Timber Firms Stand to Benefit from New Climate Law

December 15, 2010
Mark Schapiro and Sarah Terry-Cobo for California Watch

California timber firms could emerge as big winners in the state’s fight against global warming, earning millions of dollars through the sale of carbon credits if a new set of rules are approved by the Air Resources Board this week.

The plan has stoked controversy among environmentalists who assert it gives the timber industry too good a deal, enabling them to clear-cut trees at the expense of the overall vitality of the forests, while the timber industry claims the plan will help them promote the storage of carbon dioxide, a greenhouse gas, in the trees on their land.

The state board has responsibility for implementing AB 32, California’s landmark effort to limit greenhouse gas emissions. On Thursday, they will vote on a new cap-and-trade system aimed at bringing emissions to 1990 levels by 2020. It will allow companies to cancel out their emissions by purchasing carbon emission reductions somewhere else. A significant portion of those credits, or offsets, are expected to come from the carbon-storing capacity of forests.

One of the most controversial provisions would enable timber companies to obtain credits by replanting trees in clear-cut areas of the forest. The protocol also makes California the first place in the world to assign carbon credits to wood products created from the trees themselves.

For those credits, the state relies on a U.S. Department of Energy registry that estimates the carbon in everything from wooden chairs and bed frames to two-by-fours made from fir, pine, cedar and hemlock trees harvested in California.
Timber companies would then be free to sell its pool of credits to utility companies, refineries and major industrial enterprises which need them to meet their emission limits.

The state has proposed a minimum price of $10 a ton and estimates that 20 million tons will be needed over the first decade. The total offset market will likely reach $200 million by 2020, according to Point Carbon, a news service offered by Thompson Reuters.

David Bischel, president of the California Forestry Association, representing timber harvesters and processors, says that the new rules, known as the Forest Protocol, “help to monetize an important environmental benefit by encouraging more standing timber in the forests, and more wood products used by society.”

Early drafts of the protocol did not permit clear-cutting, according to Jeff Shellito, an environmental consultant and former aide to state Sen. Byron Sher, now retired. But in 2007, the timber industry began lobbying to alter the protocol in their favor. A nonprofit organization, the Climate Action Reserve, which was created to establish standards for the verification of greenhouse gas emissions and reductions, is the primary author of the new rules.

In 2002, Sher had authored legislation that established forest preservation standards for California's then-voluntary carbon market. “We went to great pains (in 2002) to ensure you couldn’t get carbon credits from clear cutting,” Shellito said.

The biggest timber company and landowner in California, Sierra Pacific Industries – with some 1.9 million acres across the state – was the most aggressive individual timber company lobbying on the regulations. Over the course of 2007 and 2008, Sierra Pacific paid $37,500 to California Strategies, a major Sacramento lobbying firm, to present its case.
The company also nurtured a relationship with Gov. Arnold Schwarzenegger. Sierra Pacific has donated $29,600 to the governor’s campaign committees, and its billionaire owner, Archie Aldis "Red" Emmerson, hosted a $250-a-plate fundraising lunch for the governor's reelection campaign at his estate outside of Redding. Emmerson is listed by Forbes as one of the world’s 500 wealthiest people.

Altogether, according to campaign contribution records filed with the secretary of state, the company has donated about $890,000 to political candidates and ballot measures in California in the past five years.

The California Forestry Association, a frequent donor to political causes and candidates, also reported spending $245,000 lobbying state agencies on a variety of issues in 2007 and 2008, including climate legislation and the Air Resources Board policy on greenhouse gas emissions.

Among the company’s requests was a plan to qualify what it calls “even-age management” of its forests for carbon credits. Even-age refers to trees that are planted at the same time for future cutting.In September 2007, Sierra Pacific sent a six-page letter to the Air Resources Board outlining the changes it would like to see in the protocols – most of which the board accepted.

“In our view,” wrote the company, “there is no valid reason for requiring multiple ages of mixed species on every acre. Indeed, natural forests before the intervention of humans often consisted of large tracts of even-age stands which were generated from fires. Today’s management often mimics this type of forest through the practice of even-age forestry.”
Under this definition, a significant portion of Sierra Pacific’s land could be credited over the next century. The company would have to verify its claims of how much new carbon is being stored in its replanted trees – which it would be entitled to cut again in 50- to 80-year cycles. Sierra Pacific nurseries are already breeding new varieties of native trees to heighten the quantity of carbon in their trunks, leaves and roots. Sierra Pacific officials declined to comment for this article, referring reporters instead to the California Forestry Association.

Critics, like former legislator Sher, say that the new protocol violates some of the basic principles of forest conservation. What the timber industry calls “even-age management” Sher calls “tree plantations.”

“The forest companies are interested in being able to harvest their trees, and replant, and then produce a new asset that they can sell,” Sher said. “It undermines the biodiversity of the forest. You end up with tree plantations that are much more vulnerable to fire and disease.”

Earlier this month, 47 environmental and conservation groups, including the Sierra Club California and the Center for Biological Diversity, protested to the Air Resources Board.

“The protocol subsidizes the current business as usual: aggressive timber management,” said Brian Nowicki, a policy analyst with the Center for Biological Diversity, a group that has sued the state over Sierra Pacific’s logging practices.
Nowicki questioned whether the rules encourage companies to do anymore than they’re doing already.

Other environmental groups, like The Nature Conservancy and Environmental Defense Fund, support the idea of creating financial incentives to keep trees with more carbon standing and rewarding landowners for agreeing not to convert forests into commercial developments for at least one hundred years, which is another provision of the protocol.

“Landowners will have to go above and beyond their current practices,” comments Michelle Passero, a senior climate policy adviser to The Nature Conservancy California. “And that should lead to more protection and better management of our forests.”

To Susan Robinson, however, that sounds like clear cutting as normal. Robinson, a former safety manager for Chevron, lives in the area around Ebbetts Pass, a community in Calaveras County that has been one of Sierra Pacific’s most heavily clear-cut areas. She’s now a leader of the Ebbetts Pass Forest Watch, an environmental group representing residents of the small towns in and around the southern Sierras.

During harvest season, which continues until the snowfall, she sees the timber trucks heading down from the mountain headed for the company’s mills in Redding and elsewhere. She says that the new protocol will enable timber companies “to transform natural forests into tree farms.”"We’re not against logging,” she said. “But we want to see it done sustainably, and the forest protocol does not do that.”

Gary Gero, president of the Climate Action Registry, said he was given a narrow goal: to fight climate change by increasing the quantity of carbon dioxide in trees and wood. “The primary purpose of the protocol,” he said, “is to ensure that the total amount of sequestered carbon increases over the next hundred years."

The registry, he said, refused one of Sierra Pacific’s additional requests – that it grant carbon credits for wood discarded in landfills.

The tension between preserving forests and preserving trees for their carbon lies at the heart of the controversy. The state’s climate legislation calls for the air board to "design emissions reduction measures … in a manner that minimizes costs and maximizes benefits for California’s economy.” Carbon in trees are the cheapest of various options that would create an abundant supply of offsets, making all credits relatively inexpensive.

Mary Nichols, administrator of the Air Resources Board, said that California “already has the strictest timber standards in the nation, and we will leverage those standards onto other states which hope to participate in the California forest protocol.”

Those standards limit clear cuts to 20 acres and require replanting areas of cut trees. She said that states like Washington and Oregon, which permit clear cuts of as much as ten times that, would have to abide by this state’s limitations if its landowners are to gain credits to sell to California industries. The same applies to forests in Brazil and Chiapas, Mexico, which are likely to be the first foreign participants in the California program.

“The advocacy groups in the forest area,” she said, “tend to value forests primarily for their ecosystem value, whereas the industry is looking at carbon as elements of value on the land.”

She says that the state board is considering additional provisions to “make it absolutely clear that we are not going to provide any incentives for even-aged management.”The measures, she said, would be aimed at ensuring that “no projects [would be] registered as offsets that had been done using any amount of clear cutting at all.” Adopting those rules, Nichols said, could take as long as two years.

The California Forestry Association would not comment on the prospect of further tightening of the rules. “We generally find it difficult to comment on potential future events,” the group’s communications director, Bob Mion, said in an e-mail.