Using tree planting to offset carbon emissions from fossil fuel reserves?

According to an environmental research paper published in the latest issue of the professional academic journal "Communication - Earth and Environment" under Springer Nature, researchers analyze that in order to offset the carbon dioxide emissions from the fossil fuel reserves currently held by the world's 200 largest fossil fuel companies, the area of new forests (afforestation) that need to be planted exceeds the land area of North America, undoubtedly facing insurmountable challenges.

This study also suggests that if the cost of offsetting all reserves is deducted from the current valuations of these companies, the majority of their market valuations will be negative.

The paper introduces that future emission scenarios typically include reducing carbon dioxide emissions and offsetting these emissions. Most scenarios assume that during the transition to clean energy, the 182 billion tons of carbon currently stored by fossil fuel companies will be used, so offsetting is necessary. Afforestation (establishing new forest areas through tree planting) is often proposed as a low-cost offsetting solution, but the feasibility of afforestation as a large-scale offsetting solution is not yet clear.

The corresponding author of the paper, Alain Naef from ESSEC Business School in France, along with colleagues and collaborators, evaluated the feasibility of using afforestation methods to offset the total potential emissions of the world's 200 largest fossil fuel companies and current reserves by 2050. They found that to offset existing reserves, the afforestation area needs to be greater than 24.75 million square kilometers, which is larger than the land area of North America. To convert such a large area into forests, existing communities and farmland can only be relocated, and key natural habitats can be destroyed.

The authors of the paper also estimated the "net environmental value" of the studied fossil fuel companies. They define this concept as the remaining financial value of a company after deducting the cost of offsetting potential emissions from existing fossil fuels from the current market valuation. The results show that based on the average emission offset cost of $83 per ton of carbon dioxide in Europe in 2022, 95% of companies' net environmental value will be deducted to negative values.

The authors of the paper conclude that although their analysis has some simplifications, the results indicate that stopping the extraction of fossil fuels is more economically advantageous for businesses compared to mining and offsetting them, and afforestation is not a feasible method to offset all carbon dioxide emissions.