A recent ruling by Verra may be of interest to you as a forest landowner considering participating in a forest carbon program. Here is a quick synopsis of the issue:
- The ruling: Verra declined to adopt the tonne-year accounting for its Verified Carbon Standard following three months of public consultations (Feb-Apr 2022) – but continues to keep the conversation going and could change its decision in the future.
- According to Verra, stakeholders and experts need to show a certain degree of agreement to move forward – something that has not yet been exhibited.
- The tonne-year accounting concept is primarily used by NCX, one of the first forest carbon developers to operate at scale in the U.S. South.
- What does this mean for forest landowners? Nothing has changed at this point. Verra has committed to keeping the conversation going and is making companies (and landowners) aware of this accounting method. When they decide to re-assess and re-open the consultation period, it will be important to make your voices heard. They only had 30 submissions during the three month public comment period.
- What they are saying: “At NCX, we are firm believers in the ability of tonne-year accounting to unlock immediacy, scale, and accountability in climate action, so we are, of course disappointed in Verra’s delay,” said Dr. Jennifer Jenkins, Chief Sustainability Officer at NCX. “However, we are very pleased to see the increased awareness and discussion about tonne-year accounting and short-term crediting that Verra’s proposal has kicked off. NCX is now working on the next evolution of certification with a focus on transparency and 3rd party verification.”
Let’s Take a Deeper Dive
Who is Verra?
Verra is a global leader helping to tackle the world’s most intractable environmental and social challenges by developing and managing standards that help the private sector, countries, and civil society achieve ambitious sustainable development and climate action goals.
Verra’s global standards and frameworks serve as foundations for channeling finance towards high-impact activities that tackle some of the most pressing environmental issues of our day.
The Verified Carbon Standard (VCS) Program allows certified projects to turn their greenhouse gas (GHG) emission reductions and removals into tradable carbon credits. It is the world’s most widely used voluntary GHG program.
Who is NCX?
NCX or the Natural Climate Exchange (formerly SilviaTerra) is a carbon developer that promotes a short-term, one-year harvest deferral through a proprietary forest carbon marketplace.
NCX utilizes satellite data, artificial intelligence and remote sensing to estimate the carbon potential of the land to incorporate landowners of all sizes. Landowners are matched with a carbon purchaser and paid for their offsets once the harvest deferral period has ended.
What is a tonne-year?
One tonne-year is a metric tonne (MT) of CO2 stored for one year. The advantage of tonne-year accounting is it enables sequestration projects to quantify the benefits of carbon storage on an annual or short-term basis. In conventional carbon credit accounting, the atmospheric benefit of emission reductions and removals (ERRs) is quantified using 100-year global warming potentials (GWPs). Therefore, removals must remain stored for 100 years to achieve the calculated benefit. For this reason, sequestration projects using conventional carbon credit accounting have a permanence liability of 100 years after the carbon is removed from the atmosphere, which is managed through the buffer.
This same permanence liability does not exist with tonne-year accounting because the sequestration activity is credited based on the years the carbon is held out of the atmosphere using an annual factor derived from the radiative forcing effect of CO2. In other words, tonne-year accounting credits temporary carbon storage based on the duration of storage. For example, if a tonne of CO2 is sequestered for one year, it generates one tonne-year, while a tonne of CO2 sequestered for five years creates five tonne-years.
Why is tonne-year accounting preferred?
Under the tonne-year approach, the number of credits issued to projects each year is based on the estimated total carbon saving over a 100-year lifetime, taking into account deductions for leakage and uncertainty, which is then divided by a tonne-year conversion ratio.
Natural systems – like forest land – are dynamic and can’t truly guarantee permanence. A wildfire that devastates previously reforested areas, releases the carbon stored in those trees back into the atmosphere. So, with tonne-year accounting, stakeholders can measure delivered impact and then issue payments and credits in one-year increments that are fair for the climate, for landowners and carbon buyers. Crediting carbon storage one year at a time also unlocks shorter-term contracts, which opens up carbon market participation to millions of landowners.
An important consideration for forest landowners:
Even though the tonne-year accounting standard is a preferred method for forest landowners in the U.S. South, due to the flexibility for management, landowners will not be able to switch from one carbon developer to the other even after the agreement / contract expires.
Here’s why: Based on the way third-party verification standard rules are currently written, if a landowner enrolls their land in one carbon program, that landowner cannot participate in a different carbon program in the future, even if their agreement/contract has expired. These rules are currently written this way by third-party verification standards to eliminate the potential for double accounting. This is mostly due to the fact that technology is still not place to track carbon through wood supply chains. So, like a conservation easement, carbon agreements are tied to the actual property/tract at this time.
These rules are likely to change in the future as short-term carbon agreements become more prevalent in the marketplace. However, there is no timeline for when these changes may occur.