Through photosynthesis, trees and soil capture carbon dioxide and store it. It’s a process as natural as sunlight.

But planting more trees or managing a forest more intensively can increase carbon storage, sequestering more of a damaging greenhouse gas.

That added storage has value in the increasingly urgent fight to slow climate change. To recognize its worth, financial markets have been formed to pay woodland owners who agree to long-term measures to lock up more carbon.

The markets are loosely known as forest carbon offsets. Maine, the nation’s most heavily forested state, has been an early participant in carbon offset markets. Most of the projects, however, are relatively modest and typically involve conservation groups and owners not focused on timber harvesting. Taken together, they represent a small slice of Maine’s 17.6 million acres of forest.

Maine’s large commercial woodland managers, as well as its 86,000 or so family-sized owners, have mostly taken a watch-and-learn approach to markets that can be complex, restrictive and fast-changing. So as policymakers seek ways to boost the carbon storage potential of Maine’s forests, the potential of offset markets remains unclear.

At the same time, a national discussion is ramping up over whether carbon offset markets actually have a beneficial net impact in keeping carbon out of the atmosphere.

OFFSETS CAN BE LUCRATIVE

As carbon markets come under more scrutiny, one Maine company’s experience is instructive.

A century-old and family-owned business, Brookton-based Baskahegan Co. was in a good position in 2018 to enter into a carbon offset project. Decades of sustainable management on Baskahegan’s land in Washington County had produced a higher-than-average standing volume of trees.

“We have more wood standing on our property than our neighbors do, and we have a higher carbon value per acre,” said Kyle Burdick, Baskahegan’s woodlands manager.

Working through a company that oversees and manages carbon market transactions, Baskahegan was able to monetize its conservation ethic on 86,000 acres. The company agreed to manage its land using practices that were calculated to offset 700,000 metric tons of greenhouse gas emissions.

Those offset credits were sold into the so-called compliance market run by California’s Air Resources Board. One aspect allows the state’s regulated power companies, for instance, to pay to mitigate the impact of burning fossil fuels. Baskahegan’s credits also were sold into a separate voluntary market that helps corporations and other employers meet sustainability goals.

The contracts that underpin these deals are binding, complex and long-term. Compliance market commitments run for 100 years; voluntary markets are set at 40 years. Each must be verified by independent inspectors. That’s one reason many woodland owners balk at diving into carbon offsets.

Each metric ton is worth one credit. Burdick declined to discuss Baskahegan’s financial specifics, but carbon credits in 2018 cost California buyers between $10 and $15 a ton. So offsetting 700,000 tons of emissions would have been worth at least $7 million.

MANY GROUPS DIVING IN

More than 500,000 acres of Maine woodland are involved in 15 separate carbon offset projects, according a recent presentation by Bluesource LLC, a U.S. and Canadian company that manages carbon transactions. Bluesource set up the deal for Baskahegan’s land.

Other offset projects include Downeast Lakes Land Trust, which in 2013 was one of the first forest management projects in the country to register with California’s program. Its project covers 19,118 acres in the Farm Cove Community Forest in eastern Maine. The trust used proceeds from that and another carbon project to buy and protect more forestland around Grand Lake Stream.

In addition, The Nature Conservancy has a project on 124,000 acres of timberland in northern Maine’s St. John Valley, the Appalachian Mountain Club has a 10,000-acre project in the Katahdin Iron Works region, and the Passamaquoddy Tribe has a project scattered over more than 98,000 acres of land in Maine.

Earlier this summer, the U.S. subsidiary of Canadian asset manager Manulife Investment Management bought 89,800 acres on the Quebec border in Somerset County. The company may sell carbon credits or use the deal to meet its own corporate carbon emission reduction goals, according to the Toronto Star.

Carbon offset markets have caught the attention of large corporations. BP, the British multinational oil and gas firm, last year bought a majority stake in Finite Carbon, a California-based manager of carbon offsets. The purchase can aid BP’s efforts to diversify into renewable energy and benefit from predicted growth in the offset markets, according to news reports. Finite Carbon helped draw up the Downeast Lakes Land Trust deal.

REPORT QUESTIONS BENEFIT

But as carbon offsets become more common, concerns are being raised about how climate-friendly they really are. Among the questions: Does it make sense to pay conservation-oriented owners to preserve woodland they never had any intention of logging or developing? Do offsets discourage big carbon polluters from spending money to cut emissions where they occur, rather than just making excess emissions legal?

These questions and others were scrutinized this year by ProPublica, the nonprofit investigative journalism group. It looked at a $7 million deal involving offsets that the Massachusetts Audubon Society sold into the California carbon market on 9,700 acres it owns in western Massachusetts. That preserved forest isn’t in danger of heavy logging or development.

A key tenet of carbon offsets is a concept called “additionality.” It means that the added carbon storage must go beyond what would have happened without the market incentive.

For its part, Mass Audubon noted it followed the California rules as written and will use the money to preserve additional land.

But the coverage, part of a larger study by ProPublica and MIT Technology Review, has prompted California lawmakers to examine the effectiveness of the state’s landmark program, which was meant to help meet aggressive climate goals.

At Baskahegan, Burdick pointed out that while the land is family-owned, it lacks conservation easements or any guarantee of who will own it in the future. But for the next century, any future buyer will need to honor the offset agreements.

“In Maine, with forest ownership shifting to investor groups, that additionality is huge,” he said.

Burdick also noted that Baskahegan used the proceeds from its offset sale to buy 24,000 acres next to existing holdings in Washington County. That land will be harvested sustainably and continue to soak up carbon.