Carbon market no longer serving small-tract forests
Published 6:50 pm Wednesday, October 18, 2023
By Bonnie Coblentz
MSU Extension Service
Some Mississippi landowners selling carbon offsets through a company geared to smaller tracts of land have lost that source of income this year.
Curtis VanderSchaaf, a forester with the Mississippi State University Extension Service, said the one-year harvest deferral program previously offered by the Natural Capital Exchange, or NCX, has ended.
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“This forest carbon market program provided a way for forest landowners to help reduce the impacts of greenhouse gas by sequestering and storing carbon from their forests,” VanderSchaaf said. “NCX was different than most of these markets that have relatively long contractual commitments, require a capital investment and require large minimum acreages for participation.”
NCX directly catered to smaller scale, private forest landowners by allowing them to sell carbon offsets based on one-year harvest deferrals.
“NCX is not out of business, but they did away with the one-year harvest deferral,” he said.
The forest carbon offset market grew out of companies’ efforts to voluntarily reduce greenhouse gas emissions and their carbon footprints. While the NCX program was easy for Mississippi timber owners to participate in, it has gone away with no similar replacement program available.
“There are two types of carbon markets: voluntary and involuntary or compliance,” VanderSchaaf said. “NCX and a couple of others are voluntary, meaning the buyer is choosing to participate, not mandated or regulated by law to purchase.
“A compliance market is a cap and trade. That’s where a government agency caps the amount of emissions an industry can emit. If businesses exceed the amount allocated to them — the cap — they either have to ‘trade’ for credits from another business in the industry that is using less than their allocated amount, or purchase offsets from somebody else, such as a forest landowner,” he said.
The goal of these efforts is that industries reduce the global impact of greenhouses gases, which are harmful to the environment.
Although the one-year harvest deferral program NCX offered is gone, other options are available. However, it is more difficult now for those who own small acreage or who want short-term contracts.
“Industries that have to offset their emissions by law need to have a steady supply of that carbon offset,” he said. “They would rather purchase from a large landowner or from an aggregator who has organized participating smaller landowners to offer a large supply of long-term carbon offsets.”
These long-term contracts can be up to 100 years, although some markets have terms as short as 20 or 40 years with requirements as to minimum acreage and harvests.
“NCX was directed toward forest landowners in the Southeast. Most of the other programs are geared toward the West or Northeast,” VanderSchaaf said. “Because of the long-term contracts and the steady supply of carbon offsets or credits, these contracts pay more.”
Jessie Purvis, a landowner in Rankin County, participated in the NCX program in 2021 and 2022 after extensively researching to determine any risks involved or long-term penalties. He was skeptical going into the program.
“Trees and many other natural resources already capture carbon and are readily renewable, so exactly why is a payment due for something that already exists?” he asked. “Shouldn’t it be for a new carbon capture operation? I’ve seen some of the same things happen in the past, and while they make great headlines and put money in pockets of well-connected individuals and businesses, many times they don’t really do what they are promoted to do.”
Through NCX, Purvis received just over $14 an acre for his one-year harvest deferral on enrolled timberland.
“Based on a one-year operation, losing the NCX program reduces the income from this tree farm by $10-$20 per acre per year while still growing timber,” Purvis said. “It doesn’t change anything about how I will operate the property overall.”
Purvis said he could possibly participate in a few other carbon credit programs, but doing so would tie up his land and prevent harvests for decades.
“I don’t plan to do anything that ties me or the land up like that,” Purvis said. “My plans may change, the land uses may need to change, health and financial needs change; therefore, I am unwilling to commit to any long-term deal.”
For more information on forestry, carbon markets and more, visit MSU Extension at http://extension.msstate.edu/natural-resources/forestry.