Forward offset crediting for reforestation projects would increase wood supply under cap-and-trade.
During the Oregon cap-and-trade program debates, concern was raised that forest carbon offset projects might reduce wood supply to Oregon mills. Last week, my colleague, Sheldon Zakreski, explained how improved forest management projects actually complement long term wood supply and timber harvesting. This week, we thought we might elaborate on the benefits of reforestation projects and the importance of forward crediting.
Reforestation carbon projects award credits to project owners for carbon sequestered in newly planted forests. Scenarios where this might take place include: reforestation following wildfires (where doing nothing might result in a shrubland), converting marginal agricultural lands back to forest, restoration plantings of degraded forests, and planting riparian buffers on farms and rangelands. These types of projects most certainly would increase acres under forest cover and thus wood supply to mills as carbon projects and sustainable forestry frequently occur together.
Besides sequestering carbon and providing wood from sustainable forestry operations, reforestation projects have myriad other “co-benefits” as well. Healthy forests provide better wildlife habitat and more biodiversity than agriculture. Forests soils are less prone to erosion. Well-managed forests reduce wildfire risk compared with post-burn shrublands. Forests and riparian buffers on farms and rangelands improve water quality for humans and fish by filtering runoff and cooling waterways with shade.
Despite the benefits to the forest products industry and the environment from reforestation, reforestation carbon projects have been slow to catch on. This is primarily because planting costs, carbon project development, and verification costs are high while offset credits are slow to materialize as young forests take some years to really start growing. After seven years with California’s reforestation offset protocol, it is clear that changes are needed to make it more financially viable.
In order to help overcome reforestation project start-up costs, the reforestation protocol should allow forward crediting, which would issue a percentage of forecasted credits at the start of a project. This would increase the financial feasibility of reforestation projects and encourage more widespread adoption. By only issuing a percentage of forecasted credits, the project has leeway for unforeseen tree mortality to occur that might reduce initially forecasted volumes. As the carbon project matures, the balance of credits would be issued based on third-party audited forest inventories.
The Climate Action Reserve recently launched Climate Forward, a new offset project registry that awards credits for forecasted emissions reductions. New methodologies have yet to be submitted to Climate Forward, but this registry provides the framework to better incentivize reforestation carbon offset projects. Oregon and California should use this framework as the basis for developing the first forward offset crediting reforestation protocol for the compliance market.