Cash in on carbon: Timber firms can harvest profits from greenhouse gas initiative

California's call to reduce greenhouse gas emissions by 2020 means new revenue for timber landowners willing to play the carbon-offset market.

Steven Brink of the California Forestry Association said the Global Warming Solutions Act, or Assembly Bill 32, is an opportunity for the industry.

"The cap-and-trade element of the initiative is where the opportunity is for forest landowners," Brink said during a panel discussion on forest carbon Friday inside Fusaro Hall at the Shasta District Fair grounds.

The two-hour presentation, attended by some 40 people, was part of the Sierra Cascade Logging Conference.

Under AB 32, the state has identified more than 400 plants — oil refineries and cement manufacturers — that need to reduce their emissions. One way they can do it is by purchasing carbon allowances.

The forestry industry through land management will be able to sell carbon offsets. The landowners can register sequestered carbon from the management of their lands with the state and then sell the credits on the open market, Brink said.

Ed Murphy, resource information system manager for Sierra Pacific Industries in Anderson, expects the state carbon registry to open this fall.

"If they make it, we will have projects to register at that point," Murphy said after Friday's panel discussion.

Murphy couldn't say how much SPI, California's largest timber operator and private property owner, would make from the sale of credits.

"We don't have any idea because we don't know at this point what the market will bear," said Murphy, who participated on Friday's panel.

But both Murphy and Brink said the way the rules are written, trading carbon credits will probably be a market dominated by large landowners.

In exchange for selling credits, the owner has to keep his land wooded for the next 100 years.

That's a requirement that makes a timber company like Collins Pine of Chester wary of making a market in carbon credits.

"It's always kind of difficult when you're talking about making a commitment for 100 years," Terry Collins of Collins Pine told panel moderator William Keye of the California Licensed Forester's Association. "There is a lot of uncertainty that makes us hesitant to do that."

Collins Pine owns and manages 160,000 acres of forest in California and Oregon.

Sierra Pacific Industries, by contrast, owns some 1.7 million acres in California.

Most small landowners can't afford the costs of registering and participating in the carbon credit program and/or locking up large swaths of land for the next century, Brink said.

Murphy also is frustrated that biomass plants, which burn wood scraps to produce energy, can't participate in the carbon trade game. Both Sierra Pacific Industries and Collins Pine operate biomass plants.

Murphy explained the state believes biomass operators already are generously compensated for the energy contracts they cut with the utilities. However, anybody who has negotiated a contract with Pacific Gas & Electric Co. knows that is not the case, Murphy said.

"Why play the backdoor game? Pay the biomass plants for the economy of offsets," Murphy said.