Bill Gates and other investors are betting Kodama Systems can reduce carbon dioxide in the air by chopping down and burying trees. Now if only Uncle Sam would get on board with tax credits, too.
By Christopher Helman, Forbes Staff
A year ago, Merritt Jenkins moved from Boston to Twain Harte, California, a speck of 2,500 souls in the foothills of the Sierra Nevadas. On his morning commute, he stops at Alicia’s Sugar Shack for a breakfast sandwich (scrambled eggs on rye with avocado), then heads to a 10-acre patch of woods in the Stanislaus National Forest. There, his startup, Kodama Systems, is testing and perfecting its 25-foot-long, 17-ton semiautonomous timber harvesting machine.
Loggers use such machines, known as skidders, to grab tons of cut trees and debris and drag them out of the woods. Kodama’s version is designed to do the job even at night, with fewer workers, using satellite connectivity and advanced lidar (light detection and ranging) cameras, the same type that are used on self-driving cars, to monitor the work remotely. It isn’t easy. “There’s a lot of texture to the trees. Every 10 feet of skid trail is slightly different,” says Jenkins, 35.
But logging in the dark isn’t the most intriguing part of the plans at Kodama, which has raised $6.6 million in seed funding from Bill Gates’ Breakthrough Energy and others. After cutting down the trees, Jenkins plans to bury them—to help slow climate change and to reap salable carbon offsets (and maybe, someday, tax credits too).
Yes, the conventional idea is to plant trees to soak up carbon dioxide from the air and to then sell credits to corporations, private jet owners and others who need or want to offset their emissions. But scientists say burying trees can reduce global warming as well—particularly if those trees would otherwise end up burning or decaying, spewing their stored carbon into the air.
California’s enormous 2020 wildfires drove home the risks to air, property and life posed by overgrown forests. “The orange skies in San Francisco were an inflection point. Now the story resonates,” says Jimmy Voorhis, head of biomass utilization and policy at Kodama. The alarm bells are sounding even louder this year as Canadian wildfires have spread dangerous air conditions to New York, Washington, D.C., and Chicago.
To help address the problem, the U.S. Forest Service aims to thin out 70 million acres of western forests, mostly in California, over the next decade, extracting more than 1 billion tons of bone-dry biomass. It is customary, after such forest thinning, for logs of marketable size to go to sawmills, with most of the rest piled up and later burned under controlled conditions. Kodama wants to bury the leftovers instead—in earthen vaults designed to maintain dry and anoxic (oxygen-free) conditions and protect the wood from rotting or burning.
Along with the VC seed money, Kodama has already received $1.1 million in grants from California’s forest fire agency and others, as well as purchase commitments for the carbon credits tied to the first 400 tons of trees it buries. On the open market, those credits should fetch $200 a ton. Eventually Kodama wants to cut down and bury more than 5,000 tons of trees a year.
A Dartmouth grad with degrees in both engineering and environmental studies, Jenkins started selling used robotic equipment while earning a master’s in robotics at Carnegie Mellon. Then he cofounded a company that uses machine learning to help farmers analyze soil. But in 2019, while earning an MBA at MIT, he concluded there was more opportunity in forestry than in the crowded ag-tech field. He backed away from the AI company and spent months with loggers to understand how they use equipment, and by 2021 had settled on forestry robotics, convinced that labor shortages would drive demand. “There’s not enough workforce,” he says. “We’ll need new training and new technologies” to meet the Forest Service’s clearing goals.
He also saw another “big gap” in the industry: what to do with all that biomass. He had heard about biomass vaults from Yale’s Carbon Containment Lab. Then mutual friends introduced him to Voorhis, a 33-year-old mountaineer, geologist and earth sciences engineer (with an M.S. from Dartmouth), who had become obsessed with the idea of reclaiming old mines as biomass burial sites. They joined forces.
The notion of burying trees sounds simple and low-tech, particularly when compared with the convoluted “carbon capture” technology now being developed to pull CO2 from the air. Thanks to the Inflation Reduction Act Democrats passed in 2022, companies like Occidental Petroleum and ExxonMobil could qualify for tax credits of $85 per ton of CO2 sequestered if they can perfect systems to suck the gas directly from the air and transport it by pipeline before injecting it permanently underground. The IRA further incentivizes some of these projects with tax credits equal to 30% or more of upfront capital invested.
If you want to cut down trees and pelletize them to burn in place of coal, there are tax credits for that too. But not, as of now, for burying them.
“If you need to remove carbon at scale, it’s crazy not to learn from nature or harness nature,” says Lucas Joppa, a former chief environmental officer at Microsoft who is now at Haveli Investments. “We’ve never come remotely close to being as efficient at removing carbon from the atmosphere as evolution has.”
HOW TO PLAY IT
By William Baldwin
Grow a tree and then bury it? What a waste! The rational place to store carbon is above ground. The wood could be the two-by-six studs in a house or the laminated beams in a commercial building, and it spares the planet CO2 emissions from steel and concrete. Participate in this environmentally virtuous business by owning shares in forest products companies, such as West Fraser Timber in Canada and Stora Enso in Finland. Earnings will be down this year as homebuilding pauses, but the trees are still growing, and the dividend yields (1.4% and 5%) continue. Recover some or all of the foreign withholding taxes on dividends via a credit on your U.S. return.
William Baldwin is Forbes’ Investment Strategies columnist.
Illustration by Patrick Welsh for Forbes
How efficient? University of Maryland atmospheric science professor Ning Zeng, considered the godfather of biomass burial, explains that the average ton of freshly harvested forest is about 50% carbon by weight, and if left to rot or burn it would put the equivalent of one ton of carbon dioxide into the atmosphere. A good rule of thumb, he says: “A ton of biomass in the Earth is a ton of CO2 not in the sky.”
Zeng has his own startup, Carbon Lockdown, which has a contract with the city of Baltimore to pick up 5,000 tons of biomass and bury it near wealthy, leafy Potomac, Maryland. He’s selling the carbon credits generated by that burial at $181 per sequestered ton on Puro.earth (a platform that was built with backing from the Finnish government and became majority-owned by Nasdaq in 2021). Swedish investment company Kinnevik recently bought 1,000 tons. “Nature-based technologies are here and scalable,” says Mikaela Kramer, who oversees carbon credit purchases for Kinnevik. “It doesn’t have to wait another 10 years.”
Still, it’s tough to get large-scale private or government investment in biomass burial because it’s neither replacing a climate-destroying industrial activity nor creating a product that’s of use to people—other than the credits themselves. It also can mean disturbing land.
In Texas, attorney Chris Knop, 43, has already interred more than 4,000 tons of biomass on 45 acres of land his company, Carbon Sequestration, owns near the Louisiana border. The land there is ideal for the anoxic burial required to prevent biomass from decomposing, he says, because of its thick layer of clay. He recently acquired 15,000 tons of debris from landowners north of Beaumont, who are clearing pine forest for real estate development and would otherwise have burned it, enabling him to sell carbon credits for $145 a ton on Puro.
Knop thinks he can break even and was counting on federal tax credits to make the venture profitable. But Congress didn’t explicitly include biomass burial in its tax-credit bonanza. Now Knop and biomass lobbyists are hoping that when the Treasury writes final rules for carbon sequestration credits, biomass will qualify. “I’m just looking for some type of affirmation,” he says.
Knop also has an out-there vision for turning America’s forestlands into carbon sponges by chopping down pine trees, burying them and then replanting with more carbon-thirsty species like bamboo, kenaf or poplar. In the U.S., hundreds of millions of acres are dedicated to cattle grazing or timber production, he says. “Why not switch to carbon farming?”
Back at Kodama, Jenkins is focused on burying wood that needs to be culled anyway for forest health, while Voorhis is aiming to adapt defunct mines and quarries—rather than dig new land—for biomass storage. “We will measure the gas and leachate and completely box off the carbon flows,” Voorhis promises. “If you meet anyone with an old inert rock quarry, let me know.”
Little Big Picture
WOOD WORK
America has plenty of trees—nearly 300 billion of them, according to the U.S. Forest Service’s “tree census.” Good thing, since wood products are used in a variety of products including cigarette filters and Parmesan cheese. Here’s how much you can wring out of a single 30-foot tall, 1.5-foot-wide tree.
7 million toothpicks
Birch
4,000 wine corks
Cork Oak
1.2 bowling lanes
Pine
Framing for 1/20th of a 2,000-square-foot home
Douglas Fir
1/40th of a 65-foot Viking longship
Oak
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