This story was updated at 9 a.m. 2/16/14 to correct the location of the 22,000-acre property.
The Maine woods have always seemed to be worth more dead than alive.
Cut a tree down and you can turn it into something that’s worth money – lumber, paper, furniture or toothpicks.
Leave a tree standing and some believe all you’ve got is shade.
But photosynthesis and efforts to curb global climate change are combining to enhance the value of a living, growing forest.
Polluters are paying two conservation organizations to manage forestlands the groups own in Maine in a way that increases the amount of carbon dioxide the trees remove from the atmosphere. The money the Downeast Lakes Land Trust and the Appalachian Mountain Club earn by selling so-called “carbon offsets” will be spent on managing forests they already own and buying additional forestland.
Some trees can still be harvested on these forests for products such as pulp, paper and timber. But deals require that ultimately, there will be more trees left standing than in the past.
It’s a formula that could hold real investment potential, not just for nonprofits but also for other landowners, for-profit enterprises and even the state of Maine.
Downeast Lakes Land Trust in Washington County became the first organization in the country approved by the California Air Resources Board to sell $1 million worth of “forest carbon offsets” to industries there that need help meeting their legal obligation to reduce carbon emissions, said the trust’s executive director, Mark Berry. The carbon offsets are on 19,000 acres of Downeast Lakes Land Trust’s 34,000-acre Farm Cove Community Forest near Grand Lake Stream.
The Appalachian Mountain Club, the oldest outdoor recreation and conservation organization in the U.S., recently received final approval to sell carbon offsets on 10,000 of 37,000 preserved acres in its Katahdin Iron Works tract – more than half of the group’s 66,000 acres of land in Maine.
How much money the club will be paid for its offset is not yet known, said David Publicover, the club’s senior scientist and assistant director of research.
Prices for carbon offsets vary widely, depending on who’s buying and why. The market for companies seeking offsets because they are violating state emissions standards tends to bring higher prices, while voluntary markets – in which companies reduce carbon dioxide emissions even though they are not legally required to do so – may bring only 20 to 50 percent as much.
The two Maine groups say they are marketing a natural asset: the ability of trees to extract carbon dioxide from the air and use it in photosynthesis, the process by which plants convert light energy into the chemical energy they use as fuel, said Berry.
Companies that exceed legal carbon dioxide limits are allowed to make up 8 percent of their total emissions through buying these “forest carbon offsets.”
Downeast Lakes Land Trust intends to use the money from the sale of its offsets to help purchase more than 22,000 acres east of Grand Lake Stream in Washington County, said Berry. The purchase would bring the trust’s holdings to more than 55,000 acres, with nearly 90 miles of lake shore and hundreds of miles of streams, he said.
What the California companies – which aren’t named in the agreement – get in return is a carbon credit roughly equal to the difference between the amount of carbon dioxide the forest is removing from the atmosphere now and the amount it will remove once it is managed according to strict standards set by the California offset program.
The land trust must commit to maintain the forests under the more rigorous management standards for 100 years, Berry said. The forests can still be harvested, but the deal requires that long-term tree-cutting be reduced, Berry said.
The idea is to leave more trees standing, Berry said. “It really boils down to that.”
The swap is one form of an emissions trading, or “cap and trade,” program. In these incentive-based approaches to reducing pollution, a limit, or cap, is placed on certain harmful emissions, including carbon dioxide, nitrous oxide, methane and other greenhouse gases.
Companies that reduce emissions below the cap are allowed to sell or trade that amount to other companies that release more greenhouse gases than the law allows.
Companies that need help staying below their cap also may turn to compensatory carbon-offset strategies, such as investing in renewable energy, wind farms and new technology to curb emissions. California allows four types of offsets, among them forests that have been certified to reduce carbon dioxide by a certain amount for specific levels of carbon offsets, Berry said.
Those forests are what Downeast Lakes Land Trust and the Appalachian Mountain Club have to offer. Both organizations now harvest limited amounts of timber from their land, and the forest carbon offset program will both bring in revenue and require them to improve their forest management and grow more timber, Berry said.
At the same time, the carbon-reducing action of their forests compensates for pollution hundreds and, in California’s case, thousands of miles away, often from industrial power plants outside New England.
Such arrangements “are offsetting a global process,” said Spencer Meyer, associate scientist for forest stewardship at the Center for Research on Sustainable Forests at the University of Maine.
Forest carbon offset projects represent a relatively new way to take advantage of the air- and water-cleansing impact of trees. And though the practice is just beginning in Maine, organizations and businesses – and, perhaps, the state – that have stayed on the sidelines till now eventually could find it financially attractive, said Rob Lilieholm, an associate professor of forest policy in the School of Forest Resources at the University of Maine.
Lilieholm predicted as many as 5 million acres in Maine ultimately could be dedicated to forest carbon offset agreements, particularly because forest management is evolving to include “a layering of economic incentives” – carbon credits, the sale of conservation easements and timber harvesting, for example.
Widespread use of trees-for-carbon-dioxide compensation is probably at least five to 10 years off, Lilieholm estimated. But the ground-breaking effect of early contracts such as the Downeast Lakes Land Trust deal “may really accelerate things,” he said.
The projects by the land trust and mountain club, which combine timber production with carbon offsets, are doubly attractive. And by demonstrating that it is feasible to develop these complex deals, the organizations are making them more attractive.
“They’re basically laying the groundwork for others down the road,” Meyer said. “I suspect that in the future as the price of carbon goes up, this could take off.”
But not everyone is convinced.
For the moment, many potential offset investors – including large and small landowners, timber companies and state officials – don’t foresee enough financial return to warrant the expense of working a contract through to completion, said Maine State Forester Doug Denico.
“There is nothing (in the offset market) that the state is pursuing and it has no proposals to (do so),” said John Bott, director of communications for the Maine Department of Agriculture, Conservation and Forestry. Trading in forest carbon offsets is still too cumbersome and complex to make it attractive for Maine, state officials said.
One deterrent is the degree of commitment. A hundred years is a long time to tie up the use of any land, even wild lands held for public use. That requirement limits the flexibility of land owners to either use their land or to sell it, because the 100-year commitment would continue under a new owner.
Also, the deals require that some additional land be set aside as “insurance” for the offset, in case trees on the original parcel are devastated by disease, pests or fire, for example. And reporting and verification requirements cost thousands of dollars per year, said Berry, the land trust director.
Internationally – more than in the U.S. – some companies are beginning to see the potential for real profit in forest carbon offsets, financial analysts report.
In 2012, businesses worldwide channeled more than $215 million into projects that incorporate tree planting, avoid deforestation, enhance forest management and support low-carbon agriculture, according to experts at the nonprofit Forest Trends, which tracks developments in the uses of forestland.
Worldwide, the sale of 26 million metric tons of carbon offsets, worth $216 million to $225 million, supports management of more than 50 million acres of forest, a land area larger than Ecuador, according to the 2013 State of the Forest Carbon Markets report by Ecosystem Marketplace in London.
The deals struck in Maine are signs that interest in the forest carbon offsets market may grow, Lilieholm and other analysts say. And if stricter emissions standards are enacted at the federal, state or regional level, these kinds of trades could become more attractive at the community or regional level.
The Downeast Lakes Land Trust deal, said Meyer, “is a win-win (by) all scales. It protects local jobs and traditions, makes a regional economic contribution and is helping with global emissions. What more can you ask for than this?”
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