The Carbon Pathway: An Alliance program helps land trusts navigate carbon financing
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About This Saving Land
A Land Trust Alliance pilot program opens the door to carbon financing for two land trusts in Maine.
Madeline Bodin is a freelance environmental and science journalist.
© 2023 Land Trust Alliance, Inc. All rights reserved.
For over three decades, Loon Echo Land Trust has conserved forests and wetlands in the northern Sebago Lake region of southwestern Maine. Like many medium-sized land trusts, success has come at a cost, or rather, with costs, significant ones. In addition to the stewardship costs typical of most last trusts, LELT has seen usage of its trail system, encompassing over 30 miles, blossom in the past 10 years, especially during the pandemic. The increased demand has meant the need to hire more summer stewardship staff and provide new amenities such as bathrooms and parking areas.
“I think land trusts, broadly speaking, have spent the last 30 to 40 years in a frantic rush to protect as much land as possible,” says Matt Markot, LELT’s executive director. “That has resulted in a lot of good conservation, but it has left land trusts financially vulnerable to long-term stewardship costs.”
LELT earns some revenue through sustainable timber harvests, which also honors the timber industry’s legacy in the region and is an important outreach tool. Still, increasing use and costs have raced ahead of what responsible timber harvests bring in.
A few years ago, looking for a new way to ease its increased financial burdens, LELT saw another way to have its forested lands yield meaningful financial benefits: the voluntary carbon market.
Carbon markets create financial incentives for activities that reduce or avoid greenhouse gas emissions, matching corporate buyers seeking offset credits to help meet their decarbonization goals with sellers who generate these credits through nature-based climate solutions.
“Plants are currently the only surefire way to pull carbon out of our air,” wrote reporter Erik Vance of The New York Times in a 2021 piece on climate change. “That means putting aside land and managing it well. Land trusts try to do just that and often need help with projects or funds to buy more land.”
For a medium-sized land trust like LELT, with 8,500 acres conserved and three full-time staff, navigating the carbon market was difficult. “We had learned enough to understand that our forestland holdings were likely good candidates for producing high quality carbon offsets,” Markot says. “What we also understood was that we had to find a partner with which to develop a project.”
“The reality is most local and regional land trusts do not have enough eligible acreage to access the voluntary market alone,” Markot says. “It’s expensive to develop a carbon project. There are thresholds for ROI [return on investment] that come down to eligible acres.” That means most land trusts need to figure out how to work with a partner—ideally another land trust—to increase the amount of eligible acreage to access the carbon market. But how could LELT do that?
Kirk Siegel, executive director of Mahoosuc Land Trust similarly thought that participating in the carbon market might be a good fit for MLT, which has conserved 22,000 acres of forests, mountaintops, agricultural lands and waterfalls where the White Mountains straddle the Maine-New Hampshire border. However, with 20 years’ experience as a land conservation attorney, he knew carbon projects were complex, so he explored the possibility cautiously.
Siegel was interested in a carbon project, specifically, because he had concerns that MLT could become too reliant on harvesting timber on fee-owned lands for its funding portfolio. A carbon project revenue stream would allow any timber harvesting decisions to be made based on habitat and biological diversity.
But, with rapidly growing conservation easement and fee land stewardship demands, and only two year-round staffers at the time, Siegel was concerned that MLT might not have the resources necessary to participate in a carbon offset project.
Creating a carbon market program
“The Land Trust Alliance is here to help land trusts protect and steward more land and do it well. We see a strong alignment with using carbon finance as a mechanism to protect and manage land. There isn’t enough federal or philanthropic funding to do all the land conservation work needed, and carbon financing can help fill that gap.”
“The Land Trust Alliance is here to help land trusts protect and steward more land and do it well. We see a strong alignment with using carbon finance as a mechanism to protect and manage land,” says Kelly Watkinson, the Alliance’s land and climate program manager. “There isn’t enough federal or philanthropic funding to do all the land conservation work needed, and carbon financing can help fill that gap.”
The demand for nature-based carbon offset credits is there, says Erin Heskett, the Alliance’s vice president of conservation initiatives. The value of the voluntary carbon market was $2 billion in 2021, the last year data is available, according to Ecosystem Marketplace, a nonprofit environmental finance information provider. That’s nearly four times its value in 2020, it reported in a brief. The 500 million carbon credits traded in 2021 represent 500 million metric tons of carbon dioxide equivalent either stored or not emitted.
The Alliance aims to help its members overcome the barriers to participating in the carbon market, including the expertise required and the complexities of aggregating land parcels between organizations. “Most land trusts don't have enough acreage on their own to support a carbon project,” Heskett says, “so they will need to aggregate their acreage with other land trusts and landowners.”
To help land trusts access the carbon market more readily, in 2020 the Alliance launched a two-pronged Carbon Offset Pilot Program, focusing on both improved forest management and avoided grassland conversion projects. It turned to Pennsylvania-based Finite Carbon, North America’s leading developer of forest carbon offsets, to develop IFM voluntary carbon projects and to The Climate Trust to develop voluntary grasslands carbon projects.
The Alliance couldn’t have picked a better time to begin such a project, says Dylan Jenkins, vice president of portfolio development at Finite Carbon. Once, the revenues available from a carbon project were too low to allow any but the largest landowners to see revenue after the upfront costs, Jenkins says. Today, they are high enough to make smaller projects viable.
One aspect of the Alliance’s assistance is a pool of re-grant funding that participating land trusts can apply for to cover the cost of exploring the feasibility of the carbon project. Those include costs that might otherwise be difficult to recoup, says Heskett, including legal fees, staff time and the cost of a forest inventory. The Alliance also developed template legal agreements and other documents with Finite Carbon and The Climate Trust to help streamline the project development process and established a well-defined pathway for land trusts to navigate the complexities of carbon project development more easily.
The program also addresses the all-important factor known as “additionality.” Additionality is the concept that entering the land in the carbon market creates an increase in the amount of carbon stored on the land, Jenkins says. For forest projects, increased storage comes in the form of trees, growth that would have otherwise been harvested, or is enhanced by improved management practices. If timber harvesting is already strictly prohibited, the land would not qualify because it couldn’t add carbon storage.
Finite Carbon works with credible buyers to ensure that their carbon offset targets are met, and value is delivered to forest landowners. Credits are the landowners to utilize as they wish—in this case, the landowners. Finite Carbon helps guide decision making with the land trusts’ best interests and values in mind.
The LELT and MLT projects were developed under the IFM protocol established and managed by American Carbon Registry, an organization charged with developing rigorous, science-based carbon offset standards and methodologies as well as providing project registration, verification oversight and offset issuance.
“ACR sets out rigorous rules and requirements to ensure carbon projects deliver real and lasting climate impact,” says Kurt Krapfl, ACR’s director of forestry. “Innovative approaches such as those developed by the Land Trust Alliance help to make carbon projects accessible to land trusts and small landowners, ultimately incentivizing the climate benefits of sustainable forest management.”
As originally designed, the pilot project targeted land trusts with fee-owned lands to develop carbon projects. It has since expanded eligibility to include a partnership between a land trust with fee-owned lands and a private landowner with eligible lands under a conservation easement.
“This is a dynamic space,” Watkinson says. “Prices change and opportunities change, and what wasn’t a fit 10 years ago or even two years ago could be a fit now.”
“Private land conservation and land trusts play an essential role in advancing natural climate solutions,” says Andrew Bowman, president and CEO of the Land Trust Alliance. “By helping our members benefit from revenue from the voluntary carbon market, the Alliance is both supporting climate change mitigation by enhancing activities that remove greenhouse gases from the atmosphere and accelerating land protection and stewardship.”
Putting the program to work
“There are no two ways about it — we would not have been able to capitalize on the carbon market without the support of the Alliance program. The Alliance’s cost-benefit analysis showed that this was the right thing for land conservation.”
When LELT and MLT found the Land Trust Alliance carbon program, things began to fall into place for the two land trusts.
“The Alliance spent a lot of time developing a model for an aggregated project, and that was immediately attractive to us,” Markot says. “It was clear that a lot of thought, care and attention went into the model.”
“We are grateful that ultimately we partnered with another land trust that we already had a great relationship with and felt very comfortable working with,” Markot says. “It ended up working really well.” Together, LELT and MLT enrolled about 8,000 acres of fee-owned land in the carbon project.
Siegel warns that the process is time consuming and can take months or years to develop from start to finish. Not only were there spreadsheets and legal documents to understand, but there was also working with Finite Carbon to take the project through all of the necessary verifications to becoming registered. Still, working through the Alliance pilot was easier than going it alone, he says.
“Once competent legal and technical advisors start reviewing the proposed project with you, you realize it’s not magic,” Siegel says. “Because the advisors have already reviewed many projects, they can help you see behind the numbers and the implications of these very large legal documents to work out what is best for the organization.”
“There are no two ways about it—we would not have been able to capitalize on the carbon market without the support of the Alliance program,” he says. But the Alliance’s support went beyond technical matters to the mission-centered conservation value of participating in such a project, Siegel says. “The Alliance’s cost-benefit analysis showed that this was the right thing for land conservation.”
Siegel says that the first year’s revenues from the carbon offset program will be set aside to fund the many years of verifications and inventories required to participate in the project. “After the first year, however,” he says, “we should see revenues that we can put back into our forest conservation programs.”
For MLT, now with four year-round staff and still growing, the carbon project solves the problem of those difficult decisions about timber harvests. Siegel says, “Any harvests we would do would be based on ecological and biological diversity mandates, rather than financial imperatives by virtue of the carbon project.”
But it will also do more. It will allow the land trust to conserve more forest land. “It is crystal clear that the revenues will make significant conservation of forest land possible,” Siegel says.
Markot anticipates that it will be 18 months before the revenues from the carbon offset project start going towards LELT’s stewardship projects such as capital improvements, including bathrooms for visitors to the land trust’s preserves.
But LELT is already benefiting. Its involvement helped the land trust access grant funding from the Open Space Institute to have researchers look at its stewardship management plans and forest management plans through the lens of offsetting carbon emissions, and offer management recommendations that go beyond growing trees for the timber markets. “We see it as an opportunity for leadership,” Markot says, “to help create new best management practices for our area.”
Markot is aware that there has been some controversy about carbon markets and whether they are an effective conservation tool, but sees the scales tipping heavily toward conservation benefits. He is confident of the rigorous protocols upheld by the American Carbon Registry and that the revenues LELT will see from the carbon market will power its mission.
“We are going to conserve more land, to restore and enhance habitats, to increase equitable access to conservation lands for everything from recreation to subsistence hunting and food gathering. We are going to support our communities as they chart pathways forward for everything from land use planning to open space planning and housing,” he says. “We are going to do a lot of good work with this funding.”
Carbon market resources
The Land Trust Alliances offers a suite of resources on carbon finance and the carbon market for its members, including a four-document Practical Pointer series and two digital downloads. Land trusts interested in learning more about the voluntary carbon offsets market should contact Kelly Watkinson at kwatkinson@lta.org.
