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Tribes urged to prepare for possible federal carbon incentives

WASHINGTON - As policymakers increasingly explore ways to slow or even halt the effects of global warming by capturing carbon dioxide, energy experts say tribes should be paying close attention.

Incentives for carbon capture and storage are currently being discussed in Congress, and the market could prove lucrative based on programs and institutional knowledge that some tribes already have in place.

At a briefing held March 31 at the Dirksen Senate Office Building, Sen. Jeff Bingaman, D-N.M., discussed the challenges surrounding carbon capture and sequestration, the process of removing carbon dioxide from the environment. One of the main obstacles in making carbon capture happen, the legislator said, is the current lack of federal incentives for entities to accomplish the goal.

''We need a rigorous carbon emissions reduction scheme to ensure that carbon capture occurs,'' said Bingaman, who chairs the Senate Committee on Energy and Natural Resources.

Bingaman noted that Congress is currently exploring legislation that could create a ''robust cap and trade program'' to help give incentives to entities that employ carbon capture techniques. Democrats and Republicans have expressed interest in supporting such a plan - both for possible economic, as well as environmental, impacts.

Under a federally recognized cap and trade incentive plan, a coal electricity plant could offset the carbon dioxide it produces by paying for carbon credits from tribal forestry, soil or other projects that pull carbon out of the atmosphere. Tribes could then receive payments as a result of environmental stewardship.

''For tribal governments and individual Indians who have large land holdings, this could become a very real economic market,'' said Ted Dodge, executive director of the National Carbon Offset Coalition. The group, which focuses on the sale of carbon credits via a non-federal trade program, has worked with a handful of tribes on monetizing their carbon collection portfolios.

Many tribes already have key ingredients for making carbon capture work, namely large amounts of land, trained staff and positive commitments to the environment. Trees and crops that suck carbon out of the air are already being grown on tribal lands or could be in the future. Scientists, too, have been working on ways to safely store carbon underground and in land formations, which could one day be another way for land-rich tribes to garner carbon capture incentives.

A financial institution called the Chicago Climate Exchange is already helping some tribes achieve modest financial gains by trading carbon credits, despite the lack of a federal cap and trade system thus far. The entirely voluntary-based member institution is currently believed to be North America's only market that allows for legally binding carbon credit trading.

The Nez Perce Tribe has been a leader in trading credits on the CCX, based on tree-planting the tribe has done on its lands since 2003. The Assiniboine Sioux, Fort Peck Indian Reservation and Northern Cheyenne tribes are all believed to be currently working plans to trade carbon credits as well.

Brian Kummett, a forester for the Nez Perce tribal forestry division, has worked for the past 14 years on planting 3,500 acres of Ponderosa pines, Douglas firs and larch saplings on trust lands held by the Nez Perce. For his region of the country, these trees are some of the best at removing carbon dioxide from the air by storing it in their leaves and bark. The forests he's helped plant also serve as wildlife refuges and have become home to many traditional Native medicinal plants.

Carbon sequestration grants from the Department of Energy have helped provide seed money to grow the forestry.

Last year, the Nez Perce tribal council decided to put its trees on the market via the CCX. To make that happen, the BIA had to sign off, in effect auditing the number of trees the Nez Perce tribe has planted, and this information then had to be shared with the exchange.

Energy experts say the tribe has effectively created a model through its work with the exchange that other tribes with trust lands could follow. Under the current rules of the exchange, tribes who join the program through 2010 could be trading carbon credits for trees planted all the way back to 2003. The exchange has also recently approved selling carbon sequestration credits on rangeland and no-till agricultural fields, which both also capture carbon dioxide from the environment.

Since December, the Nez Perce Tribe has been selling its carbon sequestering abilities and has thus far traded credits amounting to almost 8,000 tons of carbon. With carbon credits currently trading at just under $5 per ton, the tribe is seeing a small return on its investment.

With talk of a federal cap and trade system in the air, Kummett is keeping a close eye on the situation. If policymakers established a cap and trade plan, the market for capturing carbon could reach $12 - $15 per ton, according to some economic experts. Europe, which already has in place a market for trading carbon dioxide credits, has seen carbon trading reach more than $30 per ton.

''The beauty of the system with the Chicago Climate Exchange right now is that because there's no federal regulation, you can count projects that you've been doing all the way back to 2003,'' Kummett said. ''If we do have federal cap and trade down the road, it remains to be seen whether tribes could trade on their old work.''

Tribal advocates have already been talking to policymakers in Washington about their carbon concerns. One of the chief areas they'd like to see addressed surrounds terrestrial sequestration, which includes initiatives like the Nez Perce tree-planting. They'd like to see terrestrial sequestration given federal incentives like those being discussed in Congress for geological sequestration, a process of carbon capture focusing on the development of new storage technologies aimed at stopping carbon dioxide from entering the atmosphere in the first place.

That might be a tough sell, according to Senate energy officials, who say there has yet to be a real clamor on Capitol Hill to create dramatic incentives for terrestrial sequestration.

''Tribes need to be out there, explaining why terrestrial sequestration is crucial in removing carbon from the environment,'' Dodge said. ''It's a bridge to get carbon reduction now, while new geological sequestration technologies are still being developed. And there should be incentives for doing it.''

He said tribes should also be looking for ways to get in on the technology of geological sequestration. As scientists look for ways to store large amounts of carbon underground and in water and above-ground rock, a tribe with those features could find itself in a position to benefit greatly from a federal cap and trade incentive program.

''The devil is strictly in the details, and that's why tribes need to be looking at this,'' he said. ''It's all about how the system is designed and whether these types of offsets are even allowed to exist.''