Our 2023 Carbon Record

Land-Based Removals

SCOPE 1 – NET CHANGE IN OUR TIMBERLANDS
The amount of carbon stored in our timberlands changes over time. These changes occur due to tree growth, harvests, natural disturbance, and other factors. Because harvest removes carbon from the land base (transitioning much of it into storage in wood products) and tree growth adds carbon to the land base, we are interested in understanding how the amount of carbon stored on our land varies over time. Because the “true” value fluctuates on a moment-to-moment basis, we quantify the net change by comparing the carbon storage in our forests at year-end to the beginning of the year.

To avoid conflating the effects of our management activities with the changes of our land base, we compare carbon storage only on acreage we owned for the full calendar year. The use of this consistent spatial footprint for analysis means any acquisitions or divestitures that occurred during the year are omitted. Therefore, we exclude lands acquired during 2023.

Keeping track of carbon storage in standing trees and carbon removals via tree growth is compatible with the way we keep track of our standing tree inventory and growth. As with any actively managed forests, a variety of changes can occur throughout the year that affect the standing amount of carbon. Some major activities that can alter the inventory in an area are harvests, growth, and updated stand inventory (newly collected data). The magnitude of the annual change associated with these activities is tracked.

The basis of our tree and carbon inventories has two major components, inventory cruising and growth modeling. Our inventory cruising program involves ground-based sampling in our forests to get a tree-list for stands. Since stands are not sampled every year, our growth models estimate growth in the stands in the interim between samples. This allows us to have an up-to-date inventory value for every stand in our ownership at the end of every year.

At year-end, we take these stand level tree lists and apply well-documented biomass estimators and species-specific moisture contents to calculate component-based carbon inventories for our land base.^1,2 The difference between standing carbon at year-end compared to the beginning of the year is the net change for that year.

In 2023, we calculated the net change in our forests (our Scope 1 timberlands value) for three carbon pools: 1) merchantable portions of trees, 2) above-ground non-merchantable portions of merchantable trees and pre-merchantable trees, and 3) below-ground portions of all trees (excludes soil carbon).

In 2023, above ground tree growth on our timberlands removed approximately 7.6 million metric tons of CO₂e from the atmosphere. Harvest and other inventory adjustments totaled 6.4 million metric tons of CO₂e resulting in a net removal of 1.2 million metric tons of CO₂e. An additional 5.2 million metric tons of CO₂e was added to our land base from a calibration of our southern growth models. The calibration amended formerly underpredicted volumes and was based on the completion of long-term internal and industry-led studies across the U.S. South. As a result, the total net change was 6.4 million metric tons of CO₂e.

SCOPE 3 – NET CHANGE IN FORESTS OF OUR SOURCING REGIONS
Each of our mills has a geographic sourcing region. The carbon stored in forest pools in each of these sourcing regions changes over time with the local timberlands of a region either acting as a sink or a source of atmospheric carbon. Carbon sinks absorb more carbon than they release, while carbon sources release more carbon than they absorb. While forests are typically carbon sinks, they can become carbon sources if disease and other disturbances cause forests to die and decay or when forests are converted to other land uses.

The intention of accounting for carbon from non-owned forests where we source fiber is to bring the sourcing region flux into our Scope 3 GHG inventory. In doing so, this aggregates the net effect of activities including harvest, natural mortality, fire, and economic investment in forest management. The proportion of the regional carbon flux attributed to a mill should be equal to the proportion of the total regional external harvest that a mill consumes.

For carbon accounting purposes, we consider the sourcing region for a mill to be the state in which the mill is located. We calculate the statewide net flux in above ground carbon using both a U.S. Department of Agriculture (USDA) GHG Emission Report and a pre-release beta version of the American Forest Foundation (AFF) Carbon tool provided by The National Council for Air and Stream Improvement, Inc. (NCASI).^3,4 We use the estimated overall harvest in the state and calculate the land-based carbon flux associated with those harvests. We then determine our sourcing from the harvest in the state through our wood products facility usage data and establish our allocation of the land-based carbon flux associated with those harvests.

In 2023, we owned and operated wood products facilities in 4 states: Idaho, Arkansas, Minnesota, and Michigan. Arkansas, Minnesota, and Michigan forests were a net sink of carbon which is shown by a negative value in the chart below, while Idaho forests were a net source, which is shown by a positive value in the chart below. Our calculated combined contribution to the net change for these states was an atmospheric removal of carbon equal to approximately 0.9 million metric tons of CO₂e.

Idaho forests have become a source of carbon emissions primarily because of declining forest carbon storage on public forest lands resulting from slow growing older stands of trees and tree mortality from insects, disease, and fire in unmanaged stands. The carbon stored in wood products from harvested trees is not included in the state sink / source calculations.

SCOPE 3: STORED IN LOGS WE SELL EXTERNALLY
Some of the sawlogs harvested from our timberlands are sent to customers to be converted to wood products such as lumber and plywood. In addition, smaller wood from forests thinnings or the treetops are often sent to customers as fiber to produce a wide range of end products including paper, packaging, and other uses.

Our carbon storage analysis for external log sales is based on the type of log sold. We track all log volumes harvested from our timberlands and delineate them by species and product classes (hardwood vs softwood, pulpwood vs sawlog). We estimate the average carbon stored over 100 years in each log category sold using USDA’s Quantifying Greenhouse Gas Fluxes in Agriculture and Forestry: Methods for Entity-Scale Inventory (Table 6-a-5 and Table 6-a-6).⁵ The publication provides 100-year average product storage by region and log category.

In 2023, our timberlands sold approximately 6.2 million tons of fiber externally to non-PotlatchDeltic owned mills. Approximately 54% of these external fiber sales consisted of sawlogs with 46% being pulpwood. Nearly all delivered logs were softwood, with approximately 6% consisting of hardwoods. Using the GHG methodology described above, this amount of harvested fiber stores an average of approximately 1.6 million metric tons of CO₂e over the next 100 years.

SCOPE 3: STORED IN WOOD PRODUCTS WE MANUFACTURE
The trees grown on our timberlands are grown and harvested using sustainable long-term, five-year, and annual forest management plans. In 2023, about 20% of the logs we harvested, or approximately 1.5 million tons of sawlogs from our timberlands, were used in our wood products facilities. An additional 2.9 million tons of sawlogs were purchased by our mills from external sources. These logs were converted by our wood products facilities into lumber and industrial plywood.

These wood products store carbon by remaining in use, with slow reversals over their lifetime. The storage values were developed using decay curves for specific wood products that have been identified in the USDA’s report, Quantifying Greenhouse Gas Fluxes in Agriculture and Forestry: Methods for Entity-Scale Inventory (Table 6-a-5 and Table 6-a-6).⁵ Since the amount of carbon stored in a wood product decreases as the time since production increases, we use the average quantity of carbon stored over a 100-year period.

In 2023, PotlatchDeltic sold 1.1 billion board feet of lumber and 118 million square feet (3/8”) of industrial and structural plywood. Using our GHG methodology, these wood products store an average of approximately 1.4 million metric tons of CO₂e over the next 100 years.

CO2e storage in manufactured wood products

SCOPE 3: STORED IN WOOD RESIDUALS WE SELL
When a log is prepared to be sawn at our mills, we maximize the value of each log and minimize residuals. At most mills, 3D scanners and optimizers are used to automate the process. The full profile of the log is scanned which creates a computerized image of each log. The optimizer then selects the cuts of the log and how the log should be oriented to maximize value and minimize waste. It determines the number of boards to be cut and maximizes the yield from the log. This process increases productivity and quality at the mill. Overall, about 52% of each log is processed into lumber, with the remaining wood residuals consisting of sawdust, chips, shavings, and bark. These by-products can be used internally to produce biogenic energy or sold externally to be converted into a wide range of other wood products, paper and packaging products, or other end uses. Substantially all the log is utilized.

In 2023, our wood products facilities utilized an average of 19% of the wood residuals they produced for fuel in their boilers to generate thermal energy in the form of steam and approximately 81% of the wood residuals generated were sold for a wide range of end uses. We estimate the average carbon stored in the wood residuals sold and we do not include the carbon stored in internally utilized wood residuals in that estimate.

In 2023, our wood products facilities sold approximately 1.5 million metric tons of wood residuals. Using our GHG methodology, the end use products from these residuals store an average of approximately 200,000 metric tons of CO₂e over the next 100 years.

Footnotes:

Alexander Clark and Richard F. Daniels, “Estimating Moisture Content of Tree-Length Roundwood,” Pulping/Process and Product Quality Conference, Sheraton Boston (2000): https://www.fs.usda.gov/research/treesearch/9741
J. Jenkins et al., “National Scale Biomass Estimators for United States Tree Species,” Forest Science, no. 49 (February 1, 2003): https://www.fs.usda.gov/research/treesearch/6996
Grant M. Domke et al., “Greenhouse Gas Emissions and Removals from Forest Land, Woodlands, Urban Trees, and harvested Wood Products in the United States, 1990-2021,” U.S. Department of Agriculture, Forest Service, Northern Research Station Resource Bulletin WO-101 (April 2023): https://doi.org/10.2737/WO-RB-101
AFF/NCASI Carbon tool: https://ncasi-shiny-tools.shinyapps.io/AFF_Project/
M. Eve et al., “Quantifying Greenhouse Gas Fluxes in Agriculture and Forestry: Methods for Entity-Scale Inventory,” U.S Department of Agriculture, Technical Bulletin Number 1939 (July 2014): https://www.usda.gov/sites/default/files/documents/USDATB1939_07072014.pdf
J. Bowyer et al. "Utilization of Harvested Wood by the North American Forest Products Industry," Dovetail Partners Inc., (October 8, 2012): https://dovetailinc.org/report_pdfs/2012/dovetailwoodutilization1012.pdf

Greenhouse Gas Emissions

SCOPE 1 EMISSIONS: DIRECT EMISSIONS FROM OUR OPERATIONS
Scope 1 emissions are greenhouse gas (GHG) emissions that are emitted directly from our activities in our corporate, our timberlands, our wood products facilities, and real estate operations. These emissions are emitted from stationary sources and associated control devices (boilers, kilns, dryers, and a regenerative catalytic oxidizer (RCO)), mobile sources (fork trucks, log yard equipment, company-owned vehicles), long-term storage of wood residuals at our mills, and the methane (CH₄) and nitrous oxide (N₂O) emissions from biomass combustion.

To consistently calculate Scope 1 emissions, we use the National Council for Air and Stream Improvement (NCASI) tool. This approach uses methodology and emission factors consistent with guidance from the International Panel on Climate Change, and it reflects widely accepted protocols such as the Greenhouse Gas Protocol. This tool calculates CO₂ , CH₄ , and N₂O emissions from wood products manufacturing facilities and their ancillary operations. Scope 1 emissions from our timberlands and real estate segments are also calculated with this methodology.

The calculations involve the following:

For each site, we use our purchasing records and standardized emission factors to calculate CO₂-equivalent (CO₂e) emissions resulting from fossil fuels usage.
For each site, we use our steam production records to calculate biomass usage and subsequent biogenic CO₂ emissions (excluded from Scope 1) and remaining CO₂e emissions (CH₄, N₂O).
For sites with long-term residuals storage, we calculate the quantity of residuals onsite, use a methane generation rate, and apply a standardized Global Warming Potential (GWP) to estimate CO₂e emissions.

Our consolidated 2023 Scope 1 emissions were approximately 41,000 metric tons CO₂e with 17% from non-biogenic emissions from biomass combustion³, 33% from stationary sources, and 18% from long-term storage of wood residuals. Scope 1 emissions increased in 2023 from 2022 levels due to the installation of a new direct-fired kiln burner at our Ola, Arkansas facility. These new emissions were forecasted and then offset as part of our Scope 2 reduction efforts. Partnering with our Arkansas utility provider, Entergy, we were able to secure alternative emissions credits and renewable energy credits to offset the forecasted emissions of the new burner.

Over 99% of our Scope 1 emissions are from our wood products facilities with less than 0.1% from timberlands and real estate. Within wood products Scope 1 emissions, our Gwinn, Michigan wood products facility accounts for 34% of GHG emissions with higher emissions the result of the use of natural gas to fire a boiler and a direct-fired kiln. Our facility at St. Maries, Idaho has higher GHG emissions as a result of the facility being comprised of both a sawmill and a plywood mill, long-term wood residuals storage, and RCO for pollution control.

Emissions generated from biogenic carbon occur from the production of energy fueled by the use of wood residuals at our wood products facilities. These emissions in 2023 were 520,000 metric tons of CO₂ and were not included in our GHG direct Scope 1 emissions. Biogenic CO₂ emissions can be considered carbon neutral given the residual wood used for energy has a net sequestration benefit as areas harvested are replanted and the CO₂ absorption cycle is renewed as the forests grow. These biogenic emissions are also not additive to the carbon released into the atmosphere because they are considered part of the natural carbon cycle and as a result, they are preferable to the alternative use of fossil fuels.

SCOPE 2 EMISSIONS: INDIRECT EMISSIONS FROM ELECTRICITY PROVIDERS
Scope 2 emissions are GHG emissions associated with the production of the grid electricity used at our facilities and offices. For the electricity used onsite, there are emissions offsite associated with the production of that electricity. These emissions vary depending on the method of production of the electricity, with fossil fuels having high emission factors and renewable sources having low emission factors. Emission factors for electricity production vary by region and source of the grid electricity. Although these emissions are indirect, the user has some control over the amount of electricity used.

There are two methods for calculating Scope 2 emissions. The GHG Protocol Scope 2 Guidance defines both methods. A location-based method reflects the average emissions intensity of grids on which energy consumption occurs (using grid-average emissions factor data). A market-based method reflects emissions from electricity that companies have purposefully chosen. This method would include any type of contract with a utility and can take into account renewable energy credits (RECs), Alternative Energy Credits (AEC’s), or other energy attribute certificates. To calculate the emissions associated with our electricity usage, we use the same NCASI tool as used in Scope 1, which follows the GHG Protocol. We calculate Scope 2 emissions using both location-based and market-based methods. Location-based Scope 2 emissions are calculated with regional emission factors, while market-based Scope 2 emissions are calculated with utility-specific emission factors.

The calculations involve the following:

For each site, we collect electricity purchasing records and consolidate electricity usage by site.
For location-based Scope 2 emissions, we apply a regional GHG emissions factor from the Environmental Protection Agency (EPA) Emissions & Generation Resource Integrated Database (eGRID) for each site. Emissions are calculated for CO₂, CH₄, and N₂O emissions, which are then adjusted to CO₂e with standardized GWPs.
For market-based Scope 2 emissions, we apply a utility-specific emissions factor from the utility serving each site. Emissions are calculated for CO₂, CH₄, and N₂O emissions, which are then adjusted to CO₂e with standardized GWPs.

Our consolidated location-based Scope 2 GHG emissions were approximately 59,000 metric tons of CO₂e in 2023, using the most up to date emission factors from EPA’s eGRID.⁴ Our market-based Scope 2 emissions were 36,000 metric tons of CO₂e in 2023, using the most up to date utility-specific emission factors from our electricity providers.

While our location-based Scope 2 emissions calculations show a higher emissions quantity, the market-based approach is a more precise approach since it is using the emission factors with our specific electricity providers. Our market-based Scope 2 emissions calculation is lower, because our electricity provider in Arkansas has a much lower emission rate for electricity production than the Arkansas state average emission rate and includes any REC/AEC impacts. We have three facilities in Arkansas, so this results in a lower market-based Scope 2 emissions calculation.

Our 2023 market-based Scope 2 emissions declined from the previous year due to the continuation of our Green Promise RECs contract and the addition of a Go Zero contract for AECs and RECs in 2023 to further reduce our market-based Scope 2 emissions. Both AECs and RECs are third-party verified and come from low or no emissions sources. The Green Promise agreement includes 6.7 MW of solar capacity. The Go Zero agreement added an additional 2,550 KW of solar RECs plus AECs.

SCOPE 3 EMISSIONS: INDIRECT EMISSIONS FROM VALUE CHAIN
Scope 3 emissions, or indirect emissions, are the GHG emissions associated with our upstream and downstream value chain. These emissions are divided into 15 categories. These categories represent a wide array of emissions ranging from products and services that are paid for, to assets leased to other entities.

To consistently calculate Scope 3 emissions, we used the NCASI Scope 3 Screening Tool. This tool calculates Scope 3 emissions with an estimated 80% accuracy. Using fiber flows, we use the Screening Tool to calculate Scope 3 emissions for categories 1 (Purchased Goods and Services), 3 (Fuel-Energy-Related Activities), 4 (Upstream Transportation), 9 (Downstream Transportation), 10 (Processing of Sold Products), and 12 (End-of-Life for Sold Products).

The calculations involve the following:

We consolidate all accounting records for log sales from our Timberlands business.
We assign product categories to our Timberland deliveries, with the associated tonnage being tailored to a specific Category 12 emission factor.
We consolidate all accounting records for our Wood Products business for log purchases, primary product (lumber, plywood) shipments, and secondary product (wood residuals) shipments.
We convert all fiber data to dry weight.
We consolidate Scope 1 and Scope 2 CO₂e emissions.
We input fiber flow data into the NCASI Screening Tool.
We account for Wood Products business log purchases.
We account for Wood Products business primary and secondary product sales.
We account for Timberlands business log sales.
We apply appropriate emission factors for bark and planer shavings, matching the sawdust default emissions factor for categories 1, 9, 10, and 12.
We input Scope 1 CO₂e emissions to calculate upstream processing and distribution emissions for fuels.
We input Scope 2 CO₂e emissions to calculate transmission and distribution losses of electricity.
We exclude Scope 3 indirect emissions associated with our Real Estate business because they are de minimis as established by an analysis of 2021 data.

Company-wide consolidated 2023 Scope 3 emissions were approximately 3,100,000 metric tons of CO₂e using market-based Scope 2 emissions.⁵ Overall log sales were up in 2023 which offset reductions in Scope 3 emissions. Category 1: Purchased Goods and Services made up 6% of Scope 3 emissions and included emissions from professional services, telecommunications services, and wood fiber. Category 3: Fuel- Energy-Related Activities made up 1% of Scope 3 emissions and included energy losses from transportation and distribution of purchased energy in Scope 2, and any other utility or fuel information not covered by Scope 1 or Scope 2. Category 4: Upstream Transportation and Category 9: Downstream Transportation resulted in 3% and 6% of our calculated Scope 3 emissions, respectively. Category 10: Processing of Sold Products includes emissions from our sold logs and sold residuals that are processed in our customers’ mills and represented 42% of our Scope 3 emissions. Category 12: End-of-Life of Sold Products is the emissions from the recycling, landfilling, and disposal of our sold products and was 42% of our Scope 3 emissions. Other Scope 3 categories resulted in insignificant amounts of Scope 3 emissions. Overall, upstream emissions (including harvesting, hauling, and purchased materials and services) accounted for 10% of our Scope 3 emissions.

The rationale for not including the remaining categories is described below:

Category 2: Capital Goods. Scope 3 emissions associated with the purchase of capital goods has not been recognized as being a significant source of emissions in our industry. A general review of emissions associated with the purchase of capital goods supports this assumption at this time.

Category 5: Waste Generated in Operations. The majority of materials that could become waste from our operations are wood residuals which are either utilized for energy production (via biomass boilers) or used for other products by our downstream customers. Emissions from biomass combustion are a renewable source of energy and get reported as biogenic emissions. Emissions from materials sent to downstream customers get calculated in category 10 of our Scope 3 inventory. We do have some long-term storage of woody debris onsite, which is reported as part of our Scope 1 emissions as methane emissions.

Category 6: Business Travel. We reviewed emissions from business travel utilizing travel expenses from our accounting data. The analysis included air travel, hotels, rental car mileage, and mileage reimbursement (for mileage driven in private vehicles for business purposes). This did not result in a significant amount of Scope 3 emissions.

Category 7: Employee Commuting. Previous calculations of employees’ commuting using typical commuting habits from Census Bureau data and EPA emissions factors showed that these emissions were de minimis for Scope 3 emissions.

Category 8: Upstream Leased Assets. Although we lease mobile equipment for use at our mills, the fuel used in that equipment is captured in Scope 1 emissions.

Category 11: Use of Sold Products. No emissions result from the use or operation of our sold products. Separately, we account for carbon stored in our wood products as part of our removals.

Category 13: Downstream Leased Assets. We lease some of our land for recreation, and we lease some mineral rights. Recreation does not account for a significant quantity of emissions, and a preliminary quantification of mineral rights activity showed that it is an insignificant amount of Scope 3 emissions. We also lease some of our land for solar energy.

Category 14: Franchises. This category does not apply to us since we do not operate franchises.

Category 15: Investments. This category does not apply to us.

Footnotes:

GHG Intensity = Total Scope 1, 2, and 3 emissions per total division production.
2022 and 2021 are amended to reflect the addition of CatchMark Timber Trust on September 14, 2022. GHG Protocol requires previous years’ GHG calculations to be amended to estimate the impacts of significant events, such as a merger.
Greenhouse gas emissions estimates are based on the methods outlined in NCASI Report Calculation Tools for Estimating Greenhouse Gas Emissions from Wood Products Facilities Version 1.0 and associated workbook NCASI Spreadsheets for Calculating GHG Emissions from Wood Products Manufacturing Facilities Version 1.0. CO₂e (CO₂-equivalent emissions) is a term for describing different greenhouse gases in a common unit. For any quantity and type of greenhouse gas, CO₂e signifies the amount of CO₂ which would have the equivalent global warming impact. For PotlatchDeltic, CO₂e emissions include emissions of carbon dioxide (CO₂), methane (CH₄), and nitrous oxide (N₂O).
2023 Scope 2 emissions were calculated with the 2022 eGRID factors that were released in January 2024. Emissions & Generation Resource Integrated Database (eGRID) | US EPA
Scope 3 emissions were calculated with NCASI’s workbook, NCASI Scope 3 Greenhouse Gas Screening Tool, Version 1.1, and fiber flow data.

Greenhouse Gas Initiatives

We are committed to reducing our Scope 1 and Scope 2 greenhouse gas emissions and working with our value chain on indirect Scope 3 emission reductions.

We have established a 2030 greenhouse gas emissions reduction target for our Scope 1 and Scope 2 emissions of 42% from a 2021 baseline. This reduction target is in accordance with initiatives to keep global temperature increases to less than 1.5°C compared to preindustrial levels. We estimate that over 99% of our Scope 1 and Scope 2 emissions are associated with our wood products facilities. Reduction plans include the elimination of woody residuals storage, a shift to electric forklifts and hybrid vehicles where practical, and the use of alternative energy credits/renewable energy credits.

We also committed to a goal to achieve net-zero GHG emissions by 2050. Within our Scope 1 and Scope 2 emissions, this would require conversion of the natural gas boiler and direct-fired burner at our Gwinn, Michigan facility, conversion of our natural gas kiln burner at our Ola, Arkansas facility, and the use of additional RECs or AECs.

We have established a 2030 greenhouse gas emissions reduction target for our Scope 3 emissions of 25% from a 2021 baseline. This reduction target is in accordance with initiatives to keep global temperature increases to less than 1.5°C compared to pre-industrial levels. We estimate that approximately 45% of our Scope 3 emissions are associated with our wood products facilities.

The CatchMark merger materially affected our Scope 3 emissions, which triggered a base-year recalculation. This resulted in the amendment of the 2021 and 2022 Scope 3 emissions from what has previously been reported. The merger did not materially affect Scope 1 and Scope 2 emissions.