DNR Carbon Credits Bill Revised …Moving Forward

By Paul Gottlieb

Special to the Peninsula Daily News

OLYMPIC — Environmental and timber interests made U-turns in March on a bill giving the state Department of Natural Resources authority to sell carbon credits on state-owned property.

Timber interests supported the pared-down ESHB 1789 after previously opposing a more expansive version.

Environmentalists opposed the newest version for not going far enough in employing forest management solutions to climate change after favoring the original measure.

The bill, which passed the House 82-13, passed the Senate Environmental, Energy and Technology Committee on March 28 and was scheduled for an executive session in the Senate Ways and Means Committee on Monday.

It had been reduced in scope, limiting ecosystem projects on public land to aquatic endeavors; restoring damaged forests, or forestation; and establishing new forests, or afforestation. Project goals would include carbon sequestration and storage, air and water filtration, climate stabilization and disturbance mitigation.

The projects, under contracts of up to 125 years, also must result in an increase in revenue to taxing district beneficiaries such as school districts, counties and cities such as Forks, which relies heavily on timber proceeds, as compared to revenue that would exist without the ecosystem service project.

Changes in the final vs. original version reduce the revenue expectations “but revenue impacts remain indeterminate,” according to the fiscal note on the bill at leg.wa.gov.

“Private forest managers that sell carbon credits on both the regulatory and voluntary markets have generated millions of dollars per year through these projects in addition to revenue generated from more traditional businesses lines,” according to the fiscal narrative.

“DNR anticipates generating revenue in a similar fashion as those projects.”

Jefferson County resident Diane Jones, president of the Northwest Progressive Institute, testified on behalf of the organization Wednesday before the Senate Environment, Energy and Technology Committee. The panel is scheduled to vote this coming Wednesday on passing the bill out of committee.

Jones called the bill “a good start” as climate change continues to challenge forest managers.

“This bill will give DNR a new tool and flexibility to help manage our forests to their best use be it logging, wildlife benefits, carbon storage, or reducing wildfire risk. And this in turn will help DNR to support local beneficiaries,” she said.

DNR Commission Hilary Franz said the agency would be allowed to tap into a new revenue stream to combat climate change, a battle in which she said the agency is on the front lines.

The DNR manages 93,260 acres of timberland in Clallam County, according to a resource inventory by the Clallam Conservation District.

DNR’s Olympic Region, which covers Clallam and Jefferson counties and northwest Grays Harbor County, includes 371,000 acres of state forests, agriculture, urban and conservation lands, according to DNR.

“DNR is limited in our ability to use one of the best tools available to achieve the goals of the [Climate Commitment Act], selling carbon credits,” Franz said of the statewide initiative to reduce greenhouse gas emissions.

“We can sell timber, we can sell wheat, we can sell hops, we can sell apples, we can sell shellfish and geoducks, and marijuana, but we cannot sell carbon, unlike the private sector, unlike local governments and unlike nonprofits.”

That means less revenue for the state, cities and schools, and less ability to reduce carbon emissions, she said.

Bill Turner, the Washington timber manager for Sierra Pacific Industries, which operates four sawmills and two renewable biomass energy plants, said the family-owned company did not support the original bill.

“The House bill before you today has been narrowed in scope,” Turner said.

“Sierra Pacific now supports this bill. This bill would authorize DNR to enter into carbon and ecosystem service markets for reforestation and afforestation on state trust lands.

“These types of projects are additive in nature in that they will result in increased carbon sequestration by replanting burned over trust lands and create more working forests for the state of Washington.

“It’s truly a win win win situation — carbon sequestration, more working forests and more locally sources of carbon-friendly building projects.”

The legislation also was supported by the State Public Ports Association, the state Association of Counties, and the American Forest Resource Council.

But Mitch Friedman of Conservation Northwest said he supported the original bill and opposed the present version.

“It authorizes too little and limits too much,” he said.

“Specifically, environmental service funding will not be allowed for better forestry, namely longer rotations,” he said.

Rachel Baker, forest program director for Washington Conservation Action, said the bill falls short in two ways.

The bill requires an increase in revenue, unlike other state lands projects, creating an unrealistic burden, she said.

And the limited scope of authorized projects does not include those with the most revenue and carbon value, “mainly improved forest management,” Baker said.

She said of 136 forest carbon projects in California’s carbon program over the last 10 years, nine are reforestation projects that generated no credits.

There were 126 projects focusing on improved forest management that generated 99.7 percent of the program’s carbon credits.

“We urge the committee not to pass the bill,” Baker said.

Alex Harris, the land and policy manager at RE Sources, a Bellingham nonprofit, recalled six weeks earlier testifying in support of 1789.

“Since that time, the bill has seen significant modification. Most importantly, the bill does not authorize DNR’s existing carbon project nor does it allow carbon prongs to be associated with improved forest management on state lands.

“This is a major missed opportunity, because protecting mature forests and incentivizing ecological forest management are perhaps the two most meaningful natural climate solutions we have at our disposal in Western Washington,” Harris said.

“We urge you to not advance the bill out of committee.”

Carbon credits are measured according to tons of carbon dioxide. CO2 offsetting rates can vary, but to compensate 1 ton of CO2, 31 to 46 trees are needed, according to 8billiontrees.com.

Carbon credits can be purchased by companies on the private market to make up for carbon dioxide emissions from industrial production and can be sold to support activities that protect ecosystems.

The UN Environment Programme issued a report in 2021 that said carbon markets could reduce emissions “if rules are clearly defined and target actual reductions in emissions while being supported by arrangements to track progress and provide transparency.”

The global carbon credit market was valued at 760.2 billion in 2021 and is expected to grow at a compound annual growth rate of 21 percent from 2023-28, according to finance.yahoo.com.

Legislative Reporter Paul Gottlieb, a former senior reporter at Peninsula Daily News, can be reached at cpaulgottlieb@gmail.com.