Legislature(2023 - 2024)BUTROVICH 205

02/22/2023 03:30 PM Senate RESOURCES

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Audio Topic
03:30:18 PM Start
03:31:38 PM HJR6
03:36:36 PM Presentation: Alaska's Mineral Potential on State Forested Lands
03:56:36 PM Discussion About Carbon Offset Projects
04:45:04 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HJR 6 NAT'L PETROLEUM RESERVE IN ALASKA TELECONFERENCED
Moved CSHJR 6(RES) AM Out of Committee
Uniform Rule 23 Waived
Presentation: Carbon Offset: Financial
Questions by
Dr. Melanie Werdon, Minerals Resources Section
Chief, Department of Geological & Geophysical
Surveys, Department of Natural Resources
Sean Carney, President of Finite Carbon
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
                     ALASKA STATE LEGISLATURE                                                                                 
                SENATE RESOURCES STANDING COMMITTEE                                                                           
                         February 22, 2023                                                                                      
                             3:30 p.m.                                                                                          
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Click Bishop, Co-Chair                                                                                                  
Senator Cathy Giessel, Co-Chair                                                                                                 
Senator Bill Wielechowski, Vice Chair                                                                                           
Senator Forrest Dunbar (via TEAMS)                                                                                              
Senator Scott Kawasaki                                                                                                          
Senator James Kaufman                                                                                                           
Senator Matt Claman                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS  FOR HOUSE  JOINT  RESOLUTION  NO.  6(RES)  am Supporting   oil and                                                          
gas   leasing   and  development   within   the   National   Petroleum                                                          
Reserve  in  Alaska;  and  urging   President  Biden  and  the  United                                                          
States  Department  of  the  Interior  to approve  the  Willow  Master                                                          
Development Plan.                                                                                                               
                                                                                                                                
     - MOVED CSHJR 6(RES) am OUT OF COMMITTEE                                                                                   
                                                                                                                                
PRESENTATION: ALASKA'S MINERAL POTENTIAL ON STATE FORESTED LANDS                                                                
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
DISCUSSION ABOUT CARBON OFFSET PROJECTS AND THEIR POTENTIAL ON                                                                  
STATE LAND                                                                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HJR  6                                                                                                                  
SHORT TITLE: NAT'L PETROLEUM RESERVE IN ALASKA                                                                                  
SPONSOR(s): REPRESENTATIVE(s) PATKOTAK                                                                                          
                                                                                                                                
02/10/23        (H)        READ THE FIRST TIME - REFERRALS                                                                      
02/10/23        (H)        RES                                                                                                  
02/17/23        (H)        RES AT 1:00 PM BARNES 124                                                                            
02/17/23        (H)        Moved CSHJR 6(RES) Out of Committee                                                                  
02/17/23        (H)        MINUTE(RES)                                                                                          
02/20/23        (H)        RES RPT CS(RES) 6DP                                                                                  
02/20/23        (H)        DP:   RAUSCHER,   MCCABE,  MEARS,   WRIGHT,                                                          
                          PATKOTAK, MCKAY                                                                                       
02/20/23        (H)        TRANSMITTED TO (S)                                                                                   
02/20/23        (H)        VERSION: CSHJR 6(RES) AM                                                                             
02/22/23        (S)        RES AT 3:30 PM BUTROVICH 205                                                                         
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
GRACE ERVINE, Staff                                                                                                             
Representative Josiah Patkotak                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  Reviewed  the  changes  made to  HJR 6  in House                                                        
Resources and on the House floor.                                                                                               
                                                                                                                                
MELANIE WERDON, PhD., Chief                                                                                                     
Minerals Resources Section                                                                                                      
Division of Geological and Geophysical Surveys                                                                                  
Department of Natural Resources (DNR)                                                                                           
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:  Delivered  a presentation   on Alaska's  mineral                                                        
potential on state forested lands.                                                                                              
                                                                                                                                
JOHN CROWTHER, Deputy Commissioner                                                                                              
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:  Participated  in  the presentation   on Alaska's                                                        
mineral potential on state forested lands.                                                                                      
                                                                                                                                
SEAN CARNEY, President                                                                                                          
Finite Carbon                                                                                                                   
Philadelphia, Pennsylvania                                                                                                      
POSITION  STATEMENT:   Discussed  carbon  offset  projects  and  their                                                        
potential on state lands.                                                                                                       
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:30:18 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  Wielechowski,    Kaufman,  Kawasaki,   Claman,                                                          
Dunbar (TEAMS) Co-Chair Bishop, and Co-Chair Giessel.                                                                           
                                                                                                                                
             HJR  6-NAT'L PETROLEUM RESERVE IN ALASKA                                                                       
                                                                                                                                
3:31:38 PM                                                                                                                    
CO-CHAIR  GIESSEL   announced  the  consideration   of  CS  FOR  HOUSE                                                          
JOINT  RESOLUTION  NO.  6(RES)  am  Supporting   oil and  gas  leasing                                                          
and development   within the  National  Petroleum  Reserve  in Alaska;                                                          
and  urging  President  Biden  and  the United  States  Department   of                                                         
the Interior to approve the Willow Master Development Plan.                                                                     
                                                                                                                                
She   noted  that   this   was  the   first  hearing,   although   the                                                          
committee  heard  the  Senate  companion  resolution   last  week. She                                                          
asked  Grace  Ervine  to  go over  the  differences   between  the two                                                          
resolutions.                                                                                                                    
                                                                                                                                
3:32:09 PM                                                                                                                    
GRACE   ERVINE,  Staff,   Representative    Josiah  Patkotak,   Alaska                                                          
State  Legislature,   Juneau,   Alaska,  reviewed   the  changes  that                                                          
were  made  to HJR  6 in  House  Resources  and  on  the House  floor.                                                          
She spoke to the prepared document.                                                                                             
                                                                                                                                
                        Summary of Changes                                                                                    
                  CS for House Joint Resolution 6                                                                             
                            Version S.A                                                                                       
                                                                                                                                
     The   following  changes   were  made  from   Version  B  to                                                               
     Version S.A:                                                                                                               
                                                                                                                                
     Page   2,   Line  25   following   "sound":   "WHEREAS   the                                                               
     Inupiat   people  are  the long-standing   stewards  of  the                                                               
     lands   on  which   the  National   Petroleum   Reserve   in                                                               
     Alaska  sits,  and  take  seriously  the  need  for  careful                                                               
     and balanced stewardship; and"                                                                                             
                                                                                                                                
     Page   3,  Line   27  following   "populations":    "WHEREAS                                                               
     Alaska's   leadership   in   the  nation's   energy   future                                                               
     includes    robust   support   for   the   development   and                                                               
     implementation   of renewable  energy  systems  and  sources                                                               
     to  ensure  that  cost-effective   energy  and  power  exist                                                               
     for   communities   and   individuals;   and   "WHEREAS   we                                                               
     recognize   that  responsible  resource  development   today                                                               
     equips    our   communities    to   make   investments    in                                                               
     technology   and  infrastructure   to  support  the  use  of                                                               
     renewable   sources  of  energy  and  power;   "WHEREAS  the                                                               
     Willow   project   is  an  important   part  of   a  diverse                                                               
     energy future for Alaska and the United States;"                                                                           
                                                                                                                                
          Page 4, Line 19 following "residents": "and the                                                                       
     nation"                                                                                                                    
                                                                                                                                
SENATOR  CLAMAN  asked  which version  of  the resolution   was before                                                          
the committee.                                                                                                                  
                                                                                                                                
MS. ERVINE clarified that it was version S.A.                                                                                   
                                                                                                                                
CO-CHAIR   GIESSEL  found  no   further  questions   and  solicited   a                                                         
motion.                                                                                                                         
                                                                                                                                
3:34:05 PM                                                                                                                    
CO-CHAIR   BISHOP   moved   to  report   CSHJR   6,  work   order  33-                                                          
LS0415\S.A,   from  committee  with  individual   recommendations  and                                                          
zero fiscal note.                                                                                                               
                                                                                                                                
CO-CHAIR   GIESSEL  found   no  objection   and  CSHJR   6(RES)am  was                                                          
reported from the Senate Resources Standing Committee.                                                                          
                                                                                                                                
3:34:39 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
^PRESENTATION:   ALASKA'S   MINERAL   POTENTIAL   ON  STATE   FORESTED                                                          
LANDS                                                                                                                           
 PRESENTATION: ALASKA'S MINERAL POTENTIAL ON STATE FORESTED LANDS                                                           
                                                                                                                                
3:36:36 PM                                                                                                                    
CO-CHAIR  GIESSEL  announced  a presentation  about  Alaska's  mineral                                                          
potential on state forested lands.                                                                                              
                                                                                                                                
3:37:37 PM                                                                                                                    
MELANIE   WERDON,    PhD.,   Chief,   Minerals    Resources   Section,                                                          
Division  of  Geological   and  Geophysical   Surveys,  Department   of                                                         
Natural    Resources    (DNR),    Fairbanks,    Alaska,    began   the                                                          
presentation   on  slide  2  that  has  a  map   that  identifies  the                                                          
mineral   belts  throughout   the  state.   She  read   the  following                                                          
commentary:                                                                                                                     
                                                                                                                                
        • Alaska Division of Geological & Geophysical                                                                           
           Surveys  (DGGS)  and  U.S. Geological   Survey  (USGS)                                                               
           use  available   geologic   data  to  identify   areas                                                               
           where  various  mineral  deposit  types  can be  found                                                               
           in Alaska                                                                                                            
        • Multiple mineral deposit types overlap, and they                                                                      
           cover a large part of the state                                                                                      
                                                                                                                                
3:38:47 PM                                                                                                                    
DR. WERDON  advanced  to  slide 3,  Critical Minerals  &  Conventional                                                          
Mineral Belts, and described the map by reading the following:                                                                  
                                                                                                                                
        • Alaska has numerous Conventional Mineral Belts                                                                        
           (i.e., gold belts, a copper belt, and base metal                                                                     
           belts [including zinc, lead, silver, copper,                                                                         
           gold])                                                                                                               
        • Additionally, Critical Minerals (CM) are most                                                                         
           numerous in red areas, and are largely coincident                                                                    
           with the broader "Conventional Mineral Belts"                                                                        
        • The potential for finding mineralization is                                                                           
           everywhere within these mineral belts                                                                                
                                                                                                                                
3:39:27 PM                                                                                                                    
DR.  WERDON advanced  to  slide  4, Alaska's  Mineral  Belts  & Forest                                                          
Lands.  She  stated   that  land  in  the  major  mineral  belts  that                                                          
overlap  state  forest  land  may  be  considered  for  carbon  offset                                                          
projects.                                                                                                                       
                                                                                                                                
CO-CHAIR  GIESSEL   asked  if the  green  areas   on the  map  reflect                                                          
state forests.                                                                                                                  
                                                                                                                                
DR. WERDON said yes.                                                                                                            
                                                                                                                                
CO-CHAIR  GIESSEL  observed  that  the copper  belt  across  the inlet                                                          
from Anchorage showed just a little forest land.                                                                                
                                                                                                                                
DR.  WERDON  explained  that  the  Division  of  Forestry  was  in the                                                          
process  of  updating   the  forest  inventory   in  Alaska  when  she                                                          
prepared  the presentation,   so the  map might  not have  the updated                                                          
information.    She   deferred    further   explanation    to   Deputy                                                          
Commissioner Crowther.                                                                                                          
                                                                                                                                
3:40:44 PM                                                                                                                    
JOHN   CROWTHER,   Deputy   Commissioner,    Department   of   Natural                                                          
Resources,   Anchorage,   Alaska,  added   that  this   dataset  about                                                          
forestation  came  from  the wildfire   team and  is  not meant  to  be                                                         
an  accurate  depiction  of forestation   or ownership.  He  committed                                                          
to  provide  a more  comprehensive  map  on  Friday  of the  different                                                          
land   statuses  and   types.   He  noted   that  the  maps   in  this                                                          
presentation     give   very    granular    detail    about    mineral                                                          
occurrences, both under state forests and other forest lands.                                                                   
                                                                                                                                
3:41:52 PM                                                                                                                    
SENATOR  WIELECHOWSKI   asked  for  help  understanding  how  minerals                                                          
and  carbon   sequestration   is  linked  and   whether  there  was   a                                                         
concern  that  mineral   development   could  be  affected  if  carbon                                                          
sequestration is allowed.                                                                                                       
                                                                                                                                
MR.  CROWTHER  said  he  believes  the  next  presentation  will  talk                                                          
about  that interplay   and DNR  will present  details  on  Friday.  He                                                         
also  offered   to  follow  up  if  there  were  lingering   questions                                                          
after that.                                                                                                                     
                                                                                                                                
CO-CHAIR  GIESSEL  advised  that  the impetus  for  this  presentation                                                          
was to  better  understand  what restrictions  there  might  be on the                                                          
mineral  resources   under  the surface   if a  forest  carbon  offset                                                          
project were to be located above ground.                                                                                        
                                                                                                                                
3:43:37 PM                                                                                                                    
SENATOR  CLAMAN  wondered  whether  selling   a carbon  offset  that's                                                          
on top  of a high  value  mineral deposit  would  preclude  developing                                                          
those  minerals.   He  asked  whether   a  later  presentation   would                                                          
provide detail about areas where that conflict might exist.                                                                     
                                                                                                                                
3:45:04 PM                                                                                                                    
MR. CROWTHER  replied  that  in future  presentations  DNR  intends  to                                                         
present  in  more  detail  how  carbon  offset  projects   interrelate                                                          
with   other   uses,   including   a   subsurface   development   that                                                          
requires  the  removal   of  trees.  He  assured  the  committee  that                                                          
doing  an  offset  project  does  not preclude   mineral  development.                                                          
To  the  second  question,  he  said  Dr.  Werdon  has  very  detailed                                                          
information   about  some  of   the  highly  prospective   areas  that                                                          
overlap forest lands.                                                                                                           
                                                                                                                                
3:46:25 PM                                                                                                                    
CO-CHAIR  BISHOP  pointed  out  that  some  mines  that  have  been  in                                                         
existence  for  70  years  started  reclamation  projects  before  the                                                          
federal   government   required   reclamation.   Those   mines  crated                                                          
additionality when they planted forests 50 years ago.                                                                           
                                                                                                                                
3:47:11 PM                                                                                                                    
SENATOR  KAWASAKI  asked  Dr.  Werdon  if  the  areas  outside  of the                                                          
mineral  belts really  don't  have any  minerals  or if it's  that the                                                          
state doesn't know whether those areas have mineralization.                                                                     
                                                                                                                                
DR.   WERDON   answered   that   there's   a   possibility    of  less                                                          
concentrated mineral occurrences outside the belts.                                                                             
                                                                                                                                
3:48:57 PM                                                                                                                    
DR.  WERDON   directed   attention   to  the  map  on   slide  5  that                                                          
identifies  five  mining  regions   throughout  the  state:  Interior,                                                          
Ambler, Southcentral, Southwest, and Haines.                                                                                    
                                                                                                                                
3:49:24 PM                                                                                                                    
DR.  WERDON  advanced   to  the  map  on  slide  6,  Interior:  Mines,                                                          
Mineral  Occurrences  &  Forests.  She  stated  that  almost  all land                                                          
in the  Interior  is covered  by  one or  more of  the mineral  belts;                                                          
the  potential  for  new  discoveries  is  everywhere.   She  said the                                                          
red  dots reflect  the  known  mineral  occurrences,  the  yellow dots                                                          
reflect   placer  gold   deposits,   and  the   green  areas   reflect                                                          
forested   lands.   Many  of  Alaska's   active   mines   are  in  the                                                          
Interior and numerous exploration projects are underway.                                                                        
                                                                                                                                
DR. WERDON  advanced  to the  map on  slide 7,  Interior:  Pogo Mine  &                                                         
Nearby  Exploration.   She  directed  attention   to  the  exploration                                                          
projects  in the  Pogo  Mine region  and  noted  that exploring  close                                                          
to existing  mines  was an  effective  way to find  new ore  deposits.                                                          
To that  point,  mineral  resources  have  been defined  at  the Naosi                                                          
deposit  under the  Sam gold  project.  She said  the hundreds  of red                                                          
squares  represent   mining  claims  that  are  located  within  state                                                          
forest boundaries and tree covered lands.                                                                                       
                                                                                                                                
CO-CHAIR  GIESSEL  commented  that  Pogo is  an underground   mine and                                                          
the surface forests are still intact.                                                                                           
                                                                                                                                
DR.  WERDON  said  that's  correct  with  the  exception  of  the area                                                          
covered by roads, infrastructure, housing, and a tailings pile.                                                                 
                                                                                                                                
3:51:35 PM                                                                                                                    
DR.  WERDON turned  to  the picture  on slide  8  of the 13.6  million                                                          
ounce  Livengood  gold  deposit  north of  Fairbanks.  It  illustrates                                                          
that  access   roads  and  the  loss  of   trees  for  drill  pads   is                                                         
unavoidable at the advanced exploration stage.                                                                                  
                                                                                                                                
DR.  WERDON   displayed   the   map  on  slide   9,  Ambler:   Mineral                                                          
Resources & Access Road, and made the following points:                                                                         
                                                                                                                                
   similar In the southern Brooks Range, the Alaska Industrial                                                                  
     Development   and Export  Authority   (AIDEA)  and Ambler  Metals                                                          
     propose    constructing    an    industrial   road    to   access                                                          
     significant   base  mineral   resources   in  the  Ambler  Mining                                                          
     District.                                                                                                                  
   similar This area is part of a significant base metal belt that                                                              
     extends from the Red Dog Mine through the Ambler District                                                                  
     to the east.                                                                                                               
   similar The proposed route   passes    through   forested    lands,                                                          
     potentially more than the map shows.                                                                                       
                                                                                                                                
3:52:47 PM                                                                                                                    
DR. WERDON advanced to the map on slide 10, South-Central:                                                                      
Mineral Resources & Forests and made the following points:                                                                      
                                                                                                                                
   similar Across Cook Inlet from Anchorage, state and private  forest                                                          
     lands lie within the statewide copper mineral belt.                                                                        
   similar Significant mineral resources have  been   defined  at  the                                                          
     Estelle gold project, the Whistler Island Mountain and                                                                     
     Raintree projects.                                                                                                         
   similar The Old Man project is just starting.                                                                                
   similar The potential for copper deposits exists under the forested                                                          
     lands.                                                                                                                     
                                                                                                                                
3:53:33 PM                                                                                                                    
DR. WERDON advanced to the map on slide 11, Southwest Alaska:                                                                   
Mineral Resources & Forests, and made the following points:                                                                     
                                                                                                                                
   similar The statewide gold belt that runs through this area has the                                                          
     34 million ounce Donlin gold deposit.                                                                                      
   similar The statewide copper belt that runs through  this  area has                                                          
     the Pebble deposit and the copper and gold deposits                                                                        
     mentioned in the previous slide.                                                                                           
   similar The tree-covered areas are shown in bright green.                                                                    
                                                                                                                                
DR. WERDON turned to the map on slide 12, Haines Area: Mineral                                                                  
Resources & Forested Land, and made the following points:                                                                       
                                                                                                                                
   similar The state forest boundary and tree-covered lands  partially                                                          
     overlap the Haines mineral belt in the Palmer Mineral                                                                      
     District. This area is outlined in red.                                                                                    
   similar This region has many mineral sites  of  various  types  and                                                          
     metal associations under exploration by industry, the most                                                                 
     advanced of which is the Palmer project.                                                                                   
                                                                                                                                
DR. WERDON advanced to slide 13, Palmer Project - Constantine                                                                   
(APM)/DOWA, and made the following points:                                                                                      
                                                                                                                                
   similar Palmer is a Preliminary Economic Assessment-stage   project                                                          
     that hosts numerous mineral deposits of the same type as                                                                   
     the Greens Creek Mine near Juneau.                                                                                         
   similar Palmer deposits have calculated resources of copper,  zinc,                                                          
     gold, silver, and barite.                                                                                                  
                                                                                                                                
3:55:17 PM                                                                                                                    
DR.  WERDON  advanced  to  the map  on  slide  14, Haines  Area:  DGGS                                                          
Geologic   Mapping  -  Summer  2023.   She  said  DGGS  was  asked   to                                                         
conduct   a  landslide   hazards  assessment   and  bedrock   geologic                                                          
mapping  in the  area that's  outlined  in purple.  This will  be done                                                          
this coming summer                                                                                                              
                                                                                                                                
DR. WERDON thanked the committee for the opportunity.                                                                           
                                                                                                                                
CO-CHAIR GIESSEL thanked her for the presentation.                                                                              
                                                                                                                                
^DISCUSSION ABOUT CARBON OFFSET PROJECTS                                                                                        
              DISCUSSION ABOUT CARBON OFFSET PROJECTS                                                                       
                                                                                                                                
3:56:36 PM                                                                                                                    
CO-CHAIR   GIESSEL  announced   the  next  presenter   would  be  Sean                                                          
Carney,   the  president   of  Finite   Carbon.  He   was  invited   to                                                         
discuss  the  carbon   projects  his  company   helped  Alaska  Native                                                          
corporations  establish,   and what  the state's  next  step  might  be                                                         
as it looks at carbon offset on public lands.                                                                                   
                                                                                                                                
3:57:21 PM                                                                                                                    
SEAN    CARNEY,     President,     Finite    Carbon,     Philadelphia,                                                          
Pennsylvania,   stated  that  his  company  was  founded  in  2009 and                                                          
today  it  has  68 carbon  projects   in  the US  and  has  registered                                                          
about  80 million  carbon  offset credits  that  have been  transacted                                                          
for  more than  $800  million.  Finite Carbon  has  3.1 million  acres                                                          
in the US and over 700,000 are in Alaska.                                                                                       
                                                                                                                                
He  suggested  the  committee  think  about  a carbon  offset  project                                                          
as  akin  to  building  a  house.  The  carbon   offset  developer   is                                                         
similar  to  the builder  and  the  third-party  registry  is  similar                                                          
to  the municipality   or city  that  manages  the  zoning.  The rules                                                          
are  in place  from  the registry  and  the  developer  acts  on those                                                          
rules to register the credits.                                                                                                  
                                                                                                                                
The  first step  is  to define  the  project  and  measure  the carbon                                                          
in  that  area.  A typical   project  will  require  from  300  to 500                                                          
measurements,  which  can take  from  six weeks  to three  months. The                                                          
second  step  is  to  do  computer  modeling.   The  project  scenario                                                          
includes  potential   restrictions,   financial  considerations,   and                                                          
the  harvestability   of  the timber.   The  theoretical  model  shows                                                          
what  would happen  in the  absence of  doing the  carbon  project and                                                          
the  actual   comes   from  measuring   the   trees.  The   trees  are                                                          
measured  every  5-6  years  and provide  a  true-up  for the  interim                                                          
when the model predicts the growth of the trees.                                                                                
                                                                                                                                
4:00:20 PM                                                                                                                    
MR.  CARNEY  explained  that  in  the  next  step  an  auditor  does  a                                                         
site  visit and  remeasures  a sampling  of  the trees  to  ensure the                                                          
measurements  fall  within  a certain  error range.  The  modeling and                                                          
project  documentation  are  also reviewed.  The  auditor  will either                                                          
sign  off  or  request  corrective   action.  The  next  stop   is the                                                          
registry   for   another   round  of   approvals.   After   the  final                                                          
approval,  the  credits  are issued  into  an account.  Between  15-20                                                          
percent  is  taken  off  the  top to  cover  unintentional   reversals                                                          
such  as  fire  or  windfall.   The  credits  are  serialized,   which                                                          
ensures  that  the  credits  are  tracked  and can  be  traced  to the                                                          
original  source.  The credits  are then  transacted  and  a buyer can                                                          
do  one of  two things:  1)  hold  the credits  and  potentially  sell                                                          
them  in the  future,  or 2)  retire  the credits  and  carry  them  on                                                         
their  ledger.   Those   are  the  mechanics   from  the   landowner's                                                          
perspective.   It's  a  long-term  commitment   to  not  harvest  more                                                          
than  is grown.  The  proof  that this  is  happening  comes  from the                                                          
five-year audit.                                                                                                                
                                                                                                                                
4:03:12 PM                                                                                                                    
SENATOR  CLAMAN  asked  why  the  state  would  be  in  the  voluntary                                                          
market.                                                                                                                         
                                                                                                                                
4:03:35 PM                                                                                                                    
MR.   CARNEY  said   it's   not  required,   but   he  suggested   the                                                          
voluntary  market  because  the compliance  market  has much  stricter                                                          
rules  for  public  lands.  In  the voluntary   market,  the  state  is                                                         
treated akin to a private owner.                                                                                                
                                                                                                                                
4:04:46 PM                                                                                                                    
SENATOR   WIELECHOWSKI   asked  if  he  had  ever   been  involved   in                                                         
litigation related to the sale of carbon credits.                                                                               
                                                                                                                                
MR.  CARNEY answered  no;  he had  seen  boundary  disputes  but those                                                          
disputes had not led to legal action.                                                                                           
                                                                                                                                
4:05:35 PM                                                                                                                    
SENATOR   WIELECHOWSKI   referenced   the  previous  presentation    on                                                         
minerals  in Alaska.  He asked  whether  the state  would  be sued for                                                          
specific   performance  if   it  developed  a  forest   carbon  offset                                                          
project  then  reversed  course 10  years  later so  it could  develop                                                          
a gold mine under that forest land.                                                                                             
                                                                                                                                
MR.  CARNEY  said  yes;  the  state  would  have  contracts  with  the                                                          
developer,  with  the  registry,  and  with  the buyer.  The  contract                                                          
with  the  registry  offers  the least  flexibility   and the  penalty                                                          
for  breaking  that   contract  requires   repayment  of  the  credits                                                          
received   to  date.  If  the  original  contract   were  for  100,000                                                          
acres  and  100  acres  was  converted,  the  loss  probably  wouldn't                                                          
show  up  because  the growth  of  the  forest  would  likely  be more                                                          
than  the  conversion.   He  said   conversion  for   minerals  occurs                                                          
frequently   in  Appalachia,  but  he  had  yet  to  see  an  instance                                                          
where  the  conversion  exceeded  the  annual  growth  of the  forest.                                                          
The developer  contracts  are  custom  but they're  usually  from 5-10                                                          
years. The risks are the same with the buyer's contract.                                                                        
                                                                                                                                
4:08:18 PM                                                                                                                    
SENATOR   WIELECHOWSKI   asked   about  the   potential   for  getting                                                          
carbon  credits   by  cutting  a  forest  and  turning  it  into  long                                                          
lumber to build houses or other structures.                                                                                     
                                                                                                                                
MR.  CARNEY  said  there  is an  incremental   benefit  to using  wood                                                          
for  long-term  storage  of  carbon  in  building  products.  However,                                                          
it's  important   to understand   that  in  the  overall  project  the                                                          
amount  of carbon  on  the  property  always  has to  be greater  than                                                          
what  is  harvested.  If  all  the wood  on  a  property  is  cut, the                                                          
landowner   would   have  to   repay   all  the   credits   that  were                                                          
reversed.                                                                                                                       
                                                                                                                                
SENATOR  WIELECHOWSKI   pressed  the  hypothetical  possibility   of  a                                                         
landowner  benefiting   from  using the  wood  for  building  projects                                                          
because the carbon would be in long-term storage.                                                                               
                                                                                                                                
MR.  CARNEY  suggested  he  think  about  the  golden  rule  which   is                                                         
that  the  amount  of carbon   that is  put  into  a project   must  be                                                         
retained.   If a  landowner   were  to  convert  the  forest  to  wood                                                          
products,  about  60 percent  of  the volume  would  be lost  with the                                                          
conversion  from  trees  to lumber.  That  lumber would  only  have  40                                                         
percent  of the  carbon that  was in  the forest  at the  start of the                                                          
project.                                                                                                                        
                                                                                                                                
4:11:09 PM                                                                                                                    
SENATOR  WIELECHOWSKI  suggested  planting  more  trees to  offset the                                                          
carbon loss.                                                                                                                    
                                                                                                                                
MR.  CARNEY  answered  that  there's  a requirement   to replenish   or                                                         
catch  up the  shortfall  within  10  years and  the  reality  is that                                                          
it  would  take   50  years  to  catch   up  if  all  the  trees  were                                                          
harvested.   He  added  that   the  assumption   is  correct  but  the                                                          
policy is based on science.                                                                                                     
                                                                                                                                
4:12:06 PM                                                                                                                    
SENATOR  CLAMAN  mused that  if the landowner  were  to clear  cut 100                                                          
acres  for  long  lumber  for building   projects,  the  additionality                                                          
would  be lost  but  the  carbon  that's stored  in  those  structures                                                          
would  be more  than if the  timber  had been made  into  pulp. To get                                                          
the  maximum   carbon   credits  from   that  100  acres   would  mean                                                          
leaving the trees standing.                                                                                                     
                                                                                                                                
MR.  CARNEY said  he  believes  in managing  forest  land.  Carbon was                                                          
designed  by foresters  with  the idea  of subsidizing  management   to                                                         
the  ideal  rotation   age  so  the  landowner  will  have  more  wood                                                          
products  and  store  more  carbon  on the  same  ground,  but  over  a                                                         
longer  period  of  time.  An  unfortunate  byproduct   is the  notion                                                          
that  a landowner  can  create  the  most carbon  by  not managing   at                                                         
all.  While  allowed,  that is  not  in the  spirit  of forest  carbon                                                          
projects.                                                                                                                       
                                                                                                                                
4:15:27 PM                                                                                                                    
CO-CHAIR  GIESSEL  recalled   that Finite  Carbon  helped  the  Native                                                          
corporations  Sealaska,  Doyon,  and  Ahtna develop  carbon  projects.                                                          
She  asked what  he could  tell  the committee   about their  approach                                                          
to a forest carbon offset project.                                                                                              
                                                                                                                                
MR.  CARNEY  clarified  that  the  Native   corporations  that  Finite                                                          
Carbon  helped  were  Sealaska,   Ahtna,  Tyonek,  and  Hoonah  Totem.                                                          
Those  were compliance  project  so  their rules  were different  than                                                          
he'd been discussing.                                                                                                           
                                                                                                                                
CO-CHAIR   GIESSEL   offered   her   understanding   that   compliance                                                          
projects  would   use  a registry   in  California  or  the  state   of                                                         
Washington.                                                                                                                     
                                                                                                                                
MR.  CARNEY  clarified   that  the  established  compliance   registry                                                          
was in California.                                                                                                              
                                                                                                                                
CO-CHAIR  GIESSEL  asked  what  approach  those projects  were  taking                                                          
and  whether  their  private   forest  land  was  different  than  the                                                          
state's  forest  land  that  potentially  will  be used  for  a carbon                                                          
offset project.                                                                                                                 
                                                                                                                                
MR.  CARNEY  explained  that  the primary   difference  is that  state                                                          
land  tends   to  be  more   evenly  managed   for  sustained   yield,                                                          
whereas   private  land  is  more   event-driven.   For  example,  the                                                          
timber  prices   the  last  several  years   have  led  to  landowners                                                          
cutting far more than growth.                                                                                                   
                                                                                                                                
4:18:24 PM                                                                                                                    
SENATOR  WIELECHOWSKI  asked  whether  the state  could have  an issue                                                          
with  a   forest  carbon   offset  project   since  the   constitution                                                          
requires state land to be managed for sustained yield.                                                                          
                                                                                                                                
MR.  CARNEY said  the  term "sustained  yield"  has  wide  breadth.  He                                                         
used  a  bank  account  as  a hypothetical   analogy.  In  the  timber                                                          
context,  there  would be a  long term  flow of  wood products,  which                                                          
is  the opposite   of cutting  all  the  timber  every  20 years.  The                                                          
compliance  market  is  more rigid  and  any  change  has to  be clear                                                          
and  specific  to  get  credit,  whereas   the  voluntary  market  has                                                          
more leeway in the interpretation of the credit.                                                                                
                                                                                                                                
4:20:27 PM                                                                                                                    
CO-CHAIR  BISHOP  asked  if he  agreed that  the  voluntary  market  is                                                         
less  secure  for payment  than  the  compliance  market.  He  drew  an                                                         
analogy  between   the  compliance   market  and  investing   in  a  US                                                         
Treasury bill.                                                                                                                  
                                                                                                                                
MR.  CARNEY  said   the  short  answer  is  yes.   In  the  compliance                                                          
market,  companies  are required  to  buy the credits;  the  number  of                                                         
credits  that  will  be purchased  and  the  sale price  is  generally                                                          
known.  It's a  more liquid  product  that's traded  more  frequently.                                                          
The  voluntary  market is  not a  commodity  market;  it is  more of  a                                                         
boutique  market  and the  characteristics   of the  project  are more                                                          
important  than  the  fact  that  it's  a carbon  project,  which  can                                                          
affect  price.  Prices   in  the voluntary   carbon  market  can  vary                                                          
widely,  whereas  the  price  is  generally  even  in  the  compliance                                                          
market                                                                                                                          
                                                                                                                                
4:22:16 PM                                                                                                                    
CO-CHAIR  GIESSEL  asked if  it was up  to the  state to  choose which                                                          
market.                                                                                                                         
                                                                                                                                
4:22:35 PM                                                                                                                    
MR.  CARNEY  said  yes, and  even  if  the choice  was  the  voluntary                                                          
market,  there  would  be a  wide range  of  scenarios  from  which  to                                                         
choose.   One  option   would  be  to   reduce  or  eliminate   timber                                                          
harvesting.  He  said  the idea  is to  use  carbon to  invest  in the                                                          
forest  to  make   it  more  productive.   The  win-win  is  that  the                                                          
landowner  can  have  more   carbon  sequestered  on  a  property  and                                                          
create  more  wood  products.  He acknowledged   that  doing  that may                                                          
not create  the  maximum amount  of carbon,  but  it could  offer more                                                          
value to society.                                                                                                               
                                                                                                                                
He  cited  examples  in  Oregon,  Washington,   and  California  where                                                          
the  focus  is  on creating   more  climate  resilient  forests.  That                                                          
means  having fewer  trees  that are  larger and  more valuable.  That                                                          
forest  is also  less  susceptible  to  fire.  To get  to that  point,                                                          
the smaller trees have to be thinned and carbon pays for that.                                                                  
                                                                                                                                
MR.  CARNEY   opined  that   the  most   important  question   is  not                                                          
whether  to  participate  but  how  to  participate  to  maximize  the                                                          
benefits  of  the resource.  His  belief  is that  it  has to  be both                                                          
carbon  and  timber.  He  suggested  drawing  on  DNR's  expertise   to                                                         
decide  how  to  responsibly  implement  a  project  in  the  best way                                                          
possible.                                                                                                                       
                                                                                                                                
4:25:03 PM                                                                                                                    
SENATOR  CLAMAN  asked  if  state  forests  tend  to  be managed  less                                                          
aggressively  than  private  forests  because:  different   values are                                                          
placed  on state-owned  forest  lands,  investments  are  required for                                                          
more  intensive  management,  private  lands  are  better  conditioned                                                          
to have managed forests, or something else.                                                                                     
                                                                                                                                
MR.  CARNEY  replied  it  can  be  all  of  those  things,  and  there                                                          
might not be one right answer.                                                                                                  
                                                                                                                                
CO-CHAIR  GIESSEL   noted  that  the  Anew  report   identified  three                                                          
potential  areas  in the  state  for forest  carbon  offset  projects.                                                          
She  asked,  if  that's  the first  step,  how  much  more  has  to  be                                                         
done and how long might that take.                                                                                              
                                                                                                                                
4:27:38 PM                                                                                                                    
MR.  CARNEY  replied  that  the mechanics   are heavily  dependent   on                                                         
the  weather  and  daylight   and  the  extent  that  helicopters  are                                                          
necessary,  but  in  theory  it could  be  done  in  one season.  That                                                          
timeline  is very  tight and  a more  realistic  scenario  would be  to                                                         
take  the  measurements  the  first  season  and do  the  verification                                                          
the  next season.  After  that it  depends  on how  fast the  modeling                                                          
and  verification  can  be done  and the  audit  report submitted.   He                                                         
said  the  realistic  timeline  from  contracting  to  issuance  is  18                                                         
months.                                                                                                                         
                                                                                                                                
4:29:07 PM                                                                                                                    
SENATOR  WIELECHOWSKI   asked if  it  was reasonable   to assume  that                                                          
some  logging could  be done  on lands  open to  carbon  sequestration                                                          
contracts, which would bring more revenue to the state.                                                                         
                                                                                                                                
MR.  CARNEY  answered  that  the carbon  revenue  should  be  invested                                                          
in  responsibly  managed  forests.  He  said  he didn't  know  whether                                                          
that  would  result  in more  harvesting  than  an  unmanaged  forest,                                                          
but  a case  could  be made  that  a managed  forest  could  have both                                                          
more  harvesting  and  more sequestered   carbon.  The opposite  could                                                          
be  argued,  but  it  really  depends  on  the  forest.   He said  the                                                          
longer  he's  in  the industry,   the more  he  agrees  with  a friend                                                          
who  once told  him that  forestry  isn't  rocket  science;  it's more                                                          
complicated.                                                                                                                    
                                                                                                                                
SENATOR  WIELECHOWSKI   asked  if  there  was  a  private  market  for                                                          
carbon  credits.  He posed  the idea  of letting  residents  use their                                                          
permanent fund dividend to buy carbon credits.                                                                                  
                                                                                                                                
MR.  CARNEY  replied  that there  are  myriad  ways  for consumers   to                                                         
buy  offsets.  For  example,  everybody  who  buys gas  in  California                                                          
is  contributing  to  the purchase   of carbon  offsets;  there's  the                                                          
option  to  voluntarily   pay  more  for  that  gas  that  will  go  to                                                         
purchase  carbon  offsets;  and Etsy  buys carbon  offsets  every time                                                          
it ships something to a customer.                                                                                               
                                                                                                                                
4:31:51 PM                                                                                                                    
SENATOR   WIELECHOWSKI    asked   if   he'd    seen   the   governor's                                                          
legislation  and  had an  opinion  about  whether it  takes  the right                                                          
approach.                                                                                                                       
                                                                                                                                
MR. CARNEY  said  he would  like to  see effort  and thought  put into                                                          
how  to get  it  all.  For  example,  what  is the  best  way  for the                                                          
state  to deal  with  the nearly  two  million  acres  of forest  that                                                          
is  affected  by  spruce  budworm.  Salvage   harvesting  costs  money                                                          
but  it can  yield saw  timber  that will  be around  for  perhaps 100                                                          
years.  Once  those trees  are  gone,  it will  be  easier  and faster                                                          
for new  trees  to come up.  He emphasized  that  the state  has a lot                                                          
of  land  and  a lot  of  special  cases,  so  there  was  no  lack  of                                                         
opportunity to do something special.                                                                                            
                                                                                                                                
4:35:10 PM                                                                                                                    
CO-CHAIR  BISHOP  commented  that this  conversation  was  sure to get                                                          
DNR's attention.                                                                                                                
                                                                                                                                
4:35:46 PM                                                                                                                    
SENATOR  WIELECHOWSKI   asked  how  to  best  maximize  the  extensive                                                          
acreage that is affected by the spruce budworm.                                                                                 
                                                                                                                                
MR.  CARNEY   said   the  US  Forest   Service   has  done   extensive                                                          
research  on this  and there  is no  ultimate  answer; solutions  seem                                                          
to  be  specific   to  a  region   and  site.  For  example,   salvage                                                          
harvest  in  British  Columbia   was  not  very  effective.  He  noted                                                          
that  modeling  had  been  used  for  a  long  time  in  forestry  and                                                          
there   were   people    who   could   model   different    management                                                          
practices,   the  costs,  and  the  carbon  impacts  specific   to the                                                          
spruce  budworm  both pre-  and  post-kill.  The  side benefits  would                                                          
be  promoting   a  forest  products   industry,   creating  jobs,  and                                                          
being good for the environment.                                                                                                 
                                                                                                                                
CO-CHAIR  GIESSEL  commented   on  the quality   of life  issues  that                                                          
could be associated with such a project.                                                                                        
                                                                                                                                
4:38:41 PM                                                                                                                    
SENATOR   KAUFMAN   asked   why  the   salvage   harvest   in  British                                                          
Columbia wasn't economic.                                                                                                       
                                                                                                                                
MR.  CARNEY  offered  his  understanding   that  one  issue  was  that                                                          
without  fire,  the  seed  dispersal  was  inhibited   because  of the                                                          
moss  on  the  trees.  That  contributed   to  poor  regeneration.   He                                                         
repeated   that  there  were  experts   to  help  find   site-specific                                                          
solutions.                                                                                                                      
                                                                                                                                
CO-CHAIR  GIESSEL  commented  that  it  sounds  as though  this  would                                                          
be a question for the state's foresters.                                                                                        
                                                                                                                                
MR.  CARNEY  restated  his  preference  to  look  for  solutions  that                                                          
involve both timber and carbon.                                                                                                 
                                                                                                                                
4:41:14 PM                                                                                                                    
SENATOR  CLAMAN  said his  general understanding   of salvage  logging                                                          
is  that  there's  a  two  year  window  to  harvest  fire  or  spruce                                                          
budworm  damaged  trees and  still have  some  market value.  Harvests                                                          
after  that  time would  only  be  valuable  because  new trees  would                                                          
regenerate faster.                                                                                                              
                                                                                                                                
MR.  CARNEY  said the  trees  killed  by spruce  budworm  lose  market                                                          
value  after  two years  because  the  wood  is discolored,   not that                                                          
it's  rotten.   One  solution  is  to  get  ahead  of  the  curve  and                                                          
harvest  living  trees  in the  path  of the  spruce  budworm  and the                                                          
dead trees before they discolor.                                                                                                
                                                                                                                                
CO-CHAIR GIESSEL thanked him for the good information.                                                                          
                                                                                                                                
MR. CARNEY said it had been a very positive experience.                                                                         
                                                                                                                                
4:45:04 PM                                                                                                                    
There  being  no  further  business  to  come  before  the  committee,                                                          
Co-Chair   Giessel    adjourned   the   Senate    Resources   Standing                                                          
Committee meeting at 4:45 p.m.                                                                                                  

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2023 02 22 DGGS Alaska's Mineral Potential Forested Lands.pdf SRES 2/22/2023 3:30:00 PM
HJR006C.PDF SRES 2/22/2023 3:30:00 PM
HJR 6
CS HJR 6 Sponsor Statement.pdf SRES 2/22/2023 3:30:00 PM
HJR 6
CS HJR 6 Summary of Changes 2.20.2023.pdf SRES 2/22/2023 3:30:00 PM
HJR 6
Opposing comments to Willow project, and HJR6.pdf SRES 2/22/2023 3:30:00 PM
HJR 6
CS HJR 6 Letter AFN 2.23.2022.pdf SRES 2/22/2023 3:30:00 PM
HJR 6
CS HJR 6 Letter AK Congressional Delegation 9.16.2022.pdf SRES 2/22/2023 3:30:00 PM
HJR 6
CS HJR 6 Letter Alaska AFL-CIO 3.8.2021.pdf SRES 2/22/2023 3:30:00 PM
HJR 6
CS HJR 6 Letter of Support Mayor Brower North Slope Borough 2.16.2023.pdf SRES 2/22/2023 3:30:00 PM
HJR 6
CS HJR 6 Letter of Support North Slope Trilateral 2.16.2023.pdf SRES 2/22/2023 3:30:00 PM
HJR 6