The carbon economy is “a transition from a fossil fuel-based economy to where the externality associated with the burning of fossil fuels is explicitly recognized” says John Perez-Garcia, Professor at the College of Forest Resources, University of Washington. 

In a presentation during the Technical Workshop session of the recent International Wood Composites Symposium, he provided insight into this compelling but complex topic by answering the questions, what is it and how do we play? 

Perez-Garcia’s schematic of how the environment inputs energy, air, water, amenities and raw materials into the mainstream economy, which then outputs pollution and waste, clearly shows the dynamic. The carbon economy is an effort to reach a state of carbon neutrality where these inputs and outputs (CO2, CH4 and others) balance out.  

Policies that can facilitate a transition to a carbon neutral economy include carbon taxes and cap and trade schemes. Governments, through legislation and regulation, and markets, which can set prices, have leading roles in building a carbon economy. 

The role of the forest industry is to sequester carbon in carbon sinks through activities like afforestation and reforestation, forest management practices in commercial forests, forest products including substitution for fossil-intensive uses, and setting forest land aside for conservation. 

The six most common criteria a carbon offset must meet are authenticity (real CO2 reduction); veracity (accurately measurable reduction); permanence (the reduction is maintained for a long time); additionality (results in more reduction than not doing it); enforceability (someone takes responsibility for the offset); and leakage (emission reductions in one place are offset by emission increases elsewhere).

The three major issues in carbon sink activity are permanence (or non-permanence), additionality (establishing a baseline) and leakage.  In the case of afforestation, for example, they play out like this: 

Reforestation must meet the same carbon sink criteria, with a difference in what qualifies as eligible land. Managed forest, harvested wood products (HWP), longer-rotation forests and avoided forest fires share all have specific carbon sink profiles. 

And, as of today, these activities have seen limited use in the carbon economy due mainly to uncertainty factors: permanence, additionality and leakage issues; high transaction costs because functional models still need to be defined; and lack of connectivity between forest and HWP sinks. So far, most activity has been on a voluntary basis rather than participating in a compliance market.