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CARBON MARKETS 101

BASICS:

Carbon Credit = 1 metric ton of carbon dioxide sequestered from the atmosphere.

Forest carbon offset credits (carbon credits) are a natural means to sequester carbon.

Trees store carbon in leaves, limbs, roots, and soil- keeping millions of tons of carbon dioxide from re-entering the atmosphere.

THERE ARE 3 PRIMARY FOREST CARBON PROJECT TYPES

IMPROVED FOREST MANAGEMENT

Activities which result in increased carbon stocks within forests and reduce green house gas emissions from forestry activities when compared to business as usual forestry practices.

AVOIDED CONVERSION

Preventing the loss of existing forests to non-forest to non-forest use by protecting and enhancing the forest.

REFORESTATION

Restoring forest on land that was previously forested.

CARBON MARKETS

COMPLIANCE MARKET

Mandatory systems, regulated by governments in which polluters are required to utilize carbon allowances or carbon offsets to cover their emissions.

Cap and trade systems are the most common frameworks for compliance carbon markets. Regulators set a “cap” on the allowable emissions for covered entities, and the cap declines over time. Companies that significantly lower their emissions are able to sell their excess carbon allowances to larger emitters.

By law all regulated companies must offset their emissions.
To date, the California Carbon Market has generated over $43.5 bln in transactions.
The California Carbon Market is currently the largest in North America.
Washington state recently implemented a “cap and invest” program, modeled after California’s system.
Credit buyers are typically regulated entities in cap-and-trade market.
Projects must be verified by an independent third party, approved carbon registry, then a government regulator.
Projects typically have a 100+ year commitment.

VOLUNTARY MARKET

Carbon credits are voluntarily purchased by companies as a tool to offset their emissions. Many companies utilize the voluntary carbon market to help reach their Net Zero Goals.

Where carbon credits can be purchased by those that voluntarily want to compensate for their emissions. The Voluntary Carbon Market has experienced tremendous growth over the past 5 years as corporations continue to pursue their net zero initiatives. There are multiple carbon credit exchange platforms emerging in the market that will help facilitate the sale of voluntary carbon credits.

Green Assets provides landowners with insight to determine if a voluntary forest carbon offset program’s methodology is preferable to California’s compliance market.
Companies purchase voluntary carbon credits to offset their emissions based on corporate approaches to reach net zero emissions goals.
Landowners with less than 5,000 acres should consider a Voluntary Carbon Project.
Green Assets co-authored the Avoided Conversion and Sustainable Management on US Forestland Methodology with ACR.
This protocol established a methodology for generating voluntary carbon credits through avoided conversion forestry projects.
Projects must be verified by an independent third party, followed by an approved carbon registry.
Environmental and social attributes can bring additional value to voluntary offset credits.

THE DIFFERENCE: COMPLIANCE VS. VOLUNTARY

The compliance carbon market is an important tool for Governments to use in achieving their carbon reduction targets, while the voluntary carbon market provides companies and other entities (universities, individuals, NGO’s) with a way to offset their carbon emissions on a voluntary basis.

COMPLIANCE

Accreditation:

Third Pary Verifier

Carbon Registry

Regulatory Review

VOLUNTARY

Accreditation:

Third Pary Verifier

Regulatory Review

Compliance Credits can also be sold into Voluntary Markets