What’s wrong with the current management of “green” forestry projects and why we need to fix it
Companies are under increasing pressure to “do something” about their contributions to climate and social problems.
This pressure, coupled with the potential for positive PR outcomes, has led 39% of Fortune 500 companies to commit to some form of climate action, and forest carbon offsets play a huge role in their sustainability strategies.
Forest carbon projects are one of the best existing methods for drawing down atmospheric carbon. For example, a forest of about 400 hectares can remove more carbon than the world’s top carbon-removing facility (4000 tonnes/year). Carbon credits are also an easy-to-grasp concept, making for a good PR story and generally positive public reception.
Forest carbon projects measure the amount of carbon stored in their forest, and for each tonne of carbon stored, they generate one credit. Corporations pay for forest carbon credits, which then provides funding to maintain forest or improve forests all over the world. At least, that’s how it works in theory.
Right now, all forest carbon projects are assumed to be following the above logic, but we know that not all projects provide equal climate benefit. Some projects are worthless, while others provide better outcomes than they realize. Without visibility into which credits perform and which ones don’t, it’s possible to financially support projects that do nothing and continue to pollute — with disastrous results for climate action..
A big, complicated system
As of late 2021, the voluntary carbon market (which includes forest carbon as well as other types of projects) was estimated to be about $750 million, with projections to exceed $1 billion by 2022. This is one of the only ways to finance forest protection and management, providing much-needed resources to keep forests standing, and enhance carbon storage at scale. The intentions behind this market are good, but the growing market value introduces incentives for people to game the system.
The processes to generate, validate, and acquire carbon credits are fiendishly complicated. Actors include landowners, NGOs, verifiers, brokers, investors, and more. The complex chain of events provides plenty of opportunities for people to bend the rules. For example, sometimes carbon projects are developed on land that was already under protection, meaning the carbon stored in the trees was never in danger of being removed or emitted. Other times, projects claim to be “reforesting” the land, when in fact they have planted monoculture timber plantations that they plan to cut down for paper making in 15 years.
Another issue is limited monitoring and verification. Due to time and budget constraints, verifiers often limit themselves to using public data and project summaries to determine whether or not the project is doing what it promised to do. After a mandatory initial verification, projects can go without on-the-ground monitoring for years.
Even if verifiers’ methodologies were rigorous and projects were checked frequently, their results are not public. Unless you are on the inside of the big companies controlling those projects, you’ll likely never know whether the forest has yielded the expected impact or if it experienced mass deforestation. With such limited visibility, carbon credit buyers never really know what they are getting.
These issues are not secret. It’s widely acknowledged that the forest carbon industry–and corporate carbon offset buyers–need solutions to these problems.
The need for deep transparency
The promise of carbon credits is still strong, and in some cases, forest carbon projects do provide the means to protect or improve carbon storage. There are about 500 forest carbon projects in the world right now, and it’s still unclear which projects are successful, and which fail. This lack of clarity creates a PR risk for corporate buyers and carbon brokers. Most importantly, it creates an enormous risk that time and money are being poured into supposed solutions that do nothing, while offset buyers continue to pollute and the effects of climate change compound.
We have got to get this right. We need deep transparency into the carbon market.
Renoster uses remote sensing to scrutinize each project from a bird’s-eye view, and evaluate each of those approximately 500 projects to determine if they actually provide the climate benefits they claim. This analysis will reward existing projects that are getting it right, punish projects that game the market, and make it harder for future projects to cut corners.
The Mercury Rubric guides this analysis, and is built around five objective criteria to evaluate a project. These are:
- Additionality: is the project justified? Projects will sometimes claim credits for protecting areas that would have ended up storing the same amount of carbon, even without the project.
- Baseline: what would have happened to the amount of carbon in the forest if the project had not been implemented? Would it have stayed the same, decreased, or even increased? Underestimating baselines means making your project look like it’s done a lot more work than it actually has.
- Leakage: has the project led to deforestation or different management practices in surrounding areas?
- Permanence: how secure is the storage of carbon in that forest? Factors such as disease outbreaks, fires, natural disasters, and future potential harvests come into consideration here.
- Verification: is the methodology sound? Projects should be monitored according to industry standards and at appropriate intervals of time. If the methodology is sound, the numbers will be sound as well.
Nature-based solutions are our best bet if we want to combat the climate crisis. We need to be sure projects are performing as well as they say they are. Renoster’s approach is bringing deep transparency and accountability to a murky world, with better outcomes for the climate.
⚡️ Read more by visiting how we rate, or the Mercury Rubric whitepaper.
