“Carbon neutral” is a term that has been increasingly used in the news over the past few years, said Justin Mallett, consultant forester for the University of Arkansas at Pine Bluff (UAPB) Keeping it in the Family (KIITF) Sustainable Forestry and African American Land Retention Program.
But what exactly does “carbon neutral” mean? And who does it apply to?
“In response to consumer and social pressure, many companies are setting goals to become carbon neutral,” he said. “Basically, companies are vowing to reduce carbon emissions or purchase enough carbon offsets to the point that all their carbon emissions are being offset.”
Mallett said one of the most popular ways to offset carbon is through the creation of carbon credits from timberland.
“If you think back to your science class in middle school, you will remember that during photosynthesis, plants and trees take in carbon dioxide and produce oxygen,” he said. “That carbon is then stored in the trees, bark, needles or leaves, and roots. The conversion actually stores the carbon for long periods.”
In most carbon credit registries, a carbon credit is one metric ton of carbon dioxide emissions avoided or reduced.
“Carbon credits are purchased by companies — for example, Delta Airlines or General Motors,” Mallett said. “These are examples of companies that have been under increased pressure due to the amount of carbon released by their manufacturing facilities, airplanes and automobiles.”
By becoming carbon neutral, companies will have more appeal to customers and stockholders who are concerned about environmental issues, Mallett said. Some consumers will give these customers their business since they make carbon offsetting a priority.
BENEFIT TO LANDOWNERS
Most landowners do not have the resources to measure, advertise and sell sufficient amounts of carbon collected through their timber, Mallett said.
“There are companies and project developers that can measure, aggregate and register the carbon credits from participating landowners,” he said. “These carbon credits are then added to certified carbon registries and offered to buyers.”
The contracts landowners sign with carbon project developers can vary depending on the registry and the project developer. Sometimes the landowner will be allowed minimal timber harvesting — or no harvesting at all — over the life of the contract.
“Often, the registry requires that the property have sustainability forestry certification by organizations such as the American Tree Farm System or the Forest Stewardship Council,” Mallett said. “The contract length can also vary from one year to over 100 years.”
Payments may be a set amount per acre over the life of the contract, a percentage of the carbon credit amount at the time of sale or a specific amount per carbon credit. Depending on the contract, management activity costs may be the responsibility of the landowner or the project developer.
“Carbon credit sales are currently taxed as ordinary income. However they are not subject to additional self-employment taxes,” Mallett said.
For more information on this or other forestry topics, contact Mallett at [email protected].
Will Hehemann is a writer/editor at the UAPB School of Agriculture, Fisheries and Human Sciences.