Alaska’s government might someday be competing for the same customers as Sealaska Corp. in the fast-growing carbon offsets market, but that’s likely years away so the Juneau-based Alaska Native corporation that’s reportedly earned more than $100 million from its project since 2016 is for now extending an enthusiastic helping hand.
Right now it’s a sellers’ market due to an abundance of companies and other buyers trying to make “net-zero” or similar carbon claims, according to company officials. It’s also quirky and unfamiliar market for many potential players facing questions such as whether it essentially allows “dirty” companies to pay to keep polluting and research showing many of the claimed environmental benefits are bogus.
So while Gov. Mike Dunleavy is claiming Alaska has unique marketplace advantages compared to other state and foreign governments, Sealaska doesn’t see itself suddenly trying to compete on an uneven playing field.
“It could be, but I don’t think so,” Anthony Mallott, Sealaska’s chief executive officer, said Wednesday. “Most of the programs are built off demand, not supply. That could change.”
That observation came immediately after his remarks to a room full of state leaders during Sealaska’s annual reception at the beginning of this year’s session of the Alaska State Legislature, which on Friday received two bills from Dunleavy implementing his carbon proposals.
Sealaska, one of three Alaska Native corporations in the carbon market, claims it has earned more than $100 million since 2016 by putting forestry property it owns into California’s carbon credits markets, which is paying to keep the land unharvested for 100 years.
“We’re happy to be a resource,” Mallott said. “This is one of those things that is so much win-win in our mind.…We want to help and support carbon throughout our state as much as possible.”
He said having the state as a player in the carbon market offers potential benefits beyond revenue for a state trying to figure out how to replace diminishing oil resources, such as encouraging renewable energy projects which in turn makes more housing (and more affordable housing) possible.
Dunleavy has said he hopes the state can earn $900 million or more a year in carbon credits within a few years, which his budget director has acknowledged is more of a desired than tangible goal. But Mallott said he doesn’t see it as an absurd target.
“The market’s growing so fast I can see anything being plausible,” he said.
When it comes to competition among carbon credit sellers, Alaska is distinctive among governments because it is the sole owner of vast amounts of natural land, whereas carbon buyers considering other areas may have to cope with multiple overlapping owners and thus a more complex bureaucratic process, Department of Revenue Commissioner John Boyle said during a Thursday media briefing of the governor’s proposed bills.
“We really have a competition advantage, not just with any other (state) jurisdictions, but really in the world,” Boyle said.
But Boyle said he doesn’t see that competitive edge existing when it comes to Alaska Native corporations already in the carbon market or interested in joining.
“Clearly Alaska Native corporations have already beaten the state to the punch,” he said. “There’s really nothing that would prevent another Alaska Native corporation from utilizing large land holdings to do the same thing the state is doing.”
Of course, since politics are involved there’s already other questions involving government vs. private interests. Newly elected U.S. Rep. Mary Peltola found herself in headlines this week because her husband, Gene, is among four co-owners of a company launched last July called Alaska Carbon Solutions who’ve subsequently met repeatedly with Dunleavy about managing land in the state’s carbon program. The governor rejected a quick agreement since it would be an illegal sole-source contract, but some conservatives in particular are asking if the husband of Democratic Alaska congresswoman is engaging in influence peddling.
Dunleavy’s enthusiasm for the carbon market is contrary to many fellow Republican politicians nationwide who are seeking to penalize companies and entities seeking to be “net-zero emissions” players, with arguments largely based on claims the efforts are economically harmful. But the governor, besides pitching it as a long-term revenue solution, also argues it could benefit resource producers in the state such as oil companies.
An example of such cited by Boyle is an oil and gas producer on the North Slope who is seeking “net-zero” status and thus could purchase carbon credits from the state to offset the emissions produced by drilling and other extraction activities.
The governor’s two bills introduced Friday are essentially authorizing language to implement two forms of carbon offset programs. One essentially earns money by leaving carbon-absorbing natural elements such as trees and kelp intact (similar to Sealaska’s program), the other would store captured carbon emissions in a what’s pitched as a safe underground location such as Cook Inlet.
State legislators in both parties are expressing both interest and reservations about the governor’s proposals, since lawmakers have struggled for years with the issue of a long-term fiscal plan that accepts the unreliability of oil revenue. Since there’s also generally a strong reluctance to implement an income or other broad-based tax, or divert Permanent Fund earnings to the budget mostly or entirely in lieu of dividends to residents, carbon has become at least for now a relatively politically painless consideration.
Dunleavy referenced these concerns in a statement released Friday evening championing the proposed legislation.
“We’ve been told by some that we can generate revenue in the billions over 20 years just from our forest lands,” Dunleavy said. “This represents the means to fund services, lower the cost of living and improve our quality of life, to create wealth and billions of dollars in economic activity without taxing Alaskans or eliminating the PFD.”
But it’s not a simple issue since, among the many factors, there are constitution questions since the state is required to maximize its resources for the long-term benefits of all Alaskans, state Sen. Jesse Kiehl, a Juneau Democrat, told city leaders at meeting Thursday of Juneau Assembly members and the local legislative delegation.
“There are a huge number of questions in the Legislature,” he said. “There also are some open minds.”
Kiehl, a member of both the Senate bipartisan majority and Finance Committee that will scrutinize the governor’s bills, said questions about moral principles as well as financial principals may end up being part of the discussion.
“There’s definitely some money. It may even benefit the planet,” he said, “Some say if a fool and his money are soon parted then we want some of it, as long as we’re not the fools.”
The comments were in response to questions from Juneau Assembly members about whether the city might also be able to generate significant revenue by entering the carbon market. Kevin Jardell, the city’s lobbyist for state matters, said it’s a difficult prospect since, among other factors, Juneau doesn’t have the mineral rights to land that the state does.
But Southeast Alaska is likely to be a significant player assuming carbon offset activity expands in Alaska, due both to Sealaska’s success and the region’s natural rainforest environment, said state Rep. Sara Hannan, speaking at the same meeting.
“It’s maybe the easiest (land) to bring into the market,” she said. “Also, we have the kelp industry which is already attractive and growing in our region. I do think we as a region will have a substantial interest in where this discussion goes.”
While a relatively small portion of the 40 million acres of forest land the state owns is rainforest such as that in Southeast Alaska, it does absorb more carbon per-acre than the vast boreal forests of the Interior, Boyle said. But that is likely to be just one of many factors that potential buyers evaluate when negotiating with the state.
“What a project may look like in the Interior may look different than what some projects look like down there in Southeast,” he said. “What we want to see is what is it the market wants.”
Southeast Alaska’s rainforests, while potentially more lucrative acre-for-acre compared to the Interior, could also get extra scrutiny due to research such as an investigation asserting more than 90% of rainforest carbon offsets by the world’s biggest provider are worthless. The investigation focused largely on Verra’s carbon offsets in South American rainforests, with companies such as Disney and Shell among the buyers of credits.