Alaska Department of Natural Resources

Carbon Offset Program

Carbon Offset Program Manager: Trevor Fulton, trevor.fulton@alaska.gov | (907) 269-8755

In 2023, legislation was enacted allowing the State to use its lands and natural resources for carbon management projects. The legislation authorized two programs within the Department of Natural Resources (DNR): the Carbon Offset Program and Carbon Management Leasing.

The Carbon Offset Program enables the State to implement carbon offset projects on State land. Authorized under AS 38.95.400 - AS 38.95.499 and managed by the DNR Office of Project Management & Permitting, these State-led projects generate revenue through carbon offset credits while providing other environmental, social, and economic co-benefits and helping meet free-market demand for decarbonization.

The Carbon Management Leasing program allows DNR to lease State land to private parties for a carbon management purpose (i.e. a carbon offset project or other project that mitigates greenhouse gases). Carbon management leases are authorized under AS 38.05.081 and administered by the DNR Division of Mining, Land & Water.

This webpage explains carbon offset concepts and processes for projects under the Carbon Offset Program. For information on carbon management leasing, please contact the DNR Division of Mining Land & Water at nro.lands@alaska.gov or (907) 451-2740. For information about leasing State land for carbon capture, utilization, and storage (CCUS) projects, please contact the DNR Division of Oil & Gas at ccus.dog@alaska.gov or (907) 269-8800.

Carbon Offset Credits

Carbon offsets are tradable credits used to counterbalance—or offset—greenhouse gas emissions. A carbon offset credit represents one metric ton of carbon dioxide equivalent (tCO2e) removed from or not released into the atmosphere due to a carbon offset project activity.

An independent carbon crediting program (or carbon registry) verifies reductions to ensure they are real, permanent, and additional (i.e. above a “business-as-usual” baseline scenario that represents emissions levels absent the project) and issues credits based on the amount of greenhouse gas emissions reduced or removed. Organizations can purchase and use carbon offset credits to meet emissions reduction or net-zero targets (to be “carbon neutral by 2030,” for example).

Carbon offsets can be generated from a range of project activities, including forest management, reforestation, marine ecosystem restoration, aquatic plant farming, reduced wildland fire severity, and converting biomass into biochar. The over 100 million acres of land managed by DNR hold significant potential for generating carbon offset credits, especially from forest-based projects.

Carbon Offset Project Process

The process for developing State-undertaken carbon offset projects under the Carbon Offset Program is designed to produce transparent, thoroughly vetted, high-integrity projects that involve a robust public process; generate State revenue while providing environmental, social, and economic co-benefits; and achieve real and measurable greenhouse gas reductions. These steps include:

1. Identification
There are three general pathways for identifying potential projects for evaluation under the Carbon Offset Program:

The Department identifies a potential project;
The Department solicits project recommendations from third parties (e.g. a project developer, an industry representative, a member of the public, or an NGO); or
A third party submits an unsolicited recommendation for a project.

This suite of pathways encourages project ideas from a wide range of sources while allowing the Department to decide which potential projects merit further evaluation.

2. Competitive Solicitation
If the Department decides to pursue a project, it may seek a project partner to perform project development services. Contracting for development services must follow the State Procurement Code, which requires competitive bidding for contracts over $100,000.

3. Feasibility Evaluation
After identifying a potential project in Step 1 above, the Department evaluates the project’s feasibility by considering the economic effects, revenue potential, compatibility with other land uses, and other factors to determine whether to proceed with a project. A feasibility evaluation must be completed before the Department makes a formal best interest finding for the project under Step 5.

4. Land Reclassification/Management Plan Revision (as needed)
Projects must be compatible with land use classifications and management plans. If necessary, reclassification or plan amendments must be finalized before the Department completes a best interest finding under Step 5.

5. Best Interest Finding
The Department must make a written finding that the project serves the State’s best interests before listing the project with a carbon registry. The best interest finding (BIF) must include the information the Department considered during the feasibility evaluation, provide the facts and issues that are material to the determination, and be subject to public and agency review.

6. Project Registration
After a best interest finding is completed, the Department may list the project with a carbon registry. A registry requires projects to meet certain criteria to ensure emissions reductions or removals are real, measurable, and permanent. A registry also tracks credit issuance, ownership, and retirements to prevent double counting or other fraudulent activities.

The project registration process can take 18-24 months for initial credit issuance and includes:

Validation and verification of emissions reductions or removals by an independent third party;
Project review by the registry;
Project registration and initial carbon offset credit issuance;
Periodic issuance of additional carbon offset credits following monitoring, reporting, and verification;
Credit retirement (permanent removal of credits from the market once the credit owner or purchaser has applied their benefit); and
Ongoing project maintenance, monitoring, and reporting.

7. Marketing and Sales
At any point during the project development process, the Department may market a carbon offset credit portfolio to prospective buyers.

The Department may market and sell credits either on a prompt-delivery (after carbon offset credits have been issued) or forward-delivery basis (where, prior to credit issuance, the Department agrees to deliver a fixed number of credits to a buyer at a pre-defined time and price). The Department may sell credits through an exchange, a broker, or directly to purchasers (i.e. “over the counter”). Purchasers can offset their emissions by retiring credits or resale credits on a secondary market.

Additional Information

Additional information about the Carbon Offset Program can be found by contacting

dnr.carbonoffsets@alaska.gov

Additional information about Carbon Management Leasing can be found by contacting

nro.lands@alaska.gov

Resources

Senate Bill 48: Carbon Offset Program (2023)
Regulations: 11 AAC 78 Carbon Offset Projects on State Lands
DNR Fact Sheet: Carbon Offset Program (forthcoming)

Department of Natural Resources Office of Project Management & Permitting

Carbon Offset Program

Resources

State of Alaska Department of Natural Resources