Alaska Senate passes bill to create carbon credits for preserved forest land

The Alaska Senate on Monday unanimously passed a bill that would set up a system for selling credits by preserving forested Alaska land to offset carbon burned or released elsewhere.

The carbon-offset credits bill would allow leases of up to 55 years in duration, with payments made to the state by businesses and other entities seeking to preserve tracts of land for their powers to absorb atmospheric carbon dioxide. The measure, Senate Bill 48, which was the version that passed Monday, and companion House Bill 49, have become known as the “tree” bill because they focus on forest preservation.

It is a high priority for Gov. Mike Dunleavy. The Republican governor introduced it early in the session and touted the idea in his State of the State address as a potential source of billions of dollars of future revenue.

John Boyle, commissioner of the Alaska Department of Natural Resources, said he was “very excited” to get the bill approved in such an overwhelming fashion in one body of the Legislature.

“I think this whole 20-to-nil vote speaks for itself. Folks recognize that it’s a good idea and a good move for the state and we’re very happy to see it advance,” Boyle told reporters gathered outside the Senate chambers right after that body’s vote.

In floor remarks leading to the vote, Sen. Bill Wielechowski, D-Anchorage, said the program that would be established through the bill is a new opportunity for the state to generate much-needed revenue.

Wielechowski said he takes climate change seriously and wants action on it but that this bill is more about the state fulfilling its constitutional mandate to derive maximum benefit from its lands.

He also addressed some of the public backlash to the bill that emerged during the deliberation process and, as he characterized it, veered at times into conspiracy theories.

“This is the state responding to a need that exists in the free market. This is not a cap-and-trade program. We are not putting any emissions limits on anyone. This bill has nothing to do with the United Nations, George Soros or the World Economic Forum,” Wielechowski said. “We are not locking up land. This bill has provisions that state land must remain open for public access, like hunting, fishing, hiking, trapping, mining, even oil development.”

Among the types of development contemplated for land leased for carbon-offset credits is logging — even though most state-owned forested land is in the boreal region, which has traditionally not supported much commercial logging in Alaska.

“We certainly think that there’s a business case to be made in using carbon-offset projects to rebuild timber stocks to create broader stands of merchantable timber in the Interior,” Boyle said. “I think you’ll see this leading to more forest product opportunities coming out, particularly of the boreal forest, through more enhanced forest management of those state forests.”

If the bill ultimately wins final passage, his department will work as quickly as possible to set up regulations, as the state needs more revenue, Boyle told reporters.

But the amount of money to be raised through these projects is yet to be determined, he said.

“We certainly think this could be a cash-flow-positive option for the state. We’re very confident,” he said.

Moving more slowly than this measure is the governor’s companion bill that would set up a system for storing carbon gases in old oil and gas wells with the purpose of sequestering the greenhouse gases emitted by petroleum production and other industrial activities. Versions of that bill, dubbed the “hole” bill, are pending in both the Senate and House as Senate Bill 49 and House Bill 50.

That bill is also important for his department and for the Dunleavy administration, Boyle said. “Whether that comes in this session or a special session or next year’s session remains to be seen,” he said.

The carbon-credits “tree” bill passed by the Senate on Monday did include a provision aimed at boosting the carbon-injection program that would be set up through the “hole” bill.

Added during the Senate committee process was a section giving the Alaska Oil and Gas Conservation Commission authority for primary enforcement responsibility for wells used to inject carbon dioxide into underground formations. That authority for what is known as Class VI injection control wells, which are used for carbon dioxide reinjection, rests with the Environmental Protection Agency in most cases. Primary enforcement authority over injection wells of all types is a federal-state mixture across the nation. Only two states — Wyoming and North Dakota — have that authority for Class VI wells. Alaska has primary enforcement authority over what are known as Class II wells, which are used to inject fluids associated with oil and gas production, according to EPA.

Boyle said EPA has shown its interest in delegating that authority to boost carbon-injection programs like that contemplated in Alaska. He cited a $50 million fund created by the federal agency, through the federal Infrastructure Investment and Jobs Act, that is intended to help states and tribes create systems for sequestering carbon in deep wells in ways that do not hurt groundwater supplies. EPA in January announced the creation of that fund.

Since it will take some time to acquire primacy over those Class VI wells, it was helpful to have the provision included in the “tree” bill, Boyle said.

“We see that piece as being very important to enabling Alaska to remain on pace in acquiring that primacy, and we’re excited that it’s part of this bill,” he said.

Originally published by the Alaska Beacon, an independent, nonpartisan news organization that covers Alaska state government.