Glossary

Blue Carbon 102

Blue Carbon 102

Blue Carbon 102


Red, White, & Blue (Carbon): The Global Distribution of Blue Carbon Projects and Opportunities in the United States


by: Allyson Ulsh | January 19, 2022

 

Blue Carbon 102 | Allyson UlshIndonesia is home to the largest percentage of mangrove ecosystems globally. Mangroves are critical ecosystems that can sequester and store carbon dioxide, referred to as blue carbon due to their coastal nature.

Where is Blue Carbon Located?

Our team dove headfirst into the world of blue carbon in a previous blog post, Blue Carbon 101. Through exploring how blue carbon differs from ‘regular’ carbon, which ecosystems sequester it, and the interwoven community and biodiversity benefits, it’s clear that blue carbon projects have a fundamental role in addressing and mitigating climate change. Even with the understanding that mangroves, seagrass meadows, and tidal marshes are responsible for sequestering blue carbon, it’s difficult to envision precisely where these critical ecosystems are in the world.

Mangroves are found worldwide in the intertidal zones along coastlines, with a large percentage of the species’ density and diversity in Southeast Asia. Indonesia has over 3.3 million hectares (approximately 8.2 million acres) of mangroves along its coastlines, accounting for nearly 20% of the world’s global mangrove inventory [1]. Brazil, Nigeria, and Mexico jointly account for another 20% of total mangroves worldwide [2].

Seagrasses (not to be confused with seaweed) can be found globally along coastlines, including regions along the Artic circle. Similar to mangrove distribution, the density and diversity of seagrasses are highest along the coasts of Southeast Asian countries throughout the Pacific [3]. Tidal marshes, defined as the wetland areas along and between coastal areas that are inundated by daily tidal patterns, can also be found globally. The contiguous United States, excluding Hawaii and Alaska, has over 2.9 million hectares (7.2 million acres) of intertidal vegetated coastal wetlands, with mangroves and tidal marshes included in this inventory [4].

Unfortunately, mangrove, seagrass, and tidal marsh ecosystems face significant global threats. In addition to removing existing habitats, coastal development alters the hydrology and increases pollution and sedimentation, putting additional pressure on these blue carbon ecosystems. Mangrove ecosystems suffer from deforestation due to increasing pressures from coastal agriculture, including but not limited to shrimp farming, fishing, and salt production. Rising sea levels, changing salinities, and increasing temperatures all stress these critical environments, contributing to further habitat loss across all coastal ecosystems.

Seagrass meadows play an essential role in sequestering and storing blue carbon in the ocean | Blue Carbon 102 by Allyson UlshSeagrass meadows play an essential role in sequestering and storing blue carbon in the ocean.

Where Are Today’s Blue Carbon Projects?

Current blue carbon projects listed on Verra’s Verified Carbon Standard (VCS) and Community, Climate, and Biodiversity registries focus primarily on mangrove restoration across four continents. These mangrove projects highlight how carbon finance can be coupled with local conservation organizations to scale restoration efforts. Mirroring the mangrove hotspots discussed above, many of these projects are in the coastal regions of Indonesia, India, China, Nigeria, Senegal, and Mexico. There are currently 28 mangrove projects across 13 countries listed on the VCS registry at various points of project development.

Within the blue carbon space, ClimeCo has partnered with YAKOPI to fund and restore 6,000 acres of mangroves in Indonesia’s Aceh and North Sumatra regions. This mangrove restoration project involves the community throughout the entire process. Including collecting seeds from mangrove propagules, propagating the seeds in nurseries, assessing planting locations, planting the mangroves, and monitoring and maintaining the stand health. More details on this project will be shared in a forthcoming blog post highlighting the incredible community and project partners that have made this project possible.

While several mangrove restoration projects are listed on Verra’s registries, only one listed blue carbon project exists within the United States. This project involves the restoration of seagrass meadows through the direct seeding of seagrass species along Virginia’s coastline. With blue carbon ecosystems accounting for less than 1% of the United States’ natural land area, the opportunity for U.S. blue carbon projects exists but certainly with its own set of challenges.

Blue Carbon Projects available on Verra's Verified Carbon Standard Registry | Blue Carbon 102 by Allyson UlshBlue carbon project locations based on project information publicly available on Verra’s Verified Carbon Standard Registry. Smaller countries on the map may only have one icon representing multiple projects in proximity. 

Louisiana’s coastline is home to the largest, most productive tidal wetland area across the United States | Blue Carbon 102 by Allyson UlshA Louisiana Department of Wildlife and Fisheries Marsh Master moving through Louisiana’s tidal wetlands. Louisiana’s coastline is home to the largest, most productive tidal wetland area across the United States.

Coastal Blue Carbon in the United States

David Chen and I attended the Restoring America’s Estuaries: Coastal and Estuarine Summit early in December 2022 to learn more about the prospects of blue carbon projects in the United States. More than 1,375 coastal restoration professionals joined us to learn about opportunities and challenges surrounding blue carbon projects across the United States. Through attending several blue carbon sessions, we learned about topics such as seagrass carbon variability in California, the blue carbon market potential in Texas, and how to utilize blue carbon to support coastal wetland restoration in the Northeast.

While it’s clear that blue carbon projects have a fundamental role in addressing and mitigating climate change, it’s also evident that sea-level rise and its variable effects across different blue carbon ecosystems will complicate future project planning and development. Existing coastal marshes across the mid-Atlantic region are forecasted to be significantly vulnerable to sea-level rise. However, an opportunity exists for transitional zone habitats to migrate inland. Sea level rise will need to be accounted for in all aspects of blue carbon project development planning and implementation to ensure ecosystem, and subsequent carbon, permanence.

Additionally, there was a degree of uncertainty addressed in relation to the most effective restoration techniques for tidal marshes and seagrasses. Localized considerations, such as hydrology, in-land development, water quality, and salinity, among others, all play a role in the carbon sequestration rates across ecosystems. Careful consideration of the science behind blue carbon restoration will need to be accounted for in the quantification of carbon emission removals across landscapes.

Lastly are the challenges posed by jurisdictional claims. Carbon rights for the coastal and seafloor blue carbon ecosystems in the United States lie within different governmental agency jurisdictions. All blue carbon projects must involve the appropriate governmental agencies and foster relationships with the state legislature to ensure that projects and partners meet both state-led initiatives and voluntary carbon market standards. As sea-level rise affects these vulnerable ecosystems, the question of jurisdiction will become more complicated.

The scientific expertise and restoration partnership experience was unparalleled across the presentations. Our team’s overall takeaway from the conference was that while developing blue carbon projects in the United States is challenging across several facets, it is certainly possible. As a leader in developing and managing environmental commodities, we are excited to see how blue carbon projects will continue to expand and how we can be at the forefront of domestic blue carbon project development.



[1]  The Economics of Large-scale Mangrove Conservation and Restoration in Indonesia (worldbank.org)

[2]  Global Forest Resources Assessment (fao.org)
[3]  Seagrass and Seagrass Beds | Smithsonian Ocean (si.edu)
[4]  Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2020


About the Author

Allyson Ulsh manages ClimeCo’s portfolio of nature-based solutions projects. From reforestation in tropical cloud forests to replanting bald cypress trees in Louisiana, Allyson understands the importance of coupling carbon finance with local stakeholder engagement to scale restoration efforts. Allyson is a Project Associate working within the Nature-Based Solutions project team. She received her Bachelor of Science degree in Environmental Resource Management from Pennsylvania State University, Schreyer Honors College. 

ClimeCo Partners with Enaleia to Establish a Verra Plastic Collection Project in Kenya

ClimeCo Partners with Enaleia to Establish a Verra Plastic Collection Project in Kenya

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CONTACT
Nancy Marshall, Vice President, Marketing
484.415.7603 or nmarshall@climeco.com  

ClimeCo Partners with Enaleia to Establish a Verra Plastic Collection Project in Kenya

CC & Enaleia PR

Boyertown, Pennsylvania (September 14, 2022) – 
ClimeCo, a leader in the management and development of environmental commodities, has partnered with Enaleia to remove plastic pollution from vital fishing areas. Enaleia is a non-profit that engages coastal communities to collect plastic on land and in the ocean to reduce pollution and improve marine biodiversity conservation. This partnership will support Enaleia’s newest project in Kenya, contributing to the generation of plastic credits through Verra. With additional funding from ClimeCo and the sale of the credits, Enaleia estimates they will collect 1,000-3,000 tonnes of plastic annually in Kenya.

“A plastic credit is an environmental commodity that represents the collection or recycling of one tonne of plastic material, which can be used in companies’ ESG, CSR, and sustainability programs,” says Chris Parker, ClimeCo’s Director of Plastic Program. “Our approach is to create a system solution to the ocean plastic challenge.”

Enaleia, along with other professional entities that are experts in sustainable development, are collaborating with ClimeCo and the Kwale Recycling Center in Kenya to make sure that the plastic will not only be collected but also integrated into the circular economy.

The Kenya project supports over 350 fishers in Kwale County by empowering them to collect abandoned nets, gear, and marine litter. This number will increase to 800 people from the coastal communities in the following months. The waste is then taken to Kwale Recycling Center, a local collection and recycling company that transports and processes it into useful materials and products.

“Through the plastic credit model, we can set up large-scale plastic cleanup projects that can create a real impact on our oceans,” says Lefteris Arapakis, Enaleia’s Co-Founder and Director. “Taking into consideration that around 20% of ocean plastic is lost fishing gear, by empowering the fishing communities at this scale, we can not only clean up significant amounts of plastic but also prevent further ocean plastic pollution.”

This project incentivizes and encourages the fishing community to use more sustainable fishing practices, including the reduction of overfishing by pausing and limiting their fishing activities while collecting plastic. It also provides a supplemental source of income to an area experiencing some of the highest poverty rates in the country.

To learn more about plastic credits and this project, contact us



About ClimeCo

ClimeCo is a respected global advisor, transaction facilitator, trader, and developer of environmental commodity market products and related solutions. We specialize in voluntary carbon, regulated carbon, renewable energy credits, plastics credits, and regional criteria pollutant trading programs. Complimenting these programs is a team of professionals skilled in providing sustainability program management solutions and developing and financing of GHG abatement and mitigation systems.


About Enaleia

Enaleia is a non-profit social enterprise tackling two directly related problems for the marine environment: the reduction of fish stocks and plastic sea pollution. Its mission is to make the marine ecosystem sustainable by tackling overfishing and plastic pollution. Enaleia teaches fishing practices that preserve local fish populations and remove the mounds of plastic that pollute the world’s seas, adapting the fishing industry for a green future.

The Inflation Reduction Act of 2022: Tipping the Scale Toward Clean Energy

The Inflation Reduction Act of 2022: Tipping the Scale Toward Clean Energy

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FOR IMMEDIATE DISTRIBUTION
CONTACT
Nancy Marshall, Vice President, Marketing
 484.415.7603 or nmarshall@climeco.com

The Inflation Reduction Act of 2022: Tipping the Scale Toward Clean Energy


by: Erica Lasdon | August 30, 2022


Boyertown, Pennsylvania (August 30, 2022) –
Sweeping legislation signed into law this month by President Biden will allow for unprecedented investments to decarbonize the nation’s economy. The Inflation Reduction Act (IRA) earmarks the bulk of its $490 billion spending on clean energy and climate change mitigation initiatives.

Combined with other recent spending bills, the U.S. government is set to begin a period of transformative investments. The Rocky Mountain Institute, a clean energy think tank, notes that the combined bills will more than triple annual real federal spending compared with recent years, which was already elevated from levels of the 1990s and early 2000s. 



While the IRA is far from perfect, advocates say it provides extraordinary opportunities for the conservation of our nation’s lands and waterways and includes significant resources for restoring wildlife habitats and forests. 

The legislation is expected to reduce U.S. greenhouse gas (GHG) emissions to approximately 40%, compared to 2005-levels, by 2030. Without enactment of the IRA, the U.S. was on course to reduce its GHG emissions to only 26%, compared to 2005-levels, over this period, according to an analysis from the World Economic Forum

For the U.S. to reach its emissions-reduction targets, it’s imperative that we begin to take action across the entire technology adoption curve. This means exploring: 

  • Existing technologies that are ready for market but not deployed. 
  • Solutions that require some further development to be market ready. 
  • Technologies that are only prototypes and need significant development.


Importantly, IRA resources will focus on the most hard-to-abate industrial sectors, such as electric power generation. 

As widely reported, the IRA is projected to drive significant emissions reductions in the electric power sector. To a certain extent, this can lower production emissions in steel, cement, and other carbon-intensive industries. However, practical options to capture carbon from industrial processes and traditional energy production require substantial investment to help meet climate goals. The IRA addresses these challenges by creating incentives through a system of grants, loans, and tax credits, including making certain existing credits larger and more durable. 

Here are a few key IRA provisions for companies and investors to be aware of:

  • Changes to 45Q, the existing tax credit for carbon capture and storage (CCS), make it more profitable and easier to access. Companies will be able to earn $85 for every metric ton of CO2 sequestered, rather than $50/ton previously. (The amount earned is less if the CO2 is buried during oil extraction.) The timeline is more favorable too. Previously, a company had to start building capture equipment by 2026. Now it’s 2033. The IRA also significantly lowers the minimum capture requirement.

  • Methane emissions are an urgent issue for many industries, as this type of emission is far more potent than carbon dioxide and hard to detect. For the oil and gas industry, investments in methane detection and a first-time federal fee on methane emissions will amplify existing initiatives within industry to tackle this problem. The IRA also funds grants, rebates, loans, and other assistance to facilities subject to the methane fee for a variety of measures, including adding or improving equipment and processes that reduce methane emissions.

  • Other long-term tax credits include clean hydrogen fuel development, direct-air-capture deployment, and advanced nuclear projects for heavy industry.

By driving down the cost of clean energy and other climate solutions, this approach may make it easier for companies and local governments to increase their climate ambitions. 

Regardless of your business’s sector, you will feel the impact of the IRA and related legislation. As the landscape shifts, companies and investors should factor an increasing rate of technological and systems change into their future plans. 

Deep decarbonization is complex work that requires a diverse set of policy, legal, technology, and market solutions. Forthcoming investments by the U.S. government seek to put the country on a net-zero pathway. Importantly, investors and corporations have many tools available to assess their pathways to net-zero.  

Since our founding, ClimeCo has been a leading transformation partner to companies, investors, and governments pursuing a low-carbon future.  As a vertically integrated sustainability solutions provider, we have enabled our clients to go beyond business as usual. By developing frontier technology- and nature-based carbon-reduction projects, transacting voluntary and compulsory environmental credits, and advising on climate risk and disclosure, our team is dedicated to implementing decarbonization pathways tailored to our clients’ specific sectors, business models, and balance sheets. 

Please get in touch with us if you want to learn more about our: 

  • Complete range of ESG Advisory solutions that help companies improve readiness and resilience in the ever-changing regulatory environment. 

  • Project Development capabilities around high-quality carbon projects that feature strong engagement with our project partners, local stakeholders, carbon registries, and credit buyers.
  • Environmental Credit offerings from projects we develop and projects we invest in.


About ClimeCo

ClimeCo is a respected global advisor, transaction facilitator, trader, and developer of environmental commodity market products and related solutions. We specialize in voluntary carbon, regulated carbon, renewable energy credits, plastics credits, and regional criteria pollutant trading programs. Complimenting these programs is a team of professionals skilled in providing sustainability program management solutions and developing and financing of GHG abatement and mitigation systems.

For more information or to discuss how ClimeCo can drive value for your organization, contact us at 484.415.0501, info@climeco.com, or through our website climeco.com. Be sure to follow us on LinkedIn, Facebook, Instagram, and Twitter using our handle, @ClimeCo.

Dispatches from the Nature-Based Solutions Conference

Dispatches from the Nature-Based Solutions Conference

Dispatches from the Nature-Based Solutions Conference


by: Emily Romano | August 25, 2022

Site visit by ClimeCo at a reforestation project in Louisiana

Nature-based solutions (NBS) are an important part of the work we do at ClimeCo, and they are a growing sector of carbon markets. NBS are defined as actions that restore, manage, and protect natural habitats for societal benefit, including mitigation and adaptation to the effects of climate change. These activities, such as reforestation, peatland rewetting, or grassland management, have received extensive media coverage in recent years and months as they play an increasingly important role in many corporate and national climate plans. Successful NBS projects have the potential to achieve a trifecta of climate, community, and biodiversity benefits, while poorly designed projects are rightfully criticized as a step backward for climate goals, human rights, and ecosystem health.

With this context in mind, I attended the Nature-based Solutions Conference in Oxford, UK, in July 2022, hosted by researchers at the Nature-based Solutions Initiative. Held in the beautiful Oxford University Museum of Natural History, the conference attracted a wide range of researchers, policymakers, activists, NGO members, and practitioners. Sessions addressed topics such as the global status and criticisms of NBS, inclusive project governance and narratives, improved biodiversity outcomes, the economics of NBS, and applications for urban environments.

I learned a lot from the speakers, whose presentations addressed the conference’s central question: “How can we ensure that NBS support thriving human and ecological communities?” In this blog, I summarize and share the key messages I took home from this conference.

Bodleian Library, Oxford University


Key Takeaways

Concern for Low-Quality NBS

With careful planning and consideration, NBS projects can provide powerful, sustainable, and cost-effective benefits to their host communities. Unfortunately, a number of low-quality NBS projects around the world have failed in recent decades. These failures are almost always due to protocols with inadequate provisions for permanence and additionality or a lack of robust safeguards of human rights and biodiversity.

The conference explored numerous concerns surrounding low-quality NBS, primarily those voiced by Indigenous and local communities regarding projects that have caused and perpetuated human rights abuses. These include land tenure injustice, displacement of people and livelihoods, and denial of community access to natural resources. This sort of project is often characterized by a top-down design without the active participation of the local community, prioritization of western value systems, and a lack of transparency or long-term monitoring requirements. Low-quality projects often result in ecosystem failures due to inappropriate species selection or project location or the establishment of monoculture plantations without regard for local biodiversity.

An additional concern voiced at the conference was that NBS not be used in greenwashing schemes by polluters to replace decarbonization efforts. While ecosystems play an important role in climate change mitigation and adaptation, they are not capable of compensating for delayed emissions reductions in other sectors. Speakers also highlighted the moral hazard of entities from the Global North who might seek to export the responsibility and the work of decarbonization to the Global South.

These concerns are critically important for improving NBS project outcomes. The conference’s primary focus was on how to address these concerns and included many examples of current best practices from around the world.

Tradeoffs, Inclusive Project Design and Governance, and Narratives

While many NBS projects generate desirable co-benefits or “win-win” results for society and biodiversity, projects may also generate tradeoffs that create tension between competing project goals. For example, biophysical tradeoffs might occur if a project prioritizes one ecosystem service at the expense of another. Social tradeoffs might occur between stakeholders with different cultural or spiritual valuations of nature or between those with scientific knowledge and those with Indigenous knowledge. Project developers must acknowledge and mitigate these tradeoffs in partnership with local stakeholders to account for the full range of project impacts.

One strong message from the conference was the critical role that Indigenous and local community members must play in all stages of NBS projects and the importance of free, prior, and informed consent. Numerous speakers pointed out that many Indigenous groups have traditionally implemented successful NBS within their own communities, and their knowledge can fill critical gaps in scientific understanding. The inclusion of these groups from the design to the implementation to the monitoring stage of a project is not only a basic indicator of respect but can also tangibly improve project outcomes.

Indigenous and community leaders from numerous countries, including Zambia, China, Tanzania, Peru, and the Democratic Republic of the Congo, presented case studies illustrating successful NBS outcomes in their communities. These presentations called for projects to distribute benefits equitably among community members, ensure a living wage, and create sources of long-term finance controlled by the local community. Finally, the speakers emphasized the critical importance of land tenure for Indigenous peoples.

ClimeCo meeting indigenous workers at a mangrove reforestation project in Indonesia

How to Prioritize and Adequately Represent Biodiversity

Another conference theme was the need for better metrics of biodiversity, so that progress can be adequately represented in project designs and monitoring plans. Speakers highlighted several scientific and technological advances, such as ecosystem DNA and high-resolution carbon mapping tools, which would facilitate project area prioritization and robust biodiversity assessment if implemented at scale.

However, some speakers quickly pointed out that “technology is not the solution. We are the solution.” In this vein, multiple speakers recommended that biodiversity monitoring plans utilize community monitoring approaches, including input from local and Indigenous groups regarding biodiversity metric selection.

Mangrove nursery managed and developed by the local community near the reforestation site

Creating High-Quality NBS

The conference delivered a crystal-clear message that projects that do not include robust provisions for human rights and biodiversity do not fall under the umbrella of the NBS term.

To avoid the pitfalls of low-quality projects, reputable carbon offset registries have developed meaningful standards for additionality and permanence and protocols that include protections for human rights and biodiversity. The most important feature of these protocols is that registries update them when a loophole is identified. Although these updates require months or even years to go into effect, this process allows registries to enforce ever-evolving concepts of “best practice.” For this reason, carbon offsets generated using the protocols of reputable registries, such as the Climate Action Reserve, Verra, the American Carbon Registry, and Gold Standard, are categorically distinct from low-quality offsets.

Regardless of protocol requirements, project developers are responsible for designing projects that adhere to best practices and meaningfully address the concerns of Indigenous and local stakeholders. Within the voluntary carbon market, project developers and carbon credit end-users must be able to recognize the indicators of a high-quality project and must be selective in the projects they choose to support.


ClimeCo’s NBS Approach

As offset project developers, the ClimeCo team always listens for new perspectives on best practices. We believe that NBS projects have enormous potential when they are designed carefully to empower and give voice to local communities. As sustainability advisors, we also feel a keen responsibility to help clients decarbonize wherever possible. Our ESG Advisory team provides many services essential to clients at any stage of their decarbonization journey. We encourage the use of offsets to address emission sources that are difficult or impossible to abate as a part of a larger decarbonization plan.

Most importantly, we understand there is no one-size-fits-all approach to NBS project development. We are grateful for each opportunity to earn a community’s trust and seek partners who share our accountability and responsible stewardship values.

ClimeCo’s Dr. Scott Subler observing freshly planted Bald Cypress saplings

Conclusion

I left the conference inspired by the incredible work being done worldwide to improve the implementation of NBS. ClimeCo will continue to listen and apply the guidance and feedback of the global NBS community, and I cannot wait to see the good our projects can do. ClimeCo is committed to informing you of new information discovered as we continue to explore in-depth NBS concerns. We welcome comments or questions surrounding this topic.

Anyone interested in watching conference sessions can access recordings and PDFs of presentations on the conference website (I recommend Session 4 and Session 9A). For those curious to see examples of high-quality projects, the Nature-based Solutions Initiative’s organizers directed us to their Case Study Platform, a map-based tool with over 100 examples of projects from around the world that meet the researchers’ quality standards.

 


About the Author

Emily Romano is a Project Manager at ClimeCo based in San Francisco. Within Project Development, she applies a background in climate, ecosystem, and soil science to her work managing NBS projects. She holds a Master of Science in Environmental Science and Policy from Northern Arizona University and a Bachelor of Science in Geology from Syracuse University.

Emerging Efforts to Address Reforestation’s Most Challenging Problem

Emerging Efforts to Address Reforestation’s Most Challenging Problem

Emerging Efforts to Address Reforestation’s Most Challenging Problem


by: David Chen | June 20, 2022

Sapling of a tree to be reforested.

The Difficulty of Financing Reforestation

Reforestation is emerging as a desirable and effective tool for carbon emission removals and has received increased attention from investors in the last several years. Investments in reforestation enable vital carbon removal from the atmosphere and offer innumerable ancillary environmental and social benefits, from creating critical habitats for biodiversity to improving water quality, groundwater recharge, and flood prevention for local communities. Despite the demand for the carbon removals and ancillary benefits that reforestation projects provide, the most challenging obstacle for reforestation-based carbon offset projects begins before a shovel ever touches the ground.  

For nearly all reforestation carbon offset projects, the majority of costs, such as securing easements (to ensure long-term permanence) and planting activities, occur at the beginning of a project. In contrast, most carbon sequestration benefits from reforestation activities, and therefore the associated revenue from carbon offsets, accrues slowly over a long-time horizon. This delay between when costs occur and when revenue is realized has historically made reforestation challenging to finance and has hindered projects from getting off the ground; project developers cannot implement a reforestation project without a sizable initial investment, and investors looking to secure carbon credits can find it challenging to justify such an investment without assurances that expected carbon benefits from the investment would be delivered over an extended timeline.  

Although financing challenges have hindered reforestation efforts for decades, several well-known carbon offset registries, such as the Climate Action Reserve and Verra, are developing new programs and instruments that aim to address those early finance hurdles and enable more project developers, like ClimeCo, to bring reforestation projects to market.  

Boat driving by bald cypress trees in marshy water.


CAR’s Climate Forward Program

One approach currently offered is the Climate Action Reserve (CAR) Climate Forward program that seeks to drive forward-looking investments, such as reforestation, by allowing projects to generate ex ante credits called Forecasted Mitigation Units (FMUs) that can be utilized to help finance the high upfront cost of getting a project launched. As opposed to traditional carbon credits generated ex post or after emission reductions occur and can be used to offset existing sources of emissions, FMUs are an environmental instrument that are issued based on forecasted emission reductions and/or removals and are intended to offset a future stream of emissions from new economic activity (i.e., a new construction project or development). Reforestation projects under the Climate Forward program must meet stringent eligibility requirements to ensure that the carbon sequestration benefits are additional and minimize and account for the risk of natural or intentional “reversals,” a situation where the stored carbon associated with a project is released back to the atmosphere. 

In late April this year, CAR released Version 2 of the Climate Forward Reforestation Methodology, with additional assurances that bolster the environmental integrity of FMUs generated from reforestation projects in the Climate Forward program. One of the most noteworthy additions to the Reforestation Methodology is the inclusion of a permanence risk buffer pool to account for unintentional reversals outside a project’s control, such as fire, insects, and disease. To account for these unavoidable reversals, the newly updated Reforestation Methodology will require every reforestation project in the Climate Forward program to contribute a certain percentage of FMUs into a “permanence risk pool,” which will be collected and held as insurance. If an unintentional reversal occurs, CAR will retire the corresponding amount of FMUs from the permanence risk pool to compensate for the negative impact of the reversal. These updated assurances to the Reforestation Methodology will help give buyers confidence that their FMUs represent carbon that is stored for the long term. 

Saplings of mangroves to be planted in reforestation effort.


Verra’s Projected Carbon Unit

Carbon registry Verra is currently creating a solution for addressing this financing problem with a new commodity called a “Projected Carbon Unit” or “PCU.” PCUs are intended to help provide a source of upfront revenue to support the development of projects on Verra’s registry before the verification and issuance of Verra’s standard carbon offset or Verified Carbon Units (VCU).  

Unlike the FMUs generated in the Climate Action Reserve program, PCUs are not ex ante but are an instrument that reflects the validated projection of expected emission reductions or removals and cannot be used for offsetting claims until the associated emission reductions or removals are successfully verified (i.e., after the reduction has occurred). Upon successful verification, the PCU’s will automatically be converted to ex post VCUs. PCUs are intended to be generated using Verra’s existing methodologies which theoretically could provide early finance for a multitude of nature-based solutions and other carbon offsetting project types. Verra has completed two rounds of public consultation and intends to operationalize and launch PCUs in September 2022.  


Conclusion

The recent addition of the permanence risk buffer pool to the Climate Forward program and Verra’s development of PCUs are part of a larger trend of creative solutions being designed to help reforestation efforts meet the growing demand for nature-based solutions. I am excited to see these efforts by CAR and Verra and look forward to seeing even more future innovative solutions that will support these types of opportunities. The more we can reduce the hurdles of nature-based projects, the more our planet benefits.  

 


About the Author

David Chen is passionate about nature-based and blue carbon project development. From replanting bald cypress trees in the Mississippi River delta to reestablishing mangroves forests in international countries, David knows the positive impact these projects have on biodiversity and coastal resiliency to improving local livelihoods. David is a Program Development Manager at ClimeCo and has a Master of Environmental Management from Duke University’s Nicholas School of the Environment and received his Bachelor of Science from the University of California, Riverside.