There is no doubt that here in Alabama and
across the nation, market forces are
creating changes in how we view traditional
forest product markets. The major changes
are being driven by the emerging biomass
energy and carbon sequestration markets.
Energy costs are escalating, almost on a
daily basis, and any real or perceived
negative impact to supply results in quick
and often, significant price increases.
There is a frenzy of activity to find
alternative energy sources to replace or
reduce the consumption of oil. One such
alternative is woody biomass. Another is the
emerging Carbon Sequestration market.
Carbon sequestration
refers to the provision of long-term storage
of carbon in forests, soils, underground,
and oceans. One of the best and most
efficient sequesters of carbon is our
forests. Everyone knows that in the process
of photosynthesis, plants take in lots of
carbon dioxide from the air. Once inside the
leaves, carbon becomes the building block of
the plant tissue and is stored (sequestered)
above and below ground.
After many years of discussion, the
establishment of a market to increase carbon
sequestration is slowly emerging here in the
United States. Currently, this market is
strictly voluntary and is driven by
companies who want to “go green” to enhance
their public image. Companies will purchase
“credits” (a defined amount of sequestered
carbon) to offset their carbon emissions.
Because the carbon market is emerging and
voluntary, there are several reasons that
forest landowners should proceed cautiously
who have carbon credits to sell.
First, most everyone knows that demand
and supply generally establishes price.
Demand is intermittent and supply is unknown
at this time. Hence, price can be very
volatile. Secondly, in many areas, protocols
have not been established that will ensure
sellers’ interests are protected by clearly
laying out what is expected and required of
the landowner, aggregators, and verifiers.
Most small landowners have questions about
how the whole process works such as, “Will
planned forest management activities need to
be changed? How much will I receive for my
carbon tons if there is legislation
requiring a company to purchase sequestered
carbon tons versus a voluntary approach?
etc.”
The Alabama Forestry Commission (AFC)
believes the Carbon Sequestration market has
the potential to provide landowners another
opportunity to increase their forest
investment financial return. At the same
time, like any new market, it’s important
that sellers take the time to educate
themselves about the market and what steps
they need to take to ensure their interests
are protected. As long as the market is
voluntary, there is ample time for
landowners to go slow and learn as much
about this new market as they can. In the
next few weeks, the AFC will be providing
additional information on our website at
www.forestry.alabama.gov. Additionally, if
you have a specific question or concern,
please contact an AFC representative in your
county.
Linda Casey
State Forester
Alabama Forestry Commission
Additional Resources:
What is Carbon Sequestration |
Carbon Sequestration FAQs |
Download FAQs Brochure