Washington bill could allow Department of Natural Resources to sell carbon credits

In the eyes of the Washington State Department of Natural Resources, one big thing is missing from the state’s climate policies. Recent laws don’t allow the state agency to sell carbon credits, an act officials said would help slow climate change and generate millions of dollars for public schools, counties and fire departments.

“We can sell timber. We can sell wheat. We can sell apples. We can sell grapes. We can sell shellfish and geoducks. We can even sell marijuana. But we cannot sell carbon,” said Hilary Franz, Washington state commissioner of public lands, at a press conference Feb. 9 in advance of a public hearing on S.B. 5688.

That’s why Franz is pushing legislation that would add the state agency she leads to the list of private businesses and non-profit organizations that can freely sell carbon credits and create carbon offset projects, which reduce or remove greenhouse gasses from the atmosphere.

However, some counties, ports and timber companies raised concerns that the bill could reduce revenue for rural communities at a Senate Environment, Energy and Technology Committee public hearing on Feb. 10.

Bill co-sponsor Sen. Joe Nguyen, D-West Seattle, said the state needs thoughtful, innovative carbon offset projects to get off the ground.

“Goals are not enough. We have to have a plan, and this is a significant step to make it all work,” Nguyen said at the Thursday news conference.

The department now leases state-owned lands for carbon sequestration projects through third-party commercial leases, which drastically reduces revenue for the department’s beneficiaries, such as schools, counties and the state, Franz said.

“Right now, my agency is competing in the carbon offset markets with one arm tied behind our back,” she said.

Allowing the department to compete in carbon markets the legislature created through the 2021 Climate Commitment Act would save taxpayer dollars, generate revenue for department beneficiaries, like public schools, and generate money that would fund natural resource investments, like forest health and post-wildfire restoration projects, Franz said.

Carbon offset projects could include reforestation or acquisition of additional state forest lands, growing kelp forests in aquatic lands, better soil management on agricultural lands, and planting trees in urban areas, according to the department’s newly-released, “Carbon Playbook,” which outlines opportunities and additional revenue streams for potential projects.

The projects would be an effort to stanch heat-trapping carbon emissions from reaching the atmosphere, Franz said.

Those projects also could slow revenues for counties and ports that rely on working forests, said Doug Cooper, vice president of resources for the family-owned Hampton Lumber, at the bill’s public hearing Friday.

“Carbon accounting and value is one of the most contentious conversations in forest land management today,” Cooper said.

The problem with the legislation’s wording, industry foresters said, is it doesn’t account for all the downstream revenues working forests provide.

While paying for the timber is important, working forests provide many jobs, including mill work, harvesting contracts, and road builders, said Bill Turner, Washington timber procurement manager for Sierra Pacific Industries.

“If you gave me a comparable check, it doesn’t do anything for those employees. Our owner might say, ‘Thank you,’ and buy a yacht. That’s not their style, so it won’t happen. But it’s the tip of the iceberg,” Turner said, referring to all the revenue working forests provide.

However, Franz countered that carbon offset projects, such as reforestation and restoration efforts, could expand working forest land.

“We believe this is not about reducing the acres of working forests in the Department of Natural Resources, but actually growing it, growing the net increase in volume and in value over the long-term and over the short-term,” Franz said at the public hearing.

One way to do that is through timber waste, said Lauren Breynaert, Partnerships and Policy director with Myno Carbon Corp., a biochar company that plans to use timber waste to generate biochar, electricity and sell carbon credits in Kettle Falls, Washington.

“This is where the economy is headed and where the opportunity lies,” she said.

In 2021, the University of Washington and The Nature Conservancy conducted a study that found leveraging Washington’s natural resources could reduce greenhouse gas emissions by up to 9%, helping the state reach its goal of net-zero greenhouse gas emissions by 2050.

The major ways to harness natural resources to capture carbon, according to the study, include delaying timber harvests to allow trees to grow larger; increasing no-till harvesting, cover crop use, and nutrient management practices in agriculture; and avoiding development that cuts down urban and rural forests.

“The report made clear the opportunity, but what’s missing is the infrastructure. The state does not have the infrastructure yet for communities to implement natural carbon sequestration,” said Justin Allegro, policy director for The Nature Conservancy.

This legislation, he said, could help with that infrastructure.

While several tribal representatives testified in support of the bill, Jarred-Michael Erickson, the elected chairman of the Colville Business Council, added he would like to see tribes officially included in the language of the bill.

At the Thursday press conference, Franz said the department would work with tribes, state agencies and local governments. However, tribes are not listed in the bill’s text.

In addition, Erickson said the number of carbon credits issued to state agencies should be limited to avoid pricing problems for non-Department of Natural Resources projects.

Bill sponsor Sen. Liz Lovelett, D-Anacortes, said natural adaptive measures are some of the most effective ways to reduce carbon emissions in Washington.

“Working forests, conservation lands, aquatic landscapes, making sure that we’re planting trees in both urban and rural settings across the state and sequestering carbon from our marine environments by planting more kelp and eelgrass,” Lovelett said, giving examples of natural adaptive measures.

Furthermore, reducing carbon emissions is an urgent matter, Franz said.

“Every day, my agency is on the front lines of a rapidly changing climate, from wildfires and drought to dying forests to ocean acidification and sea level rise,” Franz said.

The Senate Environment, Energy and Technology Committee is scheduled to hold an executive session with no public comment on the bill at 8 a.m., Feb. 17, in Olympia and over Zoom.