Today, the American Carbon Registry (ACR) announces the launch of the public stakeholder consultation process for a new Methodology for the Quantification, Monitoring, Reporting, and Verification of Greenhouse Gas Emission Reductions and Removals from Avoided Conversion of U.S. Forests to Alternative Land Uses. The methodology was co-authored by Green Assets and ACR.

The methodology details eligibility and carbon quantification requirements for projects that forego conversion of non-federal U.S. forestlands to alternative land uses, including agriculture, mining, or development. The emission reductions are verified against a baseline of carbon stock changes that would result from conversion of the project area to the appraised highest and best use of the land, which represents the use that produces the highest value for the property. Additionality is assured by a legal commitment to retain the project area as forestland, such as a conservation easement specific to the carbon project.

“Each year, hundreds of thousands of acres of forests in the U.S. are converted to other land uses,” said Green Assets CEO Bailey Evans. “Carbon finance is a critical mechanism in mitigating forest loss and helping to combat climate change. Landowners face ever-changing scenarios for managing and maintaining their land, and this methodology will promote forest conservation and stewardship through an innovative mechanism for quantifying and incentivizing the benefits of forest conservation.”

Following the period of stakeholder consultation, the next phase of the methodology approval process is scientific peer review. ACR hopes to finalize the process and publish the methodology in the first quarter of 2023.

“Green Assets has been a leader in the development of the majority of California Air Resources Board’s (ARB) avoided conversion forest carbon projects in the country,” said Mary Grady, ACR Executive Director. “They have brought their extensive experience of avoided conversion projects within the regulated market to the development of this new methodology, which builds on the existing compliance protocol while broadening market access to a wider range of landowners through aggregation, as well as enhancing impact by accounting for the effects of land conversion on soil carbon loss.”

Public comments may be submitted to ACR@Winrock.org by November 7, 2022, with the subject line “AC Methodology Version 1.0 Public Comments”.

The American Carbon Registry (ACR), a nonprofit enterprise of Winrock International, has published for stakeholder consultation an updated version 2.0 of its Methodology for the Quantification, Monitoring, Reporting and Verification of Greenhouse Gas Emissions Reductions and Removals from Carbon Capture and Storage Projects.

As in the current published version of the methodology, greenhouse gas emission reductions and removals are quantified from the capture, transportation, and storage of anthropogenic CO2.  The new version of the methodology extends eligibility to projects that utilize Carbon Dioxide Removal (CDR) technologies such as Direct Air Capture (DAC) and the use of Sustainable Biomass as a feedstock.  The methodology also expands the eligibility criteria for geologic storage to include saline formations and depleted oil and gas reservoirs which will significantly expand the geographic range for supported projects.  For projects that utilize CO2 for Enhanced Oil Recovery, Version 2.0 includes calculations to account for emissions from transportation, refining, and end use of the produced hydrocarbons.

Please send comments to ACR@Winrock.org with the subject line “CCS Methodology Version 2.0 Public Comments” by November 1, 2022.

September 27, 2022 – Today ACR submitted formal comments to the Integrity Council for Voluntary Carbon Markets (ICVCM) on the Core Carbon Principles and draft Assessment Framework for ensuring carbon credit quality.

We recognize and appreciate the significant work that has gone into the development of the framework as well as the meaningful work ahead of us to provide constructive input to the process.

We appreciate the opportunity to provide our feedback and thoughts on a pathway forward in coordination with the ICVCM Board, Secretariat and Expert Panel.

We firmly believe in the importance of ensuring the integrity of crediting systems and resulting emission reductions and removals credits in global carbon markets, and know how important this is for building confidence and scaling the market to contribute to Paris Agreement goals.

We trust that the Board will carefully consider and reflect all input received when making decisions on the pathway to achieve the objectives of the ICVCM and remain committed to dedicating time and effort to this important shared exercise.

Read the comments here: ACR Comments to ICVCM

The American Carbon Registry (ACR), a leading carbon offset crediting program, is exploring new opportunities in the carbon markets presented by digital innovations. ACR has been engaged with numerous Web3 companies interested in creating digital carbon assets based on ACR carbon offset credits.

These discussions have occurred bilaterally, between ACR and representatives of various coalitions, and via ACR’s participation in formal working groups, including the International Emissions Trading Association (IETA) Digital Climate Markets Task Force as well as in the Gold Standard Digital Working Groups.

In May 2022, ACR announced updated program rules prohibiting the tokenization of ACR carbon offset credits unless explicitly authorized by ACR. The updated rules were designed to protect the integrity of ACR offset credits and maintain confidence in carbon markets at this critical time for achieving climate action.

It is our intention to advance the dialogue around opportunities that digitization presents to the markets with the aim of developing program rules and infrastructure to support tokenization of ACR carbon offset credits. To that end, ACR invited participation in our Digital Assets Consultation to achieve two objectives toward progress:

• Share ACR’s current thinking around the risks and potential hurdles that need to be addressed.
• Gather information from a wide variety of proponents about how different offerings and technologies can best be structured and deployed to mitigate these concerns and advance climate goals.

The Digital Assets Consultation kicked off in September 2022 with background information and a first set of questions sent to participants. Topics being explored include:

• Proposed service offerings and how they advance climate action
• Maintaining environmental integrity of the carbon markets on-chain
• Market access, democratization, and transparency
• Blockchain security and the regulatory environment

ACR anticipates following up on the questionnaires with a second phase of bilateral conversations with consultation participants and potentially a convening at the end of the process. We appreciate that there are multiple angles from which to examine this subject and ACR is considering a third phase of engagement aimed at a wider audience to present and receive feedback from ACR account holders and other users on a variety of considerations that will ultimately shape ACR’s approach to digital assets. Sign up to receive the ACR newsletter and updates.

ACR is issuing a request for Expression of Interest (EOI) to Web3 companies to participate in our Digital Assets Consultation. Alongside participation in other digital asset forums, the EOI aims to identify Web3 companies that wish to engage directly with ACR during the consultation to exchange information to inform the development of ACR’s program requirements and infrastructure for digital assets. This includes development of rules governing ACR’s authorization of the creation of digital carbon assets via the tokenization of ACR-issued credits; the required registry infrastructure to ensure transparency, security, and avoid double selling and double claims; and the consideration of legal and regulatory implications along the carbon value chain.

ACR is also participating in the IETA Digital Climate Markets Task Force, including the development of a Code of Best Practice for the tokenization of carbon credits and the use of tokenized carbon credits as well as in the Gold Standard Working Group on Digital Assets for Climate Impact with similar objectives. The aim of ACR’s broad collaboration with carbon market stakeholders is to establish a common implementation roadmap to safeguard the structural, legal and environmental underpinnings of carbon markets, while optimizing climate impact and access to finance.

If you wish to participate please respond to the EOI by submitting your company name and contact information to ACR@winrock.org with the subject line ‘Digital Assets Consultation EOI’ before August 5th.

LITTLE ROCK, 13 July 2022 — The American Carbon Registry (ACR) has published an updated version of its Methodology for Improved Forest Management (IFM) on Non-Federal U.S. Forestlands, strengthening rigor and clarity, and further ensuring the methodology delivers real climate benefits, both now and over the long-term.

“ACR’s IFM methodology v2.0 combines more than 12 years of practical project implementation experience with the latest in carbon market innovation. It is based on forest economics and rooted in science, verifiability, and transparency. As the forest carbon market continues to expand in the U.S., incorporating more kinds of landowners than ever before, it is important that our methodology keep pace with these developments to ensure the scientific rigor of climate impacts,” said Mary Grady, Executive Director of ACR.

IFM projects attach a financial value to the carbon sequestration benefits of forests, allowing landowners to meet or supplement their revenue goals while achieving a higher standard of sustainable forest management. They incentivize landowners to forgo intensive harvesting or selling off timberlands, and instead allow forestland owners to monetize the value of carbon sequestration. IFM offers an immediate, scalable, and cost-effective strategy to mitigate climate change now, as the economy transitions toward net-zero by mid-century.

The ACR IFM methodology was originally published in 2011 and is now in its fourth iteration. Over 100 projects have enrolled under the ACR IFM methodology resulting in the issuance to date of 10 million tonnes of CO2e emission reductions and removals, equivalent to offsetting the emissions of approximately 200,000 passenger vehicles each year.

“With more than 3 million acres of U.S. forestland enrolled in the ACR IFM program, and another 4 million acres of forest carbon offset projects overseen by ACR as an approved Offset Project Registry for the State of California’s cap-and-trade program, ACR’s expertise comes from experience. This is a critical decade for climate action. Carbon markets are evolving, and ACR continues to refine our approaches to set the highest bar for carbon offset quality. Our portfolio has achieved incredible impact, and we’re excited for this next chapter in IFM,” said Kurt Krapfl, Director of Forestry at ACR.

Key changes to the new version of the ACR IFM methodology include updates to additionality safeguards; increased reporting requirements; further specificity in project accounting, modeling, and verification; and specific accounting of IFM “removals” credits.

The fully approved methodology, process documentation, and change log can be found here.

LITTLE ROCK, Ark., May 30, 2022 – The American Carbon Registry (ACR), a nonprofit enterprise of Winrock International, has announced updated program rules, effective immediately, that prohibit the tokenization of ACR carbon offset credits unless explicitly authorized by ACR. The updated rules, detailed in the legal Terms of Use agreement with ACR account holders, are designed to protect carbon asset integrity, including by ensuring that ACR-issued credits are not double sold or used by more than one entity to make environmental claims.

Concerns about blockchain’s role in the carbon markets has been amplified in the recent months amid the swift emergence of a crypto carbon market, in which millions of carbon credits have been retired, tokenized and converted to cryptocurrencies.

“Over the course of the last year, we have been in discussions with a number of companies interested in utilizing a range of technologies to streamline the credit creation process as well as to create digital carbon assets such as tokens and carbon-backed cryptocurrencies. While interested in the opportunities that these and other digital technologies offer to create efficiencies in carbon measurement, monitoring, reporting and verification, and to democratize access to markets, we are committed to a rigorous assessment process to ensure that they don’t undermine the foundations of carbon market integrity,” said Mary Grady, the Executive Director of ACR.

“As things stand at the moment, we believe the new link between carbon markets and unregulated cryptocurrencies presents a reputational vulnerability that could jeopardize confidence in carbon markets at precisely the time we need scale and transparency for markets to help achieve Paris Agreement climate targets,” Grady added.

ACR’s newly announced rules are the first step in the development of a set of program guardrails to protect market integrity. Alongside its own efforts to understand the risks and opportunities, as well as what rules would need to be in place for the creation of digital carbon assets, ACR has participated in the International Emissions Trading Association (IETA) Council Task Group on Integrity in Digital Climate Markets, launched earlier this year, which seeks to ensure sound foundations for the integration of carbon markets with digital technologies. The task group has already issued a set of principles to ensure integrity in digital carbon market offerings.

Over the coming months, ACR will build on the IETA principles and collaborate with carbon market participants with the aim of establishing a common implementation roadmap to safeguard the structural, legal and environmental underpinnings of carbon markets, while optimizing climate impact and access to finance. This will include program rules to authorize the tokenization of credits; developing the required registry infrastructure to ensure transparency and avoid double selling and double claims; and the implementation of appropriate legal and regulatory considerations along the carbon value chain.

By: Kurt Krapfl, PhD, ACR Director of Forestry

ACR is launching a blog series to explore and explain carbon markets and how ACR tackles various issues in our ongoing mission to set the bar for carbon credit quality. Our first post is on additionality and baselines for Improved Forest Management (IFM) projects.

Demand for voluntary carbon credits has doubled in recent years and is expected to grow as much as 10 times by 2030 and 30 times by 2050. Much of this demand is driven by a growing number of carbon neutral and net zero commitments from companies seeking to decarbonize their supply chains and offset unavoidable emissions with high quality carbon credits.

ACR credits for emission reduction and removals in a variety of sectors and for a number of different activities that are all critical to meeting Paris Agreement goals. In the industrial sector, ACR credits for methane reduction from landfills, coal mines and (coming soon) abandoned and orphaned oil and gas wells. In the forestry sector, ACR credits for afforestation / reforestation, avoided conversion of U.S. forests (coming soon), and for IFM.

ACR IFM Additionality and Baselines

Some of the questions we get asked most are about “additionality” and baseline setting for IFM. How do we ensure that project actions or policies exceed those that would have occurred in the absence of the project activity and without carbon market incentives? How do we ensure a credible baseline scenario from which to measure performance?

We thought these would be good topics to kick the series off with to explain ACR’s approach and how our IFM methodology addresses common questions around assessing additionality and establishing a crediting baseline.

IFM Background

In the U.S., the number of IFM projects in development is growing because standards bodies like ACR have published methodologies that are applicable to a variety of landowner types, including private industrial, private non-industrial, tribal, public non-federal, and non-governmental organizations. By attaching a monetary value to carbon sequestration, the carbon market presents an opportunity for different types of landowners to achieve a higher standard of forest management, while still supplementing their revenue goals and helping to combat climate change.

It is important to note that enrollment in an ACR IFM project initiates an immediately effective, legally binding, and public-facing 40-year commitment to grow trees older and larger, and/or to harvest less frequently or intensely. The projects quantify and credit carbon stored on the landscape as a result of this new long-term management commitment. IFM offers a cost-effective and scalable opportunity to sequester carbon now, as we pursue a transition to a carbon neutral economy by mid-century.

Additionality

Key to ensuring the credibility of carbon offsets is the concept of additionality. This assumption is a central tenet of all carbon offset programs and projects, not just IFM. It is important because there needs to be a high level of confidence that project actions or policies exceed those that would have occurred in the absence of the project activity and without carbon market incentives.

The ACR IFM methodology contains specific requirements for project proponents to demonstrate additionality. As a first step, all ACR IFM projects must be verified to meet a 3-prong additionality test, requiring demonstration that they 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 involves evaluating 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 a project action or its baseline candidates, 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 common practice. This involves evaluating and describing the predominant forest management practices occurring on comparable sites of the region and demonstrating that the project activities will achieve greater carbon sequestration than in the absence of the project.

Finally, the implementation barrier test examines factors or considerations that would prevent the adoption of the practice or activity proposed by the project proponent. IFM projects often demonstrate a financial implementation barrier because carbon projects are generally expensive to implement and coincide with harvest deferral and forgone potential revenues. This results in a low internal rate of return in comparison to the land potential that dissuades many landowners from implementing carbon projects. Technological and institutional barriers associated with carbon projects may also be proposed.

Determining Baselines

Enhancing carbon stocks above a baseline scenario is what allows carbon credits to be generated. Ensuring a reasonable baseline is equally important for ensuring credibility. Under ACR’s IFM methodology, determining the baseline involves a comprehensive assessment of site characteristics and predominant forest management practices in the region to develop an alternate forest management scenario that could reasonably be expected to 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 must be 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 need to be substantially vetted and validated by independent sources.

Finally, to address the various management objectives and considerations confronting ownerships of different types, ACR IFM 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.

As a leading carbon offset standards body, ACR takes pride in ensuring our projects generate carbon credits that are additional to business-as-usual and generate meaningful climate benefits, both in the near and long-term.

We also recognize the complexities of this space and provide responses to commonly asked questions below:

Why Not Use Historic Baselines?

We do not use historical activity because, absent legal constraints, it does not necessarily represent the future management trajectory. Setting a IFM baseline solely according to recent harvest trends ignores the fact that in the absence of an abrupt paradigm shift, silviculture and forest management occurs and evolves over longer timeframes. Forest management is long-term and cyclical, and evolves based on financial needs, market conditions, agency priorities, and other factors. The future harvest scenario of any given forest is fundamentally unknown and management objectives change over time. Land can be sold and harvested. In the absence of a long-term, legally binding commitment, plans for how lands are managed can, and invariably do, change. While ACR requires that all legal constraints be modelled in the baseline, forest management plans are not legally binding and can be modified at any time.

Shouldn’t Project Proponents Justify the Baseline?

Yes. In addition to the requirement for ACR IFM projects to verifiably demonstrate that they exceed all currently effective laws and regulations, exceed common practice management of similar forests in the region, and face at least one of three implementation barriers, project proponents must also develop a baseline through a comprehensive assessment of site characteristics and predominant forest management practices relevant to the project area. 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. Project proponents must describe the baseline harvest regime and justify the harvest regime/silvicultural practices with peer-reviewed studies or other reputable reports to demonstrate that what they propose is a realistic alternate management scenario. ACR requires the details of these analyses to be included in the GHG Project Plan. All baseline assumptions are verified.

Isn’t it possible that the forests in question would be managed the same way with or without carbon crediting?

Enrollment in an ACR IFM project represents an immediate change from previous practice because it initiates an immediately effective, legally binding, and public facing commitment to increase carbon stocks in the project area for four decades. It is a tangible, firm, and immediate action to increase and directly quantify carbon sequestration according to a known and transparent framework.

It is not common for a landowner with mature timber to make a long-term commitment (40 years in this case) to light harvesting and to legally forgo the opportunity to do so. As mentioned above, 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 provide legal certainty, which was absent before, 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.

Does the project take the most aggressive harvest scenario off the table?

Yes, although carbon projects do much more than just take the most aggressive scenario off the table. Projects enrolling with ACR must maintain or increase their forest carbon stocks over the 40-year project commitment term (i.e., they cannot harvest more than annual growth). Doing so would be a reversal and they’d have to compensate ACR for the reversed credits. It is not common practice for a landowner with mature timber to enroll in a long-term, legally binding agreement that limits their capacity to harvest over time.

What about different kinds of landowners?

In the early days, the primary participants in IFM projects were large timberland owners. Over time, the market has expanded to include many different types of landowners. Evolving financial needs, market conditions, management priorities, and other factors are applicable to all kinds of landowners. Therefore, our rigorous criteria for additionality and determining baselines apply to all project proponents, who must justify why the baseline is a realistic management trajectory. Organizations that may have longer-term, institutional climate targets should also factor these into their decisions to enroll IFM projects and their justification of baseline scenarios.

How does ACR improve its methodologies over time?

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.

We are continually updating and improving our methodologies over time. The ACR IFM methodology, for example, was first approved in 2011 and is undergoing its fourth version update. The new IFM version 2.0 provides clarifications and updates to continuously strengthen the methodology, and reflects our deep knowledgebase gained from implementing IFM projects for over a decade.

ACR’s IFM methodology version 2.0 is currently in peer review and expected to be published in the summer of 2022.