Below the surface: carbon accounting and forestry done differently
May 10, 2023
At its heart, Hydrowood is a business built on storytelling. One of the world’s first underwater forestry operations, founders Andrew Morgan and Dave Wise developed a process to reclaim a drowned and forgotten forest, hidden under a cloak of dark, cold water on Tasmania’s wild west coast.
When the Pieman Lake was flooded nearly 40 years ago, thousands of trees, sought after for their inherent building qualities, were preserved in situ. Since the business idea was floated (pun very much intended) in 2012, Hydrowood has gone to great lengths to research and establish the quality of the material being salvaged. The process of being submerged in such conditions has actually allowed this timber - some of the most sought after in the world (Myrtle, Huon Pine, Celery Top) - to become a stable timber product.
“The key to Hydrowood is around saving something that’s lost."
Morgan acknowledges Hydrowood is harvesting a resource, and once it’s gone it’s gone, but there’s value in salvaging this timber. What’s been key for Hydrowood, and “the much bigger piece” of the story, is to understand that left alone, these trees would break down (albeit slowly given the cool temperate conditions) and release carbon and methane, methane being approximately 28 times higher than C02 as a global warming potential.
“Understanding our carbon footprint adds to the rich story we’ve already developed”. With a background in vegetation, ecology and zoology, Morgan explains he’s always had an environmental approach to the way he does business, “Our aim is to do things better than what’s been done in the past. We’re able to access this resource, and we’re trying to do our best by it.”
“So if we can start to measure the positive impact we’re having by pulling the timber out, stabilising it and putting it into construction? Then not only are we doing something that’s environmentally beneficial, but we may also be able to put a monetary value on it. There’s an economic rationale at play.”
If Hydrowood’s approach is applied to the hundreds of thousands of hectares of trees that have been submerged in the tropics across South America or Southeast Asia, then there may be a really compelling carbon story.
Hydrowood has worked hard to become certified under the international standard for forestry management. “We are positioning ourselves in a market that really values positive stories and it’s about getting our environmental credentials in place,” Morgan outlines. Until now, Hydrowood has predominantly been an R&D exercise. “People think we’ve been around for years, but really we only got to the pre-commercial phase in 2018/2019”.
By being able to account for Hydrowood’s emissions now, it allows Hydrowood to look forward and identify other opportunities that might present themselves. One such opportunity is just around the corner. Hydrowood have engaged OnMarket, one of Australia’s most experienced capital raising sites, to help with a crowdfunding raise. By having accurate carbon data behind them, paired with the regenerative story, it’s a very powerful opportunity.
“The type of investors who are going to be interested in us are going to want to know not only what Hydrowood’s footprint is, but what is it versus the footprint of a traditional harvest”.
Morgan acknowledges the scales are different, and until they started to engage Sumday and their accountants, it’s all been “back of the envelope” type calculations to determine if their approach is less carbon intensive that traditional harvests. Hydrowood now wants to understand the numbers more. Much of the potential advantage is about the machinery mix, Morgan explains. Hydrowood is working on water - there’s no requirement to build roads, or move large bits of timber around on land, nor is it negatively impacting the surrounding wildlife. The system is anecdotally more passive and less energy intensive. By working with Sumday and our accountants, the true impact will be better understood, and “then it’s just another quiver in our bow when talking to impact investment and private equity firms.”
Hydrowood is increasingly having conversations with companies like Levi’s, David Jones and Country Road as retail seeks to create a physical presence to demonstrate their commitment to sustainability. “Reclaimed timber from Tasmania captures people’s imaginations,” Morgan explains, “the stakeholders and investors are seeing a demand from consumers for sustainable and environmentally-friendly sourced products.”
“We saw it first with the food movement. People are aware of where and how their products are sourced.” Low food miles are a deciding factor when it comes to people’s spending habits. “Providence and name are becoming more important. I know where my beef comes from, where my wine comes from, and Hydrowood’s drive is around the providence piece.” Morgan is buoyed by a move away from a throwaway society, towards a ‘buy once, buy well’ model. Knowing the history of your timber, your furniture, the cladding on your house or the floorboards that will be walked across for 100 years, “has merit and real value. It’s something you want to pass down.”
Morgan is seeing the same on the corporate side, “Shareholders are saying, “We want you thinking about, and acting on, sustainability.””.
Morgan explains, “Our initial conversation with Sumday and our accountants was about understanding our footprint. If we get ahead of the curve now, and tell the real story about our carbon footprint, then that further informs the narrative we’ve built for ourselves”.
For Morgan, a great story teller, it comes back to what anecdotes he can share at the next dinner party.
“If I can put my hand on my heart and say ‘this dining table is made from Hydrowood, it’s come from the Pieman River, and it’s got this great, unique and impactful story to it, then that’s what drives me.”