Carbon Karma: How Companies Use Forests to Offset Pollution

Why would you pay someone just to own a forest?

Erica Grieder's weekly series explores how businesses are responding to consumers, governments, and markets to make their practices and their products more sustainable.

Why would you pay someone just to own a forest?

In the United States, at least, a handful of companies are buying
 forest carbon offsets—paying landowners to maximize the carbon-
absorbing properties of their trees to offset the fossil fuel energy the companies rely on. They do it for corporate social
 responsibility reasons, to show leadership in the industry, or perhaps
 as a marketing move.

The biggest challenge is convincing companies that paying for offsets makes sense. “So far, it is purely a
 voluntary market,” says Keister Evans, president of Forest
 Carbon Offsets, a for-profit offsets outfit headquartered in Virginia.

One of the company's credit-purchasing customers is a travel company that sails to Central America. 
Forest Carbon Offsets has some projects there, so cruise ship
 customers may be attracted to the idea of their passage fees 
boosting a sustainability concern. In other cases, the company’s
 interest is more general; Texas-based Dell, for example, has a project
 with Conservation International to protect some 600,000 
acres of forest in Madagascar, keeping half a million metric tons of 
carbon dioxide out of the atmosphere.

While “save the forests” has been a rallying cry for decades, the rise of 
forest carbon offsets as a business is quite new. During the
 United Nations’ 2007 climate change talks in Bali, the 
international community announced the Reducing Emissions from 
Deforestation and Forest Degradation program, which encourages 
reforestation and the creation of new forests, and establishes some standards toward bringing forest carbon closer to the mainstream. But REDD projects weren’t included in the Kyoto 
Protocol because of a sense among negotiators that forestry projects
 are too complex to be as attractive as other offsetting efforts, like 
renewable energy credits or efficiency improvements. Forest carbon is still a small part of the
 overall offsets market.

Forest carbon can be a tough sell to the landowners, too. It’s not that people in 
Kentucky or West Virginia don’t believe in climate change, says Scott 
Shouse, who manages a program called the Appalachian Carbon
 Partnership, but that after generations of 
business pitches—from the coal industry or timber companies—they’re a
 little leery when someone turns up promising to make them money on a
slightly abstract investment. So Shouse gives interested landowners a low-key
 pitch: Get to know a forester. Not a forest ranger—a more common 
character in the area—a forester is an advocate, like a doctor or a
 lawyer: not always right, but highly trained and expert in their 
field. They’ll come look at your land, and if it looks like a good fit
 for the program, you can implement some sustainable forestry 
techniques and sell the carbon credits through the partnership.
 There’s some up-front cost, about $1,500 to cover the auditors who will
 figure out a management plan.

The offsets depend on rigorous oversight and
 compliance requirements. An initial inventory establishes how much 
carbon the trees are capturing, and determines whether a proposed
 project has “additionality”—whether active management would yield a 
greater net benefit. 

Recurring verification audits check that the project is proceeding as
 planned. In some cases, this entails a hike into the forest to see if a reference tree has grown as predicted by the models 
several years earlier. 

If certain improvements are made—planting species with a greater
 carbon uptake, for example, or selective harvesting to foster a more 
sustainable growth cycle—more carbon will be sequestered on a homeowner's 
land, and companies will buy those offsets for the next 15 years. An acre of forested land sequesters perhaps three metric tons of carbon dioxide a 
year, each ton being worth one credit. At about $15 a credit, 
depending on market rates—Shouse’s partnership is a nonprofit, and takes a 10 percent cut—a landowner with a 100-acre plot could recoup her costs in about a year.

From an environmental perspective, forest carbon offsets are a clear
 winner: Trees hoover up carbon dioxide during 
photosynthesis and store it. (Conversely, deforestation is a 
major source of global greenhouse gas emissions.) Forests have huge benefits: They protect wildlife, water, soil, and
 livelihoods. Even aside from offsetting, people want
 to save the forests.

Regulations could change the business landscape pretty quickly. The 
failure of the 2009 cap-and-trade bill was disheartening for 
environmentalists who have high hopes for offsets—and for some
 industry interests, which would rather pick their offsets than get hit
 with a systemic carbon tax.

There is, however, movement on the state level; California plans to
 launch a cap-and-trade program next year, which will allow power
 plants, refineries and factories to meet up to 8 percent of their air-
quality compliance obligations through offsets rather than emissions 
reductions. Other states might follow suit. Evans argues that carbon 
credits are a good investment; they can be traded, and if you
 believe regulations are forthcoming, now may be a time to buy low.

The forest carbon crowd did draw some hope from the United Nations’s
 recently-concluded climate-change talks, which saw renewed 
international enthusiasm for the idea of encouraging private companies 
to invest in carbon credits and interest in establishing 
more rigorous verification for same—although the practical impact of 
those discussions remains unclear.

Photo via (cc) Flickr user Fugue


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