Glossary

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. 

ClimeCo Announces Its First Plastic Credit Project With Verra

ClimeCo Announces Its First Plastic Credit Project With Verra

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

ClimeCo Announces Its First Plastic Credit Project With Verra


BOYERTOWN, Pennsylvania (TBD)
ClimeCo is thrilled to announce that we have launched our first verified Plastic Credit Project on Verra under our Plastic Credit Program.

The Women and Youth empowerment (WaY) project is an initiative from Conceptos Plásticos; a Colombian company focused on the circular economy with environmental, social, and economic impact. This project recovers post-consumer, non-recyclable, ocean bound plastic waste in Cote d’Ivoire. Its operations remove plastic waste that would otherwise remain in the environment and give it a productive next life. The average amount of plastic waste collected by this project is estimated to be 1,070 tonnes per year.

The WaY project partners with UNICEF (United Nations Children’s Emergency Fund) to build schools from 100% repurposed plastic bricks. These schools are constructed in areas lacking sufficient educational facilities and capacity. Every classroom built uses 5-7 tonnes of recovered plastic waste. UNICEF has the goal to build up to 600 new classrooms in Cote d’Ivoire in 2022.

UN Sustainable Development Goals Supported

WaY Project SDGs (Long vertical)


About ClimeCo

ClimeCo is a respected global advisor, transaction facilitator, trader, and developer of environmental commodity market products, projects, and related services. We specialize in voluntary carbon, regulated carbon, renewable energy credits, plastics credits, and regional criteria pollutant trading programs. Complementing these programs is a team of professionals skilled in providing sustainability program management services, 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. Follow us on LinkedIn, Facebook, Instagram, and Twitter using our handle, @ClimeCo.  

What Are Sustainable Development Goals and How Can You Assess Their Impact?

What Are Sustainable Development Goals and How Can You Assess Their Impact?

What Are Sustainable Development Goals and How Can You Assess Their Impact?


by: Stephanie Hefelfinger and Rebecca Stoops | January 19, 2022

The WaY Project - Women with health insurance

Sustainable Development Goals (SDGs) are a popular topic worldwide, and you’ve probably seen organizations displaying their SDG contributions with these colorful icons. How are they justifying their SDG claims? How can you feel confident when purchasing credits, and what are the levels of assurance for SDG claims? What tools do professionals use to analyze their projects? 

What are SDGs?

The SDGs are 17 key issues that projects, businesses, and governments must target to improve the world by 2030. They were created by the United Nations (UN) Development Program and include targets like No Poverty, Responsible Consumption and Production, and Clean Water and Sanitation.  

Sustainable Development Goals - SDGs interconnect together

This diagram shows how all SDGs are interlinked and depend on each other. Image source: How food connects all the SDGs – Stockholm Resilience Centre 

Case Study of The WaY Project and Available SDG Tools 

In the voluntary credit market, plastic credits have been established to represent 1 metric ton of plastic waste collected from the environment. Projects like this can also offer other benefits that improve the community’s well-being and the environment – these benefits can align with the Sustainable Development Goals. 

The WaY (Women and Youth) plastic collection project in Cote d’Ivoire, developed by Conceptos Plásticos, collects plastic waste that would have otherwise been left in the environment. The plastic is turned into construction bricks, which are used to build schools for local communities. The project focuses on hiring women to increase empowerment and economic opportunities for a heavily underserved population. ClimeCo is partnering with the WaY Project to generate plastic credits from its plastic collection activities.  

It is essential for an organization to provide a good faith effort when presenting their SDG impact claims. When purchasing credits from a project with these claims, we highly recommend that you contact them and ask what steps they took to assess their SDG impact. To help you with this, let us walk you through the public SDG tools we used to determine our project’s biggest SDG benefits.  

The Tools

The SDG Impact Assessment Manager Tool is a free resource developed by the UN Global Compact and B Lab. The SDG Impact Assessment Manager Tool measures a project’s current impact and helps identify which SDGs have the greatest opportunity for improvement, with straightforward suggestions for actual changes. Think of this as an SDG personality quiz for a project.   

This is an example of a question from SDG 10 – Reduced Inequalities, as well as SDG 8 – Decent Work and Economic Growth: 

SDG Impact Assessment Question Example

The SDG Compass was developed by the UN Global Compact, the World Business Council for Sustainable Development (WBCSD), and the Global Reporting Initiative (GRI). Since the UN developed the SDGs at an international and country level, it can be hard to understand how they relate to smallerscale projects. This tool translates each SDG and all the targets into manageable and realistic goals that a project can achieve. The SDG Compass recommends prioritizing SDGs that could potentially affect human rights.  

The Outcome of Our Efforts 

We started with the SDG Impact Assessment Manager ToolThis requires the completion of 15-30 questions for each SDG, which usually takes a few hours to completeThe higher the score percentage (see below), the higher the impact on the goal. While The WaY Project has a positive effect on many SDGs, the results of this tool demonstrate that the largest impact is on SDGs 1, 4, 5, 9, and 10.  

The WaY Project's SDGs Impact Assessment

Next, we used the SDG Compass to study each SDG in greater detailThis explains how our project intends to actively meet the relevant SDGs. 

SDG Compass - How our project intends to actively meet the relevant SDGs.

Next, we created a diagram to see what parts of our project are directly quantifiable and measurable. All impacts are important, but its easier to prove and certify measurable impacts. Gold Standard recommends this step through their tool.

Gold Standard Tool - prove and certify quantifiable and measurable impacts.

Leveraging all three tools, we can see where our project has the biggest impactWe’ve also determined where we can improve. For example, The WaY project should continue encouraging women to use the provided Proper Protective Equipment (PPE) and work with the women to choose improved PPE offerings that fit their cultural attire 

Côte d'Ivoire - The WaY Project

Conclusion 

For those who want greater assurance on SDG claims, there are several credit registries that offer credits with SDG impacts that a 3rd party has verified – Gold Standardthe American Carbon Registrythe Climate Action Reserve, and Verra. At ClimeCo, we want clients to feel confident in our projects and their SDG claimsWe are here to educate and be a resource for understanding SDG claims, finding the right projects for clients’ ESG goals, and helping new projects develop their SDG claims. Feel free to reach out to us if you have any questions; we are happy to help.

ClimeCo - SDGs certified under Gold Standard

This is an example of certified SDGs from a project listed under Gold Standard’s registry. 


About the Author

Rebecca Stoops is a Project Manager at ClimeCo, focusing on plastic credit projects and refrigerant projects for carbon credits. She enjoys hiking, the great outdoors, and cleaning up nature by picking up trash. Stephanie Hefelfinger is a Project Associate at ClimeCo, focusing on plastic credit projects and livestock and composting projects for carbon credits. She enjoys hunting for pretty rocksThey both enjoy getting into the nittygritty details of projects to learn how they operate and their positive impacts on the environment.