Building Forest Carbon Projects: a Step-by-Step Guide

13 July 2011 |   Forest carbon can deliver tremendous economic, social, and environmental benefits – but only if it’s understood by a wide variety of stakeholders, entrepreneurs, and regulators.   This new guide aims to broaden that understanding by explaining in simple language how to find, finance, and develop forest carbon projects.

Published by Forest Trends, the Katoomba Incubator and EcoDecision, “Building Forest Carbon Projects” is a step-by-step guide to developing forest carbon projects, and it is supported by a series of chapters that provide in-depth guidance on technical, social and financial issues related to forest carbon projects.

The compiled guide begins with the basics of building a project and then looks at the challenges involved, which include everything from legal, business and community relations issues to actually carrying out the work of reforestation and forest management activities.

The guide focuses on the application of carbon standards that the majority of projects fall under: the Verified Carbon Standard (VCS), the Clean Development Mechanism (CDM) and Climate, Community and Biodiversity (CCB) standards.   It outlines the key steps for the any successful carbon project seeking certification.

Forest carbon projects face more than just technical challenges, however, and this document recognizes that.   The step-by-step guide highlights the crucial business, legal, environmental and community relation dimensions that are essential for successful forest carbon projects.

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The Supporting Documents

The sub-documents support the step-by-step guide, delving further into the technical, business, legal and community aspects of forest carbon projects.   From REDD guidance to Social Impacts guidance, these subdocuments were compiled by experts in their field.   In effort to complement existing resources, these documents are complete with recommendations for additional tools and guides.

REDD Guidance: Technical Project Design
With the expectation that a compliance market will be developed under the United Nations Framwork Convention on Climate Change (UNFCCC), the first chapter of the supporting documents looks at the technical options for various stages of REDD+ project development, which is expected to form the framework for UNFCCC compliance.   “REDD guidance” looks at how to choose eligible activities as well as the technologies and tools necessary to implement a REDD project accounting framework.

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AR Guidance: Technical Project Design

For a long period of time, afforestation and restoration (AR) projects followed a single protocol, the Clean Development Mechanism (CDM).   While there have been controversies under this protocol, it has developed a solid basis for accounting approaches.   The Verified Carbon Standard (VCS) learned lessons from the CDM and has become the most dominant standard.   Since CDM methodologies are accepted by any project utilizing VCS, “AR Guidance,” focuses on discussing the methodologies of CDM and VCS alongside each other.

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Carbon Stock Assessment Guidance: Inventory and Monitoring Procedures

To complement this discussion of these standards, “Carbon Stock Assessment Guidance” provides strategic guidance for REDD and Improved Forest Management (IFM) project types.   The document takes a look at how emerging methodologies for accounting relate to REDD.   In an effort to complement other available resources, it only overviews technical subjects and instead chooses to delve into the strategic choices for implementing a cost-effective inventory.

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Community Engagement Guidance: Good Practice for Forest Carbon Projects

“Good Practice for Forest Carbon Projects” takes a step back from the technical aspects and examines the importance of community engagement in building a successful forest carbon project.   This supporting document highlights the benefits and risks involved both for communities and project proponents when engaging in a forest carbon project.   The authors emphasize that these lessons are an important part of each step of the project development and implementation process.   With a quarter of the remaining forests in the developing world under the management of indigenous peoples or communities, this guidance is helpful for all project proponents.

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Legal Guidance: Legal and Contractual Aspects of Forest Carbon Projects

In addition to — and often alongside — community relations, forest carbon projects inevitably deal with a number of complex legal issues.   Project proponents must not only comply with laws regarding conservation but also the governance related to the sale of the credits.     As sellers of carbon credits, project proponents need to be aware of all the nuts and bolts of generating and transacting this product, and they need to manage the associated risks, liabilities, and costs.   “Legal guidance” explores these issues, describes the questions that might arise at every stage of the project and emphasizes the need for expert legal advice in some situations.

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Business Guidance: Forest Carbon Marketing and Finance

“Business Guidance” provides an assessment of the reality around forest carbon projects funding.   Though there is an opportunity to obtain carbon funding for afforestation and reforestation, many projects with positive climate impacts will remain unfunded.   This sub-document looks at what to avoid and, more importantly, highlights the characteristics that make forest carbon projects financially viable.     These include healthy forests and a solid foundation recognizing the principles that govern traditional business transactions.

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Social and Biodiversity Impacts Guidance: Key Assessment for Forest Carbon Projects

Often the most financially successful forest carbon projects do not simply rely on the viability of carbon benefits.   Rather, they keep in mind the social and biodiversity co-benefits that have attracted many offset buyers to forest carbon projects in recent years.   The most prominent standard that allows for these to be accounted is the Climate, Community & Biodiversity (CCB) Standards. Voluntary carbon market buyers and forest carbon investors prefer the co-validation of CCB and Verified Carbon Standard (VCS).

“Social Impacts Guidance” examines the application of a Social Impact Assessment and how incorporating it can benefit a forest carbon project.   It is mainly concerned with how to measure and demonstrate social impacts of projects.

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“Biodiversity Impacts Guidance” looks at how companies and governments guidelines are including biodiversity .   It provides guidance on how projects can exhibit positive biodiversity impacts to auditors and offset buyers.

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Though project proponents will always have to consult more resources, this step-by-step guide compiles the necessary guidance to create a successful—and financially rewarding—forest carbon project.   And with regulation just around the corner, it is important to continue delivering high quality credits.

Additional resources