The near-term revenue prospects for the state from carbon sequestration are signifiant, but not in the billions or the hundreds of millions, according to a state consultant’s report that is happily devoid of the over-aggressive sales pitch that Gov. Mike Dunleavy has adopted. The report calls for three pilot projects that would net the state about $8 million a year.
“The most promising and easily-implementable opportunities are in forestry,” says the report from Anew Climate LLC, a consulting firm hired by the Dunleavy administration to review the potential revenue from carbon sequestration. Nat Herz of the Northern Journal had the first public disclosure of this analysis, a report finished five months ago that was not released to the public.
The report says the immediate opportunities for carbon sequestration are limited to Alaska forests, not to pumping carbon into depleted oil fields or in seaweed projects. The report makes it clear that the state needs a great deal more information and research. Among the many things to be worked out are how yet-to-be-written rules about “avoided wildfire emissions” would apply.
The Carbon Offset Opportunity Evaluation suggests that the state start with three pilot projects to set aside more than 300,000 acres of forest near Haines, Fairbanks and Mat-Su and sell carbon credits based on the amount of carbon stored because of trees that won’t be cut and because of tree growth that takes place over time.
These three pilot projects could produce about $80 million in net revenue for the state over the first decade, about $8 million a year.
That is a long way from the Dunleavy proposal in his 10-year budget that carbon sequestration will provide $300 million to state in the fiscal year that begins next July. The pilot projects would generate about $300 million over the first 40 years.
Still, more information is needed before the state goes forward.
“If the department pursues a carbon project one of the first steps will be to develop a network of permanently-monumented, fixed-area inventory plots to be installed in the project areas. The new inventory plot network is needed to ensure the carbon measurements/models can pass the mandatory and detailed verification process required by the methodology,” the report said.
“The inventory must meet certain sampling error requirements to avoid a confidence deduction due to an inadequate number of inventory plots. Anew recommends installing plots in a systematic grid network, which is the most accurate and defensible inventory design. Plots will need to be monumented and well-marked to facilitate remeasurement during the verification process.”
The consultant says forest projects, under a framework called Improved Forest Management, are the only real options available right now and that the other ideas offered by the state for generating revenue need more work.
“No immediate project opportunities have been identified in the other categories,” the company says. “There are no meaningful opportunities related to marine or soil carbon sequestration in the state, and opportunities around LNG, fleet vehicles, and mine methane capture require further investigation.”
When specific projects are identified, in-depth feasibility studies will be needed. “The feasibility study would also identify whether the cost of implementing a project would exceed the revenue generated by the credits. Only in circumstances where the credit revenue exceeds project costs is a project recommended.”
The consultant recommends waiting until the carbon capture and storage rules about under water storage—such as in the Cook Inlet gas fields—are published by the American Carbon Registry and the Verified Carbon Standard Verra and “then further evaluating CCS (Carbon Capture Storage) project opportunities in the state.”
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