Most of us understand that trees are good for the environment and that they absorb carbon in order to grow. We are familiar with comparisons that show how many trees would have to be planted in order to compensate for the carbon emissions from an airplane flight or from driving our cars. We have heard some people say that planting trees would solve our climate change problems. But is this really true? Is it bad to harvest forests to produce lumber? How much carbon could we eliminate from the atmosphere through better forest management? We sat down with two forestry management and carbon offset program experts to discuss this topic and here is what they had to say.
Julius Pasay is the Director of Project Development at The Climate Trust, a nonprofit organization that combats climate change by funding and managing projects that reduce greenhouse gas emissions and has been in operation since 1997. Julius oversees forestry and grassland programs, and works on carbon offset project development with landowners and land managers throughout the U.S. Julius is a Certified Forester and holds a Master of Forestry from the Yale School of Forestry and Environmental Studies.
Gregory S. Meade is the Conservation Forestry Program Director at The Nature Conservancy, which has protected over 125 million acres of land over its 70-year history. Greg holds a Master of Science degree in Forestry from Virginia Tech and has 25 years of professional forestry experience and over a decade of experience in carbon offset project management. His current portfolio of 7 forest projects has sequestered over 3 million tons of CO2e across 250,000 acres — equivalent to 6.9 million barrels of oil.
Let’s start with the big picture — how much carbon is it possible to sequester from forests?
Greg: Scientists at the Nature Conservancy recently published a paper on this very topic. Natural climate solutions have huge potential to sequester carbon. Approximately 37% of the emissions reductions needed before 2030 to keep global temperature rise below 2 degrees C could be achieved with natural climate solutions. Forests are the largest component of that, but grasslands and wetlands are also important. We are making big investments in natural climate solutions, and forestry is the biggest single piece.
Is it a question of creating more acres of or managing our current forests better?
Julius: it’s a bit of both. Certainly, we can expand the acreage of forestland and be wiser about how we use land, but it is also it is about managing our forests for multiple values. Much of the working timber lands in the US and around the world are managed primarily for the financial bottom line. For example, investment organizations often called Timber Investment Management Organizations (TIMOs) take investments from pension funds and high net worth individuals and manage land for financial return. In a managed forest you are harvesting timber to make products that society desires, then regrowing that forest. The length of time that you let the trees grow before you harvest is called the rotation age. Managing forests primarily for timber-based financial returns often results in relatively short rotation ages. The last century produced a ton of scientific literature to determine the optimal rotation age based on growth rates that maximize the volume of timber produced. Trees take a little while to get growing, then they really take off and only once they get fairly old does their growth slow down. You can determine the optimal rotation age to both maximize timber production and store carbon in the forest.
So, the goals of creating the most volume of timber and maximizing carbon storage align?
Julius: In the case of many working forests, these goals can overlap. In other cases, landowners may have different objectives and choose to put acreage into permanent reserve to take that land out of production. But it’s true that when a tree is growing the most rapidly it is also sequestering the most carbon.
Greg: The challenge is that forests managed for financial returns as the primary objective, like TIMOS, typically means that trees are harvested earlier than ideal for carbon sequestration – before that optimal rotation age that Julius was talking about. Due to the time value of money, you will cut those trees down sooner to get a higher financial gain. So, carbon sequestration incentives allow you to leave the trees in the woods longer and keep that carbon tied up longer. This is called lengthening rotation age.
So how are forests at The Nature Conservancy managed?
Greg: At The Nature Conservancy, we don’t manage forests for a single objective, but rather multiple objectives. Carbon sequestration is one of our stated management objectives, but another objective is to produce high quality forest products and also to protect water quality and to provide a variety of habitats for wildlife. We think we can do all of these, and I would argue that we are doing all of these things on these properties. So, we do cut trees down, just to be clear. There are areas in our forests where we do not cut trees if it isn’t appropriate, but there are real restoration reasons to harvest timber as well as economic benefits of having local contractors harvest trees that go to the local sawmills and paper mills. We don’t want those places to go away, we just think we can accomplish those goals a little better, a little smarter and have more productive forests by managing them this way. Additionally, our forests are all certified through the Forest Stewardship Council (FSC) Certification System which has a set of principles that we follow, and they provide independent third-party oversight of our practices.
When timber is harvested and turned into lumber and used in a building is carbon sequestered in that lumber?
Julius: Yes, but not all of the carbon from the tree can be counted. First of all, when you look at the whole tree, above ground and below ground, only about 60% of that total biomass volume is harvested. The rest is left to decay and that carbon is returned to the atmosphere. Then the log is taken to the mill, and the bark and slab is removed, and the log is milled into lumber. A lot of sawdust is generated, so not all of the log becomes lumber. Then the element of permanence comes into play – how long will that lumber stay in use. For example, carbon needs to be stored for 100 years to comply with the California cap-and-trade offset protocols. So that means that only a small percentage of the original carbon in the tree can be counted as sequestered in the lumber.
Tell us how offsets play a part in forest management and sequestration
Julius: Carbon offsets increase forest management flexibility because a forest owner can be financially rewarded for meeting non-timber objectives that provide ecosystem services such as retaining mature trees for diversity and wildlife objectives or increasing riparian buffers to maintain excellent water quality. Some landowners are conservation-focused and seek to protect land from being developed. They might want carbon offset revenue to help them acquire more conservation land, or to use for implementing wildlife habitat protection programs or other programs to manage the forest for environmental benefits. Other landowners might use carbon offset revenue to lengthen the rotation age and still meet their investment return objectives.
Greg: Because we manage our forests for those multiple objectives I mentioned, it works pretty well for us to use longer rotation schedules. Any revenue we generate from offset sales we generally plow back into more conservation work. One exception to that is our Cumberland Forest project. It is interesting because it operates similarly to a TIMO, but with a conservation twist. We purchased this land, 250,000 acres, with investor funding and we are managing the forest for multiple objectives and to FSC certification standards. However, some revenues, including carbon offset sales, are returned to the investors. There are 4 carbon projects on that property that produce climate benefits and revenue, and we are also generating revenue through timber harvesting and recreational leases. Additionally, we are engaging with the local communities to explore how we can leverage our ownership of these properties to increase their economic well-being. Our anticipated ownership time period is 10 – 15 years and during that time we aim to get as much of the property into permanent protection as we can, while providing a reasonable return to investors.
So, the TIMO model motivates landowners to harvest on shorter rotation cycles and therefore those forests do not achieve the optimal carbon sequestration possible from that land. Is it true that adding carbon offset income to those forests and then lengthening the rotation cycle yields an acceptable return to the TIMO investors?
Greg: From our observation, I would say absolutely. The largest forest project developers in the US are mostly TIMOs. They have discovered that when you pair carbon markets with a reduction in timber revenue it still equals a higher number than if you forget the carbon market and keep doing what you were doing. And if you think about it, that is exactly what the carbon market was designed to do.
Who are buying these forest offsets?
Julius: In regulated carbon markets like the California Cap-and-Trade program, regulated entities that are generating emissions are allowed to buy offsets as part of their plans to meet their reduction targets. These are often power producers, refiners or other large corporate emitters. Then there are the voluntary markets where corporations use offsets as part of their voluntary plans to reduce their emissions in the absence of regulation. That voluntary market is growing quickly. In each case, these offsets are just a part of a companies’ overall strategy to reduce emissions. In cases where eliminating emissions is difficult or not possible at the moment, offsets are a good strategy.
So, it’s not people like us buying offsets to cover a plane flight or something like that?
Julius: That does happen, but it is the corporate buyers who really drive the offset market because of their demand for large offset volumes.
What is the typical cost of a forest carbon offset credit?
Greg: For us, it is right around $12 a metric ton for the California regulated market. Price reports come out every day for this market, so it is very transparent. For the voluntary market the price is more variable — anywhere from $5 and up, and the buyers in the voluntary market are usually really interested in the co-benefits along with the climate benefits. Our voluntary projects tend to have a lot of co-benefits — like protecting imperiled streams and increasing biodiversity, trying to help local communities — so we have a very compelling story to tell and the voluntary buyers really care about that. The regulatory buyers typically do not put much emphasis on co-benefits.
What kinds of things would have to change to enable forests to reach their potential for carbon sequestration — what are the impediments?
Julius: I think one big thing would be higher offset prices. These projects are expensive to develop, so you need a large number of acres to make a project feasible, but if prices rose it would make smaller projects feasible. Greg and others are working on aggregating smaller projects to make the pricing work, but this is an impediment.
Greg: I would echo that. The average forest in the U.S. is 70 to 100 acres and those forests are effectively locked out of the carbon markets because it is too expensive to develop a project that small.
There are a lot of people including us that are trying to figure out how to unlock that avenue.
The other big change that is needed is policy — if there were more states that had regulated markets and cap and trade programs like California, you would see considerably more carbon projects. You wouldn’t see TIMOs participating in the carbon markets today if it weren’t for California and that’s just one state. We need more states with policies that enable these carbon markets to grow.
Hear more from Julius and Greg, and learn more about Forests and their ability to sequester carbon by joining our free webinars as we explore 5 different methods to sequester carbon during Sequestration Week this March 8th through 12th.
Brian Stewart is the founder of Electrify Now, a volunteer-based organization working to promote renewable energy and electrification to combat climate change, increase energy security for everyone, and create and abundant and sustainable future.
Featured image by Chanan Bos, CleanTechnica.