FAQ Series: Nature-based Solutions
- Common carbon questions and answers for nature-based, natural climate solutions
- What is a project's baseline, and what if a landowner already wanted to protect their land?
- Does carbon pricing reflect quality? What impact does pricing have?
- Are buffer pools providing enough insurance when forests burn or are over harvested?
- Carbon projects and local, state, county forests
What is a project’s “baseline” and how is it determined?
A baseline refers to how the land would be managed if the carbon project were not happening. To become a carbon project, there must be an opportunity to reduce emissions on the land by a change in how the land is being managed. If other land uses are not a concern because of legal protection, or because aggressive harvests or development are not an economic possibility in the region, then the project cannot be approved for carbon.
Each of our projects involve thousands of acres, and this same evaluation is applied within a property. If there is a section of the property that is determined to be too difficult to access or too far away from harvest infrastructure, then that area is not counted towards a property’s credits. This is all evaluated through regional economic assessments, aerial and satellite surveys, and through many conversations with the local community. These conversations are a critical part of understanding the pressures on an area.
What if a landowner wanted to protect the land anyway? Should that property still be eligible for carbon credits?
Across North America, there is a large opportunity for carbon management strategies for forestland, whether it is currently held for commercial or conservation intent. Some may ask, “Should landowners already interested in conservation, be eligible for carbon credits?”
Yes they should. Conservation intent only goes so far.
Landowner intent by itself does not establish lasting protection. Economic, ownership, and legal factors can hinder or change conservation outcomes at any point. For example, harvesting or selling land to take advantage of timber values may be more attractive during times of financial hardship. Carbon projects prevent this.
Forestland is often valued for investment, development, as well as for wood product purposes, leading to high turnover. As a point of reference, 5% of U.S. timberland changes hands every year. Conservation-minded owners are no exception to this reality. Many properties that were once managed for conservation have become highly valuable sources of timber and have been sold for aggressive harvesting.
Carbon projects can provide a pathway to solidify conservation intent through lasting, enforceable protection that persists through market and ownership changes. The revenue can also provide for additional conservation improvements and expansion. Not all forestland is eligible, however. Additionality must be proven. Parcels that are already legally protected are ineligible for carbon credits.
Does pricing reflect quality? What is the difference between a carbon project selling at $5 a ton vs $500?
Pricing does not necessarily correlate with quality. The biggest factor in the price of carbon credits is supply and demand. Project types vary in their level of intensity and resources required to develop, which influences their supply. Projects also vary in the benefits they provide for surrounding communities, referred to as “co-benefits”. The number of companies making climate commitments, and the number of buyers looking for co-benefits all drives demand.
The important thing to note is that the anticipated sale price plays a big role in starting new projects. Where costs alone were a barrier, the price anticipated to be achieved is the motivating factor for new projects. This creates climate benefits that wouldn’t otherwise occur. Every project of ours—whether forestry, methane capture and diversion, or biofuel—is high quality because of the rigor of the protocol, the verification it went through, and the unique climate contribution it is making.
What impact does pricing have on landowner participation?
Carbon revenue has become an important incentive for change. Since the beginning, we have helped more landowners see the economic benefits of conservation. Higher carbon prices have made the economic benefits of conservation more comparable to revenue from traditional harvest plans. More landowners are considering changing their management practices as a result. This is what the market was set up to do: incentivize changes from common practices to achieve real, additional benefits for our climate. Prices are not yet high enough to change aggressive logging practices everywhere, but they have reached levels that are motivating many forest owners to integrate carbon into their management strategies.
What is a buffer pool and when is it used?
A buffer pool is included in forest carbon projects as a built-in insurance policy for the climate. Floods, fire and other natural disasters are realities of forests, and we need to protect the integrity of the climate benefits achieved by the projects in those events. Buffer pools generally require that projects dedicate credits commensurate with about 20% of the emissions reductions associated with each credit issuance. This is as a collective backstop against carbon loss due to calamitous natural events.
Like any insurance policy, we believe that a diversified approach to buffer credits makes a lot of sense. Why insure a project only with credits from projects that share the same risks? If you were concerned about your house burning down and saving money to guard against this risk, you wouldn’t want to store savings in your attic. In the same way, a buffer pool that protects the climate from a diverse set of sources is a better way to ensure the climate is better protected in the event of a natural disaster.
It’s also important to know that the buffer pool does not apply if a landowner does something within their control, such as over-harvesting. Those credit reversals are the landowner’s responsibility to replace, and the program penalties are significant.
What about carbon projects on publicly owned land?
We are honored to be a part of bringing the climate opportunities that forest carbon provides to local, county, and state governments because this is a tremendous opportunity for local communities as much as it is an opportunity for our climate. Note that federally owned land is not currently eligible to participate in carbon programs. Publicly owned land makes up around 40% of the forest acreage in the United States.
This is the first time that revenue for conservation practices in meaningful amounts is coming from the private sector and going to groups that are historically resource-constrained and highly dependent on harvest revenue for their local economies. Publicly-owned land has always been a source for revenue generation. It is often the case that the more rural an area is, the smaller the tax base and therefore the higher the budgetary dependence on the land. As with any other forest carbon project, carbon credits can only be produced on these lands if and only if forest management commitments make a measurable change in climate benefits. On public lands, the same verification steps apply, and the same review of baselines are considered.
Until next time.
Your questions. Answered. We’ll continue to share frequent questions about this work. Interested to learn more? Connect with us and we’ll be happy to assist.