Forests play a key role in mitigating climate change. Trees absorb carbon dioxide (CO2) from the air and store it in biomass and soil. One way to finance projects on Increasing this carbon storage in forests is through private financing through carbon credits. A carbon credit is an intangible unit that represents 1 metric ton of CO2 emissions avoided or CO2 removed from the atmosphere.. Buyers can use these credits to offset their own emissions. Forest carbon markets are the primary market for forest carbon credits, particularly in North America, where they account for a significant proportion of credits issued.

Carbon markets operate either under a “compliance system” where credits are used to meet regulatory targets, or under a “voluntary market” (VCM) where independent registries set the rules and certify credits. Forest carbon projects typically fall into three main categories: improved forest management (IFM), afforestation/reforestation (AR), and avoidance of conversion (AC).

Despite their potential, market-based approaches to forest carbon projects have so far been unstable and faced public skepticism. The problem is that existing carbon credit certification systems do not guarantee that credits are consistently real, high quality and accurately represent 1 tonne of emissions avoided, reduced or removedThis leads to widespread over-allocation of credits and the arrival of many low-quality ones on the market, which can slow down climate progress.

To assess this situation, a team of experts reviewed and assessed protocols for voluntary and regulated North American carbon markets. The assessment focused on four key components that protocols must address for a project to deliver real and lasting climate benefits: reducing the risk of volatility (ensuring permanent carbon storage), establishing additionality and a baseline (demonstrating that carbon storage would not occur without the project), requirements for quantifying and monitoring carbon stocks, and accounting for leakage (assessing the impact of a project on activities and markets beyond its borders).

The results of the assessment were worrying. Most protocols achieved low overall scores, with none rated as robustOnly one new protocol, which has not yet issued credits, was assessed as satisfactory, mainly due to improvements in the approach to demonstrating additionality.

The main shortcomings identified include:

• Reducing volatility risk: Approaches to risk assessment and reserve fund contributions are often not based on the best science and do not sufficiently take into account regional and temporal differences in risk (e.g. fires, insects). The length of the monitoring period varies, with longer periods being valued higher, but there is still debate about the appropriate durability for offsetting fossil fuel emissions.
• Complementarity and baseline: Methods for determining additionality, especially tests relying on evidence provided by the developer, were rated very poorly. Establishing realistic baseline scenarios of what would happen without the project is challenging, especially for AC and IFM projects, and often leads to overestimation of credits. Dynamic baselines that change over time were rated better, but are rare.
• Considering leakage: Estimating leakage (the movement of emissions outside the project area) is difficult and current protocols significantly underestimate leakage, especially for IFM and AC projects.

Key improvements have been proposed to strengthen the carbon market protocols and system:

• Dynamic baselines: They should be derived from empirical observations of changes in the wider landscape over time and reviewed regularly.
• Improved risk assessment: Require a reassessment of risks (e.g. fires, diseases) at least every 5 years using the best available independent scientific data and tools.
• More conservative leak deductions: For IFM projects, protocols that do not require significant reductions in production could better account for leakage. In general, approaches to accounting for leakage need to be fundamentally reworked. In the US, conservative, regionally appropriate default leakage values should be provided.
• Independent data and transparency: Supporting data and parameters for risk, baselines, biomass and emissions should come from independent sources and be prescribed by the registry, not the project developer. Radical transparency is needed to allow for scrutiny of individual projects.
• Conflict of interest resolution: The potential conflict of interest of verification and validation bodies (VVB) hired by developers should be resolved.
• Taking into account non-carbon impacts: As science advances, non-carbon impacts of forests on climate, such as albedo, should also be integrated into protocols, especially for AR projects.

These improvements would likely lead to a more conservative quantification of credits, reducing their volume but ensuring their higher quality. Continuing the current status quo without such investments poses a serious risk to climate change mitigation.It is also important to note that many of the credits on the market were certified under older, possibly weaker versions of the protocols, and their quality requires careful assessment. In addition to improving the compensation system, other models of financing forest protection and restoration that may not require the same level of precision as compensation should also be considered.

In conclusion, while forest carbon credit markets have the potential to channel private finance towards important climate action, current protocols do not provide sufficient assurance of the quality of credits. The proposed improvements, which require a collaborative effort between scientists, investors and market participants, are essential to build trust and ensure that these projects actually contribute to climate change mitigation. Spring

The entire study was published in the journal Earth's Future .