Legislature(2023 - 2024)BARNES 124
03/08/2023 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB50 | |
| HB49 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 50 | TELECONFERENCED | |
| *+ | HB 49 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 49-CARBON OFFSET PROGRAM ON STATE LAND
2:06:14 PM
CHAIR MCKAY announced that the final order of business would be
HOUSE BILL NO. 49, "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."
2:06:44 PM
RENA MILLER, Special Assistant, Office of the Commissioner,
Department of Natural Resources (DNR), provided an overview of
HB 49 via PowerPoint [hard copy included in the committee
packet], on behalf of the bill sponsor, House Rules by request
of the governor. She explained that HB 49 would provide
opportunities to generate revenue. She shared her belief that
the bill would provide a framework for the state to start taking
advantage of revenue generating opportunities from Alaska's
natural resources in a way that works with other resource
development and supports existing land use by the public. She
offered an outline of the presentation on slide 2, explaining
that the department was looking for ways to store atmospheric
emissions in living matter. Greenhouse gases were reduced by
taking actions in a project that increases carbon storage
capacity, she said, adding that the department was looking at
maintaining and increasing the amount of carbon in the landscape
over time. She noted that one metric ton of carbon removed from
the atmosphere and stored equates to one credit, which becomes a
commodity that the state can sell on a voluntary market. She
explained that the credits had real value to many corporations
that were looking to reduce their emissions or meet net zero
goals. She shared her belief that carbon offset projects
offered a new way to use natural resources and generate revenue.
2:09:41 PM
REPRESENTATIVE MCCABE attempted to clarify Ms. Miller's
reference to "net zero goals," emphasizing that those goals were
company specific and not set by the governor.
MS. MILLER confirmed that nothing in the bill would institute
any requirements on companies to reduce their emissions. She
added that emission reduction was happening on a voluntary basis
in the private economy external to any state regulations.
2:11:27 PM
MS. MILLER continued to slide 3, which offered a simplified
depiction of carbon management. Slide 4 was a visual summation
of the anticipated growth in the marketplace, demonstrating the
existing projects that were generating credits and revenue. She
highlighted the significant growth in the voluntary market,
which was valued at $2 billion in 2021 four times the value in
2020. The forecasted growth was pictured on the right side of
the slide with a potential of five times the amount of growth by
2030. She referenced a report by Shell and the Boston
Consulting Group (BCG), which identified real verifiable offsets
as the highest priority of those purchasing credits.
REPRESENTATIVE MCCABE expressed concern about bad actors taking
advantage of carbon offset programs. He pointed out that Alaska
had verifiable assets, like land and trees, to offset the carbon
emissions.
MS. MILLER agreed that there have been bad actors in the
voluntary emission reduction space. She explained that the
state would work through a registry of entities often
nonprofits - with standardized rules, protocols, and processes
for monitoring emission reduction projects.
2:16:40 PM
REPRESENTATIVE MCCABE sought to confirm that these entities were
turning towards Alaska because the state had a reputation of
"doing things the right way" when it comes to resource
development and monetization.
MS. MILLER agreed that Alaska had a solid track record. She
resumed the presentation on slide 5 by discussing Alaska's
potential for carbon markets due to the sheer amount of land in
the state, including three state forests, millions of acres of
submerged land, and uplands. She said the land base, the sheer
scale, and the resources on the land were a potential positive
for Alaska. She pointed out that Alaska Native corporations had
had some success in carbon offset projects in the compliance
markets and the voluntary marketplaces. She discussed the
potential benefits of land management techniques that make for
successful carbon projects.
CHAIR MCKAY asked whether tundra lands were suitable for carbon
storage.
MS. MILLER answered, "potentially," adding that carbon offset
projects were not limited to forests. Once the framework was in
place, she said registries could be consulted to develop
protocols for tundra projects.
REPRESENTATIVE WRIGHT inquired about kelp farming.
MS. MILLER directed the question to Ms. Colles.
2:21:38 PM
CHRISTY COLLES, Director, Division of Mining Land and Water,
Department of Natural Resources (DNR), reported that there were
about 60-70 [aquatic] farms in Alaska, half of which were
growing kelp for consumptive purposes. One [aquatic farm]
application, she said, was considering partial sequestration.
REPRESENTATIVE WRIGHT asked how long the mariculture industry
had existed in Alaska.
MS. COLLES answered that the program was established in the late
1990s and took off in the 2000s. Beginning in 2015, the
department started seeing numerous applications for aquatic
farms. She noted that Alaska was one of the fastest states in
adjudicating mariculture applications.
2:23:00 PM
REPRESENTATIVE MCCABE said he wanted to explore the word,
"charisma."
MS. MILLER stated that added value to a credit was driven by the
values of the marketplace via charisma. She continued the
presentation on slide 6, which listed the following benefits of
carbon markets: adds a new, revenue-generating tool to the
state's lands management toolkit; compatible with other land
uses; likely economic/value-added benefits.
2:26:08 PM
REPRESENTATIVE ARMSTRONG asked whether the rate of logging would
increase, decrease, or maintain as a result of carbon offset.
MS. MILLER shared her belief that carbon offset was compatible
with continued timber harvest. The amount it would change would
depend on a specific project, she said. She directed attention
to slide 7, which featured a graph of global carbon capture by
the International Energy Agency. She emphasized that carbon
management was not an "either/or," indicating that production
and use of Alaska's other resources, such as natural gas, would
continue within the construct. She continued to slide 8, titled
"Next steps," which read as follows [original punctuation
provided]:
• Charge the Department of Natural Resources (DNR)
with exploring opportunities for new projects that
align with Alaska's resource, land interests and
responsibilities
• Enable carbon offset projects on state land and
shorelines
REPRESENTATIVE SADDLER asked to what degree the state was
considering "the entire universe of opportunities," as opposed
to a clear path forward as to what the authorization for the
bill would mean to Alaska.
MS. MILLER specified the necessary steps to move forward after
creating the framework set forth in HB 49. She explained that
forest offset credits were in demand and represented a large
component of the market; consequently, it would make for a
reasonable initial step. She explained that the department
would like to field interest with the framework and solicit
additional interests while determining what projects would
maximize value and be in the best interest of the state.
REPRESENTATIVE SADDLER asked what the passage of HB 49 would
give Alaska that it didn't already have.
MS. MILLER replied that it would send a signal that Alaska was
ready to engage in the carbon offset world. She noted that
state legislation related to carbon capture, utilization and
storage (CCUS) and offsets was mentioned in a national carbon-
related newsletter.
2:31:02 PM
MS. MILLER resumed the presentation on slide 9, titled "HB 49:
Overview," which read as follows [original punctuation
provided]:
• Enables private parties to lease state land for
carbon management projects
• Establishes the Carbon Offset Program at DNR
• Authorizes use of the 3 state forests for
statesponsored [sic] carbon offset projects
REPRESENTATIVE MCCABE asked whether a corporation that leased an
acre of land in Alaska to offset carbon could exclude Alaskans
from that land.
MS. MILLER deferred to Ms. Colles.
MS. COLLES said it depended on the type of authorization
requested. She noted that the department would have the ability
to write regulations, which could be an option to consider. The
intent would be to avoid locking up the land in a typical lease
with site control.
2:33:33 PM
REPRESENTATIVE MCCABE offered his understanding that Alaskans
were concerned with access to state land and would be upset by
the idea of a foreign company fencing up the land and keeping
them out. He said he wanted to ensure that carbon offset leases
did not exclude Alaskans from the land.
MS. MILLER said the department would be happy to work on
additional safeguards.
REPRESENTATIVE SADDLER asked Ms. Miller to list the names,
locations, and sizes of the three state forests.
MS. MILLER listed the Haines State Forest Resource Management
Area, the Tanana Valley State Forest, which was over 2 million
acres, and the Southeast State Forest at around 44,000 acres.
2:36:16 PM
REPRESENTATIVE MEARS addressed the risk of lightning strikes
that lead to wildfires in the interior, in addition to the risk
of human activity and recreation. She surmised that the risk
portfolio would be higher for Alaska's forests, as opposed to
cutting them off from recreation.
MS. MILLER acknowledged that wildfire poses a risk to carbon
projects, describing carbon stored land that burns as a
"reversal" because the carbon is released back into the
atmosphere. She explained that carbon offset projects pay a
percentage of their credits into the registry's risk buffer,
which is essentially an insurance pool amongst similar projects
within the protocol against "acts of god" and actions that are
outside one's control. In addition, there were ways within the
project design to incorporate tools to avoid catastrophic fires
or reduces their power, such as fire breaks.
REPRESENTATIVE MEARS believed that there was an opportunity to
value out the forest by increasing management for fire
mitigation.
MS. MILLER agreed.
REPRESENTATIVE MCCABE asked whether [the bill] would help Alaska
bypass the roadless rule and manage the Tongass National Forest.
MS. MILLER offered to follow up with the requested information.
2:41:08 PM
MS. MILLER began the sectional analysis for HB 49 on slides 11-
12, which read as follows [original punctuation provided]:
Section 1: Exempts carbon offset program contracts
from procurement code
Section 2: Directs program revenue into a new fund to
pay for program costs
Section 3: Conforms to Sec. 4 / waives typical lease
award process
Section 4: Sets new leasing process for carbon
management purposes
Section 5: Conforms to Sec. 4 / exempts carbon land
lessee from lease preference statute
MS. MILLER invited Ms. Colles to expound on Section 4.
2:43:47 PM
MS. COLLES described many of the general leasing requirements
that were included in the bill, such as no preference rights,
renewable lease options at the end of the term, subleasing and
lease assignment options, and extensions.
CHAIR MCKAY sought clarity on subleasing.
MS. COLLES confirmed that all subleasing was approved by the
department.
MS. MILLER resumed the sectional analysis on slide 13, which
read as follows [original punctuation provided]:
Section 6: Establishes the Carbon Offsets Program at
DNR 13
• Affirms private landowner rights
• Sets project evaluation criteria, including
viability and state/local economic impacts
• Requires best interest finding and public process
• Allows DNR to register, sell offset credits
• Protects existing access, use of state lands
• Establishes new fund for project revenues, costs
Sections 7-9: Enable DNR carbon offset projects within
Haines State Forest Resource Management Area Sections
10-13: Enable DNR carbon offset projects within other
state forests
2:51:03 PM
REPRESENTATIVE MEARS asked for more insight on the "ins and
outs" of the carbon offset revenue fund.
MS. MILLER offered to follow up with the requested information.
She continued the sectional analysis on slides 14-15, which read
as follows [original punctuation provided]:
Sections 7-9: Enable DNR carbon offset projects within
Haines State Forest Resource Management Area Sections
10-13: Enable DNR carbon offset projects within other
state forests
Section 14: Authorizes DNR to adopt regulations
implementing the bill
Section 15: Sets immediate effective date for
authority to adopt regulations
2:55:28 PM
REPRESENTATIVE MCCABE moved to adopt the proposed committee
substitute (CS) for HB 49, Version 33-GH1372\S, Dunmire, 3/3/23,
as the work draft.
CHAIR MCKAY objected for the purpose of discussion.
ED KING, Staff, Representative Tom McKay, Alaska State
Legislature, on behalf of Representative McKay, provided a
summary of changes in the proposed CS for HB 49, Version S,
[included in the committee packet], which read as follows
[original punctuation provided]:
Change 1: Technical drafting changes were made
throughout the bill
Change 2: The effective date was expanded to cover the
entire bill (Page 9, line 17)
CHAIR MCKAY removed his objection. There being no further
objection, Version S was before the committee.
CHAIR MCKAY announced that HB 49, Version S, was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 49 committee substitute version S.pdf |
HRES 3/8/2023 1:00:00 PM |
HB 49 |
| HB 49 Summary of changes (A to S).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 49 |
| HB 49 Transmittal Letter 01.26.2023.pdf |
HRES 2/24/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 49 |
| HB 49 Sectional Analysis 2.1.2023.pdf |
HRES 2/24/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 49 |
| HB 49 Carbon Offset Bill Overview 2.1.2023.pdf |
HRES 2/24/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 49 |
| HB 49 Overview Presentation DNR 03.01.23.pdf |
HRES 3/1/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 49 |
| HB 50 updated fiscal note (DEC).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 updated fiscal note (DNR).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 updated fiscal note (AOGCC).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB50 CS - S.pdf |
HRES 3/1/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 Summary of Changes (A to S).pdf |
HRES 3/1/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 49 DOF Forest Management Presentation.pdf |
HRES 3/8/2023 1:00:00 PM HRES 3/13/2023 1:00:00 PM |
HB 49 |
| HB 50 amendment 1 (HRES).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 amendment 2 (HRES).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 amendment 3 (HRES).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 amendment 4 (HRES).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 amendment 5 (HRES).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 amendment 6 (HRES).pdf |
HRES 3/8/2023 1:00:00 PM |
HB 50 |