ACR Response to Last Week Tonight Show with John Oliver

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