Forest Carbon Offsets: A scorecard for evaluating project quality

John Gunn, Ph.D.Senior Program Leader

Manomet Center for Conservation Sciences

Brunswick, Maine

26 February 200804/12/23 1

Forest Carbon Offsets: A Scorecard for Evaluating Project Quality

Click here to offset your carbon footprint …

Forest carbon is clearly an important part of mitigating GHG emissions

What qualifies as a legitimate carbon offset?

The carbon market could be abusedRigor and transparency are critical to ensure that the buyer, and atmosphere, are getting the offsets expected.

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OutlineOverview of forest carbon offsets and

affiliated jargon

The Manomet Forest Carbon Offsets Scorecard as a tool for evaluating offset projects

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WHAT ROLE WILL MANAGED FORESTS PLAY IN FOREST

CARBON OFFSET MARKETS AND GHG MITIGATION?

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Volatility in CO2e markets now – drop in price related to concerns over “additionality and permanence”

Carbon Equivalent ($/MTCO2e) Trading on the Chicago Climate Exchange (CCX) from May 2008 – February 2009

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When gas is expensive, energy producers rely more on coal, which emits higher levels of CO2 and boosts demand for carbon permits.

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Global Voluntary and Regulatory Carbon Offset Market Value

OTC forest offset market with huge variation in price: $1.80/tCO2e to one transaction at $300/tCO2e.

How forests play a role in marketsAfforestationReforestation/restoration Avoided deforestation or conversion

Forest managementEnduring wood products/product

substitution

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Forests and Carbon – Market Entry Requirements Emerging:

Demonstrate that entity-wide forest holdings are sustainably managed.

Demonstrate long-term commitment to maintain carbon stocks.

Use of approved methods to quantify carbon stocks.

Independent third-party verification of carbon stocks.

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Some key concepts that will define available carbon markets for managed forests (voluntary vs. regulatory)

BaselinesAdditionalityLeakagePermanence

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BaselinesThe bar you are measured againstBase YearPractices (project level)

“Business-as-Usual”, or BAURegulatory

Stocking (e.g., FIA mean)

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Baseline Examples

BAU: Practices or

Regulatory

Additionality (real & measurable)Is CO2 really being sequestered

“additionally”?More than what would have happened in

absence of project or paymentOffsets for actual

carbon emissions

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Additionality

LeakageInternal

Owner shifts activities within ownership

External Carbon practices displace activities to other forests (local, global)

Difficult to measure 04/12/23 16

Permanence (enforceable)Intentional Conversion or Natural

DisturbanceInsurance/ReservesLegal enforcementHow long?

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Basic Elements of the Major Forest Carbon Offset StandardsStandard Baseline Additionality Permanence

CCX Base Year =Growth – Harvest 15 years

VCS 5-10 Years Prior

Practices Permanent

CCAR Regulatory Practices Perm. Easement

RGGI Proposed FIA mean > FIA mean 99 years

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What Is the Scorecard?An easy-to-use tool for evaluating quality of forest projects.

43 questions addressing:

1. Contract structure2. Baselines3. Additionality4. Monitoring, measurement, reporting, and verification5. Permanence6. Leakage7. Transparency8. Co-benefits/costs

How Can It Help You?

Guides users in understanding and addressing key quality components of offsets.

Provides a standardized reference point in an unstandardized marketplace.

Who Should Use It?

Project developers, offset buyers and sellers, anyone interested in understanding what creates high-quality forest offsets.

How Was It Developed?

Extensive reviewed of GHG registries, GHG accounting protocols, program requirements, project design and certification standards, and reports analyzing carbon markets and offset providers.

We distilled and synthesized carbon offset “best practices.”

3. Additionality Yes No

3.1 Will the project exceed regulatory requirements or other legal mandates? ___ ___

3.2 Can it be demonstrated that carbon credits will not be generated retroactively from activities that have already occurred?

___ ___

3.3 Can it be demonstrated that the project will result in a net reduction of GHG levels in the atmosphere relative to the baseline?

___ ___

3.4 Can it be demonstrated that none of the project’s credits have been sold more than once? ___ ___

3.5 Can it be demonstrated that the project’s credits will be permanently retired once they are sold?

___ ___

Subtotal (out of 5)=

5. Permanence Yes No

5.1 Is maintenance of additional carbon stocks contractually required for: At least 20 years? At least 50 years? At least 100 years? In perpetuity?

____________

____________

5.2 Have all the project’s carbon risks been identified and risk management strategies been enacted to guard against carbon loss during the project’s contractual obligation?

___ ___

5.3 Must carbon stocks be restored or replaced if lost before the end of the project’s contractual obligation?

___ ___

Subtotal (out of 6)=

Uncertainty around these key concepts will define available carbon markets (voluntary vs. regulatory)In particular: BaselinesAdditionalityLeakagePermanence

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For more information: www.manomet.org

Funded by: Merck Family FundRoy A. Hunt FoundationDavis Conservation FoundationHenry P. Kendall Foundation

Authors: Julie Beane, John Hagan, Andy Whitman, & John Gunn