New FMU carbon offset product is appropriate for a range of emissions.

Climate Action Reserve’s (CAR) Climate Forward program has excellent potential to incentivize reforestation with carbon finance, but the program’s Forecasted Mitigation Units (FMU’s) need to be better understood by voluntary carbon credit buyers. FMU’s are the conservatively forecasted emissions reductions resulting from the implementation of a project. This is in contrast to traditional carbon offsets, which are strictly associated with the year in which those emissions reductions take place and are issued after the reduction occurs. Issuing forecasted credits is critical for reforestation projects whose sequestration rates may take a number of years to really take off. Without the up-front generation of credits, it is very difficult to fund reforestation with carbon finance. With the launch of the One Trillion Tree Initiative at the 2020 World Economic Forum and a number of corporations already committed to carbon reductions through reforestation, reforestation FMUs can play a big role. With FMUs being so new (Climate Forward was launched in 2018), some confusion exists around which emissions are appropriate to offset with them. There are at least three types of emissions where FMUs could be used. First, as identified on Climate Forward’s website, are the future emissions associated with new developments or facilities. In fact, FMUs are already being used for mitigation under the California Environmental Quality Act (CEQA), which requires that new developments mitigate their greenhouse gas emissions. Certain state utility programs are also a good fit for FMUs. For example, The Climate Trust offsets the forecasted emissions from Oregon energy facilities whose mitigation was required at the time of construction. Emissions from downstream Scope 3 emissions are also an appropriate use of FMUs, although not every company tracks these emissions or attempts to offset them. Downstream Scope 3 emissions are future emissions that include transportation of a product to market, use of a product, end-of-life treatment, and other activities. Finally, voluntary buyers that take a more values-based approach that emphasizes mitigation types over a timebound reduction commitment might wish to consider purchasing FMUs. Such purchases could make the difference as to whether the emission reduction project happens. Timing concerns aside, providing the upfront funding for a project to happen is very impactful in and of itself. FMUs have the potential to greatly incentivize reforestation. Entities looking to offset their emissions or support reforestation should consider reforestation FMUs for their carbon credit portfolios.   Climate Forward Scope 3 Greenhouse Gas Standards