Carbon Footprints in the Forest
Environmentally conscious choices usually eat away at profits. But for these Eastside companies, environmental stewardship is the business model.
From the late 1980s through the early 2000s, Don Tuttle worked as a conservation biologist for the Smithsonian Institute, studying animals living in sensitive habitats and educating locals on sustainably managing the ecosystem around them.
He had some success. In Southeast Asia, for example, where it is customary to kill venomous cobras, Tuttle’s team persuaded local farmers to stop killing cobras by teaching them that a single cobra eats about 100 rats a year. Because rats reproduce about every eight weeks, the farmers learned, those 100 rats could breed a population that would eat a ton of rice a year.
On a broader scale, however, Tuttle doubted the efficacy of his work. The species he studied were imperiled, essentially, by third-world economics. Across the developing world, prime wildlife habitat is leveled by logging firms or burned to create fields that lose fertility in a few years. Tropical forests that are home to thousands of species — many yet undiscovered — are cleared to make room for monoculture plantations that stretch as far as a person can see. If cutting a tree will help a villager pay for his child’s medicine but also will endanger a lizard, the lizard’s going to lose.
Tuttle figured the best way to prevent the clearing of forests was to pay landowners to keep trees erect. So in 2008, after he had returned home to live on the Eastside and work at Woodland Park Zoo, Tuttle founded Jadora International to tackle this challenge.
“We figured the big (nongovernmental organizations) — The Nature Conservancy, Conservation International, World Wildlife Fund — they had a big global footprint already, but they were really taking the easiest property — property already designated as national parks, for instance,” Tuttle said. “What we wanted to do was go after the logging companies, the guys who were at most risk of doing serious ecological damage.”
Tuttle soon connected with Daniel Blattner, managing director of Safbois, an American-owned logging firm with a large presence in the Democratic Republic of the Congo. Safbois had a toxic reputation. Multiple Western publications had run critical stories about its practices in the Congo. One villager told The Guardian, “Our forests are being stolen from us. It is misery for the communities. Safbois has come in and is taking our future.”
“At that point, I was researching and thinking of alternative sources of revenue for our logging company,” Blattner said. “We wanted to do something right at the same time as it being economically viable to convert a logging operation to a conservation concession.” Safbois was considering a palm-oil plantation — itself a global driver of deforestation — or returning its logging concessions to the Congolese government, but Tuttle offered another solution: carbon.
During a weekend trip to meet with Blattner, Tuttle convinced him to halt logging on a nearly 465,000-acre plot called Isangi and opt instead to sell the trees’ ability to remove carbon dioxide from the atmosphere to companies looking to reduce their greenhouse gas emissions. Safbois would take a large enough share of the payments to cover land taxes — 51 percent of revenue, Blattner said.
With that one contract, Jadora ensured a forest about 30 percent the size of King County would be preserved for at least 30 years, the duration of Safbois’ logging concession. That was in 2009; since, the framework used by the Bellevue-based company to conserve forests has grown in popularity. Selling the carbon-storing capacity of forests is a new paradigm in resource economics, one being called upon by global leaders to hinder the seemingly inevitable warming of the planet.
IN EARLY DECEMBER, representatives of 195 countries gathered in Paris and agreed to a basic framework for reducing global greenhouse gas emissions. The 21st United Nations Conference of the Parties, or COP21, saw delegates arrive having already completed plans to reduce emissions within their borders, and wealthier industrialized nations agreed to pay $100 billion annually by 2020 to help finance climate mitigation and clean energy projects in the developing world.
A good deal of the negotiations was devoted to deforestation. When a mature forest is lost to fire or saw, centuries’ worth of carbon sequestration is negated. If the forest is not replanted, there won’t be new trees to suck up carbon in the decades to come. It is estimated that 12 to 20 percent of greenhouse gas emissions are the result of deforestation, a larger share than the emissions from global transportation and the primary emissions source in many tropical nations.
The nations at COP21 agreed to provide financial resources and incentives for “reducing emissions from deforestation and forest degradation.” That phrase alludes to the REDD+ program the UN started in 2007. REDD+ (the plus stands for other forest ailments such as fire and agricultural clearing) aims to reduce emissions and deforestation in tropical nations by selling offset credits that hinge on trees’ ability to sequester carbon dioxide.
Carbon offsets are billed as a method of balancing an organization’s carbon footprint. If a company emits, say, 50,000 metric tons of carbon dioxide (or equivalent amounts of other gases), it can buy 50,000 offset credits to theoretically neutralize its carbon footprint. In jurisdictions that don’t regulate greenhouse gas emissions, carbon offsets are purchased voluntarily as an act of corporate social responsibility. In areas with cap-and-trade markets, such as California, or carbon taxes, such as British Columbia, offsets are used to comply with a legally mandated cap on emissions or to reduce a tax burden.
Many are critical of offsets because they don’t directly reduce emissions; a common trope of critics is to compare carbon offsets to an overweight person paying somebody else to diet. That notion is anathema to Tamara “TJ” DiCaprio, Redmond-based Microsoft’s senior director of environmental sustainability and designer of the company’s internal carbon fee. In Microsoft’s system, which began in 2012, each department must pay a fee for every ton of greenhouse gas it emits. Those fees are collected and spent on internal energy-efficiency measures to decrease Microsoft’s energy use.
To zero out the company’s remaining carbon footprint, Microsoft purchases carbon offsets. In fiscal 2014, the latest reporting available, the company purchased renewable energy certificates — property rights to power from a renewable energy project — equivalent to 1.52 million tons of carbon, which balanced out most emissions resulting from Microsoft’s electricity use. Microsoft directly emitted about 85,000 tons of carbon that year, all of which was negated with offset projects. Offsets also covered the 310,000 tons of carbon emissions that resulted from employee air travel.
Microsoft’s offset investments are geographically and developmentally varied. They include wind projects in China and Turkey, REDD+ investments in Kenya and Indonesia, and replacing wood-burning cookstoves in Guatemala and Ghana.
“We invest in projects that not only reduce carbon, but also drive innovative technologies,” DiCaprio said. “… Carbon offsets are the primary vehicle in which a corporation can transfer funds out to emerging nations to help them develop low-carbon economies.”
RECs are the most popular carbon credit, particularly in compliance markets, because the accounting is simple: Every ton of emissions from coal- or gas-fired power can be neutralized by purchasing solar or wind credits. For forestry offsets, the logic is more complex. Developers like Jadora typically must prove three facets before their offsets can be validated: additionality, leakage avoidance, and permanence.
Additionality means that the offset contract will protect the forest from imminent harvest. Leakage occurs when protecting one forest results in the destruction of another, so developers must present safeguards and bank extra offset credits to ensure their projects don’t result in forest degradation elsewhere. Finally, permanence must be proven — if a customer is paying for a tree to absorb and retain carbon dioxide for 100 years, then that tree has to indeed remain standing for a century.
Despite the complications, forest-related offsets are growing in popularity. According to an annual report from Forest Trends, 31.4 million forest credits were purchased in 2014, enough to offset the annual production of eight coal-fired power plants. Forestry and other land-use credits accounted for more than half of all voluntary credits sold (DiCaprio said about half of Microsoft’s offset portfolio is forestry-related). That total is likely to swell in the coming years; at COP21, Germany, Norway, and the United Kingdom pledged to spend $5 billion on REDD+ projects between now and 2020.
JADORA’S ISANGI PROJECT has been issued about 1.6 million offset credits to date. As the forest grows and stores more carbon, it’s expected to generate about 400,000 new credits a year. Monitoring and managing Isangi makes Jadora a major employer in the villages in which it operates. About 30 employees work from Safbois’ old logging camps, and Jadora solicits work from 25 to 50 day laborers, depending on the season.
Fifteen percent of Jadora’s revenue is distributed to locals in the form of projects voted on by the communities. “We don’t pay cash,” Tuttle said. “If I hand some chief out in the jungle cash, it’s not going to his community. It’s going straight into his pocket.” Instead, representative boards in each village meet quarterly to decide how their funds will be apportioned.
Projects Jadora has paid for read like the goal sheet of many aid organizations. Schools and clinics have been erected. Small coffee and cocoa farms provide cash crops and mend soil, while tilapia ponds provide a consistent source of protein. Small loans have financed a bike repair shop and a seamstress, though many of the loans go unpaid. “A lot of the time, we don’t hear from that person again,” Tuttle said.
Tuttle hopes these projects will lift villagers above subsistence, a lifestyle that taxes the surrounding forest. The Isangi forest was threatened not only by logging, but also by slash-and-burn farming, the practice of clearing a patch of forest, burning the slash to supply nutrients to the soil, then moving on when its fertility is sapped. A slash-and-burn field typically lasts two years in the Isangi area, Tuttle said. In contrast, fields tended with Jadora’s assistance have been productive since their 2009 sowing.
Jadora’s executive team operates from Tuttle’s condo building in Bellevue, where he lives in a lovely but impersonal 25th-floor pad with expansive west-facing views. Tuttle has the firm grip of someone who has spent years working outdoors, but the smooth hands of someone who hasn’t done so in a while. When he’s tired, Tuttle chases a cup of coffee with a pinch of green apple-flavored Skoal. “I have one really bad vice — do you mind?” he asked me when we first met. “I was up until 3:30 working this morning, then had a 7:30 conference call.”
Tobacco use isn’t the only thing Tuttle is self-conscious about. Jadora is one of the few forest-credit developers that is a for-profit organization, and Tuttle often feels the need to justify Jadora’s intention to operate in the black. This might be a function of his science background. He refers to researchers he’s worked with like idols; one, “a rock star in conservation biology,” another, “the father of modern ecology.”
The career-long scientist entered a unique commercial position when he founded Jadora. The company’s inherent goal is conservation, a concept long associated with goodwill, not profit.
“We’ve had people in the company say we’d be better off with a standard business model — just sell credits,” Tuttle said. “But we’re bleeding hearts. We want to see the kids get help. We want to preserve and promote endangered species. Frankly, that doesn’t mesh so well with the bottom-line approach.”
But the push for ecosystem pricing, in this case carbon sequestration, is being led by people like Tuttle — scientists taking a crack at business in an attempt to fundamentally shape the way a tree is valued. For people accustomed to astute, evidence-based observation, the grandiose talk of a startup founder is difficult, even if they are working in one of the rare sectors that may truly be disruptive.