Will Forest Carbon Credit Sales Reduce Log Availability?
Forest carbon sales provide an economic alternative to logging. However, they are not entirely an “either/or” proposition.
Do forest carbon credit sales1 represent a threat to global log supplies? It’s easy to see how forestry companies might feel worried. Consider two recent high-profile examples from here in BC:
In March 2022, Mosaic Forest Management announced it would defer harvesting on 40,000 ha of privately-owned forestland in coastal BC for 25 years (or potentially longer), opting instead to sell carbon credits as part of its BigCoast Forest Climate Initiative.
In 2019, the Municipality of North Cowichan sharply scaled back harvesting on its 5,000 ha Municipal Forest Reserve and began a multi-year public engagement process. Outside experts presented four management options for the forest, including replacing the income from logging the forest with income from conservation-based carbon credit sales. The conservation options proved to be very popular with the voting public.
When I wrote about carbon credits for Wood Markets Monthly earlier this year, I concluded that carbon credit sales could erode log supplies in areas that are economically marginal for logging (for example, due to logistical complexity) or where there is a high social or political cost to logging. However, whether carbon credit sales prove to be lucrative enough to attract widespread conversion of land from wood production to carbon credit production remains to be seen.
But… Do Carbon Credit Sales Always Preclude Logging?
In the above examples, carbon credits and logging were mutually exclusive: the number of credits were calculated based on the volume of carbon that would otherwise have been emitted had logging occurred according to “business as usual” management practices. However, the science of carbon sequestration is not all-or-nothing. While the immediate effect of logging is a release of carbon into the atmosphere, this carbon will be re-absorbed over time. Moreover, research has shown that forests that are harvested regularly (such as those of the Nordic countries, where 70-80% of the forest is harvested every 70-120 years) can sequester and accumulate more carbon per hectare than forests at similar latitudes that are largely unmanaged (such as the boreal forests of Canada, Russia, and Alaska).
If logging strategically can improve carbon balance, can forest carbon credits be awarded for projects that increase carbon sequestration, in addition to projects that prevent emissions from happening? The answer is “yes.” Carbon consulting firm ClimeCo explains that carbon accreditation standards can award credits for several different types of projects. For example:
Protection (or conservation) projects avoid emissions by avoiding logging, particularly in areas of high ecological value and/or high risk of loss;
Restoration projects, such as afforestation and reforestation, increase carbon sequestration through the growth of new trees; and
Improved forest management projects combine a combination of both approaches.
Activities within the “improved forest management” category can include lengthening the rotation age, making silvicultural improvements, planting more productive tree species, minimizing the forest area lost to roads and landings, improving log utilization rates, and maximizing the length of time that forest products stay in-use. Done well, these activities don’t necessarily reduce log availability – indeed, they may even increase it.
Why Conservation-Based Forest Carbon Projects Dominate
Given the potential to increase forest income through a combination of logging and carbon credit sales, why have the majority of carbon credit projects (at least here in BC) stressed logging avoidance rather than logging improvement? One reason may be that there are additional factors behind the organizations’ decisions not to log. For example, North Cowichan’s community forest is used extensively for recreation.
ClimeCo’s Juliana Magalhães suggests an additional reason: calculating the carbon impact of silvicultural activities is extremely complicated. Credits are not earned for merely having good forest practices; the activities must be over and above what the “business as usual” practice is for the area. For example, if local laws require forests to be re-stocked following logging, companies cannot gain carbon credits for doing so. This principle is known as “additionality.”
Selling carbon credits from publicly-owned forestland can be even more complicated than from private land, as the decision-making process is often more bureaucratic. Further, as most carbon credit projects require a long-term commitment (up to 100 years), land tenure uncertainty adds another challenge.
Will Forest Carbon Credit Programs Grow in Popularity?
In recent weeks, several forest investment companies have announced carbon credit projects. For example, Sydney, Australia-headquartered New Forests purchased the McCloud Forest in California as part of its Forest Climate Solutions Fund. The company plans to sell both timber and carbon credits, with the carbon credits being sold on California’s regulated carbon market. Similarly, a consortium of ten companies led by Japanese firm Sumitomo Forestry have launched an investment fund to buy and manage forest land in North and Latin America.
Whether carbon credits will transition from niche to mainstream remains to be seen. Private forestland is generally a very conservative investment, so selling carbon credits (which can be very volatile in price) represents a completely different challenge to forest managers. Carbon markets and verification standards are still developing, and, as Dr. Magalhães points out, calculating additionality is very complex. Finally, carbon credit sales on publicly owned land have an additional set of challenges.
Forest Carbon is a Trend to Be Watched, but Not Feared
Forest managers have long had to juggle timber with competing values such as conservation and recreation. While some values (such as logging and old-growth management) are mutually exclusive, carbon sequestration has the potential to combine with other values, including timber.
For forest owners, carbon credits represent both a new means of funding enhanced silviculture or conservation activities as well as an overall revenue top-up. However, supply chain stakeholders such as logging contractors and independent sawmills may see carbon credits as yet another source of uncertainty in an already uncertain timber marketplace. Forest owners would be wise to bear this in mind.
When companies find ways to remove carbon dioxide from the atmosphere, or eliminate carbon emissions that would otherwise have occurred, they can sell “carbon credits.” These credits are then purchased by companies or individuals wishing to offset their own carbon emissions.
Logging and old-growth management are not necessarily mutually exclusive. In some forests with an old-growth or mature component, thinning can reduce competition from younger trees that have "invaded" due to a lack of natural, low-intensity fire, boosting the health and resilience of the remaining trees. This practice ought to count as improved forest management.
Another very good summary of a tricky topic. I think a key point is that every forest will have a different ability to sequester carbon and different levels of additional icy. Conservation is probably a great carbon strategy for wetter and long lived forests but less viable in fire prone ecosystems. And...the level of carbon storage from forest management will depend on how the fibre is used. The more volume that goes to long lived wood products, and the less that goes to short term storage (such as pulp and paper), the greater the carbon storage benefit from sustainable forest management.