The Planet Needs Forest Carbon 2.0
Climate change poses a huge threat to the planet, and forests are a key part of the solution. Done right, forest carbon projects can hold gigatons of carbon out of the atmosphere.
However, a steady drumbeat of articles have pointed out the shortcomings of traditional forest carbon projects. Projects are burning up a few years into decades-long contracts. Researchers and journalists are raising questions about project quality. There's a supply crunch because it's too expensive and too slow to bring new projects online.
The “Forest Carbon 1.0” approaches of the 20th century simply can't deliver the speed and scale of high integrity impact demanded by the 21st century climate crisis. We can and must do better.
The planet needs a new "Forest Carbon 2.0" approach to restore confidence in forest carbon markets and deliver high integrity climate impact with speed and scale. Forest Carbon 2.0 should learn from the past and take advantage of the tools of the present.
This article is the first installment in a series exploring how Forest Carbon 2.0 can set a new standard for transparency, accountability, and impact. Let's get started.
Principles
Throughout this series, we'll be guided by several foundational principles for Forest Carbon 2.0:
What we do today matters
The time for climate action is now, not decades in the future. Forest Carbon 1.0 rewards promises for climate impact that won't be delivered until we’re well past our 2030 and 2050 climate goals. Forest Carbon 2.0 should incentivize present-day action so that climate impact is maximized now, when it matters most.
Every acre matters
Solving the climate challenge will take all of us. Every acre of forest and every landowner needs to be able to participate. However, the decades-long commitments and prohibitively expensive project costs of Forest Carbon 1.0 keep most landowners from participating. Forest Carbon 2.0 leverages available technology and innovation to democratize access so that everyone can be part of the climate solution.
There is no permanence in nature
Forest Carbon 1.0 relies on claims of "permanence," but the truth is that forests are dynamic, constantly changing ecosystems. Trees grow, compete, reproduce, and die in a natural cycle. Every acre of forest is unique and is constantly changing. Sometimes the changes are slow, like the steady growth of an oak. Sometimes the changes are fast, like a wildfire that burns up a forest. But there is always change. Forest Carbon 2.0 recognizes that forests are dynamic natural systems and accounts for impact accordingly.
Measure and pay for performance
Forest Carbon 1.0 operates on a "pay and pray" model that rewards promises of impact decades in the future. A project developer commits to a decades-long contract to deliver climate impact but receives most of the payment upfront. Then, for the next several decades, all parties involved pray that there is no "reversal" due to a wildfire, hurricane, or other disturbance.
In contrast, Forest Carbon 2.0 uses a "pay for performance" model that holds project developers accountable for delivered results and creates incentives for constant improvement. Crediting happens after climate impact is delivered and verified. Now that technology makes it possible to measure every acre of forest every year, robust measurements can and should underpin every aspect of forest carbon projects.
Forest Carbon 2.0 also takes the limits of measurement and forecasts into account. Forests are complex systems and perfect measurements are unobtainable. Instead, imprecision and uncertainty should be explicitly quantified. To incentivize real climate impact, Forest Carbon 2.0 rewards higher precision measurements and penalizes imprecision.
Build in the ability to learn and adapt
Forest Carbon 1.0 assumes we already have all the information we need to impose 100 year obligations on the landscape. But the world never stands still. Science improves. Technology gets better. Landowners' needs change. The landscape changes. Society's values evolve. Locking acres into fixed 100 year contracts – as in Forest Carbon 1.0 – does not allow us to learn, adapt, and improve as new science becomes available.
Instead, Forest Carbon 2.0 builds in the ability to continuously improve by incorporating the best science and technology available each year. Forest Carbon 2.0 acknowledges that we don't have all the answers right now and expects us to constantly learn and improve.
Every Project is a Tonne-Year Project
One of the core principles of Forest Carbon 2.0 is that there is no permanence in nature.
This is in direct contradiction with one of the most obvious failings of Forest Carbon 1.0 - it pretends to be permanent. Forest Carbon 1.0 units which are represented as "permanent" often have decidedly finite time horizons, often 100 years or less.
Let's stop pretending. Carbon storage in forests can’t be permanent.
Let's also stop pretending that only permanent carbon storage has value. Forest carbon storage is both temporary AND valuable.
We need a way to think clearly about carbon and time.
The solution is a simple but powerful concept called tonne-year accounting. Its foundation is a unit called a tonne-year which represents one tonne of carbon dioxide equivalent held for one year.
Because any carbon contract can be denominated in tonne-years, this allows us to rigorously compare the climate impact of different contracts of different durations.
Forest Carbon 1.0 in Tonne-Years
To see how tonne-year accounting works, let's consider the California Air Resources Board forest carbon credit. This contract requires a forest carbon project to hold 1 tonne of carbon in the forest for 100 sequential years.
Using tonne-year accounting, we can represent this project as a stream of 100 tonne-years that are delivered one per year for 100 years:
In voluntary markets, some contracts have terms shorter than 100 years. For example, a 20 year carbon contract could likewise be represented as a stream of 20 tonne-years delivered one per year for 20 years.
Viewed this way, it's clear that Forest Carbon 1.0 contracts deliver tonne-years over decades. These contracts give full credit for the climate impact in the first year, even though only one tonne-year has been delivered at that point.
Forest Carbon 2.0 in Tonne-Years
A core principle of Forest Carbon 2.0, on the other hand, is "what we do today matters." Climate impact delivered today is more valuable than climate impact delivered a century from now.
Tonne-year accounting lets us be precise about when the climate impact of forest carbon projects is actually delivered. Because time matters in our current climate crisis, accounting for time properly is a key element of Forest Carbon 2.0.
A major innovation in Forest Carbon 2.0 is "accelerated delivery" of tonne-years. For example, a Forest Carbon 2.0 contract might specify delivery of 100 tonne-years all at once in year 1, rather than a Forest Carbon 1.0 contract that delivers 100 tonne-years, one tonne-year at a time, over the course of a century.
Note: the selection of 100 tonne-years is arbitrary and is an expression of time preference. Different time preferences will result in different numbers. This topic will be covered later in this series.
Both of these contracts deliver 100 tonne-years but there's a big difference in the delivery schedule. Compared to a Forest Carbon 1.0 project which doesn't fully deliver 100 tonne-years until 100 years from now, a Forest Carbon 2.0 project can deliver 100 tonne-years of carbon this year. Not only is this better for achieving our climate goals, but it also ensures that credits are delivered only after the full climate impact has occurred. This also eliminates the need for long-term monitoring or buffer pools – in this way Forest Carbon 2.0 reduces non-delivery risk, an important benefit for buyers and sellers alike.
Direct Air Capture in Tonne-Years
Some new "direct air capture" project developers are claiming to have truly permanent (e.g. infinite) storage of carbon. Even "permanent" projects like direct air capture can be measured with tonne-year accounting. A truly permanent carbon contract could be represented as an infinite stream of tonne-years starting now and continuing on forever into the future.
Measurements Make Markets
Tonne-year accounting is a very simple concept that gives us a quantitative basis for the comparison of the climate impact of different carbon contracts. By using tonne-years to put different carbon contracts on the same footing, carbon buyers can make apples-to-apples comparisons of the wide range of projects in the market.
CEO – Royal Moving Co | Strategic leadership and operational Efficiency
6moZack, thanks for sharing!
President at Wagner Forest Management, Ltd.
2yYes, ‘what we do today matters’. But on a larger scale than the individual landowner. With reference to the NCX program, on a regional basis, if some landowners who were really planning to harvest soon defer harvest for a few years, but there is no change in regional growth or consumption of timber, then there is no change in regional carbon storage or sequestration. The payments to the deferring landowners are a mis-allocation of capital in the fight against climate change - especially payments to landowners who had no intention of harvesting soon (if ever). And, yes, ‘forests are complex systems and perfect measurements are unobtainable’. As described, NCX’s methodology seemingly generates annual estimates of carbon stocks with /- 10% confidence intervals, and then suggests that an annual carbon increment of 2-5% can be reliably discerned. A credible methodology should produce an estimate of the carbon benefit itself (the annual increment, for NCX) that has a confidence interval of /- 10% - preferably even tighter. I agree that the Forest Carbon 1.0 IFM systems had and have many of their own issues, and that IFM protocols and forest carbon offset markets need to evolve in order to deliver consistent, true carbon impacts.
Rural Entrepreneur | Professional Marketer | Managing partner @ Mi6 | Competitive Squash Player | Founding Member of AREA 81
2yWill definitely give this a read. I'd be interested in hearing Jim Hourdequin thoughts on this article. His role in helping us understand carbon credits/offsets and his transparency is refreshing and needed due what's happened in the past with respect to low quality carbon credits, protected forests getting credits when they shouldn't and greenwashing in general.
I'm glad to see you begin to make the argument that this program will result in long-term increase in regional average stocking...same level of industry but with a higher inventory. Your case is based on plantation pine forests across the US South. Will you develop the scale to operate that broadly in a mandatory environment? Given that for every "delivery" there is an offsetting "emission" a year later (assuming a 1-year contract), without a highly robust subscription effort, I can foresee a point where emissions exceed deliveries, resulting in diminished inventory and zero long-term gain. It strikes me that higher regional inventory must be "permanent" in order to transfer carbon "from the atmosphere to the biosphere." You folks are gonna' have to be very busy!
Using space to improve life on Earth
2yYour key message here Zack Parisa for Forest Carbon 2.0 is the importance of impermanence and a performance based approach, the idea that no two acres nor two seasons are the same when it comes to annual carbon sequestration. As many northern forests become less productive due to heat waves, drought, and accelerating disturbance regimes, how is NCX accounting for these chronically stressed and increasingly carbon sourcing stands in their framework? Monitoring annual (or quarterly) carbon sink performance of a stand of trees is the only way we will build long-term confidence in this market and in specific investments. If you aren't remotely measuring productivity or carbon flux trends for every acre day over day, week over week, month over month, and year over year then how can you provide confidence in stand carbon stability over time? It's easier to measure and report this than you might think