With carbon emissions and climate change being a big discussion point in all industries, the timber industry is one that is looking ahead at how they can tackle this. In some countries, the introduction of carbon credits is leading to the monetisation of forests being sequesters of CO2 rather than the traditional value in the felling of trees. With timber like birch plywood and other materials in high demand, particularly with the construction industry looking to introduce more timber into their building practices, ensuring that this industry maintains a strong stance on carbon emissions is vital in protecting the planet and preserving our forests. In this article, we’ll be discussing what carbon credits are, how they work, and what impact they are set to have on the timber industry as a whole. 

What Are Carbon Credits? 

Carbon credits are a method of incentivisation to help businesses, governments, and other organisations to reduce their greenhouse gas emissions and carbon footprint. They are a tradeable certificate or permits that allow a business or other body to emit one tonne of carbon dioxide (or the equivalent of another greenhouse gas) into the atmosphere. Giving credits allows for carbon emissions to be better controlled and therefore helps to reduce climate change. Carbon credits are built on the principle of carbon pricing and are becoming a common occurrence in the timber industry. 

How Do Carbon Credits Work? 

Carbon credits are managed through what’s known as a cap-and-trade system. A cap on the amount of greenhouse gases that can be emitted is set and this is all managed within the system. The idea of this cap is to reduce the amount of overall emissions over time. Companies can either receive or purchase emission allowances and if they emit less than what the cap allows, then they’re able to sell their surplus to other companies. This means that all businesses under the cap-and-trade system are only emitting within the cap. 

Businesses are also able to take part in special projects like reforestation or renewable energy projects. By doing so, they will able to generate more carbon credits and they will be offsetting against the cap. The company can either use these additional credits or they can be sold in the voluntary market. 

What Impact Will Carbon Credits Have?

While on the face of it, carbon credits seem like a good thing for the timber industry to help with the reduction of greenhouse gas emissions, there are also some challenges that the system presents. 

There may be a sharp reduction in timber harvests as forest owners maximise carbon sequestration. This means that the supply for the industry could lessen and we could end up with increased prices and a drop in timber reliance as a result. 

Further to this, there’s a big potential for conflict over land use. Land that may have previously been used for timber production or other agriculture may shift towards carbon sequestration projects meaning there will be a limit to the amount of land available for traditional uses. 

Finally, carbon credits focus specifically on carbon and carbon sequestration. This could lead to too much hyperfocus on this gas, with other important forest values like biodiversity and recreation being overlooked. This means that there could be a skewed ecological balance if forest management strategies are focused solely on carbon. 

Nevertheless, there is a wealth of promising opportunities being driven by carbon credits. This includes the opportunity for new revenue streams for forest landowners, which could be particularly attractive when timber prices are low. This could also incentivise sustainable management and investment in the forestry sector to help with more conservation and sustainable management practices. 

As with any introduction of a new system, the balance between the opportunities and challenges needs to be taken into consideration. However, the focus on improving the carbon emissions that the timber industry is producing will continue to be at the forefront of any new regulations and industry changes as we fight to save the planet.