The U.S. government has announced a $150 million grant program to support small forest landowners in participating in the carbon credit market. The program, revealed by Agriculture Secretary Tom Vilsack at a conference in coastal Georgia, aims to provide opportunities for small and underserved forest landowners managing 2,500 acres or less to engage in the growing carbon market. The ultimate goal is to protect U.S. forests and combat climate change.
The current global investments in Nature-Based Climate Solutions (NCS) or Nature-Based Solutions (NBS) amount to approximately $154 billion per year. While this may seem substantial, it falls short of the necessary funding to effectively sequester carbon through nature. The United Nations (UN) has stated that this amount needs to double to $384 billion by 2025 and quadruple to $674 billion by 2050. Closing this financing gap is crucial in addressing the climate crisis.
To help bridge the financing gap, the Agriculture Department will roll out a $150 million grant program to support small forest owners. Secretary Vilsack highlighted a key barrier for this group of landowners to participate in carbon markets, stating that they often lack the technical assistance and financial resources required. Small landowners covering less than 5,000 acres face both technical and financial obstacles in benefiting from selling carbon credits. While large companies invest billions in protecting forests through carbon offsets, family landowners often do not meet the eligibility criteria, which includes having inventory, land management plans, and models to determine the carbon value of their land.
As carbon markets continue to grow, more players are entering the market. The voluntary carbon market was valued at $2 billion last year, and forecasts indicate exponential growth. However, small forestland owners have not significantly benefited from the sale of carbon credits, with revenues primarily going to large forest owners. The $150 million subsidy program aims to address this disparity. The grant is part of a significant climate law passed by the U.S. Congress in 2022 and targets small landowners with 2,500 acres or less, as well as underserved owners such as military veterans.
Despite criticisms of the effectiveness of forests in capturing and sequestering carbon, payments for landowners who grow and protect trees have increased. Large companies continue to rely on forest carbon sequestration and pay for credits to offset their emissions. The United Nations panel appears to favor nature-based solutions over technology-based carbon removals, especially as prices of nature-based carbon offset credits decline. Natural climate solutions, including forest projects that incentivize landowners not to cut down trees or sell their land to developers, are believed to play a significant role in achieving the goals of the Paris Agreement.
Earlier this month, Finite Carbon and LandYield partnered to launch the “CORE Carbon” platform, which aims to break barriers and provide new opportunities for family forest landowners to benefit from carbon credits. The platform allows landowners with 40-5,000 acres to enroll in a carbon offset program. A similar program was previously created by the Nature Conservancy and the American Forest Foundation, enabling family landowners to apply for subsidies of up to $25 million to generate carbon credits and earn income from selling them.
The $150 million grant program was first introduced to the Sustainable Forestry and African American Land Retention Network, a group representing black forest landowners in the Southern states, including Alabama, Arkansas, Georgia, Mississippi, North Carolina, South Carolina, Texas, and Virginia. The group’s leader expressed their intention to apply for the subsidy program, although the actual demand is still uncertain. The income generated from carbon offset credits may not be substantial due to the smaller acreage involved, but it could be enough to cover taxes. According to the American Forest Foundation, small landowners under their forest carbon program earn an average of $10 per acre per year. For a landowner managing a 1,500-acre forestland, this would amount to $15,000 a year. While this income may not be significant, it has the potential to increase as prices rise.
The $150 million grant program aims to empower small forest landowners and bridge the gap in the carbon credit market. This initiative not only provides income opportunities for smaller, underserved landowners but also strengthens the nation’s efforts in combating climate change through nature-based solutions.