F E A T U R E D N E W S 14 West Virginia Forestry Association Mountain State Forestry | Spring 2022 www.wvfa.org of rules and requirements. Large corporations are one example of a buyer purchasing voluntary carbon credits to offset their carbon footprints to address stakeholder/shareholder interests. Until recently, credits within the ARB system commanded higher prices. Now, however, that is changing quickly as demand for forest carbon credits begins to exceed the available supply (Figure 1). While both ARB and voluntary credits may range between $8–$15 per ton today, prices are projected to rise to $50–$70 by 2030 (Figure 2). Do carbon credits compete with timber? Sure, that’s the point after all, deferring harvests while storing carbon on the stump. Until recently, however, carbon prices generally were lower than any forest products prices on a per cord or per ton basis, minimizing financial incentives to avoid cutting timber. Now that is changing as carbon prices rise to levels that compete with the lower ends of conventional timber markets. For example, $8/ton for carbon credits is approximately equivalent to about $25/cord for pulpwood (min. 5” dbh). So, as carbon prices go above this level, a landowner may make the rational decision to harvest less pulpwood and instead sell carbon credits. At $50/ton, carbon begins to compete directly with hardwood sawtimber (min. 12” dbh). These are exciting times for foresters and forest landowners, especially in West Virginia where growth rates in natural forests are robust and carbon sequestration is high. While the concepts of forest carbon as a management goal and a marketplace have been around for decades, it’s only in the last few years that they have begun to take off in the Appalachian region. No doubt there will be new and interesting changes as forest carbon projects and markets grow and evolve in West Virginia and beyond. 0 20 40 60 2010 2012 2014 2016 2018 Offset Credit Price Forecast (US$) FIGURE 1 Category 2 (High Quality Avoidance) Avergage: 54.20 2020 2022 2024 2026 2028 2030 Category 2 (High Quality Avoidance) Avergage Category 1 (Removal) Average Category 1 (Removal) Average: 61.46 FIGURE 2 0M 5M 10M 15M 20M 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Supply & Demand (Foresty Offsets) Forestry Retirement: 23.57 Forestry Issuance: 9.40 Forestry Retirement Forestry Issuance
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