David Bugni’s property near Estacada, Oregon, on July 12, 2024. Bungi owns 100 acres of forest which he has entered into a carbon project with the company Forest Carbon Works. (Rian Dundon/Oregon Capital Chronicle)
No man-made machine on Earth can better capture planet-warming carbon dioxide from our atmosphere than a healthy forest.
And the most effective carbon-storing forests in the world are the wet, dense, giant conifer forests of the Northwest. The forests in Oregon’s Coast Range absorb and store more carbon per acre than almost any other forests in the world – including the Amazon Rainforest.
For more than a century, these forests have been heavily logged, supporting a vast timber industry worth billions of dollars. But, companies behind a new and growing market force are hoping to bank on the money-making potential of Oregon forests that are left intact, doing what they’ve always done: absorb and store carbon in their bark, tissue, leaves and needles and in the soil beneath them. In doing so, they help combat the growing threat of climate change.
New carbon crediting markets are betting on a future where they can make money on Oregon’s forests without cutting them down, and instead, based on the carbon they store. Dozens of companies have sprouted up to broker agreements with public, private and tribal landowners to preserve forests by selling credits to polluting industries that have to, or want to, show they are offsetting their own carbon dioxide emissions driving climate change.
The Capital Chronicle spent months investigating the potential for Oregon forests to play a larger role not only in the growth of emerging, multi-billion-dollar carbon crediting markets, but also in a global and collaborative fight against climate change. The investigation included interviews with dozens of forest managers, carbon credit brokers, scientists, market experts and critics along with multiple visits to forests across Oregon and Washington to see the projects on the ground.
In Oregon, two dozen projects encompassing more than 1.3 million acres of forest are listed in the American Carbon Registry, the first voluntary greenhouse gas registry in the world that monitors projects and issues carbon credits. These forests have all been added to the registry in just the last 10 years, and 20 of those projects were added in just the last four years.
They have, according to dense and often voluminous paperwork, generated more than 6.5 million carbon credits so far – equal to pulling at least 6.5 million additional metric tons of carbon dioxide from the atmosphere – by remaining intact and growing older, bigger and healthier. The credits linked to those benefits have been sold to polluting companies that have paid millions of dollars in exchange for permission to say they have – by supporting those projects – offset or reduced their own carbon dioxide pollution.
Reducing global carbon dioxide emissions, and making money along the way, is a priority not just for individual landowners and polluting industries, but also for state, federal and tribal governments. Oregon’s Gov. Tina Kotek and her peers in 17 other Western states consider using forests as emission storage powerhouses as a key strategy for tackling climate change, laying out their ideas in a recent proposal to “decarbonize the West.”
The report recognized the urgency of curtailing greenhouse gases to fight climate change. The overwhelming consensus among climate scientists is that to stop the worst possible outcomes from climate change, we must keep the average global temperature from rising more than 2.7 degrees Fahrenheit from preindustrial times. The planet has already seen a 2 degree rise since the 1850s. To limit a further temperature rise, experts say humans will need to largely stop burning fossil fuels and reach “net-zero” emissions by 2050, meaning no more carbon dioxide would be released into the atmosphere than would be taken out.
We cannot lower our emissions and slow the worst effects of climate change without protecting what’s left of our forests. Trillions of trees and their soils around the world each year absorb, on average, between one-quarter and one-third of all human caused carbon dioxide pollution, according to NASA.
But trees and forests alone will not solve the emission problems humans have created, scientists say. There are not enough forests on Earth to absorb and store all of the excess carbon dioxide humans are responsible for, and planting a bunch of new trees to counterbalance this would be akin to bailing out a flooded basement with rolls of paper towels.
Climate scientists and policy experts have said for decades that the only way to protect the health of the planet and our future is to reduce the amount of carbon dioxide we send up into the atmosphere every day.
This is among the reasons that governments in more than 140 countries, including the U.S., as well as 23 state governments, have passed legislation setting greenhouse gas emission reduction targets. In Oregon, the state has set a goal of reducing emissions 90% from pre-1990s levels by 2050.
Forests can be a tool. And the effectiveness and integrity of this tool is being tested in carbon markets being built right now.
How carbon markets work
There are two market models for creating, selling and buying carbon credits. One is a compliance market, which is regulated by a government and created to help polluters comply with legally mandated carbon emissions caps. Companies can buy down some portion of their required emissions reduction each year by purchasing carbon credits, with 1 metric ton of carbon dioxide equal to one credit.
The other market is voluntary, and is regulated by nonprofits and private companies. Voluntary markets exist for companies that want to buy carbon credits not because they must, but because they want to show that they are trying to reduce the impact of their pollution. What both markets do, in essence, is put a price on carbon dioxide pollution and ask polluters to pay for it.
The carbon credits used to offset that pollution are generated by landowners, companies, nonprofits and other entities that are undertaking work to reduce the amount of carbon dioxide in the atmosphere. This includes groups restoring wetlands, companies plugging orphaned oil wells and landowners improving the management and conservation of their forests. Polluters cannot buy the power of existing forests: They can only buy credits for those that are improved or grown to capture and store more carbon dioxide from the atmosphere.
In the compliance market, forest landowners have to agree that for at least 100 years they will manage their forest to collect additional carbon dioxide – more than the forest would store without intervention. In the voluntary market, owners have to agree to improved forest management plans of at least 40 years.
This management creates – by reducing logging, letting trees get older before they’re logged or planting more trees – what is called “additionality.” To enter a carbon market, a forest owner has to prove that each additional metric ton of carbon dioxide projected to be removed and stored in the trees would not have happened without the financial incentive of the market.
The largest compliance market in the U.S. is run by the state of California. Most Oregon forest carbon projects are registered in this market, but a growing number are turning to the voluntary market. The average price paid to landowners per credit in California’s market in 2023 was about $33. The average credit price paid to landowners in voluntary markets worldwide in 2023 was about $6.50.
Birth, death and rebirth of Oregon’s carbon market
Oregon was the first state in the U.S. to pass a law capping greenhouse gas emissions from power plants, and the first to create the prototype of a state-mandated carbon exchange. In 1997, the Oregon Legislature passed House Bill 3283, requiring all newly built energy facilities to keep their carbon dioxide emissions 17% below the cleanest power plant in the country. If unable to reach that target, the companies could pay to offset their emissions by investing in activities that would absorb and store carbon dioxide or cut emissions.
It led to the creation of the Oregon Climate Trust, today known as The Climate Trust, a nonprofit designed to acquire carbon offsets for companies. To do so, the group identified, evaluated, quantified and verified projects that could offset carbon dioxide emissions. The trust came up with some of the first methodologies for measuring carbon storage from forests and other ecosystems, and the first protocols for ensuring the accuracy and integrity of projects.
In the years following the passage of House Bill 3283, Oregon legislators tried and failed at least nine times to pass legislation that would have put a price on carbon dioxide pollution and would have required all polluting companies in the state to cap their emissions by either buying or trading carbon credits.
The last attempt to pass such a cap-and-trade law in 2020 made national news when Oregon’s Senate Republicans walked out of the legislative session to avoid voting. Oregon has not passed such legislation since, and instead, the Oregon Department of Environmental Quality has had to piecemeal together its own programs to begin putting prices on greenhouse gas pollution. In 2016, it enacted the Clean Fuels Program, which requires fossil fuels suppliers, such as Chevron and Exxon Mobil, to gradually reduce the carbon dioxide emissions from the fuels they sell in Oregon, until they’ve cut emissions at least 37% by 2035. The companies selling fossil fuels in Oregon essentially owe a carbon debt to DEQ. To pay it, they can reduce the carbon intensity of their fuels by blending them with biofuels, such as those from vegetable oils and animal fats. They can also buy carbon credits from clean fuels producers to offset some of their emissions. Clean fuels producers, such as companies installing electric vehicle charging stations, earn carbon credits from the environmental quality department. For every ton of carbon emissions they save from entering the atmosphere, they receive one carbon credit. Buyers and sellers negotiate the sale price, but the average price for each Oregon credit in 2023 was about $129. The department is also currently trying to reinstate a carbon investment program that’s similar to House Bill 3283.
The Community Climate Investments program would charge companies $129 per offset they wish to buy to meet some portion of their required emissions reduction under Oregon’s Climate Protection Program. Officials at the environmental quality department say this reflects the costs of running the program, the true cost of carbon dioxide emissions and the costs of investments that will help the state transition off of fossil fuels. The Climate Protection Program, which is being reworked by the environmental department and is expected to be reinstated by early 2025, calls for a 50% reduction in greenhouse gas pollution by 2035 and a 90% reduction by 2050.
The department would send the bulk of the money to a nonprofit that would help fund community-based projects such as weatherizing public buildings, installing heat pumps or solar panels at affordable housing sites, or buying electric vehicles or vehicle chargers for community groups and tribes.
Oregon’s neighbors have also acted, with California and Washington already running government-regulated carbon markets. Washington’s launched in early 2023, and generated more than $1.8 billion in credits in its first year. But in November, Washingtonians will vote on whether to have it dismantled following a ballot initiative to repeal the state’s landmark climate legislation, including its cap-and-invest program. That initiative is being led by a conservative political committee funded largely by a Washington hedge fund manager and part-time farmer, Brian Heywood. Critics say the program won’t significantly move the needle on climate change but will drive up fuel, food and energy prices.
California’s market has been around since 2012, and has, according to a 2020 report, generated more than $12.5 billion in revenue from hundreds of projects over the years, which are expected to keep nearly 45 million metric tons of carbon dioxide out of the atmosphere. That’s equal to taking more than 10 million gas-powered cars off of California roads for a year.
Nearly 40 countries have imposed a government-mandated tax on carbon dioxide emissions. These include much of the European Union, or EU, China, Argentina, New Zealand and Japan. And dozens of countries have propped up government mandated cap-and-trade programs. This also includes every country in the EU, Canada, Colombia, South Africa and Australia, according to the World Bank. Despite efforts over the last 20 years, Congress has failed to pass legislation that would put a price on carbon dioxide pollution in the U.S. and create a federally mandated and regulated cap-and-trade market for emissions.
Reporting for this project was supported by the MIT Environmental Solutions Journalism Fellowship.
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