One Way Forest Carbon Credits Might Come in Handy

Wildfires are razing U.S. forests faster than either natural regrowth or active replanting can restore them. There’s a nearly 4 million-acre backlog in the western U.S. of forests that have burned and not been re-seeded. That’s slightly larger than the size of Connecticut. And unless we pick up the pace, the shortfall could increase two to three times over by 2050 as wildfires get worse under a warming climate.

These are the findings of a study published last week on the yawning gap between reforestation needs and reforestation capacity in the western U.S. Trees are still the country’s most important resource to counteract climate change, offsetting more than 12% of annual greenhouse gas emissions as of 2021. But in some areas like in the fire-ravaged Rocky Mountain region, forests have become a net source of carbon to the atmosphere, releasing more than they draw down. To prevent the reforestation gap from widening, the new study warns, we have to fix the “reforestation pipeline” — our capacity to collect seeds, grow seedlings, and plant them.

It also highlights solutions. The research was primarily funded by a company that finances tree-planting efforts by selling credits to carbon-emitting businesses based on the amount of carbon the trees suck up, allowing those businesses to offset their own emissions. To rebuild the country’s reforestation capacity, the study recommends — surprise, surprise — expanding the role of forest carbon offsets, among other ideas.

Some might look at this paper and dismiss it as biased science, but it got me thinking about the long-running debate in the climate community over trees. Should companies be allowed to offset their emissions from burning fossil fuel by planting carbon-sucking forests? It’s easy to say no. Too many forest-related carbon offset projects have come under fire for using faulty accounting methods or for “protecting” forests that were at no risk of being felled. Plus, there’s the larger risk that offsets provide a license to emit.

But when you contemplate the chasm between the funding and infrastructure required to restore forests and current capacity and incentives — not just in the U.S., but also globally — it’s easy to see why so many people ignore these realities and say we must finance reforestation through carbon markets. The new study spells out the predicament quite clearly.

Solomon Dobrowski, the lead author and a professor of landscape ecology at the University of Montana, was quick to tell me that these numbers were a rough estimate. “I'm not so hung up on the absolute number,” he said. “We can increase the precision of that number. But the take-home message here is that the needs are rapidly outstripping our capacity to fill them.”

Dobrowski studies how forests grow back after a disturbance like a wildfire, and he’s been documenting a concerning trend. Larger, more severe fires are “punching these big holes into landscapes,” he told me. A severe burn might leave a mile-long stretch between nearest living trees, making it impossible for the forest to regenerate through natural seed dispersal.

At the same time, the government is struggling to pick up the slack. Due to funding shortfalls, the U.S. Forest Service has managed to address “just 6% of post-wildfire replanting needs” per year over the last decade.

The average area burned in the U.S. more than doubled from 2000 to 2017 compared to the preceding 17-year period. But the uptick in severe fires is not the only reason we’ve fallen so far behind on reforestation. At the same time fires have increased, both public and private forestry shops have collapsed. Ironically, the decline of an ecologically destructive industry — logging — also gutted the potential for an ecologically regenerative forestry industry to thrive.

Previously, most of the Forest Service’s reforestation work was funded by the agency’s timber sales. But beginning in the 1990s, logging on public lands sharply declined due to a confluence of factors, including over-harvesting in previous decades and the listing of the northern spotted owl as protected under the Endangered Species Act. The agency’s non-fire workforce has decreased by 40% over the past two decades. It also shut down more than half its nurseries, leaving just six remaining. Many state-owned nurseries have also closed due to budget cuts and reduced demand for seedlings.

Today, the reforestation supply chain is mostly sustained by private companies serving what’s left of the wood product and fiber industry. State and local regulations require companies to replant in the areas they harvest. But since the industry is concentrated on the west coast, so is the supply chain — 95% of seedling production in the western U.S. occurs in Washington, Oregon, and California. That means interior states like Montana, Colorado, Arizona, and New Mexico, which are seeing increasingly large fires, have no mature supply chain to support reforestation.

The New Mexico Natural Resources Department, for example, estimates it needs 150 million to 390 million seedlings to replant the acres burned in the past 20 years. But the only big nursery in the state, a research center at New Mexico State University, can supply just 300,000 seedlings per year. The nearest U.S. Forest Service nursery serving the region is in Boise, Idaho, more than 700 miles away. Matthew Hurteau, a forest ecologist at the University of New Mexico who is a co-author on the reforestation study, told me he has been working with the state to develop a new nursery capable of producing 5 million seedlings a year. The project has received some funding from the U.S. Department of Agriculture and the state government, but still needs to raise roughly $60 million more, Hurteau said.

Nurseries aren’t the only bottleneck. Hurteau has also been working to build the state’s seedbank, a time-consuming process that requires going out into the field and collecting seeds one by one. Another piece of the puzzle is workforce development. Dowbrowski pointed out that the majority of tree planting today is not done by government workers but rather by private contractors that hire H2B guest workers. Due to federal limits on immigration, reforestation contractors haven’t even been able to hire enough to meet current planting demand.

The new paper is far from the first to highlight these issues, and policymakers are beginning to address the problem. In 2021, the Forest Service got a major infusion of cash from the Bipartisan Infrastructure Law, which lifted the cap on its annual budget for reforestation from $30 million to at least $140 million with the directive to clear its backlog.

But Dobrowski said this is a far cry from all that’s needed. In the study, he and his co-authors estimated that clearing the existing backlog in the West alone could cost at least $3.6 billion. And that’s a conservative estimate — it doesn’t include the cost of building more greenhouses or expanding the workforce. “The reality is that the feds don’t have the infrastructure and workforce to address this at scale,” he told me. The Forest Service budget also won’t address reforestation needs on private lands, which account for about 30% of forested land in the western U.S.

After establishing the scale of the problem, the paper raises a followup question: How can we scale the reforestation supply chain? There, it pivots to argue that “new economic drivers” — like carbon markets — “can modernize the reforestation pipeline and align tree planting efforts with broader ecosystem resilience and climate mitigation goals.”

This is precisely what Mast Reforestation, the company that funded the research, is trying to do. Mast is vertically integrated — it collects seeds, grows seedlings, and plants them. The company has developed software to improve the efficiency of each of these steps and increase the chances of success, i.e. to minimize tree deaths. To fund its tree-planting efforts, Mast sells carbon credits based on the amount of CO2 the trees will remove from the atmosphere over their lifetimes. It only plants on privately owned, previously burned land that wouldn’t have otherwise been replanted (because the owner couldn’t afford it) or regenerated (because the burn was so severe). The idea is to create a more stable source of financing for reforestation not subject to the whims of congressional appropriations.

Matthew Aghai, an ecologist who works as the chief science officer at Mast and another of the study’s co-authors, told me there’s a misunderstanding among policymakers and the general public that when forests burn, the government is ready to step in, and all that’s needed is more funding for seedling production. Aghai hopes the new paper illuminates the truth, and how risky it is to wait for state backing that may never arrive. He told me that he sought out Dobrowski to work with him because he knew, as a former academic himself, that if he had written the paper on his own, there would have been a stigma attached to it. “I think the best way for me to get those ideas out was actually something that needs to happen in our broader market, which is a lot more collaboration,” he said.

There are many climate advocates who believe the problems with carbon offsets can be fixed, that the markets can be reformed, and that “high quality” nature-based credits are possible. Indeed, many consider restoring trust in nature-based carbon credits an imperative if we are to fund reforestation at the level that tackling climate change requires. A few weeks ago, Google, Meta, Microsoft, and Salesforce announced a new coalition called Symbiosis that will purchase up to 20 million tons of carbon removal credits from nature-based projects that “meet the highest quality bar” and “reflect the latest and greatest science.” Then, last Tuesday, the Biden administration followed up with a show of support for fixing the voluntary carbon market, because it can “deliver steady, reliable revenue streams to a range of decarbonization projects, programs, and practices, including nature-based solutions.”

But there is one fundamental problem with selling carbon credits based on trees, which no amount of reform or commitment to high integrity can solve. Fossil fuel CO2 emissions are essentially permanent — they stay in the atmosphere for upward of a thousand years. The CO2 sequestered by forests is not. Trees die. In a warming world, with worsening pest outbreaks, drought, and wildfires, the chances of a tree making it to a thousand years without releasing at least some of its stored carbon are slimmer than ever.

Hurteau, despite contributing to the paper, is deeply skeptical of financing reforestation through the sale of carbon credits. “We need to be making monster investments in maintaining forest cover globally, and I understand why people look at carbon finance to do this,” he said. “But you can't fly in an airplane and pay somebody to plant trees and have it zero out. From an energy balance perspective, for the Earth’s system, that's not real.”

When I raised this with Dobrowski, who endorsed the paper’s conclusions about the potential for carbon markets, he said it’s something he struggles with. He agreed that a ton of fossil fuel emissions is not the same as a ton of carbon sequestered in trees, but comes back to the fact that we need new incentive structures for people to do reforestation and be better stewards of our forests. It’s something I’ve heard echoed many times over in my reporting — the unspoken subtext essentially being, do you have any better ideas to raise the billions of dollars needed to do this?

Aghai had a slightly different take. To him, the one-to-one math isn’t so important “as long as the trajectory is moving forward, we're accumulating carbon, we're protecting watersheds, we're increasing the biodiversity index.” That may sound a bit hand-wavy — and it still gives a pass to polluters. But then he raised an interesting point, one that I don’t think I’ve heard before. The environmental damage caused by fossil fuels is not just the carbon they spew into the atmosphere. And the value forests provide is not just the carbon they sequester.

“Carbon’s our currency right now. It’s the thing that everyone is measuring around,” he said. “But what about all the other destruction that comes with the energy sector? There's cascading effects that impact water, soils, methane. Forests tend to stabilize everything by moving us toward homeostasis at a landscape level. For me, these markets will work when we catalyze them at a regional, dare I say global scale.”

Are these benefits enough to dismiss the incongruity inherent to forest carbon offsets? To say, for example, that trees might not actually offset the full amount of carbon that Google is putting in the atmosphere, but the funding Google is providing to get these trees in the ground makes some greater, unquantifiable progress toward our climate goals?

Some scientists have proposed alternative solutions. Myles Allen, a professor of geosystem science at the University of Oxford, has advocated for “like for like” offsetting, in which companies only buy nature-based carbon credits to offset their emissions from nature-based sources, such as land cleared to grow food. To offset fossil fuel emissions, the logic goes, they could buy other kinds of credits, like those based on carbon captured from the air and sequestered deep underground for millenia. The European Union is currently considering a rule that would require companies adhere to this principle. Others have suggested companies could make “contributions” to climate mitigation through investments in forests, rather than buying offsets.

Both would be significant departures from the way corporate sustainability managers have used carbon markets in the past. But the current system is in crisis. The volume of carbon credits traded declined precipitously in the last two years as buyers were spooked off buying offsets. Forestry-related credits, in particular, contracted from $1.1 billion in sales in 2022 to just $351 million in sales in 2023, a 69% drop. Within that, the vast majority of the credits traded during both years came from forestry projects that reduced emissions, not reforestation projects like Mast’s that remove carbon from the atmosphere.

Even if you agree with Aghai that carbon markets are our best hope at addressing the reforestation gap, gaining the trust of buyers is a prerequisite. That means that scientists, companies, and governance groups like the Integrity Council for the Voluntary Carbon Market first have to converge on what these credits actually mean and how they can be used.