Sealaska Timber Company, a subsidiary of a corporation owned by Alaska Natives, has decided to close down its controversial logging operations in the southeast Alaska panhandle, the company announced last week.

Sealaska’s Chief Executive Officer Anthony Mallott hailed the unexpected decision as a move toward a more sustainable business model. But it is also clearly another big hit for Alaska’s reeling timber industry, where log shortages have forced mills to close.

However, it is not clear how the decision might impact a Sealaska carbon offsets project that is connected to California’s cap and trade program.

“After decades of logging on our lands, we plan to transition out of logging operations this year,” Anthony Mallott, the company’s CEO, said in a statement on January 11. “We are still in the land-management business, with a goal to continue to create financial, community and cultural value from our lands .... This transition is not expected to significantly affect future profits or dividends. Our financials have been steadily improving for seven years, and we expect that trend to continue. This decision is part of our long-term plan to focus our resources on generating sustainable value for our shareholders.”

In recent years, Sealaska harvested between 55 and 65 million board feet of timber per year from its 362,000 acres in southeast Alaska, Jaleen Kookesh, vice president of Sealaska’s policy and legal affairs, said in testimony before the state Legislature in 2019. “This is nowhere close to what we used to harvest, but this is a sustainable amount based on our current land base.”

“We’re very much focused on balanced land management,” she added. “We get a bad rap sometimes. We only own about 362,000 acres of a very large region, but we are often criticized for clear-cutting everything. We only have utilized 35 percent of our land base for a working forest.”

As per this new decision, starting next year that percentage will drop to zero.

Most of the timber harvested by Sealaska, some 80 to 85 percent by the company’s own admission, came from old-growth trees of at least 100 years of age, triggering criticism from environmentalists and some of Sealaska’s 23,000 shareholders. Only about 5 to 10 million board feet came from previously harvested, or second growth, lands.

Dominick Dellasala, chief scientist for Wild Heritage, a project of Earth Island Institute, says Sealaska’s decision to not cut down its old growth trees, which sequester a large amount of carbon, will benefit the climate. It will also benefit the region’s biodiversity. Studies show that 94 percent of the old growth on Southeast Alaska’s Prince of Wales Island, where many of Sealaska’s timberlands are located, have been clear-cut, leading to the loss of 75 percent of the island’s wolf population. Protecting the trees is likely to help restore the wolf.

What is not clear though, is what the decision means for Sealaska’s 2018 carbon offsets agreement with BP Alaska. As part of that deal, verified through California’s cap-and-trade program, BP had paid Sealaska $100 million to keep nearly half of this forestland — 165,000 acres — standing and thus storing the carbon trees absorb from the air in their living tissue. The carbon credits from this project were slated to offset emissions from petroleum drilled by BP Alaska in Prudhoe Bay and the Arctic National Wildlife Refuge, should drilling begin there.

In an investigative feature in Earth Island Journal’s Winter 2021 issue, we questioned that agreement, pointing out that while it clearly benefits the ecology of the forest, it provides uncertain benefits for the climate. Our reporting also found the agreement allows for an increase in BP’s petroleum emissions, but does not clearly show there will be an equivalent increase in the amount of carbon stored in the forest.

If BP’s emissions are not offset, the amount of carbon in the atmosphere will increase. But even they are offset, the amount of carbon in the air will stay the same. Both scenarios will exacerbate climate chaos.

Danny Cullenward, a lecturer at Stanford Law School and a member of CARB’s Independent Emissions Market Advisory Committee, which monitors California’s cap-and-trade program, had said the deal was “an invitation for fraud” because it will be impossible to verify. (In interviews with us, Cullenward said he was expressing his personal views and was not speaking for the committee.)

When apprised of Sealaska’s latest decision last week, Cullenward was perplexed that the announcement failed to indicate whether carbon incentives were part of the decision. “That silence is interesting,” he said. “I wonder what it means. I would have imagined that if the offsets income was enough to justify getting off timber harvesting forever, Sealaska might have said that explicitly. If that was the case, why didn’t they say so? Something doesn’t add up here, but it’s not clear to me exactly what that is.”

Catherine Mater, a former forest consultant for Sealaska, said the decision may have related to federal tariffs imposed by President Trump on logs exported to China Tariffs of 25 percent were imposed in June 2019, around the time the Sealaska carbon offset deal went into effect. Sealaska reports that it exported a majority of its logs to China (though it also exports to Japan, Korea, Canada and Washington State), where they return four or five times more revenue than local mills can pay.

“I think Sealaska could see the writing on the wall with their current forestry business model,” Mater said.

There is some evidence supporting Mater’s claim. In her February 2019 testimony to the legislature, Kookesh had acknowledged tariffs are a problem for Sealaska’s log export business. “We are very concerned,” she said. “Right now, we have customers over there who are willing to split the cost of the tariff. Not sure they are going to be willing to stomach the 25 percent, so we do hope that there is some resolution with the federal administration. If the tariff goes to 25 percent we might not be able to sell that under those conditions.”

The tariff did go up to 25 percent a few months after Kookesh’s testimony.

Sealaska is still on record as supporting President Trump’s October 2020 decision to resume old-growth logging on roadless lands in the adjacent Tongass National Forest. Mater suspects the company has worked out a deal with the White House and Alaska Gov. Mike Dunleavy, a Republican, “to offer their management services” to other tribes once logging resumes in roadless areas.

Other Alaska Native groups will be impacted by Sealaska’s decision to quit logging. Sealaska, one of 13 Alaska Native corporations created by the Alaska Native Claims Settlement Act of 1971, must share 70 percent of its profits from timber harvests with the other corporations.