• Some people believe that we shouldn’t use carbon markets to support healthy forests because forests can burn.
  • Tools such as non-permanence buffer pools, which account for potential unexpected loss of carbon stocks, ensure the net impact remains positive, even if some forests burn.
  • Research suggests that companies that are material users of carbon credits decarbonize twice as fast as those that do not use carbon credits.

Driving through the charred remains of forests in British Columbia and Alberta, it’s impossible to escape the heartbreaking reality that none of this had to happen. Scientists long warned that human activity was changing the planet in dangerous ways, and by 1979 it was already clear that we’d flipped the world’s forests from being a natural carbon sink to a net source of greenhouse gas emissions (external link).

The Intergovernmental Panel on Climate Change (IPCC) tells us we must flip those land systems back (external site) to being sinks if we’re to meet the climate challenge, and carbon markets (external site) can help do that.

Unfortunately, an argument has taken hold in some circles – namely, that we shouldn’t use carbon markets to support healthy forests because forests can burn.

The argument has its roots in two perspectives. The first relates to a disconnect between the lifecycle of CO2 and the lifespan of forests, while the second reflects a distorted perception of how voluntary carbon credits are used.

To the first point: carbon dioxide stays in the atmosphere for 300 to 1,000 years after being emitted. Some argue against using forests to absorb industrial emissions because we can’t guarantee any individual forest will be around that long. But this only makes sense if you ignore the IPCC’s dire warnings (external site) about the need to save forests now or risk finding none left centuries from now.

Verra’s Verified Carbon Standard (VCS) Program aims for a century’s worth of impact, which buys enough time to get us well beyond 2050, by which point we need to reach net-zero emissions. We have created a variety of mechanisms (external site) for achieving this, and one is to require that all forest carbon projects contribute credits to our “non-permanence buffer pool.”

The contributions are based on the project’s risk of having a loss in the next 100 years. If a fire, hurricane or other catastrophe causes a reversal, credits equal to the size of the loss are canceled from the pool to compensate the atmosphere and ensure the environmental benefit of the issued credits is maintained.

Only one project has suffered a loss in the current conflagration so far – a 40,000-hectare project called the BigCoast Forest Climate Initiative. It contributed just over 15% of its credits to the buffer pool and may have lost as much as 100 hectares, or 0.25% of the project area.

To put this into perspective, that is a tiny fraction of the 8 million hectares of Canadian forests incinerated in 2023, which have pumped more than 600 million tons of carbon dioxide (external site) into the atmosphere so far this year.

Once we know the exact size of BigCoast’s loss, the emissions will be deducted from the next tranche of issued credits. If the project cannot cover the loss on its own, credits from the buffer pool will be canceled, and the project will need to pay back the buffer for any credits used exceeding the project’s previous contribution.

The big question in all of this is how risk is calculated, and this is also changing as science evolves. When the buffer pool concept was created more than a decade ago, there was no scientific agreement on how to estimate future risks of climate change with numerical precision. Then came two IPCC initiatives: the Special Report on the Ocean and Cryosphere in a Changing Climate (SROCC) and the Working Group I contribution to the Sixth Assessment Report (AR6): The Physical Science Basis.

These efforts infused more science into risk analysis, and the result is something called the “climatic impact-driver” (CID) approach to estimating risk. CIDs synthesize the analysis of sector resilience plans and impacts, as well as the assessment of risk management literature, to categorize the risk into 33 distinct drivers, such as extreme heat, extreme cold and drought, in specific areas.

Three years ago, we began exploring means of incorporating future climate impacts into Verra’s risk assessments. We engaged a consulting team that included leading climate scientist Daniel Ruiz-Carrascal, who served as lead author on IPCC’s AR6. Working with more than two dozen independent reviewers, Ruiz-Carrascal and the team helped develop a digital tool that estimates climate impacts on projects under several mid-term climate change scenarios. A consultation (PDF) on the proposed update was held in February 2022, and the final tool will be available in August 2023.

In short, forests do burn, but the global buffer pool ensures the net impact remains positive.

To the second point: it’s an article of faith among some that companies buy voluntary credits to buy themselves out of a problem rather than address it head-on, but research has long shown (PDF) the opposite to be true. The most recent evidence comes from Trove Research (PDF). They compared the reductions achieved by companies that use carbon markets to those that don’t and found that “companies that are material users of carbon credits decarbonize twice as fast as those that do not use carbon credits.” That doesn’t include the additional reductions they finance through carbon credits.

What’s more, it shows that a growing number of companies follow the “mitigation hierarchy” that Verra advocates. These companies both abate their emissions in alignment with a 1.5°C warming scenario and accelerate global reductions further by using the voluntary carbon market for emissions that can’t be reduced immediately. This aligns with new guidance from the Voluntary Carbon Markets Integrity Initiative on claims and will be further supported in Verra’s upcoming claim guidance.

The bottom line is that Earth’s living ecosystems are hemorrhaging carbon, and the IPCC has warned that we must stop the hemorrhaging (external site) immediately. We cannot withhold treatment until a perfect solution comes along, and history shows that’s unlikely to happen. Instead, we need realistic, science-based treatments to stabilize the planet at net-zero emissions. Carbon markets and investing in protecting forests are one of the best treatments we have.

If you have any questions, please contact Candace Vinke, Director, Nature-Based Innovations (cvinke@verra.org).

This article was originally published on the World Economic Forum blog (external site) on July 31, 2023.