Above, Jeff Coombs is pictured in his mill office in Tamworth. Paula Tracy photo
By PAULA TRACY, InDepthNH.org
TAMWORTH – Landowners who enroll their properties in carbon capture markets are closely watching a bill that comes up for a hearing in the Senate next Tuesday which would tax the growth of timber.
It is considered closing a “loophole” in the timber tax to its advocates, but those who own land and have enrolled their tracts in this newly emerging market are claiming it would be double taxation.
And they see a nightmare scenario with many different variables on how this tax would be paid.
Climbing up a steep woods road in his tracked ATV recently, Jeff Coombs slowed the vehicle to point out red paint markings on trees in the Ossipee Range.
He owns a contiguous tract of about 12,000 acres which are now enrolled in a voluntary carbon capture market but have not yet been sold.
Beech, hemlock, yellow birch, striped maple, sugar maple, red maple were numbered and included in the plot area which was bordered by “X” painted markings.
These trees will be checked for growth every five years to make sure they are still growing, he said.
Under the bill, he would pay the town a 10 percent tax once the credits were sold and every year pay an amount for the growth of those trees as a yield tax.
Coombs, a licensed forester, uses this land to source about a third of his mills’ needs to sell kiln dried firewood and kindling products in bundles at grocery and convenience stores. This is his 26th year in business with what is now known as the Ossipee Mountain Land Company in Tamworth with about 30 employees.
He also taps trees for maple syrup, opens it up for recreational use and hopes to now have a new way to pay the bills if he can sell carbon offsets on a voluntary market to companies that want to reach net zero emissions goals by buying credits which has them allowing the trees to grow instead of harvesting them.
Coombs said if he does sell carbon credits, he still plans to cut the same amount of trees to feed his mill and the five towns where the land is located would still get paid the same timber tax on that, but they would also be getting a new source of revenue from the carbon tax.
Eventually those painted trees will be cut and sold, likely outside of the length of the term of the carbon contract, and there would be a timber tax again on that, which he said is unfair.
Coombs is among nine property owners in the state who have registered their private tracts of land on the state’s new carbon registry. A link to it is here:https://www.nhdfl.dncr.nh.gov/sites/g/files/ehbemt866/files/inline-documents/sonh/nh_carbon_registry_3_18_2025.pdf
So far, this is a small number of acres when compared to all the forested acres in the state. The registry shows a total of 184,096 acres enrolled in carbon sequestering programs with about 4.7 million forested acres total out there in the Granite State, which is about 84 percent forested and most of that, held privately.
The carbon market is growing and many from municipalities to the forest products industry worry that carbon sequestration will have a negative economic impact on the state.
The municipalities and county governments are responding to potential loss of timber tax revenue and are supporting a bill they say closes a loophole created by carbon credit forestry.
House Bill 123 https://gc.nh.gov/bill_status/billinfo.aspx?id=106&inflect=2 extends yield taxes to property enrolled in or registered for the purpose of generating carbon offset credits and would go into effect next April.
It passed the lower chamber and is now due to be heard in the Senate Energy and Natural Resources Committee at 9 a.m. on May 6. It would extend an existing yield tax for timber to carbon farms at the same 10 percent rate.
Coombs is opposed to the bill and said if passed it would amount to double taxation.
He said his operation is far different from the property that likely prompted the legislation.
The largest carbon generation property in the state is at its very tip, the 141,062 acres of Connecticut Lakes Realty Trust land in Coos County now owned by Aurora Sustainable Lands. It is a carbon first corporation which is part of Anew.https://anewclimate.com/solutions/carbon
Aurora is also opposing the legislation.
Coombs noted he already has spent thousands of dollars to prepare the property to enter a carbon registry from legal work, insurance to documentation.
Chocorua Forest Lands LLC signed up in 2020 as registered on the voluntary market to sell carbon credits for a term of 40 years on 11,358 acres in Carroll County in Moultonborough, Sandwich, Tuftonboro, Ossipee and Tamworth.
Driving the ATV along a ridge line in Ossipee, Coombs said, “I don’t think the state understands all the different components and the variables that go along with it.”
For his part, “You can spend all this money and not sell anything and then all of a sudden you sell something and they take 10 percent of it and you don’t even cover your original costs,” he said as the John Deere idled.
Jasen Stock, executive director of the NH Timberland Owners Association, was also in the cab of the vehicle and said Coombs is more typical among those property owners who have registered in the state than Aurora.
NHTOA is opposed to the legislation, sponsored by State Rep. Arnold Davis, R-Berlin, and is co-sponsored in the Senate by State Sen. Howard Pearl, R-Loudon.
Aurora has the majority of the land in the registry, a 141,062-acre tract which was signed up for carbon credits on the California compliance market in 2013 by the previous owner, the Forestland Group.
Separately, that tract has a conservation easement attached to it with the state which was sold to assure recreation and logging on the tract forever. The state, which holds the easement, is in negotiation now with Aurora for a 10-year cutting agreement that looks to reduce traditional logging on the tract by about 50 percent. The first proposal was rejected by the state forester with concerns that it does not live up to the terms of the easement drafted 20 years ago, before there was a carbon market.
Pittsburg used to get almost 20 percent of its town revenue from the timber tax on that property but with less cutting in recent years, that funding has been reduced.
Aurora has offered a gift to the three towns of Pittsburg, Stewartstown and Clarksville which comes up with a payment for any loss over the five year timber tax average, but there is nothing in law to require that sort of tax help into the future.
The Coos County Commission and the NH Municipal Association are among supporters of the bill. Town managers and selectmen see it as a way to even up the tax burden and close a “loophole.”
Mark Brady, Coos County Administrator, said in an email that “this legislation is about fairness, justice, and responsibility and those that oppose it have not offered any legitimate reason as to why carbon harvesting should be granted a tax break.”
He said the bill is needed “because if the loophole in the yield tax (timber) is not closed, the state will be incentivizing carbon harvesting over traditional forest management which will result in (1) significantly less timber tax revenues for municipalities which will then cause an increase in property taxes, and (2) the destruction of what is left of our timber industry.
“Carbon harvesting really is a revolutionary way to manage our forests when one considers that for seventy-five years the timber tax has done an excellent job of promoting responsible forest management, providing a reliable municipal tax stream, and supporting the timber industry,” Brady said.
“This bill simply updates the statute to the present reality and keeps the proper balance between conservation and the state and county’s economic interests. The promoters of carbon harvesting use slick environmental slogans while they make massive amounts of money for their shareholders at the expense of the New Hampshire taxpayer.” Over 200 municipalities in New Hampshire receive timber tax.
But people like Coombs and Stock say it is unfair and potentially unconstitutional as it would be double taxation. And they argue it is based on a false assumption that carbon sequester properties will not cut the timber.
It’s really, they say, the state looking for a scapegoat for changes in the timber harvesting practices which are more likely based on the fact imports are way up and mills are closing.
Supporters acknowledge municipalities would make more money if the bill passes but are hoping that it instead leads to a study committee where the entire tax law is examined for fairness.
An analytical review of the New Hampshire Timber Yield Tax, Final Report of Society of American Foresters, Subcommittee on Timber Yield Tax in January 2024 concluded that the state’s timber yield tax “is a complex, subjective, and inefficient method for collecting tax revenue with numerous inequities. Moreover, the TYT is a deterrent to hiring professional foresters who work to conserve forests in New Hampshire. The financial burden of the tax combined with the administrative, compliance and additional costs associated with the tax lead to a substantial reduction in the potential income from sustainable forest management to forestland owners discouraging the retention of forests in the face of competing uses. Consequently, the TYT does not meet the ‘purpose of encouraging conservation of the forest resources of the state’ specified in the 1942 constitutional amendment.”
And an April article in the Northern Logger by Charles Levesque pointed to the issue of the loss of timber taxes to more global market impacts and a loss of the biomass as more likely the culprit than carbon sequester markets.
In New Hampshire, Levesque wrote, “the wild fluctuations in harvest levels and the ultimate 35 percent reduction from 2000 to 2021 are also largely the result of pulpwood but, more so, biomass reductions as the biomass electricity plants have shut down or curtailed operations due to electricity market conditions and pricing,” Levesque wrote.
“While some would suggest that forest carbon markets are to blame for some of these changes, that simply isn’t true – yet. Will there be a mega-shift to selling forest carbon instead of timber over this wide geography at levels that would alter the data we have shown here? Time will tell, but this author believes the price of forest carbon offset credits will need to rise significantly – double or more than the current prices – to make a real difference.”
NO CHANGE IN CUTTING SEEN FOR THIS CARBON FARM IN THE OSSIPEE RANGE
Coombs said he does not envision any change to timber harvesting or timber tax payments to the five towns in Carroll County where his land is located if and when he sells credits and only an increase in tax revenue if the bill is successful.
With a map of his land laid out on the table at his mill’s offices in Tamworth before the trip into the forest, Coombs sat with his son, Theodore, who is the president and general manager of the sawmill and Stock and described a case of double-taxation that is being contemplated in House Bill 123.
The property is one whole piece and part of a larger tract used primarily for logging over the past century in the Ossipee Range which is known geologically as a concave volcano or a ring dyke.
He does own about 300 acres of old growth forest which is rare and remote at more than 2,000 feet in elevation. The state Natural Heritage Inventory has found the largest red spruce in the state and largest red maple on his land.
A piece of the land has deed restrictions from the Society for the Protection of NH Forest and two pieces have a Forest Legacy easement paid for by a combination federal money and state which is managed and monitored. The public is welcome to roam the property and use it for recreation.
The carbon credit market was emerging over 10 years ago and it came to include forests with corporations wanting to get to a goal of zero carbon emissions or being compelled to as in the case of California. The markets have emerged to get forestland owners to not cut their trees and essentially sequester carbon in their growth to offset emissions. This is similarly done with farmland which is left fallow and even landfills along with timberland.
Coombs said he was looking at one of those markets as a potential fit for this company and began about six years ago to discuss the idea with a broker.
They signed a contract with Bluesource in 2020 which is now called Anew https://anewclimate.com/solutions/carbon
Coombs has not sold on the voluntary market, yet.
If HB 123 passes, Coombs said he would be required to pay a tax to the state and eventually after the 40 year term another timber tax to cut the wood. This does not include the property taxes he pays, though the land is in current use and taxed at a lower rate.
Stock said there are very distinct differences between woodlots like Coombs has and many other timberland owners, and that of Aurora’s Connecticut Lakes Headwaters tract.
One aspect is that Coombs land and all other owners except Aurora are not involved with the California compliance market and the term is far shorter.
Aurora’s land was registered in the California compliance market for 100 years beginning in 2013.
“We are in the voluntary market,” he laughed when it was mentioned that Executive Councilor Joe Kenney of Wakefield calls it the “unregulated” market.
Kenney supports the legislation and notes that California is getting the benefit of New Hampshire’s well maintained forests at the expense of the state’s loggers, mills and taxpayers who are having to make up for the loss of timber tax.
Coombs disagrees.
“There’s plenty of regulation with it,” Coombs laughed, of the reference to the voluntary market. “It’s a forty-year rather than 100 year and the people who participate are voluntary and are not compelled by state law in California for polluters.
“This is a real working forest. And we have this mill and we process, kiln dry and package firewood here and to grocery stores,” he said.
About 10,000 cords are processed at the mill and shipped with about a third or 3,000 cords coming from Coombs’ woodlot.
They cut just about the annual growth on the woodlot.
He said he expects logging levels will not change if he sells carbon.
Asked if he could make more money on carbon instead of cutting timber, he said “no.”
He explained there are two types of credits on a property like his: There are the conservation credits which are the residual volume of timber on the land when the contract is signed with you.
“So they measure up all those trees and you have to leave those trees forever, well for the length of the contract which in my case is 40 years. You can’t go below that stocking quote. Then the growth they call renewals or removals.
“So every year, if you cut, we have to report everything we do, we show them what we’re harvesting. And then they calculate how many tons of residuals there is left on that so you have to maintain that base value.
“So the way we manage the forest, we wouldn’t go below that anyway. So it doesn’t really change anything from our standpoint. We’ve always kept the stocking level at least what it was the year before we took what growth there was…
“We don’t ever plan on just stop harvesting and just sell carbon. That is not what we are in business for. It supports this mill. It is part of the procurement base of this mill. And it just helps us to be able to keep the land…keep it in open space…for recreation use. It’s good for the state to have open space.”
HOW WILL THE DRA ADMINISTER THE TAX?
Stock said it was important to put Coombs’ situation into the context of House Bill 123.
He said the bill assesses the net income of a carbon credit.
“We just heard there are two types of carbon credits…this is why DRA (Department of Revenue Administration) is saying the administration of HB 123 can’t administer it because what is a credit worth?”
The current timber tax is easy, he said, because the DRA does surveys of prices on sales and aggregate that data and find out what is being paid per board foot or per cord.
“If Jeff does a harvest, the town has a nice little list with a range for each species that they can go through and consider his costs, say if he had to build a lot of road to get in there for the cut,” Stock said.
“For folks to jump up and down and say ‘this isn’t any different than timber taxation,’ I am sitting in the back of the hearing room pulling out my hair and saying ‘it’s totally different’ because there are all different (carbon) contracts, there is different pricing in the contract, even there’s different types of credits in the contract…so for folks to say this is a ‘loophole.’ It’s not a loophole especially if that tree does get cut down the road,” and is taxed at the stumpage.
To add even more complexity, Stock says, the bill says the town will assess 10 percent on the net income of the contract. So what is the net income? That includes deductions for the creation of management plans, cruises, legal costs, insurance.
“It just doesn’t work,” Stock said.
And there are no other states to compare to because most other states have income taxes, they said.
New Hampshire does have a business profits tax which would tax everything included in the business which brought income and companies are paying that as well and Coombs said in that case he would be taxed again.
But if you sell an easement, he noted, and you are not allowed to cut timber on it as a term of the easement “but you get paid for that you, don’t have to pay 10 percent of that to the town,” he said and if you thin out a maple sugarbush, you can sell that but you dont have to pay a yield tax on it….we don’t want that and we don’t want this either.”
Coombs said there are just too many things legislators haven’t thought out as part of this bill and carbon sequestration is hard enough to understand to begin with and it is new.
“It just came on too quickly,” he said. “There hasn’t been enough thought put into it.
“If the general court wants to study it, they can but if it were to pass, I think what you would see is years and years of legislation to fix this bill. Or go to court. Or both.
“It will probably end up there,” Coombs said of litigation.
Coombs said there is another component that is unfair.
The bill would not include the 2013 carbon sale for the Connecticut Lakes Headwaters because it occurred before the law passed.
Going forward, they would just be taxed on the growth.
Because he has not yet sold, Coombs said it would not be fair because he would have to pay the tax on the sale and the annual growth.
“They had a good market from 2013 through 2021,” Coombs said. “When 2021 came along, somebody came up with the idea that – and maybe it’s true- that some of the credits were not as good as other credits in other words, there were developers out there coming up with credits and verifying them…but they couldn’t guarantee they would stay on the stump for the 40 years or the 100. So they had to come up with a new verification system, which is what we have gone through and now the market is picking back up because once that word got out, the American Airlines and the Amazon they stopped buying till they knew what they were buying…I’m hoping this year, maybe we can sell some.”
Others said in recent months credits have declined in value due to the Trump Administration, tariffs and other aspects of volatility.
Stock said if you read the bill you have to ask when is the taxable event because there are differing terms when carbon credit is issued or when it is sold.
“It’s not clear when the town will send a tax bill? If that is the case how do we assess income? Unrealized gains? The bill doesn’t work, that is why we are fighting it,” Stock said.
Coombs said he understands the reaction in the north country to the loss of a timber tax in the case of the Connecticut Lakes Headwater tract, but in his case “If we are paying the same amount of taxes to the town that we always had, the towns aren’t losing anything on the deal like that.”
He noted deals to make land forever wild in the region have gone through without such taxation.
LANGUAGE OF HOUSE BILL 123
This is complicated stuff but to follow, this is what is being added to the 1940s era timber tax law under the bill which has already passed the House. Currently, all timber sold is taxed at 10 percent and the town where the land is located gets the tax. Under this provision, the yield tax would be extended.
“The owner of a property that has been enrolled or registered for the purpose of sequestering carbon dioxide and/or generating carbon offset credits shall annually pay a yield tax of 10 percent of the estimated net value of the carbon offset credits issued and sold in the previous calendar year.
“Total tonnage of carbon offset credits issued in the previous year shall be the amount as issued by the carbon registry equal to the total tonnage of eligible annually sequestered carbon the property owner reports.
“The net value of the carbon offset credits issued in the previous year shall be calculated by multiplying the amount of eligible annually credited carbon the property owner reports to the entity in which the property is registered or enrolled by the average price-per-metric ton paid by the entity in which the property is registered or enrolled in the previous year less the costs incurred by carbon developer and landowner.
“Whenever a property owner enrolls or registers a property for the purpose of sequestering carbon dioxide and/or generating carbon offset credits, the property owner or their agent, shall file an intent to sequester carbon form at the time the project is registered into the carbon registry established in RSA 227-G:4//
“If a property is enrolled or registered for the purpose of sequestering carbon dioxide and/or generating carbon offset credits prior to enactment of this provision, the property owner or their agent shall file an intent to sequester carbon form into the carbon registry established in RSA 227-G:4, XII within 30 days of the effective date of this section.
“The property owner or their agent shall submit to the carbon registry established in RSA 227-G:4, XII the total tonnage of carbon offset credits generated in the previous year within 10 days of reporting this information to the entity in which the property is registered or enrolled.
“A tax of 10 percent of the monetary value of the net value of the carbon offset credits issued on the property in the previous year shall be assessed by the assessing officials in the town in which the property is located within 30 days after the property owner’s submission to the carbon registry established in RSA 227-G:4, XII of the amount of carbon offset credits sold on the property in the previous year. Interest as provided in RSA 79:4-a shall be charged 30 days after the bills are mailed by the tax collector on any tax which is due and payable and which remains unpaid.
“All other provisions of RSA 79 shall be applicable to the owner of a property that has been enrolled or registered for the purpose of sequestering carbon dioxide and/or generating carbon offset credits, and shall be enforced by the host municipality or county commissioners if the subject property is located in an unincorporated area.”
The bill’s future is in question related to being an additional tax after getting a unanimous recommendation of ought to pass out of committee in the House, to a bit of a floor fight for passage.
Republican Gov. Kelly Ayotte, who has said she opposes any new taxes, has not weighed in on the subject but in her inaugural address she expressed a concern that the conservation easement for the Connecticut Lakes Headwaters Tract be upheld to allow for continued logging and that the fabric of the logging culture and industry of the state continue.
Those watching the issue expect that there may be more amendments to the bill which will come for the first time in its new form to a public hearing on Tuesday at 9 a.m.
