maintain the trees under contract.
similar The landowner is required to monitor and verify the
inventory every 10 or 12 years. The verification process is
intense and thorough.
similar Third-party forest certification will likely be required
for landowners who are also engaged in traditional forestry
uses such as logging. A cost is associated with this.
similar A landowner is restricted from harvesting more than when
they entered the carbon project. The contract requires
maintaining a certain inventory on the land.
4:35:33 PM
MR. LOJEWSKI directed attention to the picture of himself
holding a drone and a helicopter in the background. He described
drones and carbon offset projects as beneficial new tools in a
land manager's toolbox.
MR. LOJEWSKI displayed a picture of a frost-covered meadow
surrounded by forest land to make the point that with careful
thought and planning, carbon credit programs and traditional
forestry uses like logging and timber can be compatible.
4:36:36 PM
MR. LOJEWSKI advanced to the last slide and explained that it is
a picture of himself on Port Graham Corporation lands that are
inholdings in the Kenai Fjords Park. The corporation enrolled in
the carbon credit project to be a good neighbor to the park. It
also aligned with a management goal of preserving the esthetic
quality and recreation potential of the land.
4:37:35 PM
DR. ENG mentioned the overflights of old clearcuts and asked Mr.
Lojewski to address the question of additionality if the land
does not have road access.
MR. LOJEWSKI answered that the old logging operations he
mentioned required setting up a logging camp, potentially
putting in an airstrip, and building a barging facility. The
logs were either put on barges or rafted and towed to a log ship
and exported, usually to Asia. This is how logging was done for
decades in Alaska, sometimes in very remote areas. The verifiers
stumbled over the question of additionality and how some areas
could be logged, until they flew over the old clearcut areas and
talked to Alaskans who had been involved in those logging
operations. He also pointed out that timber markets change, and
what might not be feasible today for harvesting timber will
almost certainly have greater value in the future and likely be
logged by a private landowner who wants to pay dividends to
shareholders.
^FOREST OFFSETS IN A CARBON TRADING SYSTEM
FOREST OFFSETS IN A CARBON TRADING SYSTEM
4:39:38 PM
DR. ENG introduced Chris Maisch who is the retired state
forester and the immediate past president of the Society of
American Foresters. He will discuss national policy in the
forest offset carbon trading system.
4:39:56 PM
CHRIS MAISCH, Immediate Past President, Society of American
Foresters, Fairbanks, Alaska, stated that his forestry career
spans about 37 years, the first 15 of which were specialized in
inventory in the boreal and coastal forests. He clarified that
his comments were his own as a certified forester who has
practiced in Alaska.
4:40:51 PM
MR. MAISCH began the presentation with a historic look at carbon
markets. He spoke to the following points:
• Carbon markets have been around since the 1990s, as a
way for those emitting Greenhouse Gases to "offset"
their own emissions.
• Forest carbon markets like CCX and VCS rose to
prominence in the late 2000s, in response to potential
climate legislation for "cap and trade".
• In lieu of federal legislation, regional climate
efforts became the primary option.
• With recent focus on climate solutions, but no sign of
federal legislation, the private sector has grown with
many different voluntary market forest carbon
opportunities.
4:42:45 PM
MR. MAISCH displayed the slide 3, Market Types and Common Terms,
noting that these were discussed earlier.
• Regulatory (aka compliance) vs. Voluntary Markets
• Additionality - a project must sequester carbon
that is in addition to what would have occurred
in the absence of the project.
MR. MAISCH explained that additionality is measured through
some sort of a baseline, depending on the protocol and
registry. It is the key way to generate a delta between
business as usual activity and activity that generates that
will be sold.
• Baseline How one measures additionality. Could
be business as usual, regional averages, counting
from a base year, or other methods.
• Leakage - when a carbon sequestration project
causes unintended increases or decreases in GHG
emissions elsewhere.
• Permanence - the degree to which sequestered
carbon is "permanently" removed from the
atmosphere.
4:43:32 PM
MR. MAISCH advanced to slide 4, Who Sells/Buys Voluntary
Forestry Offset Credits and Why?
• Private companies that want to make
sustainability or net carbon neutral claims
concerning their operations
• Companies will use a strategy of: avoid
emissions, reduce emissions and mitigate
emissions forestry offset credits
• New opportunity for non-federal public lands to
become sellers, many states considering projects
with sales completed in MI- Pigeon River Project
(Josh), MN, TN, NM, MA
• Key Point- the offsets need to be real,
additional, quantifiable, verifiable and
permanent to the desired project life time
horizon (1,40,100 years)
MR. MAISCH said the strategy companies employ to improve
sustainability and work toward carbon neutrality is threefold:
avoid emissions from their activities, reduce emissions, or
mitigate emissions. Forest offset credits are employed to
mitigate emissions. He emphasized the importance of the last
bullet.
4:44:55 PM
MR. MAISCH directed attention to the next slide that lists the
websites and names of project developers that have been in
business for 10 years or more. He noted that anew, formerly
known as bluesource, was on the list. These are the companies
that make it possible for landowners to develop a project in
both the compliance and voluntary markets. Perusing their
websites will show the different approaches.
4:45:24 PM
MR. MAISCH said the next slide shows the prices and types of
offset forestry projects. The company anew has proposed an
Improved Forest Management project, but other methodologies
include extended rotation projects, deferred harvest projects,
afforestation/reforestation projects, and avoided forest
conversion projects. It depends on the registry, developer, and
strategy that's used to generate those saleable credits. He
noted that the prices listed for the voluntary market range from
$0.01 to $70.00/metric ton of CO2 equivalent (MtCO2e) because
they reflect both national and international prices. He
acknowledged that Mr. Strauss cited prices specific to his
company's projects in the US. Price estimates in the regulatory
market range between $14.00 and $19.00/MTCO2e.
He read the statement near the bottom of the slide because he
thought it was worth repeating:
For a quality offset, whatever you do needs to
generate "additional" carbon on the landscape compared
to a "baseline", which achieves a level of
"permanence" desired by the buyer.
4:47:30 PM
MR. MAISCH said Mr. Klienhenz included questions and answers
about the forestry carbon offset market and the following points
add to the discussion:
Some Points to Consider
From a Landowner Perspective
• What kind of commitment am I making? For how
long? (1 ,20,100 years)
• How does it impact other values and uses for my
land (ie aesthetics, wildlife, timber supply,
etc)?
• Does it make financial sense? Does it make
ecological sense?
• Is it too good to be true?
From a Forestry Perspective
• What impact might carbon markets have on timber
markets? At what price point?
• Do carbon markets align with promoting a healthy
and sustainable forest resource?
• Are we losing sight of other ecosystem
benefits/markets (ex water quality other
ecosystem services) in focus on carbon?
• Are we maintaining public trust in our
sector/profession?
MR. MAISCH pointed out that the two headlines near the bottom of
the slide illustrate that forestry carbon offset projects have
their critics.
4:49:31 PM
MR. MAISCH concluded his presentation by highlighting the role
of the Division of Forestry and Fire Protection in the forest
carbon offset market. He spoke to the following:
• State agencies should build on what they
currently do best providing professional
management of public forests for a range of
benefits and products, and being a trusted source
for landowner education, information and
technical assistance.
o Evaluate opportunities for public land
participation in forestry offset markets
while continuing to support the wood needs of
the timber industry.
o Develop publications and other communication
tools to strengthen employee knowledge and
understanding about carbon sequestration and
how to engage in carbon markets.
o Provide localized information about regional
carbon storage demand and supply to assist
landowners in price negotiations. (forest
inventory- FIA, GIS databases of forest
lands)
He emphasized the importance of supporting the needs of the
existing industries.
4:50:59 PM
DR. ENG summarized the following points:
similar Timber and carbon are complementary; there's no need to
choose one over the other.
similar The governor's carbon offset bill creates the opportunity
for carbon offset projects by establishing the process.
similar Supply and demand in the private market will determine what
projects will materialize and where.
similar The repeated discussion of additionality is indicative of
the history of these projects.
similar The voluntary market is difficult to quantify. Verifiers
had to do flyovers to realize that hard to access areas had
previous activity.
similar There are examples that willing buyers in a voluntary
market may be willing to pay for charismatic carbon
projects. He asked what could be more charismatic than
Alaska.
similar The example from Michigan of Ernest Hemmingway hunting and
fishing demonstrates that additionality has more elements
than just a calculated business decision.
4:53:25 PM
SENATOR CLAMAN commented that whether or not to harvest timber
in the boreal forest is a market decision, and the pitch the
governor's office is making is that the state should give itself
the opportunity on state land to see what the market for carbon
looks like.
4:54:44 PM
DR. ENG agreed that you don't know until you try. He also noted
that the state forest within the Fairbanks timbershed has about
1.8 million acres and that a Canadian company was interesting in
setting up a sawmill in that area. He said the wonderful thing
about the private market is that it will ultimately provide the
answers.
4:55:37 PM
CO-CHAIR GIESSEL referenced the slide that talks about prices
and types of projects and asked for an explanation of a project
that has carbon stored in wood products.
MR. MAISCH explained that it's a concept of generating credits
by using wood products to build structures or manufactured
products like furniture. Carbon is stored in those buildings or
pieces of furniture. Some registries are working on protocols
that would allow credits to be generated and sold using that
methodology.
SENATOR GIESSEL asked if that potentially would be another type
of credit if it was possible to harvest the timber and quantify
how much was turned into durable products.
MR. MAISCH said it could be, but the chain of custody protocol
isn't fully developed for where the wood goes and the type of
durable product it will go into. Discussions about this are
ongoing and one idea is to use block chain technology to track
the wood. He deferred further comment to Mr. Strauss.
4:57:48 PM
MR. STRAUSS said it's a good point, but it's important to
understand that the programs that are being discussed, and the
examples that both he and Mr. Lojewski gave, all track the wood
products. It's essential because 100 percent the carbon in a
tree that's harvested isn't immediately emitted into the
atmosphere. That is accounted for in both the project and the
baseline scenario. He also mentioned that the materials left on
the forest floor and the materials that generally goes to make
pulp and paper are not long lasting.
CO-CHAIR GIESSEL thanked the presenters.
5:00:22 PM
There being no further business to come before the committee,
Co-Chair Giessel adjourned the Senate Resources Standing
Committee meeting at 5:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SRES Carbon Offsets_Lojewski 2.20.23.pdf |
SRES 2/20/2023 3:30:00 PM |
|
| SRES Carbon 101_Maisch 2.20.23.pdf |
SRES 2/20/2023 3:30:00 PM |
|
| SRES How Carbon Project Come Together_Klienhenz 2.20.23.pdf |
SRES 2/20/2023 3:30:00 PM |
|
| SRES Forest Carbon 101_Strauss 2.20.2023.pdf |
SRES 2/20/2023 3:30:00 PM |
|
| Carbon Offset Opportunity Eval.pdf |
SRES 2/20/2023 3:30:00 PM |
|
| Forest Offsets Policy Briefing Paper SAF.pdf |
SRES 2/20/2023 3:30:00 PM |
|
| 2014 BARRETT CARBON SEQUESTRATION STUDY.pdf |
SRES 2/20/2023 3:30:00 PM |