The Dunleavy administration has refused to explain how it intends to generate $7 billion in new revenue over the next decade, though it released a state budget forecast saying the money will begin to appear starting next summer, rising to $900 million a year by 2027.

It will be up to the resources committees in the Legislature to inject a sense of reality into the carbon capture and sequestration plans that Gov. Mike Dunleavy is promoting as a painless cure to state budget problems. The state stands to collect “millions, if not billions,” according to Dunleavy.

A consultant hired by the Department of Natural Resources produced this report last summer proposing three pilot forestry projects that would net the state $8 million a year. That’s significant, but it’s not $7 billion over a decade.

The pilot projects would be near Haines, Mat-Su and in the Tanana Valley. The report contains nothing that would lead anyone to conclude that $300 million would be generated in the fiscal year that begins next July.

The 10-year state budget forecast calls for $300 million in “new revenue” starting next July.

Neil Steininger, Dunleavy’s budget director, had not responded to multiple requests for an explanation of the $7 billion in new revenue listed in his report until Wednesday.

According to the Alaska Beacon, he told reporters privately in December that the number represents Dunleavy’s target for what would be gained by selling carbon credits. But Steininger says he did not make that claim.

Alaska news organizations have yet to press Steininger about the $7 billion in mystery money. Steininger sent an email Wednesday in which he said the $7 billion in new revenue is not what the state expects to collect from carbon capture and sequestration projects.

Instead, the $7 billion is how much the state needs from various sources to make state finances look better on paper over the next decade and to justify big dividends. Dunleavy has proposed no sources of new revenue except the “millions, if not billions” from carbon capture.

As I’ve mentioned multiple times since December, the 10-year budget forecast with the $7 billion in new revenue does not mention any source for those billions.

“We did not make any statement that the revenue targets were an analysis of potential carbon revenues. Just that, under current forecast, there is a need for new revenue to balance the 10 year plan and that the carbon package is an effort to address that need. The amounts listed are not an analysis of any specific measures but are the amount needed to ensure a balanced budget and stable reserves. Further detail on carbon bills will be addressed through the legislative process,” Steininger wrote Wednesday.

The $7 billion in mystery money plugged into the 10-year budget makes it appear that the state can afford to spend $2.5 billion to $3.2 billion per year on Permanent Fund dividends over the next decade. The table in the 10-year budget justifying big dividends is a fraud because the $7 billion in mystery money is not something to count on.

The consultant hired by the state provided nothing that justifies claims of $7 billion in new revenue from carbon capture programs.

The consultant says forest projects are the only real options available right now for carbon revenue and that the other ideas offered by the state for generating funds from carbon need more work.

“No immediate project opportunities have been identified in the other categories,” the company says. “There are no meaningful opportunities related to marine or soil carbon sequestration in the state, and opportunities around LNG, fleet vehicles, and mine methane capture require further investigation.”

When specific projects are identified, in-depth feasibility studies will be needed. “The feasibility study would also identify whether the cost of implementing a project would exceed the revenue generated by the credits. Only in circumstances where the credit revenue exceeds project costs is a project recommended.”

The consultant recommends waiting until the carbon capture and storage rules about under water storage—such as in the Cook Inlet gas fields—are published by the American Carbon Registry and the Verified Carbon Standard Verra and “then further evaluating CCS (Carbon Capture Storage) project opportunities in the state.”

More reasons to be skeptical of carbon credits as the miracle that will solve Alaska’s financial problems and allow giant dividends are contained in a new analysis today from The Guardian newspaper about the value of carbon offsets from the Verra carbon program.

“The forest carbon offsets approved by the world’s leading provider and used by Disney, Shell, Gucci and other big corporations are largely worthless and could make global heating worse, according to a new investigation,” the newspaper said.

Verra claims the newspaper is wrong. The Guardian says that its 9-month investigation found that “only a handful of Verra’s rainforest projects showed evidence of deforestation reductions, according to two studies, with further analysis indicating that 94% of the credits had no benefit to the climate.”

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