Alaska Legislature gets first look at carbon plan proposed by Gov. Mike Dunleavy

Gov. Mike Dunleavy on Friday officially unveiled a pair of bills intended to market Alaska as a destination for companies interested in reducing the effect of their greenhouse gas emissions.

The result could generate millions of dollars for the state while helping reduce the effect of global climate change.

One bill would create laws and a leasing structure for companies interested in capturing carbon dioxide and injecting it deep below ground, where it cannot contribute to climate change.

The other piece of legislation would allow companies to pay to preserve forested state land from logging and development, offsetting any greenhouse gas pollution they make. Payments would be made through the global market for carbon credits.

“There’s a burgeoning market for carbon credits, particularly in the voluntary market, and Alaska seems to be really well-positioned to take advantage of these opportunities,” said John Boyle, commissioner of the Alaska Department of Natural Resources.

The Alaska Center, which advocates for environmental protections in the state, noted on its website that the governor’s proposal requires a delicate tap dance in order to “convince skeptical members (of the Legislature) the benefit of leaving certain forests un-clearcut, certain wetlands un-mined, etc.”

Rep. Tom McKay, R-Anchorage and a former oil and gas worker, chairs the House Resources Committee, which will hear the proposals first in the House. 

“The key words are ‘due diligence,’” he said. “We need to do what’s best for all Alaskans, as per the constitution … that’ll be, I think, our overriding mission.”

In the Senate Resources Committee, co-chair Sen. Cathy Giessel, R-Anchorage, said she expects to begin two weeks of hearings Feb. 20.

While those meetings haven’t been formally scheduled, Giessel said the forestry component of the carbon plan will receive the most immediate attention, with underground carbon sequestration taking second billing.

Carbon credits like the one proposed under the Dunleavy plan aren’t a new idea, and the principle is relatively straightforward. To compensate for carbon dioxide emitted by their business, a company pays to preserve a section of forest — even a kelp forest underwater. As plants grow, they absorb carbon dioxide from the air, locking it in wood or seaweed. 

If a tree isn’t cut down or burned, that’s a net benefit to the atmosphere. 

Third parties, both in the United States and internationally, operate a market in surveying forests and selling credits based on those forests’ ability to absorb carbon from the atmosphere. 

For the most part, the market in carbon credits is voluntary, driven by the desire to not contribute to the growing problems caused by climate change.

That’s one piece of the Dunleavy plan. In the other piece of legislation, the governor’s administration is setting out rules for capturing and injecting carbon dioxide deep underground. Most of the state’s oil producers already inject natural gas, seawater and other material underground to boost oil production, and the same principle could be used to sequester carbon dioxide pulled from the atmosphere.

This effort, known as “carbon capture and underground sequestration,” is used on a limited basis internationally, as heavily polluting industries capture carbon dioxide directly from its source before it’s released into the atmosphere. 

Some companies are also experimenting with pulling carbon dioxide from the open air, but that technology is energy intensive and hasn’t been reproduced on a commercial level.

Complicated legislation typically takes at least two years to pass the Legislature, and Giessel said it’s reasonable to think that it will be “a couple years” for carbon legislation to leave Juneau.

To develop both bills, the governor’s office hired the Legislature’s normal consultant on oil and gas issues, Gaffney Cline. 

To avoid a conflict of interest, they’ll have to hire new outside experts, extending the time it takes to analyze the bills.

Even if the bills become law by the end of the 33rd Legislature in 2024, it’s likely to take several years before the state realizes any income.

The forest-related bill is likely to move quickest, but when Michigan launched a similar program, it took 18 months for a third-party broker to physically examine state forests, then begin selling carbon credits, Giessel said.

That was unusually fast, she said, and involved forests accessible by road. Most of Alaska’s forests don’t have roads, and the process of surveying them could take years. That makes both the timing and potential revenue uncertain.

The state’s own fiscal notes say that “revenues are not specifically estimated because of the market and timeline uncertainty for carbon offset projects.”

An August 2022 study performed for the Department of Natural Resources estimated that three pilot projects — one near Haines, another near Fairbanks, and a third in the Matanuska-Susitna Borough — could earn $82 million over 10 years.

Operating expenses for the forest-linked program are projected to be about $1.3 million per year once it’s fully established, and to be higher in the near term as the project gets started, according to fiscal notes submitted by the Department of Natural Resources.

“You’ll probably hear us very much threading a needle,” Giessel said of the upcoming legislative hearings. “We’re not wanting to discount or in any way vilify the (proposal). Of course, we’ll look at it. It’s just more complicated than it seems.”