Challenge

A Tribal Nation with several hundred acres of forested land under a Conservation Easement approached Capacity Consulting, Inc. to understand how their land could benefit from carbon offset programs and potentially create an ongoing revenue stream for their Tribe. 

Carbon offsetting by sequestration is a measured reduction in greenhouse gasses (GHG) to make up for emissions that occur elsewhere. Carbon offsets are essentially a tradeable certificate proving one ton of CO2 or the equivalent impact amount of another GHG has been removed from (or not emitted into) the atmosphere. When the number of carbon offset credits obtained is equal to an organization’s carbon footprint, that organization is considered carbon-neutral.

Conservation Easements are opportune mechanisms to initiate carbon sequestration projects on forested land. They prompt investing in natural resource assessment and deriving ongoing income for growing trees rather than cutting them.

For now, investing in the carbon offset market has been restricted to privately held land, which is why Tribes and Native corporations have become major players. Carbon offset programs are attractive to Tribes because they preserve cultural resources and monetize land that is less than ideal for timber harvest and/or development. Several Tribes across the U.S. have utilized their forests to enter the carbon market which has seen substantial growth in the last few years.

Some examples to review include: 

• The Sealaska Corporation 
• The Redwood Forest Foundation 
• The Passamaquoddy Tribe 
• The Confederated Tribes of the Colville Reservation
• Keweenaw Bay Bands of Lake Superior Chippewa

Process

Primary and secondary research provided sound guidance on comprehending and navigating regulations for project standards and verification, review periods, and long-term monitoring obligations. Our industry and market analysis and case studies delivered accurate data and projections for venture possibilities; both the Compliance Market and the Voluntary Market were examined. Additionally, several interviews were conducted with the National Indian Carbon Coalition and Tribal Carbon. 

Recommendations

Carbon sequestration revenue generation is contingent on the amount of utilized forest area. Owning measurably less forested assets than the ROI threshold is the largest barrier of entry for landowners wishing to participate in carbon capture markets. The second biggest entry obstacle is upfront program development costs once enough land is purchased.

For the right landowner, access to this revenue-generating forest product can be a great way to diversify income streams. According to experts in the industry, a land size of approximately 3,000 acres is recommended to make this venture feasible.

Capacity determined that an independent carbon sequestration venture is not feasible for the Tribe since its current forested assets are below the industry standard ROI threshold. However, to provide value and future opportunity for the Tribe, the Capacity team provided two partnership-based options that could be feasible. 

Option one is to purchase land with funding support from the Indian Land Tenure Foundation (ILTF). Option two is to aggregate enough acres with nearby Tribes and collectively submit the total land under one carbon offset project. We provided operational business plans and financial proformas for each option.