As industrial polluters try to erase their greenhouse gas emissions, they plan to spend billions of dollars in the coming years on preserving and restoring forests to cancel out pollution they can’t directly eliminate with electric vehicles, energy efficiency improvements and wind and solar power projects.
Protecting, enhancing and restoring forests brings undeniable benefits. A growing tree breathes in carbon dioxide, reducing the concentration of heat-trapping gas in the atmosphere, while providing a host of local environmental goods. Forests represents the largest category in a portfolio of natural climate solutions that scientists estimate could account for more than a third of global emissions reductions needed by 2030 to preserve a livable climate.
Airlines, oil and gas giants, and tech companies including Microsoft and Amazon are investing more in the complex systems that fund carbon projects, quantify the resulting climate benefits, and help the companies claim them as their own. These systems have long been subjects of skepticism, with lingering questions about their impact on the global climate calculus.
There’s “a long and fraught history” of offset markets providing environmental cover to polluters, said Jennifer Crider, senior director of public affairs at Microsoft. “Someone will buy their way to carbon neutrality and then turn around and sell the offset credits,” she said. “Does that help the atmosphere? No. Does that help your talking points? Yes.”
Environmental justice advocates say emissions offsets can let companies continue burning fossil fuels and polluting in vulnerable communities, even as they burnish their image through the preservation or planting of trees often far removed from their operations.
Crider and others said offset markets are improving, and the potential of natural climate solutions funded through them is too great to ignore.
Offsets represent a welcome source of revenue for forest landowners who would otherwise harvest their trees. For conservation groups, offsets promise funding for long-term stewardship.
Amazon pledged last year to be “carbon neutral” by 2040, though it hasn’t determined yet how many offset credits — each representing one metric ton of carbon dioxide equivalent — it will need to reach its goal. The company’s 2018 greenhouse gas emissions totaled 44.4 million metric tons. It is prioritizing operational changes and new technologies, such as investments in electric delivery vans and renewable energy, to reduce its climate footprint. CEO Jeff Bezos said last month Amazon has a “challenging but credible plan” to reach 100% renewable energy use by 2025 instead of its earlier 2030 target.
Microsoft, which began investing in carbon offset projects in 2012, earlier this year upped the ante, aiming to become “carbon negative” by 2030, meaning it would finance projects that remove more greenhouse gas emissions from the atmosphere than it emits, while reducing its direct emissions by half. As part of that strategy, it is focusing more on projects that can remove carbon from the atmosphere (and funding technology development and other projects to the tune of $1 billion) rather than those that avoid new emissions, such as paying people not to cut down trees. The company said in January it expected to emit 16 million metric tons of carbon in 2020. It expects to buy 2 million offset credits next year and up to 6 million offset credits in 2030.
For forest landowners such as the Sealaska Corporation, which runs businesses in Southeast Alaska for the benefit of 22,000 shareholders of Tlingit, Haida and Tsimshian descent, the sale of emissions offset credits is a valuable revenue source that aligns with their long-term environmental and business goals. Sealaska collected its last payment in March for the sale of 9.3 million credits to oil supermajor BP for more than $100 million, helping fund scholarships and a native language program.
In exchange, Sealaska, which had derived a big chunk of its revenue from timber sales during the last 40 years, committed to reducing harvesting on 165,000 acres of Southeast Alaska forests for the next century.
“It allows us to keep healthy forests providing environmental benefits for a hundred years, and we don’t have to just forgo operating profit,” said Sealaska CEO Anthony Mallott.
While a typical timber harvesting program may generate more revenue per acre than the offset payments, that revenue would be stretched over decades. The carbon project generates revenue immediately, making the two options “pretty even” financially, Mallott said.
The Sealaska carbon project also leaves open the acreage for other uses, including traditional harvesting of spruce tips and berries, and recreation. And, as in most forestry offset projects, limited timber harvests can continue, provided that they do not reduce the total carbon sequestered on the project below the initial baseline levels.
BP, meanwhile, uses the credits — part of a larger portfolio it has purchased over the last five years from Native American tribes, including a half-million-acre project with the Confederated Tribes of the Colville Reservation in northeast Washington — to comply with California’s emissions limits.
Developing forest carbon projects was a major undertaking even for a corporation with large forestland holdings, dedicated staff and a long-term view, Mallott said. The cost and complexity has been prohibitive for most smaller landowners — the families, trusts and individuals who control the largest portion, some 38%, of the 822.5 million acres of forests and woodlands across the U.S.
Susan Benedict, whose grandfather bought a roughly 2,000-acre tract of forest 15 miles northeast of State College, Penn., in 1943, first sought to tap the financial value of the carbon stored in her family’s trees more than a decade ago. The up-front costs just to determine whether she would be able to participate ran to $15,000. “Our property was too small to get the volume to make it work,” Benedict said.
Now, Benedict is working with The Nature Conservancy on what is billed as a lower-cost method of developing and monitoring a forest carbon offset project, geared for the financial needs and timelines of smaller landowners. New approaches to sampling and measurement of forest carbon stocks promise to lower costs as much as 75%, according to Nature Conservancy forest carbon scientist Peter Ellis. Contract terms would run to only 20 years. A parallel effort would allow multiple landowners to band together in carbon co-ops, spreading development costs across more acreage.
“It’s been on my radar for a long time, but finally there’s a program that’s actually going to work for me, I think,” Benedict said, describing a stand of older trees to be preserved along a stream bank that is habitat for trout, fishers and great horned owls. “This is one that checks a lot of different conservation boxes and mitigates climate change at the same time.”
Amazon in April announced a $10 million contribution to support the work — joining earlier funders including 3M, International Paper and philanthropic foundations — and pledged to buy $5 million in credits from the resulting projects.
“Amazon is really catalyzing those enabling conditions that certainly will help open up the supply for Amazon’s own aspirations, but also increase the opportunities for others,” said Lynn Scarlett, The Nature Conservancy’s chief of external affairs.
Markets for buying and selling emissions offsets have been around since the early 2000s. In 2012, California began its rigorous cap-and-trade program, allowing companies to comply with greenhouse gas limits by offsetting some of their emissions with forestry and other projects that avoid or reduce emissions.
Now, demand for offsets in the large California market is waning as the state ratchets down the percentage of emissions that companies can offset from 8% of total emissions to 4% beginning next year. The economic collapse has also reduced many companies’ direct emissions.
But the climate change commitments of corporations are supporting demand in voluntary markets, which remain small. There are several voluntary market programs, each with different methodologies for verifying emissions offsets projects, administered by nonprofit groups and international organizations including the United Nations.
Emissions market analysts are also anticipating a major source of new demand from the aviation industry. The International Civil Aviation Organization’s industry-wide emissions offsetting program is set to begin in 2021. It could create demand for 2.7 billion tons of emissions offsets in the next 15 years, according to Ecosystem Marketplace, which tracks offsets markets, though the dramatic reduction in travel from the pandemic may depress demand, at least in the near term.
The accounting and verification systems built up around offset markets are getting better at addressing concerns about emissions offsets, market participants said. One concern is that payments may not prompt landowners to adopt practices beyond what they’d do anyway. Another is that projects may cause logging to shift from one forest to another, resulting in no net reductions in the bigger global climate equation.
Amazon Employees for Climate Justice leaders warn that communities near Amazon’s warehouses and air cargo hubs will continue to suffer from poor local air quality even as the company calls itself “carbon neutral” by way of forestry projects far removed from its operations. “We want zero emissions by 2030, while investing first in the communities most impacted,” Maren Costa, a leader of the employee group fired from Amazon in April, said during the company’s virtual shareholder meeting last month.
Scarlett notes that offsets are “complements, not substitutes” for direct emissions reductions, and a robust strategy is a prerequisite to working with The Nature Conservancy.
“It’s not about simply shifting emissions from one place to another or having a set of vulnerable communities shouldering the burden of emissions — not only greenhouse gases, but associated air pollution that comes from a lot of energy use,” Scarlett said.
Offset buyers focused on impact seek projects that are verifiable and durable, said Crider, the Microsoft director. Remote sensing technologies and traditional measurement methods are used to document tree growth and identify illegal logging, forest fires and other occurrences that can erode the purported emissions reductions. (Recent research suggests climate warming is accelerating the loss of old-growth forests.)
“The measurement piece is getting more precise, but it still has a way to go,” Crider said.
Microsoft in 2015 invested in a Nisqually Land Trust project to protect 520 acres of forests outside Ashford that otherwise might have been clear-cut over time. Now, the project is preparing for its first audit to verify the trees are absorbing as much carbon as projected. It’s causing Joe Kane, executive director of the land trust, some trepidation. If a project comes up short of expectations, the owner who was paid in advance for the offset credits is still on the hook — creating a long-term financial risk for project owners.
“If we don’t have that carbon, we have to go out and buy it from somebody else,” Kane said.
More likely, the forest will sequester even more carbon as the trees grow over the decades, generating additional credits that can be sold to support ongoing stewardship.
Kane said offsets — despite their challenges and uncertainties — have tremendous potential to fund habitat conservation, water management, local economic development, forest climate resiliency and removal of carbon dioxide from the atmosphere.
“In the big picture, nothing captures carbon like a tree,” Kane said.
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