John Gunn, Ph.D. Senior Program Leader Manomet Center for Conservation Sciences Brunswick, Maine 26 February 2008 06/08/09 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 abused Rigor and transparency are critical to ensure that the buyer, and atmosphere, are getting the offsets expected. 06/08/09

Forest carbon is clearly an important part of mitigating GHG emissions

What qualifies as a legitimate carbon offset?

The carbon market could be abused

Rigor and transparency are critical to ensure that the buyer, and atmosphere, are getting the offsets expected.

Outline Overview of forest carbon offsets and affiliated jargon The Manomet Forest Carbon Offsets Scorecard as a tool for evaluating offset projects 06/08/09

Overview of forest carbon offsets and affiliated jargon

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

WHAT ROLE WILL MANAGED FORESTS PLAY IN FOREST CARBON OFFSET MARKETS AND GHG MITIGATION? 06/08/09

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 06/08/09

When gas is expensive, energy producers rely more on coal, which emits higher levels of CO 2 and boosts demand for carbon permits.

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 markets Afforestation Reforestation/restoration Avoided deforestation or conversion Forest management Enduring wood products/product substitution 06/08/09

Afforestation

Reforestation/restoration

Avoided deforestation or conversion

Forest management

Enduring wood products/product substitution

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. 06/08/09

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.

Some key concepts that will define available carbon markets for managed forests (voluntary vs. regulatory) Baselines Additionality Leakage Permanence 06/08/09

Baselines

Additionality

Leakage

Permanence

Baselines The bar you are measured against Base Year Practices (project level) “Business-as-Usual”, or BAU Regulatory Stocking (e.g., FIA mean) 06/08/09

The bar you are measured against

Base Year

Practices (project level)

“Business-as-Usual”, or BAU

Regulatory

Stocking (e.g., FIA mean)

Baseline Examples BAU: Practices or Regulatory

Additionality (real & measurable) Is CO 2 really being sequestered “additionally”? More than what would have happened in absence of project or payment Offsets for actual carbon emissions 06/08/09

Is CO 2 really being sequestered “additionally”?

More than what would have happened in absence of project or payment

Offsets for actual carbon emissions

Additionality

Leakage Internal Owner shifts activities within ownership External Carbon practices displace activities to other forests (local, global) Difficult to measure 06/08/09

Internal

Owner shifts activities within ownership

External

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

Difficult to measure

Permanence (enforceable) Intentional Conversion or Natural Disturbance Insurance/Reserves Legal enforcement How long? 06/08/09

Intentional Conversion or Natural Disturbance

Insurance/Reserves

Legal enforcement

How long?

Basic Elements of the Major Forest Carbon Offset Standards 06/08/09 Standard 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

What Is the Scorecard? An easy-to-use tool for evaluating quality of forest projects. 43 questions addressing: Contract structure Baselines Additionality Monitoring, measurement, reporting, and verification Permanence Leakage Transparency Co-benefits/costs

An easy-to-use tool for evaluating quality of forest projects.

43 questions addressing:

Contract structure

Baselines

Additionality

Monitoring, measurement, reporting, and verification

Permanence

Leakage

Transparency

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.

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.

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.”

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 : Baselines Additionality Leakage Permanence 06/08/09

In particular :

Baselines

Additionality

Leakage

Permanence

For more information: www.manomet.org Funded by: Merck Family Fund Roy A. Hunt Foundation Davis Conservation Foundation Henry P. Kendall Foundation Authors: Julie Beane, John Hagan, Andy Whitman, & John Gunn

For more information: www.manomet.org

Funded by:

Merck Family Fund

Roy A. Hunt Foundation

Davis Conservation Foundation

Henry P. Kendall Foundation

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