Photo by Sarah Brown on Unsplash

The Five components of Forest Carbon Projects

…and what to look out for when buying offsets

Beyond reducing our use and reliance on fossil fuels, nature-based climate solutions are one of the best ways to combat climate change. Preserving only 10 hectares (25 acres) of rainforest can keep more carbon out of the atmosphere than the world’s largest direct carbon capture facility.

The voluntary forest carbon market is one of the only ways to fund forest protection and restoration at scale, but it is a complicated world. Project descriptions more often resemble international treaties than forest carbon contracts, frequently exceeding 200 pages filled with jargon. Meanwhile, there are numerous examples of unjustified or over-credited projects. Right now, it’s tough to wade through the materials to know which projects are legitimate, and which are just greenwashing.

Despite the complexity, all forest carbon projects consist of five major components and need to get them right in order to have genuine, positive climate impact:

• 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.

In this article, we describe these components in greater detail and explain how projects cheat on each element, leading to low-quality carbon credits.

1. Additionality

Additionality simply asks whether or not the project is justified. Does the project need to exist in order for that carbon to be captured or stored? Usually, this is answered through a series of financial and risk justifications in the project documentation. Additionality is addressed in different ways for each project type.

Avoided Deforestation (AD)

Here the question is simply “Would these trees have been cut down in the absence of the project?” For example, projects taking place far away from roads in untouched Amazon rainforest where deforestation was never really a risk may not be additional. Renoster checks satellite imagery around the project to see if deforestation is really a risk.

Some regions do not need Avoided Deforestation projects because they are not at risk of being harvested. They could be protected areas already, difficult to reach, or simply not areas that are targeted by loggers.

Reforestation

“Would these trees have been planted in the absence of the project?” If the project is sponsored by a timber company that plants trees all the time, this could mean that it’s not additional. Carbon projects place no constraints on normal timber practices, and reforestation projects usually plant trees, harvest them, and then replant them. This means that carbon revenue from a great many reforestation projects isa cherry on top of timber income. Renoster uses satellite imagery to see if there are similar tree plantations in the region that aren’t enrolled in carbon offsets.

Sometimes we can understand if the trees would have been planted anyway just by looking at the surrounding area. Here, teak has also been planted in several areas outside of the project, likely for timber harvesting purposes. Read more about Guanaré (VCS 959)

Improved Forest Management (IFM)

IFM projects are meant to provide a financial incentive to improve forestry practices and increase carbon stocks when compared to a business-as-usual scenario.

To determine additionality for an IFM project, the question to ask is: “Were these trees really at risk of removal or bad forestry practices in the absence of the project?”. Unfortunately, many IFM projects are sponsored by conservation organizations that never intended to cut trees. Examples include bird sanctuaries, recreational ski slopes, and city water districts. These projects enrolled in the carbon market with the justification that the carbon project protects the trees from a timber harvest. For example, imagine the Audubon Society cutting down all the trees in a preserved forest. Those projects aren’t really additional, and those credits are worthless. Our team looks at historical satellite imagery over the project to see if it’s actually “improving” upon the forest’s existing management.

A forest preserved in an IFM project has no history of prior harvesting, unlike its surroundings, which have been commercially harvested over the years (shown in different colors). This demonstrates that the land was already preserved.

2. Baseline

The baseline is a sub-component of additionality, and tries to predict what would have happened to the forest if the carbon project didn’t exist. Projects are credited based on the difference between their baseline (a projection) and the expected project outcome (also a projection).

In this way, a forest carbon protocol only generates credits where the project is likely to increase the carbon stock.

Avoided Deforestation

AD baselines usually involve selecting a reference region outside of the project and looking at historical satellite imagery to see what happened to it over time. Then it’s assumed the same thing would have happened to the project. This can cause obvious problems if the reference region isn’t representative of the project.

People manipulate their reference regions in all kinds of ways, placing them hundreds of kilometers away from the project, in different ecosystems, or in places with more desirable land (image credit: VERRA’s project description posted in their registry).

Reforestation

Reforestation often assumes the baseline to be zero. However, it’s worth noting that in some cases, there is a chance that the area would have been reforested anyway. This is particularly the case if the region’s experiencing a shift from pasture to timber plantations, or if the forest would have regenerated itself with time.

Improved Forest Management

Baselines for IFM are often calculated using forest modeling software. The forest is “grown” virtually several decades into the future, and then harvested as if it were being managed for timber. This can result in projects making claims of aggressive harvesting that may be extremely unlikely or impossible. For example, projects on the east coast of the United States will claim that the land would have been clear cut, even though large clear cuts are not a common practice.

To estimate a baseline without IFM, a modeling software imagines how the forest would have grown (picture taken from CAR project description posted in their registry).

3. Leakage

Leakage is the concept that if one forest is protected through a carbon project, loggers will just go cut down trees somewhere else. There are two different types of leakage: geographic and market. Geographic leakage asks if the loggers went next door and if regional deforestation rates have gone up in response to a project. Market leakage asks if taking this timber off the market has created a deficit in supply that, driving up timber prices, caused trees to be cut down somewhere else on Earth. As you can imagine, this is very hard to answer, and figuring out how to address it is an ongoing discussion in global policy forums

This project is taking place in an area that is clearly in the process of being deforested. Saying that the surrounding deforestation is caused by the project is not believable and penalizes a project that’s most likely protecting a key area that is at risk.

Avoided Deforestation

Geographic leakage is usually assessed by creating a leakage belt around the project and monitoring its deforestation levels. If deforestation increases after the project start date, the project is penalized. Market leakage is usually assessed through a complex formula that reduces the number of credits awarded by a few percentage points .

Reforestation

Leakage really isn’t an issue for reforestation projects, especially since those projects are still allowed to harvest timber from the trees that they planted.

IFM

Leakage here is dealt with similarly to AD projects. However, most IFM projects are smaller than AD projects, so they are less likely to affect the timber market. Also, IFM projects usually take place in the developed world where illegal logging is less of a risk.

4. Permanence

Permanence asks “how long will this carbon stay out of the atmosphere?” Usually, it’s measured in terms of the length of the project, and is essentially the same for all project types. In recent years, protocols have allowed project durations to shrink. In the beginning of the voluntary carbon market, project durations were 100 years, but landowners are hesitant to lock up their land for such a long time, which limited participation and supply of carbon credits. While folks concerned with climate change impacts want project lifespans to be as long as possible, a voluntary carbon market won’t work without a critical mass of participating landowners. Many projects today have a 30–40 year-long lifespan.

But changing the length of project durations has real implications. For example, if it takes trees 40 years to reach maturity, and a project is 40 years long, then the carbon project has only perpetuated normal forestry practices. For projects to mean anything, permanence needs to be longer than the commercial rotation age.

Increasingly, we’re starting to see tonne-year permanence in use. The idea is that delaying a harvest by as little as a single year has a ripple effect on forest management that will last a century. While this is partly true, it depends on whether that harvest is really being delayed. Otherwise, it doesn’t accomplish anything. The idea only works if you’re catching the forest when it is about to be cut.

Photo by Josh Carter on Unsplash

Verification

Verification is simply the act of measuring the amount of carbon in the forest. This step happens by a third party after the project developer has submitted a project plan and documentation to a project registry. In theory, verification is an ongoing process throughout the lifespan of the project, making sure that project claims are legitimate. It can be done in two ways: either by hand measuring a sample of trees in the field or by using a remote sensing technology that measures tree height, species, and diameter (like LiDAR).

Avoided Deforestation / Improved Forest Management / Reforestation

Verification should be an open-and-shut thing, but it can also get complicated. For example, in some Avoided Deforestation projects, project developers take a regional average of forest carbon in the project’s ecosystem. This is easily manipulated using regional averages that are certainly higher than the project’s. For the project to accurately measure forest carbon, developers should measure its trees.

Occasionally, people make another mistake, using remote sensing technologies that aren’t really capable of measuring forest carbon. You can make a pretty carbon map using 2D-satellite imagery, but the margin of error will be enormous. All remote sensing models that measure carbon should either include some form of 3D laser scanning, L- or P-band radar, or photogrammetry if they are to be taken seriously. This is known to those who are in the field, but not clear to those who are not experts.

Conclusion

These five components to all forest carbon projects form the basis of Renoster’s Mercury Rubric. At Renoster, our team carefully analyzes each of these elements for every forest carbon project to arrive at our quality rating.

Although there are a lot of things that can go wrong in forest carbon projects, it’s never the forests that let us down– it’s the people managing the forests. Great projects are out there and are doing more to remove carbon from the atmosphere than almost any other carbon capture solution.