When it comes to climate action, sooner is better than later. The world needs to act with urgency and to encourage early and decisive action, even as science, technologies and best practices continue to evolve.

We applaud first movers, like Nike, who take ambitious, voluntary actions to reduce their own operational and supply chain emissions. If more companies had acted like Nike did nearly 20 years ago, the world would be in a better place. Instead, many companies eschewed climate leadership, which, in addition to the lack of national climate regulation in the U.S. and other major emitting countries, explains the current climate crisis.

To meet the Paris Agreement climate targets – the world’s best hope to avoid catastrophe – protection, conservation and restoration of forests are critical. These actions are also among the most readily deployable, affordable and scalable available today. When it comes to mitigating reversal risks associated with these projects, ACR has robust, legally binding and enforceable systems in place to ensure the integrity of the carbon credits we issue.

ACR has separate mechanisms to address unintentional (e.g., wildfire) and intentional (e.g., over-harvesting) reversals from forest and land use projects. Project Proponents are legally bound to fully compensate for intentional reversals. For unintentional reversals, ACR manages a diverse, well-capitalized Buffer Pool. Currently the ACR Buffer Pool represents approximately 20% of credits issued from projects that require a Buffer Pool contribution. ACR has yet to experience an unintentional reversal from its Forestry and Land Use portfolio of nearly 80 projects.

ACR’s Buffer Pool contains a diverse mix of credits, which adds integrity to the pool overall. Many of the credits in the ACR Buffer Pool are from project activities that are not reversable, such as landfill gas and switch to low Global Warming Potential refrigerants.  In addition to the diversity of types of credits in the Buffer Pool, the number of projects being backed by the pool and their geographic diversity makes it very unlikely that a single catastrophic event could cause a reversal that would threaten to deplete the pool.

And because ACR does not refund credits deposited to the Buffer Pool, the overall pool continues to grow. In addition, in the case of an unintentional reversal, ACR follows its protocol as detailed in the Buffer Pool Terms and Conditions for cancellation of credits, including project type and vintage. As a result, it is uncertain whether older vintage non-forestry credits will ever be canceled to compensate for unintentional reversals.

In summary, ACR is confident in the rigor of our approach to mitigate the risk of reversals for forestry and land use projects, and we will continue to evaluate other options that become available in the market.

ACR RESPONSES TO INQUIRIES FROM BLOOMBERG

Below are ACR’s responses to email inquiries from Ben Elgin of Bloomberg.

JUNE 2024

1) Critics of rules that allow buffer-credit substitution fear that this will allow in lower-quality credits, and thus undermine the effectiveness of this as an insurance mechanism. I realize ACR tightened the rules a bit (around vintage, if I recall correctly) a couple of years back. It would be great to discuss this and hear ACR’s thoughts on this criticism.

First it is important to note that the ACR Buffer Pool is only used to compensate for unintentional reversals. Intentional reversals must be compensated directly by the Project Proponent based on a legally binding agreement with ACR.

ACR allows Buffer Pool contributions from any ACR project type, with the vintage of credits used for Buffer Pool Contributions limited to no more than five (5) years prior to the vintage of the carbon credits being verified and issued. ACR allows for non-reversible tons to be contributed to the Buffer Pool to ensure the pool is robust and can mitigate large or widespread natural disturbances. Similar to any risk mitigation mechanism, diversity in the makeup of this pool adds resilience. A larger and more-diverse credit pool, in terms of geography, project type, and reversal risk, is better.

ACR has a large and growing volume of credits issued to aggregated or programmatic projects, which by definition have a wide geographic spread and inherent diversity, decreasing the likelihood of a single catastrophic event causing a reversal. In the event of an unintentional reversal from a project, ACR cancels credits in the Buffer Pool as detailed in the ACR Buffer Pool Terms and Conditions Section VIII. ACR has yet to experience an unintentional reversal from its AFOLU portfolio (nearly 80 projects) that requires compensation from the Buffer Pool.

2) The Nike gas-substitution project is the biggest in the pool, making up more than 18% of the total. I’d like to discuss this project…I thought it was mostly dormant. But many who worked on this two decades ago say that carbon credits didn’t spur the gas-substitution work. I’d be curious to hear ACR’s thoughts on this. And I’d like to know who supplied these credits to the buffer pool?

The Nike project was one of the world’s first voluntary corporate GHG emission reduction projects and earned credits by replacing SF6 – a highly potent GHG with a GWP of over 22,000 – in its most popular shoes, retooling its manufacturing and making changes to its supply chain accordingly. The project is dormant in that no credits have been issued to it since 2005.

3) There are three renewable-energy projects in here, which combine to make up around 15% of the pool. These types of credits have long been criticized for lack of additionality. People involved with two of these projects have told me they would have been built without carbon credits. I’d be curious to hear ACR’s thoughts on this.

The renewable energy credits were verified to meet additionality and other requirements of the methodology.

AUGUST 2024

1) You mentioned in the June email that the vintage of credits used for buffer-pool contributions can be no more than five years prior to the vintage of the carbon credits being verified/issued. I just want to clarify: This is a fairly new requirement that doesn’t apply retroactively to previous buffer contributions, is that accurate?

The ACR Buffer Pool Terms and Conditions requirement regarding the vintage of credits contributed to the Buffer Pool has been in place since the beginning of 2021 and is not retroactive.

2) In the ACR blog post, it says that reversals for projects that contributed AFOLU credits to the buffer pool would be compensated with AFOLU credits from the buffer pool. Is there a way for buyers – or the general public – to see what credits, or types of credits, were contributed to the buffer pool by each project?

All credits that have been contributed to the ACR Buffer Pool are published on the ACR registry. Contributions are not linked to specific projects because the mechanism is a pool. Protocol for use of credits from the pool to compensate for unintentional reversals is detailed in the ACR Buffer Pool Terms and Conditions.

3) The Nike project looks to be non-additional. The company’s ESG report at the time counted the emission reductions that were then sold as carbon credits. People who worked on this project for Nike tell me that the sale of carbon credits didn’t factor into its decisions/efforts to switch out heat-trapping gases from its shoes. Some of this might be understandable as the carbon market was in its infancy at the time. But what does ACR say to people who are concerned that close to 20% of the buffer pool is from this non-additional project?

ACR refutes your unsupported allegation that the Nike project is non-additional. According to the project documents published on the ACR Registry, the project’s additionality was both regulatory and financial: There were no existing federal, state or local regulatory requirements for the phase-out the use of, capture, and/or destruction of SF6 or C3F8. And at the time of the switch, the price of SF6 was ~$5.25/lb and the replacement gas, C3F8 cost ~$9.25/lb. Neither the performance nor the cost of C3F8 relative to that of SF6 justified Nike’s switch to the use of C3F8. The primary stated reason for Nike to switch gases was to produce a net environmental benefit.

4) Lastly: Several fires have hit carbon projects in the western US this summer. It looks like the Shelly Fire hit ACR733 (Scott River Whiskey) pretty hard; and it may have also impacted ACR732 (Scott River Shackleford). I realize this only recently happened; but do you have any preliminary updates on the fire impacts for ACR carbon projects (such as number of acres impacted or the amount of carbon lost) from this summer?

ACR is aware of the fire burning in or near carbon project areas. However, until the fire is extinguished, the full extent of its impact cannot be safely or accurately assessed. The ACR Buffer Pool Terms & Conditions details how reversals are reported and the volume assessed, and how reversals are verified and ultimately compensated.

If the fire causes a reversal, it would represent the first use of the ACR Buffer Pool to compensate for an unintentional reversal.

The ACR Buffer Pool is used to compensate for unintentional reversals for ACR projects only. Intentional reversals of ACR projects must be compensated directly by the Project Proponent based on a legally binding agreement with ACR. California ARB manages a separate buffer pool to address risk to projects operating in its compliance market.

By: Mary Grady

This column was originally published in Environmental Finance on September 6, 2024.

When you’re in a hole, the first rule is to stop digging. Today, the world finds itself in a climate hole, yet we dig ourselves deeper by continuing to emit climate-changing gases into the atmosphere.

Despite this reality, there’s an emerging perception that, when it comes to carbon credits, removals – pulling carbon out of the atmosphere and sequestering it in long-term storage – are preferable to or more impactful than emission reductions. This is demonstrated by increasing corporate hesitation about reduction-based carbon credits, on the one hand, and a raft of high-profile removal-based agreements and initiatives, on the other.

While all corporate leadership should be applauded, this “either/or” approach is dangerous for climate action. For the atmosphere’s balance sheet, emission reductions and removals are both vitally important.

The well-established greenhouse gas mitigation hierarchy makes the case plain by prioritizing actions as follows: Avoid, reduce, replace, compensate, and remove. For natural climate solutions, the conservation hierarchy follows a similar structure, emphasizing the following order of priority: protecting, managing, and then restoring lands. Considering that the world’s forests store 861 gigatonnes of carbon, it’s evident that achieving the goals of the Paris Agreement is impossible without forest protection. Therefore, our primary near-term focus should be on reducing emissions, including efforts to protect and sustainably manage forests.

The importance of forest protection was underscored in a recent peer-reviewed study in Nature Climate Change, revealing that the four climate strategies with the greatest potential for global impact and the highest scientific confidence are tropical forest avoided loss, tropical forest reforestation, temperate forest reforestation, and temperate forest avoided loss. Avoided loss (reductions) and reforestation (removals) are all vital climate actions. This finding is echoed in the latest IPCC Synthesis Report, which identifies reduced conversion of ecosystems and ecosystem restoration as two of the five actions with the greatest mitigation potential.

When it comes to corporate climate action, the reality is that some sectors are difficult to fully decarbonize, meaning we need a comprehensive strategy, which evolves over time, as recommended by the Oxford Principles for Net Zero Aligned Carbon Offsetting. While placing significant emphasis the importance of removals, the team at Oxford was clear that before 2030 a well-balanced carbon credit portfolio should prioritize emission reductions, including nature-based reductions.

There are a few simple reasons for the importance of emission reductions today.

First, deforestation and forest degradation continue to represent 12-20% of total emissions. Methane leaks account for 12% of all U.S. emissions and approximately one-third of global warming to date. As these examples and many others show, we still have a lot of emissions to reduce, a process that carbon markets can accelerate.

Second, habitat loss is contributing to the Sixth Mass Extinction. Nearly half of all species are in decline and current extinction rates are 1,000 – 10,000 times higher than expected background extinction rates. Reducing deforestation protects habitat, and improves water quality, soil health, and the livelihoods of those dependent on these resources.

Third, emissions that we reduce now are better than emissions we remove later, because they provide immediate benefit to the climate. Removals take longer to have an effect, whether you are talking about planting trees – which take time to grow – or investing in a new technology that has yet to reach global scale. If we rely only on these solutions, we will see far greater levels of dangerous warming in the coming decades.

Finally, protecting and improving management of existing ecosystems is more cost-effective than creating new ones. With limited time and resources, we need to make both near-term and long-term investments to ensure we are getting the biggest climate bang for our buck.

A simple “either/or” approach rarely captures real-world dynamics. We need “both/and,” especially when confronted with the stark reality of the climate crisis. We need nature and technology; voluntary and compliance markets; jurisdictional scale and projects; regulations and incentives. And we definitely need reductions and removals.

A focus on solely removals misses the moment and devalues the critical action we know is needed right now to keep emissions out of the atmosphere. Instead, credit buyers should consider a portfolio approach that balances the strengths of different strategies to achieve long-term climate stability.

Mary Grady is executive director of ACR, a carbon crediting program operating in global compliance and voluntary carbon markets.

ACR Responds to Latest Guardian Attack on the Voluntary Carbon Market

Two ACR projects were recently called into question by The Guardian. We were contacted just days before publication and asked to respond to the findings of an “investigation” for which next to no information was provided, either in terms of the methodology or underlying data. The scant sources that were shared with us either did not seem to support the journalist’s conclusions, or have been heavily contested for lack of transparency.  Far from being a balanced investigation, in this case the journalist seems to have cherry picked sources to tell the story she wanted to tell, omitting information that ran counter to her narrative. Despite serious concerns with this opaque process, we provided a timely and detailed response to the Guardian’s inquiry, which, predictably, was not reflected in the one-sided story. So, we provide it here.

ACR Response to Inquiry from Nina Lakhani of The Guardian US

September 17, 2023

As the Global Stocktake highlighted earlier this week, “global emissions are not in line with modelled global mitigation pathways consistent with the temperature goal of the Paris Agreement,” adding that, “much more ambition in action and support is needed.”

At ACR this reality shapes everything we do, pushing us to operate a global system driven by integrity and urgency.

Trove Research found in a report issued this week, “investment into carbon credit projects between 2012 and 2022 totaled $36 billion, with half of this occurring in the last three years and more than $3 billion in future investments already committed” and in another from June 2023, “companies that use material quantities of carbon credits are decarbonizing at twice the rate of companies that do not use carbon credits.” These studies show that carbon markets offer a critical way to scale up investment in climate solutions while also catalyzing corporate action to reduce carbon emissions.

In short, when it comes to the public interest in climate action, urgency and integrity must walk hand in hand.  And right now, with many valuable initiatives underway, too many parties are thinking of integrity as a destination, rather than a journey – one that ACR has been on since we launched the first greenhouse gas trading platform in the world in 1996.

Since our founding, we have continually improved our approaches, invested in new methodologies and sunset others. For example, catalyzing carbon finance to scale up grid connected wind energy accelerated the transition in many countries and drove down costs to a point where carbon finance is no longer needed.  Science develops and markets change, so our approaches continue to evolve.  And through it all, we keep pushing to bring the best standards to market as quickly as possible, driven by integrity and urgency.

While we strive to be open and responsive with all inquiries about our program, you have provided little information about the methodology of your “investigation” into two ACR projects (of over 650 on our registry). You have then provided us with a short Excel spreadsheet that gives no information as to how and why you reached your conclusions, citing sources whose evaluations do not align with your check box assertions and that have also been heavily contested for lack of transparency. Nevertheless, you contacted us about two projects, which we address below:

Merit Energy Geo-Seq

Credits have not been issued to this project for 15 years and the methodology underpinning the project was made inactive at the time of the last issuance. When the project was developed 20+ years ago before ACR became part of Winrock, additionality was determined based on a very low penetration rate of Enhanced Oil Recovery with CO2. Even today, only approximately 5% of the nation’s oil is produced using Enhanced Oil Recovery with CO2, which is hardly a threshold for common practice. CO2 is considerably more expensive than the alternatives, which is why the penetration rate is so low. CO2 injected in geologic formations is monitored for stability and considered permanently stored.

GreenTrees Advanced Carbon Restored Ecosystem

GreenTrees has enabled many hundreds of private landowners to reforest over 130,000 acres of marginal and degraded sites in the Mississippi Delta. Planting trees is an expensive, risky, and long-duration endeavor and is neither legally required nor a common practice. The carbon market incentivizes afforestation and reforestation by generating a tangible revenue stream for these actions to be maintained for ACR’s legally binding minimum 40-year term where it was otherwise absent. The line of evidence you’ve presented in condemning this project fails to support the assertion that credits from GreenTrees are “fundamentally flawed” or “junk”. Earlier this week a report, Assessing the Quality of Carbon Credit Rating Agencies, cautioned that discrepancies in assessment criteria, lack of standardization and transparency, and lack of regulation and oversight amongst carbon credit rating agencies may ultimately present confusion to the market. The line of evidence you’ve presented here goes a step further in shaking buyer confidence and creating market confusion without a firm scientific basis or reasoning.  We urge a more thorough analysis considering empirical evidence from multiple independent and unbiased sources.

The ACR methodology used by GreenTrees is applicable to marginal and degraded lands, which are lands that would not revert to forest cover without human intervention. Where trees are completely absent across the site and regeneration is not expected, the baseline will be zero. Where some natural regeneration occurs, remnant trees are either excluded from the project area or considered in both the project and baseline scenarios. Findings of an “inflated baseline”, “exaggerated claims”, and “not additional” should be reconsidered. As noted above, ACR requires a legally binding agreement with the project proponent to maintain project monitoring, reporting and verification activities for a minimum term of 40 years, which is the timeframe for permanence as defined by the Integrity Council for the Voluntary Carbon Market in their Core Carbon Principles Assessment Framework.

We urge you to reconsider your assessment in the interest of providing fair and unbiased reporting of the GreenTrees project, and the carbon market as a whole.

The American Carbon Registry (ACR) is a mission-driven nonprofit organization housed at Winrock International. Winrock’s mission is to empower the disadvantaged, increase economic opportunity and sustain natural resources. Climate change poses great risk for the poorest populations and the most fragile ecosystems around the world. This is why immediate action is needed.

Last night, the Last Week Tonight Show with John Oliver aired a segment critical of carbon markets and carbon offsets, including specific ACR-registered forestry projects. Unfortunately, the debate about the role that carbon markets and high-quality offsets have to play to address climate change is complex and not one that we can effectively engage in this type of media format.

Scientific reports[1] by the Intergovernmental Panel on Climate Change (IPCC) have assessed the critical role of forests to reduce and stabilize emissions in all 1.5°C-consistent pathways to achieve Paris Agreement targets and reach net zero emissions by mid-century. The Nature Conservancy, the World Resources Institute and others estimate that the combined climate impact of halting deforestation, restoring forestland, and improving forestry practices could reduce and remove seven billion metric tons of carbon dioxide each year.[2] This represents over one-third of the mitigation the IPCC says we need through 2030.

The Paris Agreement Article 6 recognizes international cooperation, including through markets, as a tool to achieve greater ambition and specifically recognizes efforts to protect, restore and manage forests under Article 5. Winrock and ACR agree that well-designed carbon markets have an important role to unlock a broad range of additional actions to help achieve national and global climate goals alongside urgent decarbonization in all sectors of the economy.

In the global carbon markets, ACR has earned a reputation for strong standards and effective oversight. Our program rules address key tenets of quality broadly recognized in the carbon market including additionality, baselines, accounting for leakage and mitigating the risk of reversals. All our methodologies have been vetted in a transparent manner, with input from leading experts and scientists through a public stakeholder consultation and blind scientific peer review. We oversee carbon project verification by independent, accredited auditors; and issuance of serialized credits that are tracked on our transparent registry. We take pride in the quality and rigor of our crediting program, which is delivering a very real climate impact.

ACR’s commitment to delivering integrity to global carbon markets is demonstrated by our role for the past decade as the leading California Air Resources Board (ARB)-approved Offset Project Registry for the state’s regulated cap-and-trade program in addition to ACR’s 2020 approval by the International Civil Aviation Organization (ICAO) as one of only eight programs globally approved to supply carbon credits for the Carbon Reduction Offsetting Scheme for International Aviation (CORSIA).

While few in the space would disagree that carbon credits are not an alternative for internal corporate emission reductions, the Last Week Tonight Show with John Oliver missed the opportunity to use its platform to explore the legitimate and critical role high-quality credits can and must play to accelerate the transition to a global net-zero economy by midcentury.

The producers from the program reached out to us with questions that pertained to the concept of “additionality.” Essentially, how do we ensure that projects create carbon benefits that exceed those that would have occurred in the absence of the project and without carbon market incentives? How do we ensure a credible baseline scenario from which to measure climate performance? And, would conservation-minded landowners have managed their forests the same in the presence or absence of a carbon project?

Specifically, the producers inquired about three projects – which together represent less than .01% of registered U.S. forest carbon projects and less than .25% of total volume of issued U.S. forest carbon credits – that were the subject of prior, deeply-flawed reporting. Unfortunately, the rules underpinning quality in the carbon market are nuanced and have not been well conveyed by the media to date.

Nevertheless, we emphasize that these projects can and do provide meaningful climate benefit while also noting that organizations that have longer-term, institutional climate targets are expected to factor these into their decisions to enroll IFM projects and their justification of baseline scenarios.

Below is the information that we provided to the producers, which included an explanation of the key principles that govern our standard for Improved Forest Management (IFM) projects, an explanation of why conservation organizations, or conservation-minded landowners, have a place in the carbon markets, and specific clarification on the projects in question.

Response Provided to Last Week Tonight

The American Carbon Registry (ACR) is a mission-driven nonprofit organization housed at Winrock International. We believe that well-designed carbon markets can unlock a broad range of transformational actions to help achieve ambitious national and global climate goals. U.S. forests and forest products currently absorb and store almost 15% of the country’s carbon emissions from burning fossil fuels, but have the potential to capture nearly twice as much if we take actions such as planting more trees and employing climate-smart practices to conserve and manage forests.

The U.S. forest carbon market includes over 200 projects on more than 7 million acres across the country that have issued 218 million tons of CO2 emission reductions and removals in the last decade. ACR has issued two thirds of these credits under a combination of the California market and our own ACR program.

The rules underpinning quality in the carbon market are nuanced and have not been well conveyed in media coverage to date. Enrolling a forestry project on ACR represents an immediately effective, legally binding, and public-facing commitment to long-term carbon sequestration where it previously was absent.

Initially, the primary participants in Improved Forest Management (IFM) projects were large timberland owners. Over time, the market has expanded to include many different types of landowners, including conservation organizations. Beyond their well-known conservation mandate, these organizations are also land managers that buy and sell land frequently and often have the ability to harvest forestlands as a revenue stream when needed.

Evolving financial needs, market conditions, management priorities, and other factors — which are applicable to other kinds of landowners – are also relevant to NGOs. In other words, carbon projects can play a critical role in their management decisions and helping them achieve their environmental objectives.

As the carbon market has expanded, ACR’s criteria for additionality and baseline determination has been applied to all project proponents, including NGOs and conservation organizations, who have to justify why the baseline is a realistic and plausible management trajectory. Organizations that have longer-term, institutional climate targets are expected to factor these into their decisions to enroll IFM projects and their justification of baseline scenarios.

Like anything else, as the market grows, our methodologies and standards continue to evolve and strengthen based on real world experience. In fact, last month ACR released an updated version of our IFM methodology that included updates to additionality safeguards; increased reporting requirements; and further specificity in project accounting, modeling, and verification, among other updates.

Some key points to keep in mind:

Conservation organizations and NGOs manage forestlands for a number of uses. The environmental benefits for which these organizations manage land should not be conflated with specific climate benefits measured in tons of carbon. The two are interlinked, but not the same. Managing a property to deliberately enhance carbon sequestration can and often does involve different actions than managing a property for other conservation-related purposes, such as habitat, wildlife, water and air quality, and environmental sustainability and justice.

Conservation requires significant ongoing expenditures and is not guaranteed. Conservation organizations can and do decide to harvest portions of their land when financial needs arise, or they can decide to sell the land altogether. The carbon market serves as a vehicle to quantify and monetize carbon as a climate benefit and to fund conservation efforts to tip the scales towards other conservation benefits when other funding sources aren’t available. A system in which conservation finance is only available to bad actors disincentivizes the good ones.

Enhancement of carbon on a property requires verified assurance that the property will be managed to a standard that far exceeds what had been permissible and feasible including by providing legal certainty where it was previously absent.

Companies that purchase these IFM credits are investing in a legal certainty that the land in question will be managed to enhance carbon sequestration for the duration of the project, which in the case of ACR is a minimum term of 40 years.

Proof Point

The Hofmann Forest in NC is a just one example of how plans for forest management can unexpectedly change in light of financial needs, even for forests that are considered a public good and would seemingly never face intensive pressures to liquidize their standing timber, if there are no restrictions on the sale of the land, on conversion and/or on harvesting.

A 79,000-acre tract of public land in eastern North Carolina, Hofmann Forest has been owned for the benefit of NC State University since 1934. In 2013, lack of income prompted officials to announce plans to sell the forest. The sale agreement was leaked describing plans for conversion of much of the land to crops and urban development. A group of professors, foresters and environmentalists filed a lawsuit to stop the sale, but ultimately went undecided by the Supreme Court. By then, the sale had fallen through. Nineteen months later, University officials signed a $78 million, 50-year timber deed with Hofmann Forest Timberlands LLC to grow, harvest and replant timber on almost three quarters of the acres in Hofmann Forest. The University earns about $3 million a year from the deal, generating reliable income more than double what the forest had previously been generating.

What is important to note is that prior to 2013, no one would have predicted a sale of Hofmann Forest for uses different from the way the forest had historically been managed by the University for 80 years. But financial needs were great and there were no legal restrictions preventing the sale, conversion of the forest or timber harvesting. Luckily there was a course correction to a different revenue stream than forest conversion. In this case it wasn’t financed by carbon markets, rather by timber sales, but in other cases, carbon markets could serve as an alternate revenue stream to timber harvest.

Key Principles Relating to ACR Improved Forest Management (IFM) Projects

Enrolling a forestry project on ACR represents an immediately effective, legally binding, and public-facing commitment to long-term carbon sequestration where it previously was absent. It is a tangible, firm, and immediate action to increase and directly quantify carbon sequestration according to a known and transparent framework. Regardless of current landowner intent, landowner plans and intent can and often do change. If not legally restricted, lands are often sold, and well-intentioned dreams of sustainable forest management are often upended by financial pressures and changing economic conditions (such as the Hofmann Forest example above).

Revenues from carbon offsets support reforestation, sustainable forest management and prevention of conversion of forests to non-forest uses. They also help to ensure forests remain healthy and productive, and support efforts to acquire and conserve additional lands. Ultimately, forest carbon projects attach a tangible monetary asset to carbon sequestration where timber and/or mineral extraction were previously the only revenue sources and promote much needed efforts to achieve Paris Agreement climate ambitions.

ACR projects substantiate their additionality according to a published and scientifically peer reviewed known and transparent framework.

Each project must 1) exceed all currently effective laws and regulations, 2) exceed common practice management of similar forests in the region, and 3) face at least one of three barriers to their implementation (financial, technical, or institutional)

The regulatory surplus test requires a project to evaluate all existing laws, regulations, statutes, legal rulings, deed restrictions, or other regulatory frameworks relevant to the project area that directly or indirectly affect GHG emissions associated with the project, and which require technical, performance, or management actions. The project action cannot be legally required.

The common practice test requires an evaluation of the predominant forest management practices of the region and a demonstration that the management activities of the project scenario will increase carbon sequestration compared to prevailing common practice. All projects must evaluate and describe the predominant forest management practices occurring on comparable sites of the region and demonstrate that the project activities will achieve greater carbon sequestration than in the absence of the project.

The implementation barrier test examines factors or considerations that would prevent the adoption of the management practice employed by the project. Forestry projects often demonstrate a financial implementation barrier because the projects are generally expensive to implement and coincide with harvest deferral and forgone potential revenues. This results in a lower internal rate of return in comparison to the land potential that dissuades many landowners from engaging in sustainable forest practices.

ACR projects develop a credible alternate baseline scenario against which project performance is assessed. Determining the baseline involves a systematic, comprehensive assessment of site characteristics and predominant forest management practices in the region. The alternate baseline forest management scenario is objectively assessed as to whether it could reasonably occur in the absence of the project.

ACR baselines consider all legal constraints to forest management, as well as operational constraints to forest management such as site access, mill capacities, and hauling distances. Baseline silvicultural treatments are substantiated by peer-reviewed or state/federal publications, attestations from regional foresters, or other verifiable means to ensure their relevance to the project area. In other words, they are substantially vetted and validated by independent sources.

Finally, to address the various management objectives and considerations confronting ownerships of different types, baselines employ a Faustmann approach to net present value (NPV) maximization, which considers prices, costs, and the time value of money in determining harvest schedules. Faustmann’s original 1849 work forms the basis for modern optimal rotation/investment decisions and forest economics. NPV discount rates based on peer-reviewed literature govern the intensity and temporal distribution of baseline harvests, considering the specific characteristics and motivations of each ownership type.

The ACR approach is a consistent, replicable, and verifiable metric upon which to assess management decisions across the major U.S. forestland ownership types. It also provides a transparent and systematic metric by which landowners, project developers, verifiers, and offset purchasers can base their assessment of an ACR IFM carbon project.

Conservation is not guaranteed, regardless of current ownership class or management intent. Outside of a conservation easement, it is not common for a landowner with mature timber to make a long-term, legally-binding commitment (40 years for ACR) to light harvesting and to legally forgo the opportunity to do so. Forest management is long-term and cyclical based on financial needs, market conditions, agency priorities, mill conditions, and other factors. Carbon projects typically provide a minimal cost recovery in comparison to the forgone revenues and opportunity cost associated with harvest deferral and managing for carbon sequestration. Carbon projects do, however, provide legal certainty where it was previously absent that the project area will increase its carbon stocks over time and that the property will be managed to a standard that far exceeds that previously allowable.

Absent a legally binding constraint to how a particular land can be managed, management priorities can and do change. The sale of forest land for conversion to another use or commercial timber harvest on lands that don’t have restrictions is not unusual. ACR projects “lock in” a conservative and sustainable management regime associated with carbon sequestration and its associated climate benefits.

The carbon market is rapidly evolving and strengthening rigor. All ACR methodologies must undergo a rigorous approval process that involves internal review, public consultation, and blind scientific peer review. ACR is the only registry to require scientific peer-review for the approval of its methodologies. The ACR IFM methodology, relevant to the projects in question, was first approved in 2011 and has undergone four version updates. The newest version of the methodology (recently updated in July 2022) demonstrates the continuous strengthening of the methodology, and reflects our deep knowledgebase gained from implementing IFM projects for over a decade.

ACR’s responses to project-related questions

Hawk Mountain Improved Forest Management Project

Prior to developing the carbon project, the Hawk Mountain project area had no restrictions on timber harvesting, and the forest was aging. It is ACR’s understanding that in the absence of carbon revenue, the management activities required for improved forest health would not have been feasible without additional funding such as through timber harvesting. Similar parcels in the region have been aggressively harvested. Given the lack of legal constraints on forest management at Hawk Mountain, the value of the trees on the property and the access to harvesting infrastructure, heavier timber harvesting was an economically and legally plausible scenario to ensure sufficient revenues to achieve the organization’s avian habitat objectives into the future, especially if donor funding were ever to fall short.

As the foundation of additionality of the carbon project, the project proponents worked for three years to implement a creative approach to conserve the sanctuary, including putting the majority of its landholdings in a perpetual conservation easement and developing a management plan to improve the health of Hawk Mountain’s aging forest. The income derived from carbon market finance has been a critical driver in the ongoing protection and management of the forests including addressing invasive species threats and ensuring oak regeneration, while also bringing greater ecosystem awareness and delivering clear climate results.

ACR understands that the representatives of Hawk Mountain expressed strong dissatisfaction about Mr. Elgin’s use of only portions of their comments to him during his original reporting and felt he had taken some of their statements out of context. This is consistent with ACR’s experience with Mr. Elgin.

Hudson Farm Improved Forest Management Project

The forests of the Hudson Farms project have been managed for timber revenues over the history of the property. The timber stocks across the greater forest property hold substantial financial value, and as forest stocks continue to mature, the pressure to harvest increases. Until the commitment to the carbon project on ACR, Hudson Farms had no legal measures in place to ensure the long-term maintenance of forest for growth and carbon stocks. Hunting activities are focused on a small percentage of the property’s total acreage, and it should be noted that for any property where hunting is prioritized, aggressive harvest should not be considered off the table. As a matter of fact, in the absence of a carbon project, heavy timber removals have occurred to foster habitat for select hunting species.

According to the project developer, it should be noted that the club’s core activities take place on just a few hundred of the 4,000 acres of the property’s forest footprint and the property’s deeper history has been one active in forest management. The carbon project was pursued because it allowed for the owners to support and maintain the forest as working forestland with legal protection in place that would persist through potential management or economic changes, in effect protecting the forest stocking from the pressures or temptations of fluctuating timber value that may have driven a more aggressive harvest period for sections of the land.

Pennsylvania Ridges Improved Forest Management Project

Even though TNC has owned most of the project land since 1999, that does not mean that, short of legal constraints on sale and/or harvest, that they would not sell the land or that they will continue to manage the forest the same way in the future. The Pennsylvania Ridges property is well stocked with high value hardwood species and was not subject to any formal harvest prohibitions prior to the enrollment of the project on ACR. Without concrete protection measures, there was no assurance that high forest stocks would be maintained over the long-term or last through ownership changes. By committing to the carbon project, the economically attractive timber products are now guaranteed to be left so the forest can maintain the substantial carbon stores in its trees.

[1] IPCC, 2018: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. Waterfield (eds.)].

IPCC, 2019: Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems [P.R. Shukla, J. Skea, E. Calvo Buendia, V. Masson-Delmotte, H.- O. Pörtner, D. C. Roberts, P. Zhai, R. Slade, S. Connors, R. van Diemen, M. Ferrat, E. Haughey, S. Luz, S. Neogi, M. Pathak, J. Petzold, J. Portugal Pereira, P. Vyas, E. Huntley, K. Kissick, M. Belkacemi, J. Malley, (eds.)].

[2] Bronson W. Griscom et. al, Proceedings of the National Academy of Sciences Oct 2017, 114 (44) 11645-11650

Conservation practices result in credible sustainability benefits including reduced greenhouse gas emissions and savings in water and energy use

SAN FRANCISCO, June 14, 2017 – Terra Global Capital, a woman-run private social enterprise, along with the American Carbon Registry (ACR), a nonprofit enterprise of Winrock International, announce the first-ever issuance and sale of greenhouse gas emission reduction credits from the sustainable production of rice. To reduce methane, a greenhouse gas over 20 times more potent than carbon dioxide, farmers in California and the Mid-South implemented a variety of groundbreaking voluntary conservation practices that included alternate wetting and drying and early drainage of their fields as well as crop residue management. In addition to generating verified carbon offset credits, these practices also resulted in reduced energy consumption and the reduced use of millions of gallons of water, a critical resource in both regions.

This project is a public private partnership managed by Terra Global and funded by the USDA Natural Resources Conservation Service under the Conservation Innovation Grant program and Entergy Corporation, an integrated energy company, through its Environmental Initiatives Fund. Since 2001, Entergy has invested approximately $35 million in a variety of projects that help protect and restore crucial natural resources, from wetlands restoration to reforestation and climate smart agriculture.

“The partnership that enabled this first-of-kind carbon offsets began with the growers and leveraged the expertise of many, many organizations,” says Mike Sullivan, State Conservationist for NRCS in Arkansas. “Getting innovative conservation on the ground requires forward-looking growers and a team of experts to support their efforts; this project had all of the components of success. It wasn’t easy but innovation is never easy. That’s where the NRCS Conservation Innovation Grants program provides such important value to our Nation’s rural economies and rural innovators.”

Chuck Barlow, Entergy’s vice president of environmental strategy and policy, stated “this pilot program with rice growers in our service areas of Arkansas and Mississippi is a good example of the innovative partnerships Entergy is forging to help reduce greenhouse gas emissions and sustain crucial industries – like farming – that are economic drivers for our local communities. Every day, Entergy employees reach far beyond our core business of powering the electrical grid to connect with customers and power life in meaningful ways.”

The conservation practices covered more than 2,000 acres of farmland and were implemented by two farmers in California and five farmers in Arkansas and Mississippi who took a leadership role in piloting the practices and participating in the generation and sale of carbon credits.

“The rice carbon credit project has been very rewarding for Whitaker Farms. Conservation has always been a major component in our family operations. This project has helped save millions of gallons of water, lower fertilizer rates, increase waterfowl habitat, and lower greenhouse gas emissions. We consider this a win-win for the environment,” said Arkansas rice producers Jim and Sam Whitaker.

In addition to producing American Carbon Registry verified carbon credits, a sale of the credits, managed by Terra Global, was transacted with Natural Capital Partners on behalf of its client Microsoft, to reward the farmers for their activities and recognize the environmental benefits embedded in the rice they produced.

“Being the first of a kind emission reductions from sustainable rice production, Microsoft valued the innovation by farmers and the investment in technology to catalyze measuring and monitoring emission reductions”, said Rob Bernard, Chief Environmental Strategist, Microsoft.

To achieve the verification of carbon credits, the program team completed all the data collection with participating farmers and quantified greenhouse gas emission reductions in accordance with the ACR methodology. This also included the launch of PRESTO (Producer’s Environmental Sustainability Tool) developed by Terra that was used to capture data directly from the field, perform automated quantification and deliver information to buyers of emission reductions.

“The PRESTO platform, a technology that effectively captures farmer’s data and simplifies the quantification process and the rigorous third party audit is essential for developing and scaling agricultural carbon credits”, said Leslie Durschinger, Founder and CEO of Terra Global Capital.

This project was made possible because of the collaboration of Terra Global and American Carbon Registry with partners USDA-NRCS, Entergy, California Rice Commission, White Rive Irrigation District, and Environmental Defense Fund.

January 20, 2015 – Miami, FL – On average, the American lifestyle produces enough carbon dioxide (CO2) emissions (17.6 metric tons) to equal over 41,000 miles of driving in a typical passenger car.  Manmade carbon emissions are considered the leading cause of global climate change, yet carbon reduction and other sustainability efforts don’t always eliminate one’s carbon footprint to zero.  To address this problem, Sustain:Green has created a new biodegradable MasterCard® rewards cardholders with carbon offsets for their everyday purchases.  Carbon offsets rewarded to Sustain:Green users help fund Mata no Peito rainforest preservation projects in Brazil.

To reward users of the card, Sustain:Green reduces their carbon footprint by 2 pounds for every dollar in net merchandise purchases.  On the card’s first use, an additional 5,000 pounds of CO2 is eliminated on the cardholder’s behalf.  Card users can calculate their carbon footprint and track their reduction through their personal online dashboard.  All carbon offset purchases and retirement on behalf of Sustain:Green cardholders are recorded transparently on the American Carbon Registry. 

“After recycling, reusable grocery bags, and turning down the thermostat, the options most people have to reduce their carbon footprint usually fall into three categories, too difficult, too expensive, or not possible,” said Arthur Newman, Co-Founder and CEO of Sustain:Green.  “Just by using our card for purchases they would make anyway, consumers can shrink their carbon footprint for free, everyday, while also helping to preserve rainforests critical to combating climate change.  We hope they will use the card in conjunction with other carbon reduction lifestyle changes, such as fuel efficient transportation choices.”

The Sustain:Green MasterCard is issued by Commerce Bank.  Commerce Bank is ranked among the top 10 on Forbes’ list of America’s Best Banks for the sixth year in a row.[1] With a deep commitment to sustainability, Commerce Bank issues the Sustain:Green MasterCard and manages all aspects of the credit card not specifically related to the rewards program.

“At Commerce, we consider sustainability factors in all facets of our business. Since 2009, our E-statement usage has increased by more than 230% and we’ve reduced annual energy consumption companywide by more than 20% over the last 6 years,” said Chad Doza, Senior Vice President of Consumer Credit Cards.  “Our relationship with Sustain:Green enables us to expand on our sustainability efforts by offering a customized credit card solution for Sustain:Green members to help reduce carbon footprints and preserve rainforests.”

For transparent tracking and accounting of carbon offsets rewarded to card users, Sustain:Green works in concert with the non-profit American Carbon Registry (ACR).  ACR is the world’s first private, voluntary offset program, with two decades of experience in the development of science-based greenhouse gas accounting methodologies, as well as operational experience in the oversight of carbon offset project verification, registration, offset issuance and retirement reporting.

“Until now, carbon offsets were a typically used by businesses to reduce their carbon footprints,” said Mary Grady, American Carbon Registry Director of Business Development.  “Today, with the Sustain:Green MasterCard, individuals can reduce their carbon footprint, easily and automatically just by using the card.  We applaud Sustain:Green for helping engage consumers in the fight against climate change.”

The biodegradable Sustain:Green MasterCard also brings simplicity to corporate social responsibility efforts.  CSR managers can track the collective carbon reduction of cardholders within their company through the online dashboard and non-profit organizations can anonymously track similar data of their members.

Individuals can apply online at www.sustaingreen.com.  Organizations interested in sharing the biodegradable Sustain:Green MasterCard with their employees or members should contact the company directly at www.sustaingreen.com.

About Sustain:Green

Sustain:Green is a provider of unique credit cards, supported by MasterCard and issued by Commerce Bank, that offer carbon reduction rewards with every swipe. The founders of Sustain:Green combined their backgrounds in finance, green technology and carbon markets, with their passion for sustainable living, to create a financial services product with social value. Every time the biodegradable cards are used, a concrete contribution to the fight against climate change is made through carbon offsets and reforestation projects. Sustain:Green partners with leading environmental organizations and financial institutions, such as the American Carbon Registry, who share in their vision of a healthier planet. Learn more by visiting sustaingreen.com or facebook.com/SustainGreen.

[1]Forbes, America’s Best and Worst Banks 2014, December 19, 2013

WASHINGTON, Nov. 17, 2014

USDA Release No. 0253.14

Contact: Office of Communications (202)720-4623 (202)720-4623

Agriculture Secretary Tom Vilsack today said a U.S. Department of Agriculture grant has helped initiate a partnership that is improving the environment, creating a market for carbon credits generated on working grasslands. Chevrolet, a division of General Motors, recently purchased almost 40,000 carbon dioxide reduction tons generated on working ranch grasslands in the Prairie Pothole region of North Dakota.

“This announcement is the first-of-its-kind. The amount of carbon dioxide removed from our atmosphere by Chevrolet’s purchase of carbon credits equals the amount that would be reduced by taking more than 5,000 cars off the road,” Secretary Vilsack said. “This public-private partnership demonstrates how much can be achieved with a modest federal investment and a strong commitment to cut carbon pollution.”

Robert Bonnie, USDA’s under secretary for Natural Resources and Environment, announced the purchase and USDA’s involvement in the project at an event today at USDA headquarters. He was joined by Senate Agriculture Committee Chair Debbie Stabenow of Michigan, Greg Martin, executive director for global public policy, General Motors; Sean Penrith, executive director of The Climate Trust and Paul Schmidt, chief conservation officer of Ducks Unlimited.

Chevrolet’s first purchase of third-party verified carbon credits generated on working ranch grasslands was undertaken voluntarily as part of its commitment to reduce eight million tons of carbon dioxide from being emitted. This is comparable to the annual carbon reduction benefit of a mature forest the size of Yellowstone National Park.

USDA’s Natural Resources Conservation Service (NRCS) awarded $161,000 through a Conservation Innovation Grant (CIG) to Ducks Unlimited in 2011 to develop the necessary methodology to quantify the carbon stored in the soil by avoiding grassland conversions, resulting in the generation of carbon credits.

This is how the credit system works:

• Landowners voluntarily place lands under a perpetual easement but retain rights to work the land, such as raising livestock and growing hay.
• The carbon storage benefits of this avoided conversion of grasslands are quantified, verified, and formally registered resulting in carbon credits.
• The carbon credits are made available to entities interested in purchasing carbon offsets.

The landowners receive compensation for the carbon credits generated on their lands. “Ranchers benefit from new revenue streams, while thriving grasslands provide nesting habitat for wildlife, are more resilient to extreme weather, and help mitigate the impact of climate change,” said Vilsack.

Besides the landowners, USDA, and Ducks Unlimited, other key partners that helped make this project a success include The Climate Trust, American Carbon Registry, The Nature Conservancy, Environmental Defense Fund and Terra Global Capital.

USDA’s CIGs support the development of new technologies and approaches to agricultural conservation on private lands. This project was one of nine greenhouse gas mitigation and carbon market projects funded by NRCS 2011. More information on these innovative projects can be found on the webpage of Coalition on Agricultural Greenhouse Gases, a strategic partner of USDA.

Public-private partnerships to enhance U.S. carbon sinks such as forests, grasslands, wetlands and coastal areas, are a key part of President Obama’s efforts to prepare communities for the impacts of climate change and enhance the nation’s climate resilience. In October, as called for in the President’s Climate Action Plan, the Administration announced a Climate and Natural Resources Priority Agenda that represents a first of its kind, comprehensive commitment across the Federal Government to support resilience of our natural resources. It identifies a suite of actions (including efforts like the USDA-Chevy agreement) the Federal Government will take to enhance the resilience of America’s natural resources to the impacts of climate change and promote their ability to absorb carbon dioxide.

This announcement is one of many USDA efforts to help America’s farmers, ranchers and forest owners adapt to new challenges caused by a changing climate – ranging from more intense weather events, to increased risk of wildfire, to a greater prevalence of invasive species. While assessments on the future of agriculture and forestry show that climate change holds these and other challenges in the years ahead, American producers are longtime leaders in innovation, risk management and adaptation. USDA has supported these efforts for more than a century. Now USDA is developing new tools to help rural America create climate solutions and play a role in President Obama’s comprehensive effort to reduce carbon pollution. More information on USDA’s work is available at www.usda.gov/climatesolutions.

Sacramento, Calif., October 16, 2014 – The American Carbon Registry (ACR), a nonprofit that oversees the creation of rigorous carbon offset protocols as well as the independent registration of carbon offset projects, approved a protocol today that is designed to enlist ranchers in the fight against climate change. The protocol rewards ranchers for land management practices that put more carbon in the soil, thereby improving soil health and reducing greenhouse gas emissions.

The new protocol, Compost Additions to Grazed Grasslands, provides a clear process for calculating the GHG reductions from applying compost to rangeland. By strategically applying compost to grasslands, ranchers have the opportunity to generate revenue from environmental stewardship through the sale of emission reductions on voluntary carbon markets.

“This project rewards ranchers for stewardship activities that help store carbon in their soils, while improving soil health and the productivity of their land,” said Robert Bonnie, USDA Under Secretary for Natural Resources and the Environment. “The American Carbon Registry’s approval of this protocol supports the ability of innovative efforts like the Marin Carbon Project to identify conservation practices that increase productivity and create new sources of revenue for ranchers.”

In addition to providing a sink for carbon, rangelands provide a wide variety of other natural benefits to society, including food, fiber, habitat, watershed health, open space, and cultural value. Rangelands in the West are currently under pressure of conversion to other land uses, like urban development and croplands. Therefore, finding new revenue streams for ranchers helps keep them on the ranch and enhances these valuable natural areas.

“This offset protocol is a new tool farmers and ranchers can use to mitigate and adapt to climate change and in a way that benefits their bottom line” said Robert Parkhurst, Agriculture Greenhouse Gas Markets Director for the Environmental Defense Fund. “It also demonstrates the essential role working lands play in the fight against climate change.”

The new offset protocol is supported by research conducted over the past seven years by the Marin Carbon Project and the University of California, Berkeley on two locations in California.  The research has demonstrated that a one-time application of compost can sequester almost 1,000 pounds of carbon per acre per year.

“The adoption of this protocol takes the research conducted in Marin and provides an incentive for others to model and implement it on lands throughout California and the western United States,” said John Wick, co-founder of the Marin Carbon Project.

The protocol was developed by Terra Global Capital under a Conservation Innovation Grant to EDF from USDA’s Natural Resources Conservation Service.  It has the potential to reduce emissions of carbon dioxide by 28 million metric tons per year if compost can be applied to just 5 percent of CA’s rangelands. That’s equivalent to removing nearly 6 million cars from the road.

“The approval of this protocol by ACR is the first step in providing ranchers the opportunity to generate incremental income for the environmental assets they create through sustainable land-use management,” said Leslie Durschinger, Founder and Managing Director of Terra Global.

The protocol approved by ACR today allows ranchers to model the increase in carbon sequestration on their land, have it independently verified, and generate tradable offset credits.

“American Carbon Registry is pleased to add this protocol to our growing list of agriculture, forest, and land use protocols available to U.S. farmers and ranchers,” said John Kadyszewski, director of ACR. “Our approval of this protocol allows these working landowners to be paid for delivering environmental benefits from actions on their land.”

American Carbon Registry (www.americancarbonregistry.org), an enterprise of Winrock International, is an Offset Project Registry for the California cap-and-trade program as well as a leading voluntary carbon market offset program recognized for its high standards for environmental integrity.

Environmental Defense Fund (edf.org), a leading national nonprofit organization, creates transformational solutions to the most serious environmental problems. EDF links science, economics, law and innovative private-sector partnerships. Connect with us on Twitter and Facebook, and our Growing Returns blog, which covers agriculture and the environment.

Marin Carbon Project (marincarbonproject.org) seeks to enhance carbon sequestration in rangeland, agricultural, and forest soils and for landowners and land managers of these landscapes to serve as stewards of soil health and undertake carbon farming in a manner that can improve on-farm productivity, enhance ecosystems, and address climate change.

Terra Global (www.terraglobalcapital.com) is the leader in forest and agriculture greenhouse gas emissions analytics, advice and finance, providing technical expertise and investment capital to their global client base in a collaborative and innovative manner.