As companies look for ways to offset their emissions of climate-warming pollution, forest carbon credits have emerged as a popular tool.
They’re designed to fund forest conservation and management projects that capture and store carbon dioxide in trees and other parts of the ecosystem. In theory, it’s a much-needed solution: The credits help pay for protecting forests, which are an example of what practitioners call “carbon sinks.”
But questions remain about how effective these credits really are – and whether the rules that govern them are strong enough to ensure real climate benefits.
Rebecca Sanders-DeMott, the director of Ecosystem Carbon Science at the Clean Air Task Force, an environmental organization headquartered in Boston, teamed up with researchers from around the U.S. to evaluate the carbon market system and to recommend improvements to lead to reliable, high-quality forest carbon credits.
Yale Climate Connections spoke with Sanders-DeMott about how forest carbon credits work, what current protocols get right and wrong, and how the system could be improved.
This interview has been edited and condensed.
Yale Climate Connections: How do forest carbon credits work?
Rebecca Sanders-DeMott: Forests are a really important sink for carbon around the globe, but they’re under threat from deforestation, increasing wildfires, drought, insect pests, and disease. We can manage forests in a way that protects and maintains those carbon sinks, but it costs money.
Forest carbon credits came along as a way to help pay for the management that’s required to protect and expand these carbon sinks – think of them as a way to put money towards keeping forests standing and healthy. One credit from those kinds of projects should represent one ton of additional carbon dioxide that is stored in a forest because of a project or intervention that somebody did.
You can be offered to spend a few extra dollars on carbon credits to make your shipping carbon neutral, or maybe you’ll be offered carbon credits to purchase to offset your flight. But globally, individuals are not the biggest consumers; it’s really industries like car companies, fossil fuel companies, and more recently, tech companies that purchase these carbon credits to offset the emissions from their industrial processes.
YCC: What are forest carbon credit protocols?
Sanders-DeMott: Carbon credit protocols are the rules for certifying carbon credits and for calculating how much carbon can be credited to a specific project. They lay out a very detailed technical set of rules for the things that you have to count – the math that you have to do – to demonstrate that your project stored “x” tons of additional carbon.
There are four key components of these protocols. First, how can you demonstrate that the carbon will be stored for a very long time and therefore be meaningful to the climate? The second is “additionality,” or can you demonstrate that the carbon stored by your project wouldn’t have been stored anyway and is actually a result of what you are doing to earn these carbon credits? The third is leakage or indirect emissions. If you initiate a forest carbon project and conserve a forest that [would have] been logged, you might just end up displacing that logging activity somewhere else. And that can erode the climate benefit of your project. And the fourth is monitoring and verification – the scientific approaches you need to use, and for how long, to prove that what is on the ground is matching what you’re selling in that carbon credit.
YCC: Who develops these protocols?
Sanders-DeMott: Within the voluntary carbon market, they’re managed by organizations called registries, and in certain compliance markets, they can be organized by governments. The registries are largely nonprofit organizations that issue credits to projects and maintain and track them as they’re being traded and retired. The [nonprofits] develop the protocols, and then project developers use those protocols. Over time, we’ve seen those registries engage the scientific community in consultations and technical advising, and we’ve also seen them engage project developers to understand what’s feasible on the ground. In some cases, project developers who have a particular kind of project in mind can develop a protocol themselves and then approach a registry and request that that protocol be adopted. There are also some regulations that require these protocols to be developed, and in those cases, it’s state or other government agencies developing the protocols, ideally with input from stakeholders who include scientists and project developers. So it’s a collaborative process.
YCC: What were the goals of the Ground Truth: An Assessment of Forest Carbon Credit Protocols report?
Sanders-DeMott: It’s become clear over the last several years that a lot of the forest carbon credits that are out there right now are not delivering their promised climate benefit.
To be effective, the carbon stored in forests has to be durable – or stick around for decades, ideally a century or more – and the protocols need to account for the risk that forests might die – from disease, logging, or going up in smoke – and that carbon be rereleased to the atmosphere. But we found that some protocols are underestimating that risk, and so we’re not seeing that risk being properly characterized, and that risks the climate benefit of the credit.
Accurately characterizing what would have happened without the project existing in the first place is another problem that we see impacting quality. Characterizing the baseline situation involves a lot of assumptions and guesses about what would have happened in the project’s absence, but some protocols are using fixed assumptions over time. But the world is dynamic, and the environment, the climate, and sociopolitical situations are changing over time, and to not allow that baseline – and its assumptions – to also vary over time means you could be over-crediting a forest if, for example, it would have become legally required that that forest be conserved anyway. Or you could alternatively be under-crediting a forest if economic conditions change and logging really ramps up in a specific region, and then the value of that project is even higher.
So we looked [at 20] forest carbon credit protocols to examine the rules. Where are they strong? Where are they weak? Where can they be improved? And our guiding question was “Are these protocols strong enough to ensure that the carbon credits certified are high quality?”
YCC: What were the key findings?
Sanders-DeMott: We found that in general, the protocols are often too weak to guarantee high-quality credits. But the good news is we do think the system is fixable, and the registries and states or governments that manage the carbon markets can step up and improve these protocols. And so we outlined some key improvements that we think are necessary to raise the bar on these protocols and help ensure that credits are reliably high quality.
YCC: How could they be improved?
Sanders-DeMott: Using existing and new and emerging data and maps that reflect real, place-based risk for things like wildfire or insect and disease outbreak would be a major step forward. We have these tools available in many places in the world already, and so we’d really like to see these data sets integrated into the protocols.
Another improvement relates to the additionality and accounting for change. Because we know that forest conditions change over time, it’s important to make sure that assumptions about what would have happened are regularly tested and recalculated so that credits aren’t over- or under-allocated. This might look like shortening the length of time that a given project approval is good for, or revisiting and reestablishing that baseline every five or 10 years.
Alternatively, we’re seeing some really exciting and interesting approaches being picked up in the voluntary carbon market, where that baseline assumption is actually being measured on the ground by using forest areas that are similar to the project but aren’t enrolled in a carbon project. So we can actually observe them over time to see what would have happened and base the project credits on that value instead of an assumed value.
Another improvement relates to leakage or those indirect emissions that can result when you change the amount of timber being harvested from one area, for example, but the market still demands that timber be harvested from somewhere else. There’s a lot of research to do to characterize how big this problem is in different areas. To date, most protocols are using default values that apply everywhere, but we know that it’s important to understand the context of an individual location.
And finally, it’s important that credits are tied to real, on-the-ground outcomes, so strong monitoring and verification over time is essential. Forest carbon projects involve long-term contracts, but we need the rules to be structured in such a way that we can allow for timely improvements to integrate the best available science and new monitoring technologies as they emerge. We see things changing really quickly with the availability of remote sensing data, digital tools, and the advent of AI. What is possible could look really different in five or 10 years than it does today, and what’s possible today looks really different than it did five years ago, so we need these protocols to be flexible to ensure that the best technologies are used.
YCC: Is making these improvements realistic right now? Who would need to drive those efforts, and what are some of the challenges to make the necessary changes?
Sanders-DeMott: We’re seeing a lot of these recommendations being taken up already. This market is really dynamic. The registries who are responsible for holding these protocols and certifying credits are putting a lot of effort into revising protocols and taking on some of these new approaches. Some of these ideas are being market-tested right now, and there’s high demand from buyers for credits that are taking on these new approaches. It’s difficult and challenging to implement, but the buyer demand for quality is there, and we are starting to see the registries respond and implement some of these changes to strengthen the protocols.
We also have a really exciting development in state compliance markets. Washington State has released a draft rule, and they’re finalizing major updates to a forest protocol within their cap-and-trade system. This could set a national precedent for rigorous, credible forest carbon credits within states and governments.
YCC: How can individuals looking to offset their flights, or companies looking to buy offsets, find out which protocols are doing the best job and what’s most trustworthy?
Sanders-DeMott: We developed a scorecard for the protocols, which people can look at to see how different protocols scored. But protocols are being updated rapidly over time, so it may not be up to date for all of the protocols. But generally, newer protocols are the ones that are integrating these changes, and so looking for credits that come from new projects that are using these new, up-to-date protocols is likely to reflect higher quality.
But it’s also really hard to find that information. A lot of times, when you’re offered a credit to purchase, you don’t actually know what protocol that came from or who certified it. So we’re pushing the carbon market community to increase transparency so that people can look for the newest protocols, the newest credits, using the best available technology.
YCC: What do you want people to most understand about the benefits and potential harms of using this as a tool, depending on how it is being used?
Sanders-DeMott: Forests are really important for helping to fight climate change, and they are under threat. So using all of the tools that we have available to help protect and enhance carbon storage in forests is really important. We just have to make sure that the rules are strong when we’re financing forest management through the sale of carbon credits. The bottom line is that forest carbon credit can work as one way to finance forest management – but only if the system is strong and rooted in science. With the right rules, we can make sure that these credits actually protect and enhance forest carbon storage and help fight climate change.
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