No reversal risk can be insured against in perpetuity. Over the very long run, the chance of reversal for projects that store carbon in trees and soils approaches 100%. Buyers should keep this in mind when considering offset credits from these kinds of projects. As a rule of thumb, if your goal is strictly to offset GHG emissions, avoiding reversible GHG reductions altogether is the safest approach. However, addressing emissions from agriculture, forestry, and land use is critically important for mitigating climate change globally – and these kinds of projects often have desirable co-benefits. If your primary goal is to contribute to mitigation efforts (not offset per se), then purchasing credits representing additional GHG reductions from these projects can be a great choice.
Assuming some risk of reversibility is acceptable, questions for buyers to consider include:
- Does the project have a formal plan for managing and reducing reversal risks, and is this plan being followed? Higher quality carbon sequestration projects will have management plans in place to lower the risk of reversals. These plans may cover physical measures like thinning or other treatments to reduce the risks of fire and disease in forests; financial management practices to reduce risk of project failure or bankruptcy; and/or easements, legal restrictions, or other measures to guard against over-harvesting or land conversion. Projects with strong plans, along with implementation and enforcement provisions, are likely to have higher quality offset credits.
- How long is “permanence” guaranteed by the offset program that issued the credits? Offset programs differ significantly in terms of the length of time that they will guarantee compensation for reversals. The majority do so only through the end of a project’s lifetime, which under some programs may be as short as 10 years. Other programs offer a minimum guarantee of 100 years from the time a credit is issued. Offset programs are not always transparent about what their minimum guarantee is, so it is worth inquiring either with project proponents or directly with program staff. The longer the guarantee, the higher the relative quality of the offset credits.