Climate Lab is a Seattle Times initiative that explores the effects of climate change in the Pacific Northwest and beyond. The project is funded in part by The Bullitt Foundation, CO2 Foundation, Jim and Birte Falconer, Mike and Becky Hughes, Henry M. Jackson Foundation, Martin-Fabert Foundation, Craig McKibben and Sarah Merner, University of Washington and Walker Family Foundation, and its fiscal sponsor is the Seattle Foundation.
Washington’s Department of Natural Resources is making a renewed push for legislation that would allow it to sell carbon offset credits created from state timber lands.
Under bills proposed in the state Legislature, the credits would be sold to businesses during the state’s carbon-allowance auctions to balance greenhouse gas emissions and allow the state to conserve some forests. The bills would also allow the state to sell other environmental benefits like water rights and wildfire mitigation.
This latest effort comes with added urgency for Lands Commissioner Dave Upthegrove, who ran for office in 2024 on the promise to protect some of the state’s older forests. In August he signed an order to conserve 77,000 acres of “structurally complex” forests, which he says are vital to sequestering carbon, supporting critical habitat and providing biodiversity.
But DNR’s financial obligations have presented a thorn in Upthegrove’s plans. The state forestry agency is responsible for raising revenue through its land trusts to fund K-12 schools, counties and other services. DNR raised $198 million in the last fiscal year, primarily by auctioning off rights to harvest timber.
Upthegrove is pushing the state to find other ways to fund these services and local governments so his agency can focus on ecological sustainability.
“It’s an outdated system,” Upthegrove said. “We have lots of tools as a government on how to raise revenue. But when these older forests are gone, they’re gone forever.”
Now, he says it’s time for the state to enter the emerging markets for carbon and other “ecosystem services.”
A DNR report commissioned by the state Legislature and published in August found three near-term, economically viable ways the state could generate revenue off its 5.6 million acres of forest and other land that would not involve cutting down trees.
Among those, the most well-known may be to sell carbon credits.
As part of Washington’s 2021 Climate Commitment Act, the state’s largest polluters must buy allowances to release greenhouse gas emissions. Under proposed, DNR-backed bills, the state would generate offset credits from trees it protects from being cut down, selling them during the state’s carbon-market auctions. The idea is a company’s emissions would be canceled out by investing in conservation projects that absorb or hold what’s assumed to be an equal amount of carbon.
Offsets have been scrutinized for where they fall short, like whether they actually reduce carbon in the atmosphere. Drought, extreme heat, invasive beetles and wildfires — all becoming increasingly common — threaten the success of these projects if they destroy trees anyway even if they aren’t harvested for timber.
On average, carbon offset credits from timber lands could generate about a third of the revenue that timber sales currently do, according to DNR analysis. The report also stated there was a limited area — about 25,000 acres — where carbon offset credits could generate as much money as timber harvests. Plus, carbon regulatory markets can require commitments to preserve trees for 100 years or longer.
A second economically viable method is to enter another emerging market for “Avoided Wildfire Emissions,” in which companies pay for forest management that prevents wildfires.
Lastly, DNR’s report said the most lucrative way to make money off the state’s land trusts is to sell water rights. By directly leasing water rights to the rivers, lakes and groundwater on lands DNR manages to farmers or other customers, the report said DNR could potentially raise $15 million to $44 million annually. DNR staff said this option has social and environmental concerns, however, and would need further consideration.
Although analysis suggests that many of these markets may generate less net revenue than timber, DNR might want to explore them to diversify its current and future revenue streams, the report said. The report also found that entering new markets would likely take several years and require significant staffing along with changes in legal authority.
Upthegrove said he’s aware of the limitations of the approach.
“I’m not under the illusion that that generates the same revenue as wood products would, but it can be a piece of a larger solution that’s a meaningful part of it and has secondary benefits as well,” Upthegrove said.
His plan is drawing intense opposition from parts of the state that rely heavily on the timber industry.
“Selling carbon credits would not come even close to capturing revenue needed for Lewis County,” said Lindsey Pollock, a Lewis County commissioner.
She said the debate is not only over revenue DNR collects, but also the jobs and tax revenue the timber industry generates. She said those jobs provide income, pride and employment near workers’ families. And she said the timber industry already manages the land in a way that regrows trees in cycles.
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“This idea that you can give us pennies on the dollar to set aside even more land is reprehensible,” Pollock said.
In 2022, former Lands Commissioner Hilary Franz proposed removing 10,000 acres of state trust lands from timber markets for carbon offset credits, but 22 state legislators signed a letter expressing concerns and requesting a meeting with her. The effort failed.
Senate Bill 5999 and House Bill 2170 would grant DNR authority to generate revenue by selling carbon credits and other ecosystem services. They have both been referred to each chamber’s Agriculture & Natural Resources committees in the current legislative session.
Greg Kim: 206-464-2532 or grkim@seattletimes.com. Greg Kim is a reporter for Climate Lab at The Seattle Times who writes about the intersection of climate, energy and business. Previously, he worked on Project Homeless.
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