Part III: Where Carbon Offsets Originated and Why They Are More Important Now than Ever

June 9, 2021

Recent attacks on carbon offsets in both voluntary and compliance markets threaten to stymie evolving carbon markets twenty years into their existence—just as they are both gaining enough momentum to make meaningful greenhouse gas reductions. Net-zero goals by corporations and binding greenhouse gas reductions are being set by more than 197 nations worldwide under the Paris Agreement. Each of these commitments will need offsets in order to reach the deep reductions of 80% of 1990 levels necessary by 2050. Offsets, more than just a recent fad, are incredibly important to keeping the earth’s warming to only a 1.5 or 2-degree scenario. In this series (read part one and part two here), we go back to the origins of why they were used in the first place and trace their trajectory forward.

Part Three: Conservative Estimates

Those criticizing forestry projects fail to mention how the protocols for quantification of offsets are extremely conservative. Landowners often receive as little as one offset for every ten tons of CO2e that they protect. Protocols do not allow for credits to be generated from several meaningful forest carbon pools including soil, foliage, non-merchantable tree species, downed dead trees, shrubs, and forest floor duff/litter. Committing to harvest restrictions associated with participating in the offset programs ensures that the substantial volumes of carbon housed in these pools will be maintained, even though carbon offsets will not be realized by the forest owner because they are not credited.

Secondly, these voluntary protocols require a 40% deduction of credits for lost carbon due to “leakage” or the shifting of harvesting from one property to another—despite the economic research which suggests that less than 20% of harvests shift[1-5]. Finally, the protocols require a contribution that is site-specific, but usually averages about 20% of the total sequestered carbon, towards a buffer pool in the case of pests, wind events, fire, or other force majeure events that could cause unintended reversals of carbon on the property.

The 40 to 100+-year commitments that landowners must make to participate in a forest offset project are significant and participation to this point has been limited, with only about 2% of non-federal U.S. forestland protected by these projects. A higher price on carbon and more stable price signal would certainly help incentivize more development of these projects, and recent attacks on them threaten both of these essential components from maturing.

While the positive list approach that has evolved over the last twenty years of carbon market formation may not be perfect, it does provide a clear and straight-forward path to offset project development, which has the potential to scale these markets even more. The enormity of the climate challenge requires our immediate attention and all tools we have at our disposal; reductions from within fencelines of organizations are essential but cannot get us to net zero fast enough to meet the 1.5 or 2-degree warming scenarios. Offsets must not only continue to be a tool we use, but must be ramped up significantly, and forestry offsets offer scalability and a host of free co-benefits like habitat, biodiversity, soil, and watershed protection, nutrient cycling, and recreation that are not even quantified in the price per offset.

[1] Hooda, N., Gera, M., Andrasko, K. et al. Community and farm forestry climate mitigation projects: case studies from Uttaranchal, India. Mitig Adapt Strat Glob Change 12, 1099–1130 (2007).

[2] Kuik, O. J. (2013). REDD Policies, Global Food, Fiber and Timber Markets and ‘Leakage’. In J. Gupta, N. van der Grijp, & O. J. Kuik (Eds.), Climate Change, Forests and REDD: Lessons for Institutional Design (pp. 207-228). Routledge. 

[3] Lasco, Rodel & Pulhin, Florencia & Come, Renezita. (2007). Analysis of leakage in carbon sequestration projects in forestry: A case study of upper magat watershed, Philippines. Mitigation and Adaptation Strategies for Global Change. 

[4] US EPA (2005). Greenhouse Gas Mitigation Potential in US Forestry and Agriculture.

[5] Warman R & Nelson, R. (2016). Forest conservation, wood production intensification and leakage: An Australian case, Land Use Policy, Volume 52. (pp. 353-362)

Read More From This Series

This article is contributed by

Lizzie Aldrich, PhD
As Vice President of Business Development, Lizzie identifies and acquires new clients in the Low Carbon Fuel Standard and renewable natural gas markets. She also leads the voluntary offset sales efforts where she identifies buyers, develops marketing materials, and negotiates sales agreements.

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