02/24/2023 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB48 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 48 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 24, 2023
3:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Cathy Giessel, Co-Chair
Senator Scott Kawasaki
Senator James Kaufman
MEMBERS ABSENT
Senator Bill Wielechowski, Vice Chair
Senator Forrest Dunbar
Senator Matt Claman
COMMITTEE CALENDAR
SENATE BILL NO. 48
"An Act authorizing the Department of Natural Resources to lease
land for carbon management purposes; establishing a carbon
offset program for state land; authorizing the sale of carbon
offset credits; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 48
SHORT TITLE: CARBON OFFSET PROGRAM ON STATE LAND
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/27/23 (S) READ THE FIRST TIME - REFERRALS
01/27/23 (S) RES, FIN
02/24/23 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
JOHN BOYLE, Commissioner-Designee
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Provided opening remarks and answered
questions during the introduction of SB 48.
RENA MILLER, Special Assistant to the Commissioner
Commissioners Office
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Presented SB 48 on behalf of the
administration.
ALISON ARIANS, Deputy Director
Division of Forestry and Fire Protection
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the introduction
of SB 48.
CHRISTY COLLES, Director
Division of Mining, Land, and Water
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Answered questions and provided information
during the introduction of SB 48.
CHRISTOPHER ORMAN, Assistant Attorney General
Natural Resources Section
Civil Division
Department of Law
Juneau, Alaska
POSITION STATEMENT: Answered questions during the introduction
of SB 48.
ACTION NARRATIVE
3:30:36 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 Kawasaki, Kaufman, Co-chair Bishop, and Co-
Chair Giessel.
SB 48-CARBON OFFSET PROGRAM ON STATE LAND
3:30:55 PM
CO-CHAIR GIESSEL announced the consideration of SENATE BILL NO.
48 "An Act authorizing the Department of Natural Resources to
lease land for carbon management purposes; establishing a carbon
offset program for state land; authorizing the sale of carbon
offset credits; and providing for an effective date."
3:31:41 PM
JOHN BOYLE, Commissioner-Designee, Department of Natural
Resources, Anchorage, Alaska, thanked the committee for the
series of informational presentations leading up to the
introduction of SB 48. They highlighted the opportunity and
promise associated with carbon offset projects in Alaska. It can
change the paradigm for managing state forests, particularly in
the Interior. This will result in healthier trees that absorb
more carbon and are more resilient to wild fire, and perhaps
grow a forest products industry. The message is that carbon
offset projects are not an either or choice. They give a suite
of tools to process and harvest more timber and realize more
revenue to the state. This will help diversify the economy, grow
the budget, and provide economic opportunities throughout the
state. He opined that the committee's questions about managing
risks and balancing mineral interests in conjunction with carbon
offsets have been good and the discussions productive. He said
it's becoming clear to everyone that there are many
opportunities in this space.
CO-CHAIR GIESSEL listed the individuals who were available to
respond to questions.
3:35:08 PM
RENA MILLER, Special Assistant to the Commissioner,
Commissioners Office, Department of Natural Resources,
Anchorage, Alaska, stated that the bill broadly will enable the
state to evaluate new opportunities to generate revenue from
Alaska's natural resources through carbon management. It allows
the Department of Natural Resources (DNR) to undertake carbon
projects on state land, and it allows private parties to lease
state land for carbon management purposes. She agreed with the
previous statement that carbon projects can be compatible with
other uses.
3:36:11 PM
MS. MILLER displayed the graphic on slide 2 that illustrates
carbon management to reduce greenhouse gases by either
preventing the emission from the source or by removing CO2 from
the atmosphere. On the left the drawing shows that emissions
from a power plant tie into the CCUS/Geological Sequestration
Bill that the committee may hear in the future. In the second
option, those emissions tie into forest carbon offsets. This
represents the nature-based carbon removal process put forward
in SB 48.
3:37:17 PM
MS. MILLER described carbon offset projects outlined on slide 3.
1. Project manages living matter to reduce CO2 in the
atmosphere
2. Work with a registry: methodology, project data,
validation, audits
3. Credits generated to project, then sold on market
4. Credits applied by buyer to offset emissions
CO-CHAIR GIESSEL mentioned additionality and asked how many
board feet were currently being harvested that would not be
harvested if the state were to put those state forests into
carbon offset projects.
MS. MILLER replied that it was DNR's understanding that the
calculation of additionality would be very project-specific and
site-specific. She deferred the question about current harvest
to Alison Arians.
3:40:01 PM
CO-CHAIR GIESSEL asked Ms. Arians if she could estimate the
number of board feet the state was currently harvesting
statewide.
3:40:07 PM
ALISON ARIANS, Deputy Director, Division of Forestry and Fire
Protection, Department of Natural Resources (DNR) Anchorage,
Alaska, stated that the number varies depending on the year, but
in FY2022 the harvest was 9,599 thousand board feet (MBF) and in
FY2021 the harvest was 42,345 MBF. She offered to follow up with
the harvest numbers over the last ten years.
CO-CHAIR GIESSEL said she had the information she needed.
CO-CHAIR BISHOP requested the additional data broken down by
region.
CO-CHAIR GIESSEL asked Ms. Arians to send the information to her
office and she would distribute it to the committee members.
MS. ARIANS agreed to supply the totals broken into the Coastal
Southeast, Coastal Southcentral, and Northern regions.
3:42:17 PM
MS. MILLER displayed slide 4, Carbon Markets - Growth, and
conveyed that the slide came from a Shell oil company report
forecasting growth in the carbon offset market. She said DNR
believes that it affirms that the carbon market is real, it is
growing, and that it offers opportunity. She noted the
successful projects on Alaska Native corporation lands.
She relayed that DNR sees real potential in the voluntary market
for the state to sponsor carbon offset projects that generate
credits that can be sold to companies looking to balance their
ledgers.
3:43:04 PM
CO-CHAIR GIESSEL said she'd read that the voluntary market had
dropped from $25/credit to about $2/credit and that it was being
contrasted with the cap and trade market. She asked whether the
state had analyzed that kind of value.
MS. MILLER said she would follow up with an answer, but her
understanding was that the voluntary market fluctuates based
largely on the buyers' perception of the value of the credits.
Nevertheless, DNR expects significant increase in the voluntary
market and sees more price stability, but less opportunity for
the state in the compliance market.
3:45:05 PM
MS. MILLER advanced to slide 5, Opportunity for Alaska, and
discussed the following, specifically mentioning the anew
report:
• Alaska has the resources
o Forest carbon potential:
• 100 million acres of uplands
• Millions and millions of acres of forested
state lands
o Kelp potential:
• 60 million acres of tide and submerged lands
• Potential affirmed by third parties
• Benefits for revenue, diversification, economic
development
• Constitutional responsibility to maximize use
3:47:42 PM
SENATOR KAUFMAN asked if she said that constructing a road might
be necessary to prove or manage a project.
MS. MILLER replied that's a possibility, and in some remote
areas helicopters might be necessary.
SENATOR KAUFMAN commented on the emotional conflict associated
with building a road to prove an ecological benefit.
MS. MILLER agreed that it could be an emotional issue for some
people.
MS. MILLER turned to the State of Alaska General Land Status map
depicted on slide 6 and noted that DNR was working on a map that
shows where forest carbon offset projects on state land could
occur. Part of this process is to look at each legislatively
designated areas to determine whether it is compatible with the
specific terms of these projects. DNR mapping staff is working
on this and the committee will be apprised when the more
detailed map is available.
3:50:12 PM
MS. MILLER reviewed the potential questions listed on slide 7.
• Why would anyone pay us for what we are already
doing?
• How does it impact other land uses?
• How to achieve additionality?
• Leakage potential
• Reversals
She opined that SB 48 empowers DNR to address these questions in
a manner that protects the state's best interests. She
reiterated that additionality will be determined on a case-by-
case basis. Each project will have unique characteristics.
3:51:42 PM
SENATOR KAUFMAN asked if she would briefly define the terms
specifically used in carbon offset.
3:52:22 PM
MS. MILLER provided the following definitions:
similar Additionality is the reduction in greenhouse gas/CO2 emissions
or the increase in carbon storage above the baseline.
similar Leakage is the situation where emissions reductions in one
area transfer to another.
similar Reversals are for stopping a project for some reason. The
contractual terms with a registry and buyers and potentially a
project developer include buffers against that.
CO-CHAIR GIESSEL advised that the definitions start on page 6 of
the bill.
3:54:24 PM
MS. MILLER advanced to slide 8 and highlighted the following:
Enable carbon offset projects on state's vast
landholdings and extensive shorelines by:
• Making carbon management a possible use of state
land
• Allow DNR to lease land to third parties for carbon
management purposes
• Task DNR with standing up a carbon offsets program
to do state-sponsored projects
• Inventory and assess state's resources for
suitability and prospectivity
3:55:27 PM
MS. MILLER turned to slide 9, SB 48: Overview, and discussed the
following:
• Adds a new, revenue-generating option to DNR's state
lands management toolkit
• Provides flexibility as state engages in a dynamic
field with commercial markets
• Protects the public interest in state lands and
multiple-use land management
• Maintains existing land uses by individual Alaskans
and by Alaska industries
3:56:31 PM
MS. MILLER advanced to slide 10, SB 48: Overview: Land leases,
and discussed the following:
SB48 enables private parties to lease state land for
carbon management projects.
• Applicant applies for a lease up to 55 years
• Lease compensation must be designed to maximize
return to the state
• DNR ensures lease is in best interests of the state
through formal finding
• No lessee preference conveyed
3:57:30 PM
MS. MILLER advanced to slide 11, SB 48: Overview: State
projects, and discussed the following:
SB 48 establishes Carbon Offset Program.
• DNR undertakes carbon offset projects on state
land
• Viability, state/local economic effects among
evaluation criteria
• Proposed projects require best interest
finding/public process
• Makes eligible state land available for carbon
offset projects (among other uses)
State-sponsored projects not allowed on state
parks, refuges, rec areas, etc., without
legislative approval
• State land remains open to the public for
traditional uses (hunting, fishing, access, etc.)
• Program revenue pays for administration,
additional projects
3:59:08 PM
SENATOR KAUFMAN expressed interest in seeing a sample contract
for a forest carbon offset project and the broker fees to
execute a project and a reversal.
MS. MILLER said she'd look into providing some common
provisions, but project development companies generally use
different standards of contracts and methodologies.
4:01:23 PM
MS. MILLER turned to slide 12, SB 48: Overview: Forest plans,
and reviewed the following:
SB48 grants legislative approval for state-sponsored
carbon offset programs on state forests.
• Haines State Forest, Southeast State Forest,
Tanana Valley State Forest
• Adds carbon offset projects to existing non-timber
uses
• Requires management plans to identify appropriate
forest land for projects, and requires projects
be consistent with management plans
4:02:04 PM
CO-CHAIR BISHOP referenced the second bullet and asked how much
carbon the tundra on the North Slope removes from the atmosphere
annually and whether that would be an existing non-timber
resource that could be sold as a credit.
MS. MILLER answered that the bullet speaks specifically and
solely to the three state forests, not tundra. She was not aware
that DNR had talked to anybody interested in a tundra carbon
offset project at this time. She deferred further comment to
Christy Colles.
4:03:47 PM
CHRISTY COLLES, Director, Division of Mining, Land, and Water,
Department of Natural Resources, Anchorage, Alaska, said DNR is
aware that tundra absorbs a lot of carbon, but a market for
tundra has not been identified. She noted that markets in the
future may include things like tundra and kelp.
4:04:32 PM
COMMISSIONER-DESIGNEE BOYLE added that the intent of the bill is
to provide DNR with broad flexibility to evaluate other
opportunities such as tundra and some mineral deposits that
might make sense not to develop. He said it's all very nascent.
CO-CHAIR GIESSEL asked Ms. Miller to continue the presentation.
4:06:16 PM
MS. MILLER presented the sectional analysis for SB 48:
Section 1: Amends AS 36.30.850(b) to exempt DNR from following
the state procurement code when contracting with
third parties for purposes related to the carbon
offset program, streamlining the process.
She said the basis for this provision is to put the state on
more equal footing with the commercial parties with which it
will engage. The contracts could be for consultants that will
help the state navigate this new field or project developers.
After the commissioner has evaluated a specific proposal, the
best interest finding is still required before a project can go
forward.
CO-CHAIR GIESSEL asked whether the best interest finding has to
be presented to the legislature.
MS. MILLER deferred the question to Ms. Colles.
4:08:10 PM
MS. COLLES stated that a best interest finding (BIF) does not go
before the legislature. The department drafts the preliminary
decision that goes out for public notice and to agencies. Based
on the feedback, the BIF may be amended before the final
decision is released. She added that preliminary decisions may
be sent to legislators, particularly if their district is
affected, and those comments are considered as well.
4:08:42 PM
MS. MILLER continued the sectional analysis.
Section 2: Amends AS 37.05.146(c) to allow revenue from
carbon offset credits to be treated as
designated program receipts.
She noted that this new fund is created in Section 6.
Section 3: Conforms to Sec. 4 (leases for carbon
management) by exempting the new statute, AS
38.05.081 from the Alaska Land Act's general
leasing procedures. This will ensure that
leases under AS 38.05.081 do not need to comply
with a competitive bid process or auction.
CO-CHAIR GIESSEL asked whether the bidding process would be
public or closed.
MS. MILLER deferred the question to Ms. Colles.
MS. COLLES answered that Section 3 exempts carbon from going
through the process of an auction or bid. The statute allows but
doesn't require auctions and this provision would exempt the
department from having to solicit interest from other parties
for a similar project in the same location.
CO-CHAIR GIESSEL observed that this was not like an oil lease.
MS. COLLES said that's correct. She added that it might have
been envisioned that way when the statute was written, but there
typically isn't competition or interest on state lands from
individuals who want to use the same space for a similar
activity.
4:12:21 PM
MS. MILLER continued the sectional analysis noting that Section
4 replaces the process that is exempted in Section 3 with a
process that is specific to carbon management.
Section 4: enacts a new subsection AS 38.05.081 relating to
leases of state land for carbon management
purposes. The proposed section AS 38.05.081
authorizes DNR to lease land for carbon
management. The proposed section would allow
DNR to lease lands to private parties to
implement their own carbon offset projects.
Proposed AS 38.05.081(b) specifies the process
for how a person may apply to DNR to lease
lands for carbon management purposes.
Proposed AS 38.05.081(c): specifies a process
for deciding between applications for the same
land. If there are two or more applications for
the same land, the director of the division of
lands within DNR has the discretion to select
the lessee by considering the applicant's past
carbon management experience, the lease term,
and the proposed carbon management use of state
land. An aggrieved applicant may appeal the
decision within 20 days after receiving notice
of the decision.
Proposed AS 38.05.081(d): allows DNR to
authorize up to a 55-year lease for a carbon
management purpose. This subsection also
authorizes the commissioner of DNR to terminate
a lease if the land is not being used for the
approved carbon management purpose.
Proposed AS 38.05.081(e): specifies a lessee
does not receive a preference right to purchase
the land. February 1, 2023 33-GS1372\A Page 2
of 3.
Proposed AS 38.05.081(f): DNR can consider
factors set out in AS 38.05.073(m) in deciding
the appropriate lease compensation for a lease
under the section, including "the fair market
rental value" or the "annual gross receipts"
generated by the land.
Proposed AS 38.05.081(g): clarifies that carbon
management land leases can be subleased,
assigned, renewed, and extended consistent with
AS 38.05.070 and 38.05.095.
Proposed AS 38.05.081(h): requires the director
of DNR to complete a written best interest
finding under AS 38.05.035(e) before leasing
lands for carbon management purposes. A best
interest finding is required to comply with
art. VIII, sec. 10 of the Alaska Constitution
and the statutory and case law that implements
it.
Proposed AS 38.05.081(i): defines "carbon
management" to include greenhouse gas
mitigation and non-geologic carbon
sequestration projects.
CO-CHAIR GIESSEL asked whether the commissioner or director was
awarding the lease because subsection (a) in the new Sec.
38.05.081 says the commissioner may lease state land for carbon
management purposes and subsection (c) says the director shall
award the lease to the most qualified applicant in the event
there are competing applications.
MS. MILLER deferred the question to Ms. Colles.
4:15:00 PM
MS. COLLES answered that it depends on the commissioner's
delegations, but often the commissioner may be the one to offer
the leases and the director authorizes the leases. She also
pointed out that much of Section 4 implements what has been done
with other long-term leases.
4:16:01 PM
MS. MILLER advanced to Section 5.
Section 5: of the bill amends AS 38.05.102 by noting that a
lessee under the proposed AS 38.05.081 (see Section
4) does not obtain a long-term lease preference
right in the land. This is a conforming amendment
consistent with language included in the proposed AS
38.05.081(e) (see Section 4).
4:16:20 PM
MS. MILLER described Section 6 as the core of the bill.
Section 6: would establish the carbon offset program as a new
article within AS 38.95 through enactment of AS
38.95.400 - 38.95.499. The new sections create a
process for DNR to implement a project to yield
carbon offset credits and create a fund for revenues
generated from the carbon offset projects.
Proposed AS 38.95.400: establishes the carbon offset
program and creates powers and duties for the
commissioner of DNR. It allows DNR to contract with
third parties to carry out the purposes of AS
38.95.400 - 39.95.499 and explicitly disclaims
application of the carbon offset program to
activities of private landowners.
Proposed AS 38.95.410: requires DNR to adopt
criteria to evaluate carbon offset projects on state
lands. The statute prevents carbon offset projects
from being undertaken on legislatively designated
lands without approval by the legislature or as
provided by law. The statute also requires the
director of lands, with the consent of the
commissioner of DNR, to find that a carbon offset
project is in the best interests of the state before
undertaking the project [page 5, line 10].
Additionally, carbon offset projects would be
limited to a term of 55 years. Lastly, the statute
provides that carbon offset projects cannot restrict
public access, fishing, hunting, or other generally
allowed uses. February 1, 2023 33-GS1372\A Page 3 of
3.
MS. MILLER referenced Senator Bishop's earlier comment and said
.410(b) potentially could include tundra.
CO-CHAIR GIESSEL said that seems to conflict with subsection
(c). It says legislatively withdrawn lands may not be used
without approval by the legislature, so all land wouldn't be
available.
MS. MILLER answered that the legislatively withdrawn land refers
to subsection (b) that says, "Except as otherwise provided in
statute or regulation adopted by the commissioner, state land
shall be available for carbon offset projects." One of the
things that is already otherwise provided in statute or
regulation is the legislatively withdrawn land.
She reiterated that the legislatively withdrawn land cannot be
used without legislative approval. However, the bill authorizes
the use of legislatively withdrawn lands that are within the
three state forests.
4:19:58 PM
MS. COLLES clarified that some legislatively designated areas,
such as the Bison Range, may allow carbon projects. She said it
will be necessary to look at all the legislatively designated
areas to see which ones would allow a project to be done.
CO-CHAIR GIESSEL observed that these projects wouldn't
necessarily be confined to state forests.
MS. COLLES said that's accurate.
SENATOR KAUFMAN asked how additionality would be measured on
tundra.
MS. MILLER said the bill is written to accommodate the broadest
possible range of carbon projects as long as they meet the
requirements of the registry, which includes additionality.
4:22:21 PM
COMMISSIONER-DESIGNEE BOYLE posed a potential scenario to prove
additionality on tundra. He pointed out that the coal deposits
on the North Slope may be economic to develop, and if the state
were to forego that type of extraction that would disturb a
number of surface acres of tundra, that may be a means of
proving additionality.
MS. MILLER continued to review Section 6.
Proposed AS 38.95.420: specifies that after DNR
issues a best interest finding, it may then enter an
agreement with a registry to validate a carbon
offset project and to generate revenue from the sale
of carbon offset credits. AS 38.95.420 would also
require DNR to maintain records for verified carbon
offset projects for the term of the project and any
additional time period required by the registry.
Proposed AS 38.95.430: Creates the carbon offset
revenue fund. The fund would be outside the general
fund, would hold appropriations from the
legislature, including program receipts from sale of
carbon offset credits, and would allow the
commissioner of DNR to spend money appropriated to
the fund for carbon offset program purposes. Fund
appropriations would not lapse.
4:24:57 PM
CO-CHAIR BISHOP asked whether the terms and conditions in Sec.
38.95.420 would be public records.
MS. MILLER deferred the question to Mr. Orman.
4:25:45 PM
CHRISTOPHER ORMAN, Assistant Attorney General, Natural Resources
Section, Civil Division, Department of Law, Juneau, Alaska,
confirmed that the records maintained under Sec. 38.95.420 would
be public under the Public Records Act.
4:26:12 PM
MS. MILLER continued to the definitions in Section 6 and noted
that there were 13 terms related to the new carbon offset
program.
Proposed AS 38.95.499 provides definitions for the
program.
Sections 7 and 8: allow for designation of state lands within
the Haines State Forest Resource Management Area to
be available for carbon offset program purposes.
MS. MILLER noted that the Haines State Forest was already broken
out in statute, and the bill makes two changes to accomplish
this for all three state forests.
4:27:07 PM
CO-CHAIR GIESSEL asked why the Haines State Forest was called
out separately.
MS. MILLER deferred the question to Mr. Orman.
MR. ORMAN replied that they're separate statutes. The
legislature first withdrew the Haines State Forest Recreation
Area and identified it in AS 41.17.200-230. After that, the
legislature identified two more state forests, and created the
state forest system in AS 41.17.400 and AS 41.17.500.
Section 9: amends AS 41.15.315, which requires that the Haines
State Forest Resource Management Area be managed
under the principles of multiple use and sustained
yield, by adding a new subsection to require DNR to
amend the management plan required under AS
41.15.320 to identify lands appropriate for carbon
offset projects.
Section 10: amends AS 41.17.200 to provide that state forest
system lands are eligible for carbon offset
projects.
Section 11: amends AS 41.17.220 to provide that in addition to
managing state forests under the sustained yield
principle, provisions of AS 41.17, and a forest
management plan, state forest lands must also be
managed in accordance with a carbon offset project.
Sections 12 and 13: require DNR to update existing forest
management plans to accommodate carbon offset
programs.
4:32:01 PM
CO-CHAIR GIESSEL asked whether Sections 9, 12, and 13 also
provide the opportunity for public participation in land
management questions.
MS. MILLER deferred to Ms. Arians to discuss the public process
associated with forest management plans and any amendments to
the plans.
4:32:29 PM
MS. ARIANS responded that the management plans for all state
forests require a public process that is laid out in statute. A
draft plan is released for public review, the comments on the
draft are all answered, a final plan is released, it undergoes
public review, and the commissioner signs the plan. The statute
also provides for an appeal process.
4:33:19 PM
MS. MILLER continued the sectional analysis.
Sections 14 and 15: allow DNR to immediately adopt implementing
regulations, but the regulations would not take
effect until the effective date of the bill.
MS. MILLER conveyed DNR's preference for an immediate effective
date.
CO-CHAIR GIESSEL asked whether the regulation had begun.
MS. COLLES confirmed that DNR had not started a process yet.
CO-CHAIR GIESSEL observed that a regulation package usually
takes a year to complete.
MS. COLLES estimated that it would take 2 years, depending on
the public interest and number of comment periods.
4:34:44 PM
SENATOR KAUFMAN pointed out that a criticism of this plan is
that it's going the wrong direction because it will tie up more
of Alaska's limited state land. He asked if that was an accurate
characterization and if there were any mitigations.
4:35:34 PM
COMMISSIONER-DESIGNEE BOYLE said DNR's position is that a carbon
management project does not create a new conservation unit; the
areas would be open to multiple uses such as hunting, fishing,
camping, recreating, cutting firewood, and even a mineral
project. The terms will differ with every project, but the state
is obligated to take a well-balanced viewpoint. Article VII of
the constitution mandates the development of state resources by
making them available for maximum use consistent with the public
interest. He emphasized that he looks at carbon projects as
maximizing opportunities for Alaskans.
4:39:17 PM
SENATOR KAUFMAN asked if carbon projects would be enabling a new
form of tax.
COMMISSIONER-DESIGNEE BOYLE said he'd heard that concern but he
didn't agree. The authority that is sought is for the state to
be able to engage and evaluate with individuals in the voluntary
market interested in doing carbon offset projects. The state
would not be imposing a carbon tax or a cap and trade system on
existing entities within the state. The state seeks to engage
with entities that are voluntarily choosing to pursue carbon
offset projects as a mechanism to meet net zero benchmarks. The
choice for Alaska is whether it wants to participate and profit
from these projects.
4:44:22 PM
SENATOR KAUFMAN asked if there was anything that could be done
to ensure that revenue that is generated from these projects is
spun off and not simply funding their own existence.
COMMISSIONER-DESIGNEE BOYLE replied that it is DNR's intent to
bring in revenue to the state in excess of the cost of
administering the program. The state is able to play a role with
very low risk exposure. The project developer pays both the
state lease fee and to implement the project. He noted that the
state could develop a project on its own, but that was not the
intention at this point.
4:47:26 PM
CO-CHAIR GIESSEL said this project has appeal for people who
want to see forests managed more productively, but she worries
about the estimates of revenue. The anew report identified the
Haines forest as the most productive area and estimated the
value at $15-25/credit, but recent reports indicate the price
has dropped to $2.00/credit. The state's investment wouldn't be
as large as the developer, but putting together the regulation
package would not be free. Given the state's track record on
investment decisions such as the Delta grain storage project and
the seafood processing plant in midtown Anchorage, there is
cause for concern.
She said the committee will hear the bill again, but any update
on the value of the carbon credits would be very helpful.
COMMISSIONER-DESIGNEE BOYLE assured the committee that DNR was
looking at the program through the same lens. Clearly, the state
has had a poor track record of picking winners and losers.
That's why the bill gives DNR broad flexibility to monitor and
track the development of this nascent market, and make an
educated decision on where the state should get involved in this
space. He opined that it should give some confidence to the
public worried about the disposition of public funds that this
program would be a very modest increase in the budget. Just one
of the benefits that would accrue to the state is that the new
staff would also help make the department's permitting teams
more robust and efficient in processing other permits.
4:53:27 PM
CO-CHAIR GIESSEL held SB 48 in committee for future
consideration.
4:54:11 PM
There being no further business to come before the committee,
Co-Chair Giessel adjourned the Senate Resources Standing
Committee meeting at 4:54 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 48 Transmittal Letter 1.26.2023.pdf |
SFIN 5/8/2023 9:00:00 AM SRES 2/24/2023 3:30:00 PM |
SB 48 |
| SB 48 Anew - Carbon Offset Opportunity Evaluation Appendix_A.pdf |
SRES 2/24/2023 3:30:00 PM |
SB 48 |
| SB 48 Sectional Analysis 2.1.2023.pdf |
SRES 2/24/2023 3:30:00 PM |
SB 48 |
| SB 48 Anew - Carbon Offset Opportunity Evaluation Appendix_B.pdf |
SRES 2/24/2023 3:30:00 PM |
SB 48 |
| SB 48 SRES Hearing Request 2.1.2023.pdf |
SRES 2/24/2023 3:30:00 PM |
SB 48 |
| SB 48 DNR Overview Presentation for Senate Resources 02.24.2023.pdf |
SRES 2/24/2023 3:30:00 PM |
SB 48 |
| SB 48 Anew Alaska DNR Carbon Offset Opportunity Evaluation.pdf |
SRES 2/24/2023 3:30:00 PM |
SB 48 |