Strategies for Avoiding Lower-Quality Offset Credits

Forestry & Agriculture

Biological sequestration absorbs CO2 emissions through the growth of vegetation and the continued storage of some of the carbon in plant tissues and organic materials derived from plant tissues (e.g., stored in the soil). There are two broad types of biological sequestration projects:

  1. Those that avoid emissions via conservation of existing carbon stocks, including:
    • Avoiding deforestation, and
    • Avoiding degradation of existing forests.
  2. Those that increase carbon storage, including:
    • Converting land from non-forest cover to forest (afforestation and reforestation)
    • Increasing carbon stocks in forest land remaining forest (forest management), and
    • Increasing soil carbon stocks through soil management techniques (e.g., no-till agriculture).

Reforestation and the protection of remaining forests are vital for climate change mitigation. Nevertheless, forestry projects have a number of characteristics that make them ill-suited for use as carbon offsets.

Permanence

First, there is a risk that forest carbon will not be stored permanently. CO2 sequestered by trees can be re-released into the atmosphere due to harvesting, fire, or disease. Offset programs have chosen different approaches to addressing this risk of non-permanence. For example, California’s offset protocol for improved forest management requires that a project be monitored for 100 years after the last year of offset credit issuance, and that carbon reversals, if they occur within this timeframe, must be compensated for. In contrast, ACR or VCS do not have such long-term safeguards in place, if the forest were harvested the year after the project ended there would be no accounting for this reversal. For information on insurance buffers or temporary crediting mechanisms for managing permanence risks click here.

Additionality

Second, additionality and baseline selection is particularly challenging for forest projects, especially those that protect or improve management of existing forests. Determining if a forest would have indeed been cut down if it had not been turned into an offsetting project is difficult. The baseline scenario is usually determined by using historical data and extrapolating into the future. Large amounts of offset credits can be generated through creative modeling and claims that harvesting would have occurred based on common practice in the region. For instance, imagine projects on land that have been owned and managed by a land conservation organization for decades that claim additionality on the basis that it is common practice to harvest even though that has not historically been their practice.

Leakage

Third, forestry projects are particularly prone to leakage, which is difficult to quantify for forestry (and other offset) projects (Henders and Ostwald 2012). Protocols have various approaches to quantify leakage and there is little consensus on the validity of any one approach. Leakage occurs, for example, if a reduction in harvest in North Carolina due to an improved forest management project results in intensifying forest harvest in the Pacific Northwest or in Indonesia. In this case, the project has only shifted the location of emissions, not led to a net reduction.

Co-Benefits

Forest carbon sequestration projects are attractive because forests provide a wide range of ecosystem services. Forests provide clean water, and moderate water flow rates. Forests provide habitat for many plant and animal species, and provide livelihoods for millions of people.

Protecting Existing Forests

Projects that protect existing old growth forests are expected to provide the greatest carbon mitigation benefits. Emissions from forest degradation and deforestation are currently estimated to cause about 15% of total global anthropogenic climate warming. Currently, emissions from deforestation are so great that stopping this source of emissions would have the greatest net impact on forest-related emissions.

Creating credits to Reduce Emissions from Deforestation and forest Degradation (REDD+) has many challenges: Quantifying baseline emissions, preventing displacement of emissions, solving conflicts about who controls forests, getting countries to agree to continue protecting forests, and continuing to provide crops and forest products. It can be argued that deforestation is a demand-side problem, and that as long as the demand for biomass (fuel and timber) and land cannot be shifted and decreased, forestry offset projects in one area will only cause a change in the supply source rather than lower demand on the whole. This problem is also prone to ‘leakage’ because the demand shifts from one place to another.

In other words, says the argument, none of the forest conservation standards satisfactorily account for international leakage and market shifting. This argument holds true for certain sectors (e.g., timber demand) but may not for others, where good project design is able to affect supply and demand (e.g., by providing local livelihoods through sustainable harvesting, more sustainable and productive agriculture, increasing energy efficiency and providing alternatives to wood fuel and serving demands for wood products with new, highly productive plantations that take harvesting pressure off natural forests).

Most beneficial are projects that maximize both carbon storage and carbon uptake by protecting carbon-rich old growth forests but allowing selective, well-managed harvesting to increase carbon uptake of young trees, to create local economic opportunities, and to protect biodiversity.

Exemplary bio-sequestration projects can address several global problems: they can sequester and store carbon, protect watersheds, offer economic opportunities for the local population, and conserve or restore biodiversity. Conversely, poor-quality projects may result in a loss of biodiversity, displacement of the local populations, and even net loss of carbon stocks.

Ways to address these challenges of biological sequestration projects include:

  • Limiting offset projects to afforestation and reforestation, where we can have more confidence in baselines.
  • Developing quantification and liability mechanisms at the national or international scale, to account for leakage.
  • Imposing rules for biological sequestration projects that specifically focus on maximizing biodiversity and social benefits.
  • Addressing permanence by requiring that sequestration be monitored for as long as it is used as the basis for emission credits and discontinuing or revoking credits if monitoring ceases or shows the underlying carbon sequestration to be reversed.

The currently available offset standards deal with the challenges of bio-sequestration projects in the following ways:

  • Either excluding or strictly limiting bio-sequestration projects (Gold Standard, CDM)
  • Imposing rules for bio-sequestration projects that specifically focus on maximizing biodiversity and social benefits (CCB Standards, Plan Vivo).
  • Addressing issues of permanence by either issuing temporary offset credits (CDM) or establishing carbon buffer zones which retain a portion of the project carbon credits and sales in case of forest loss and provide funding for reestablishment (VCS, Plan Vivo, CAR, ACR).