If you’re a Society of American Foresters member, I highly recommend spending some time reading through the February 2022 #ForestrySource magazine. The special “Forest Carbon” issue offers several interesting and helpful articles if you need to come up to speed on the topic.
I especially enjoyed the interview (see video below) with Leigh Greenwood and Dr. Grant Domke discussing their research on the impacts of forest insects and diseases on the carbon sequestration capacity of US forests.
An analysis of 2020 carbon reports from public timber REITs was recently published by William Sonnenfeld with some very interesting insights and important takeaways. Will’s analysis ultimately reminds consumers to seek out a clear understanding of the stipulations, positioning, and disclosures for what is being reported (specifically, don’t compare two numbers unless your confident they are comparable!).
One topic of particular interest to me is whether it’s appropriate for the party responsible for growing the tree (i.e., the ultimate owner of the land asset on which the tree was grown), to “claim” carbon storage in long-lived wood products produced from the logs they grew. After all, this party assumed the risks and costs associated with capturing and storing the carbon…while the log buyer is responsible for transforming the log from round wood form to some other end-use product (i.e., dimensional lumber).
Hypothetical: Is it not appropriate for a homebuilder claim that they’ve produced X homes after they sell them to their buyers? Or rather, is it acceptable for the homebuyer to state “I built this house”.
My position is that the “grower” of the wood fundamentally owns the claim for carbon storage, unless they otherwise elect to sell/transfer that claim. The later part of the prior sentence is where I see the forestry business getting very interesting because it creates new compelling opportunities for timber owners (and effective solutions for interested buyers of the “claim”). We’ve seen companies like NCX capitalize on this by helping serve as a matchmaker between timber owners and interested buyers of the “claim”. But, there remains much to work out. A significant gap in the marketplace still exists to remedy the “perceived” ownership claim conundrum once a forest is harvested. At a minimum, the industry needs to be cautious not to double count claims on stored carbon and carbon in long-lived forest products.
Maybe most exciting of all, I think this is where the blockchain carries relevance in our industry. As a bit of an intangible, carbon remains a bit of a mystery for many and even more so when the wood is harvested…but what if you staked the claim on the blockchain? All of the sudden, you have a more tangible solution for ownership claim and a traceable chain-of-custody from woods to goods if the blockchain entry is georeferenced to clearly designate the space and time relevant for harvested wood. Food for thought…
Daniel Crawford 