Rethinking permanence in forest carbon projects
This article is sponsored by NCX.
Trees can be a key part of the climate solution, but first we need to rethink the concept of “permanence” when it comes to forests. Whether it is “immediacy,” “durability” or permanence, time plays a key role in effective climate action. Accounting for time correctly unlocks the full potential of forests and other nature-based climate solutions.
A recent New York Times editorial urged, “Let’s Not Pretend Planting Trees Is a Permanent Climate Solution.” And it’s true: Like any other organism, trees are born, grow old, and die in an ongoing cycle. No individual tree will live forever.
There is no permanence in nature, yet permanence is often considered an important part of forest carbon programs. Many forest carbon credits represented as permanent have decidedly finite time horizons, often 100 years or less. Several “permanent” forest carbon projects have even burned up in California wildfires.
Let’s stop pretending carbon storage in forests can be permanent and 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, recently incorporated into Canada’s Greenhouse Gas Offset Credit Regulations. Its foundation is a unit called a tonne-year which represents one tonne of carbon held for one year.
To see how tonne-year accounting works, let’s consider the California Air Resources Board’s (CARB) forest carbon credit. Under CARB’s rules, a forest carbon project must 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, with one delivered per year for a century. Note that traditional forest carbon standards give full credit for the climate impact in the first year, even though no tonne-years have been delivered at that point.
Tonne-year accounting lets us be precise about when the climate impact of forest carbon projects is actually delivered. Traditional forest carbon contracts deliver 100 tonne-years, one tonne-year at a time, over the course of a century.
Rather than stretching out delivery of tonne-years over decades, it’s also possible to set up forest carbon projects with accelerated delivery. For example, a project could issue credits based on delivery of 100 tonne-years all upfront in year one. This also eliminates the need for long-term monitoring or buffer pools (reserves of non-tradable carbon offsets to cover unforeseen losses in carbon stocks).
Crucially, any carbon contract can be denominated in tonne-years. Truly “permanent” carbon storage can be represented as an infinite stream of tonne-years. This raises the obvious question of what a tonne-year delivered a million years from now is worth, but we will leave full treatment of that topic for another article.
For now, we can simply say that in a climate emergency, it is preferable to have tonne-years delivered sooner rather than later. As the 2022 report by the Intergovernmental Panel on Climate Change states, “Any further delay in concerted global action will miss a brief and rapidly closing window to secure a livable future.”
Tonne-year accounting can help to quantify the climate impact delivered during this critical decade. To see how, let’s consider two types of carbon credits:
- Forest Carbon 1.0 — 100 tonne-years, delivered one per year for 100 years
- Forest Carbon 2.0 — 100 tonne-years, delivered all upfront in the first year
(Note: The selection of 100 tonne-years to achieve “permanence” impact equivalence in Forest Carbon 2.0 is arbitrary and is an expression of time preference. Different time preferences will result in different numbers.)
If we buy one credit for each year of the 2020-2029 decade, this is how many tonne-years are delivered over that 10-year period:
As shown above, a single Forest Carbon 1.0 credit delivers 1 tonne-year every year. Buying one credit each year for 10 years will result in 55 tonne-years of climate impact delivered by 2030 — with 945 tonne-years promised but not yet delivered.
A single Forest Carbon 2.0 credit delivers 100 tonne-years each year. Over a decade, these credits will have resulted in 1,000 tonne-years of climate impact fully delivered.
Because Forest Carbon 2.0 projects can have “accelerated delivery” of tonne-years, they can have almost 20 times the climate impact (1,000 vs. 55 tonne-years) of Forest Carbon 1.0 projects during this critical decade.
Even if we extend this example out to 100 years, the Forest Carbon 2.0 approach still delivers double the impact.
Tonne-year accounting makes it possible to rigorously measure and credit climate impact on a yearly basis, enabling the creation of 1-, 3-, 5-, and 10-year forest carbon programs. With tonne-year accounting, we can recognize the stream of tonne-years created by these programs and credit them appropriately as they are delivered.
Shorter-term contracts also open up participation in forest carbon markets. Most landowners are reluctant to tie up their land in decades-long, multi-generational contracts. The short-term contracts enabled by tonne-year accounting solve this major constraint to scaling up forest carbon programs.
Deployed across the landscape, shorter-term contracts credited using tonne-year accounting can efficiently unlock large-scale, immediate climate impact. As a stylized example, let’s look at plantation pine forests in the U.S. South.
Roughly speaking, landowners on average grow their pine trees to age 26 before cutting and replanting, so the average age of these forests — when the landscape is managed at steady state — is 13 years. This is the economically optimal approach for landowners if they are only being paid for timber and not for carbon. Currently, the total amount of carbon dioxide equivalent held in plantation pine trees across the U.S. South is around 850 million tonnes.
Offering annual contracts on a pay-for-performance basis, enabled by tonne-year accounting, can incentivize these landowners to grow their forests slightly longer before harvesting. If the harvest age rises to 28 years, then the average age across the landscape rises from 13 to 14 years. In aggregate, this holds 170 million more tonnes of carbon on the landscape.
What happens on an individual acre is less important than what happens across the landscape; what matters is increasing the total amount of carbon held in forests overall.
Short-term contracts credited via tonne-year accounting can create landscape-level change. By nudging lots of individual landowners to grow slightly older forests with more carbon-rich trees each year, small changes collectively add up to enormous impact.
Accounting for time correctly is essential for effective climate action. For nature-based climate solutions, the concept of permanence is misleading and insufficient. There is value both in getting started sooner (“immediacy”) and in holding carbon longer (“durability” or “permanence”). Tonne-year accounting helps us understand and value both immediacy and durability by measuring and crediting climate impact precisely. The flexibility and scale afforded by this powerful tool can maximize climate impact during this critical decade.
July 11, 2022 at 01:21PM
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