Tweaks to Oregon's cap and invest bill could generate revenue for forestry.
The 120-acre Raincloud Tree Farm near Oregon City is a member of a new species. The property demonstrates an innovative type of carbon offset project, one that could create opportunity for rural landowners with small parcels to sell the carbon storing effect of their trees if Oregon passes a cap and trade program.
“Up until now there hasn’t been much or any engagement with that demographic in the carbon market,” says Brian Kittler, director of the western regional office at the Pinchot Institute for Conservation and a member of the natural and working lands workgroup in the governor’s Carbon Policy Office.
The institute helped Raincloud’s owners use new data collection technology developed by University of California, Berkeley scientists to make their offset project affordable.
Democrats’ “Cap and Invest” proposal failed in the 2018 short session, and legislators are back at the drawing board, scribbling furiously. For a second shot in 2019, the revamped bill will need to appeal to a diverse cross-section of industry groups, environmentalists, tribes and landowners.
One sector, forestry, has yet to jump on board. The timber industry and forest landowners have little reason, aside from politics, to oppose cap and trade. Their emissions wouldn’t fall under the cap. Yet forestry has remained largely silent on the policy.
One tiny cog in the byzantine carbon reduction machinery could perhaps change their minds. Legislators are beginning to discuss a new set of rules that govern carbon offsets for forestry and agriculture. Offsets form a key part of the “trade” element of cap and trade.
A large factory spewing black smoke, for instance, could install equipment to bring its emissions under the cap. But that equipment might be too expensive. So instead, the factory could pay a forest owner to set aside trees that capture that same amount of carbon going out the smokestack. In other words, the trees “offset” the emissions.
Small landowners manage most of Oregon's private forestland.
Several Oregon forest owners already sell offsets through the existing market created by California’s cap and trade program. The Warm Springs tribe sells offsets to California companies. The city of Astoria earns additional revenue by selling offsets from an island of old-growth temperate rainforest in the Bear Creek Watershed. The project will continue through 2054, according to the online publication Treesource, and the city expects to generate around $2 million in revenue.
Private forest owners could also use offsets to diversify their revenue streams. They could split their operations between harvesting and carbon storage. One timber giant, Green Diamond, set aside 600,000 acres for offsets in Klamath, Lake and Jackson counties.
“The important thing to recognize when it comes to forestry offsets is it’s a voluntary activity,” says Jana Gastellum, climate program director at the Oregon Environmental Council. “Nobody is telling the timber industry they need to design a carbon offset project. The protocols allow the landowner to generate offsets and harvest timber at the same time. That’s the type of thing if I was a landowner gives me great flexibility.”
“A lot of times the steps and rigor involved with generating an offset tends to favor those larger landholders," Zakreski says.
For that to work, however, the carbon offset rules must be crafted with care. “We’re starting to have a conversation around offsets and what protocol we want to have,” Kittler says. “But we haven’t tackled a lot of sticky issues.”
One of the major considerations is making offsets work for small properties like Raincloud Tree Farm. These non-industrial parcels of less than 5,000 acres comprise most of Oregon forestland. But stringent rules bar them from entering the offset market. The few forestry offset projects in Oregon must bow to California’s expensive monitoring and “permanence” standards.
In the current environment, says Sheldon Zakreski, chief operating officer at The Climate Trust, one of the largest carbon offset developers in Oregon, “a lot of times the steps and rigor involved with generating an offset tends to favor those larger landholders.”
Kittler and other environmental leaders are dreaming up ways to make offsets work for the little guy. New technology for gauging carbon storage, including satellite imagery and remote sensing, can slash the costs of monitoring. In another approach called “aggregation,” a land trust pools a cluster of small properties into one project to reduce costs.
Oregon’s new offset protocols would need to spell out exactly how these methods would work, to the letter. If one landowner in a pool wants out midway through the project, the whole thing could collapse like a Jenga tower. Satellite imagery can suffice for some monitoring, but at other times, inspectors need to set foot on the property.
Another issue is how Oregon’s carbon market would link to those in other states, particularly California. Oregon has an opportunity to develop its own rules with considerations unique to its landowners. But for Oregon landowners to sell carbon offsets to California, they need to meet that state’s standards.
Kittler says that in his workgroup with the Carbon Policy Office, the conversation is beginning to shift from incentives to offsets. A committee will likely present general recommendations for offset protocols in advance of the legislative session, and more specific rulemaking would be hashed out if the bill passes.
A spokeswoman for the Oregon Forest & Industries Council says its members, manufacturers and landowners, remain divided over offsets. They can’t know for certain whether the offset protocols would benefit them, or if a cap and trade bill would harm their supply chain or jeapordize manufacturing jobs, until legislators present a bill for the 2019 session.
Though well-designed offset rules would create new opportunities for forest landowners, not everyone would benefit, and not right away. Kittler says forestry offsets make sense for a “very select segment” of landowners, namely those with old growth or mature second growth forests.
Timber still fetches a much higher price than carbon, meaning the traditional emphasis on harvesting will continue.
“Timber’s way up so people are cutting,” Kittler says. “Carbon’s way down so not many people are looking at it. Financially I can’t necessarily see this being a huge impact for landowners right away.”
“We’re starting to have a conversation around offsets and what protocol we want to have,” Kittler says. “But we haven’t tackled a lot of sticky issues.”
Gastellum says offsets can’t substitute for pollution mitigation. The number of offsets allowed should be regulated, she says, because “we can’t offset our way out of this system.”
Yet for all their limitations, forestry offsets could form a key piece of the carbon reduction puzzle. It gives forest landowners, who already have little to lose from carbon legislation, something to gain.
“They’ve been a pretty prominent thing to discuss,” Zareski says. “Oregon’s got a long forestry history. When you look at California, forest carbon offsets have proven to be the most effective type of offset.”
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