Native Insight Competition Winner: Charles W. Ralston

ALASKAN NATIVE CORPORATIONS CAN PROVIDE INTERNATIONAL BENEFITS THROUGH MARKETING CARBON OFFSET CREDITS

Alaskan Natives have a specific asset that could be of essential importance as the world economies strive to put the current economic recession behind them.  What is this unique resource?  Land!  The Alaska Native Claims Settlement Act of 1971 (ANCSA) allowed Native corporations established under ANCSA to select a total of approximately 40 million acres of land in Alaska.   Of this total, approximately 22 million acres were selected by village corporations; 18 million acres were selected by regional corporations; and an additional 2 million acres were reserved for existing cemeteries and historical sites, small townships, and Native allotments.  The balance of these 2 million acres was to be conveyed to the regional corporations.  These Native lands, and more specifically forestlands, offer Alaskan Native regional and village corporations a unique opportunity to help stimulate economic renewal, while at the same time providing the potential for a significant economic stimulus to Native corporate shareholders through increased dividends.

To most Alaskan Native people, land is sacrosanct.  Not until modern times was there much of a formal system of land ownership among Alaskan Natives.  Through traditional use of specific land areas, families, clans, tribes, and bands eventually established “ownership” based on this historical usage of the land.  The process of conveying land to official Native ownership began in 1971, although it took many years for lands to be surveyed, deeds to be recorded, and conveyances to be made.  For most Alaskan Natives, and especially for those living rural subsistence lifestyles, land has much more meaning than just its economic value.  Land is the source of subsistence food, and its proper stewardship means survival for subsistence users today and in the future.  Selling land or even developing its natural resources at the expense of limiting subsistence activities does not generally sit well with Native people, who seem to understand that there needs to be a balance between developing the land and providing land to support subsistence resources for the next generation, as well.

So, how can Alaskan Native regional and village corporations and their shareholders benefit from the ownership of approximately 40 million acres of land in Alaska?  And, more importantly, how can these Native lands provide financial benefits to shareholders without disrupting subsistence activities, while ensuring that these lands will remain intact for future generations?  The answer to this can be gleaned from recent news stories about Japan’s purchase of carbon credits from the Ukraine, a country about the size of Texas or approximately one-fifth the size of Alaska.          

In March of 2009, various news agencies reported that Japan, in seeking to meet a 2012 cap on greenhouse gas emissions, as established by the 1997 Kyoto Protocol, had agreed to purchase 30 million tons of heat-trapping carbon from the Ukraine in the form of carbon offset credits.  The cost was not disclosed in all reports, but some estimates put the price tag at $40 million over ten years. 

The Kyoto Protocol, the 1997 agreement between industrialized nations to address global warming, mandates cutting greenhouse gas emissions.  Japan has a large stake in this, as one of the strongest promoters of the Kyoto Protocol.  Countries such as Japan that signed the Kyoto Protocol must purchase permits for each ton of greenhouse gas that exceeds their emissions cap.  Additionally, Japan has made a commitment to further reduce greenhouse gases by 25%, a pledge recently announced by newly elected Prime Minister Yukio Hatoyama.        
However, rather than cutting greenhouse gases, Japan’s emissions rose 8.7 % from 1990 through March of 2009, while Japan had pledged to cut emissions by 6% in the years leading up to 2012, according to Japan’s Environmental Ministry.   Japan had so far bought 23 million tons of certified emission reduction credits (prior to the March 2009 agreement to purchase 30 million credits from the Ukraine).   In the future, Japan plans to buy as much as 100 million tons of carbon credits to avoid a predicted shortage of emission credits, and is currently holding talks with the governments of the Czech Republic, Hungary, Poland, and Russia about additional purchases.          

This is where I see Alaskan Native corporate lands coming into the picture.  In most parts of Alaska, Native boreal forestlands are relatively undeveloped.  These forestlands are primarily used for hunting, fishing, firewood gathering, and berry picking – activities that leave the land much as it was found and create a very small carbon footprint.  I suggest that perhaps Alaskan Native regional and village corporations could join together to establish a commission for looking into the sale of these carbon credits.  Now that the Obama administration, in a turn-about from the Bush years, has indicated that the United States will honor the Kyoto Protocol, an increased domestic market for these credits is likely to evolve, in addition to the already-established international market.           

Selling carbon emissions credits appears to be a win-win situation.  Yes, some people say that buying and selling carbon credits is "bogus" and that it is "a game" being played on paper with our environment.  However, this game is for real, and international players are stepping up to make deals.  Why shouldn’t Alaskan Natives benefit from the sale of such credits, especially if the integrity of the land remains intact?         

Other groups, including Oregon woodland owners are beginning to study the marketing of carbon offsets; however, since only large blocks are readily marketable, small woodland owners have a hard time marketing carbon offsets on a small-scale basis.  So Oregon woodland owners are forming cooperatives to join smaller parcels together in order to offer marketable carbon offsets.  It seems Alaskan Native corporate landowners could do something similar.        

The main clearinghouse for marketing energy credits in the United States is Chicago Climate Exchange, a carbon-trading market.  Currently prices for carbon offsets are somewhat low; however, future market conditions, including the emissions cap and the increased trading of carbon offsets, should push the price up.  President Obama has called for a national system for trading these credits, similar to the government-mandated system presently in place in the European Economic Union.  Currently, carbon is trading for about $2 per ton on the climate exchange.  This equates to about $3.50 to $7 per acre of forestland at current prices.  If the market for these credits expands due to federally mandated trading guidelines, experts predict increased demand and price increases up to $5 per ton, which would make carbon offset trading even more profitable.          

Yes, there are many challenges to using forestlands for carbon offsets.  One challenge is in calculating how much carbon is stored by each acre of forest.  Another challenge may be in bringing together various ANCSA village and regional corporations into some type of consortium to jointly market these credits.  Still a third challenge may be in waiting for the market to develop and the price per ton to increase, something that is predicted to happen if the federal government steps in to regulate the sale of carbon credits.         

One option is for Alaskan Native corporations to do nothing -- to just remain on the sidelines and see how this offset marketing business develops over time.  But perhaps a more prudent option would be for Alaskan Native corporations to direct some resources toward studying this issue in order to determine if there is potential for profit, while at the same time benefiting the environment.  Again, this seems as though it could be a win-win situation.  Lands would continue to be managed and used much as they are today for both subsistence and business purposes, while corporations and shareholders reaped the potential economic benefits.  The sale of carbon offsets could have a net positive environmental impact on our planet, and especially on our northern climate, which would ultimately benefit Alaska's Native people by preventing further environmental degradation. Another advantage of preserving forests for their carbon carrying ability is old forests hold more carbon than younger forests, in both the trees and the soils.  Older forest offer better fish and game habitat, also, which enhances subsistence opportunities. Additionally, in the Amazon region, the sale of carbon credits is seen as a means of fighting poverty, as income from credits is distributed to forestland owners.  This means of combating poverty might apply in rural Alaska, as well, if shareholder dividends increased due to the sale of carbon offset credits.  It truly appears to be a win-win scenario.        

My proposal is that carbon offset trading be analyzed for its potential benefits to Alaskan Native corporate and shareholder interests.  The thing that sets Alaskan Natives apart in this relatively new business enterprise is the vast (40 million acre) landholdings they control jointly.  There is a history and precedent, established through stipulations in ANCSA, for the sharing of revenues from subsurface development among Native regional corporations.  With effort and foresight, Alaska's Native corporations could similarly organize to examine this potential business venture that could serve to fight poverty, promote economic renewal, and help jump-start the US and international economies.                                                   

Reference Materials:

Arnold, Robert D.  Alaska Native Land Claims. Anchorage, Alaska: The Alaska Native Foundation, 1976.


Carbon Trading: A Primer for Forest Landowners.  September 3, 2009.


Japan Times. Hatoyama firm on 25% emissions goal.              September 8, 2009.


Preusch, Matthew.  Oregon woodland owners consider selling carbon credits.            April 1, 2009.


Ritter, Mario. Carbon Trading: How the Chicago Climate Exchange Works.             May 30, 2006.


Sato, Shigeru.  Japan Buys Ukraine Carbon Credits to Keep Within Cap.              March 19, 2009.




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* This was a winning essay from the recent "Native Insight" competition sponsored by the Alaska Federation of Natives organization.

Nearly 300 Native thinkers from across the nation submitted "Native Insight" essays about the economy and prospects for recovery. Women submitted 58 percent of the 280 eligible Native Insight entries, and men submitted 40 percent. Alaska Natives made up 32 percent of the applicant pool, with American Indians submitting 48 percent of the entries, and Native Hawaiians 16 percent.

The competition was open to Alaska Natives, Native Hawaiians and American Indians of all ages. The 500-1,600 word essays were due September 15, 2009. Essays addressed one or more of three writing prompts focused on how the Native community can support economic renewal, what it will take for the American economy to rebound and what the American leadership can do to jumpstart recovery.

The Native Insight Winners’, Finalists’ and Semi-Finalists’ ideas will be shared with members of the Obama Administration and published here at nativetimes.com as well as other Native news outlets.