Without a new consensus on Forest Carbon Sequestration, little will happen to quantify and protect the valuable carbon that is stored within trees.   The two American models for creating a marketplace for forest carbon sequestration can help shape voluntary and regulated efforts around the globe where the rule of law is strong.  

Standard Carbon LLC has developed experience with elements of both the Exchange Offset Program administered by the Chicago Climate Exchange (CCX), and the 1605(b) guidelines from the US Department of Energy.

CCX has made forest carbon sequestration a priority by lowering transaction costs and simplifying the enrolment of forestlands into their Exchange Offset program.  With an aggregator acting as a bridge to the exchange offsets program, even small forests under 20 acres can be economically feasible. Here is how they have done it right:

1. Use of discounted accumulation tables for small projects
2. Flexible mechanisms to assure long-term protection of carbon stocks including enrolment in federally funded programs such as the Conservation Reserve Enhancement Program (CREP)
3. Desk audits of legal contracts and other evidence for small project verification
4. Clear eligibility requiements

The DOE’s 1605(b) guidelines make voluntary protection of forest stocks a priority by establishing uniform accounting methods, and by gathering useful technical data from the US Department of Agriculture.  As a completely voluntary program, the Department of Energy has established the guidelines with an approach to forestry that recognizes the expensive risk that permanent protection status places on a forest landowner.  The guidelines allow forest carbon to be sold 50 years in advance to help cover the opportunity cost of the land. 

Paying a premium for high quality, verified emission reductions is good for the carbon market because it creates a price signal for excellence. 

In an article by Steve Zwick, Renat Heuberger of South Pole Asset Management says that the company’s new “Gold Standard” Certified Emissions Reductions (CERs) will offer buyers a hedge against more strict offseting requirements in the future, and be more stable because they have been generated by a project in a sustainable development setting.  This could be true, but the “Gold Standard” also provides a platform for companies to brand a commodity and add value to their efforts against climate change. 

Gold Standard credits could be worth more than the risk that they hedge.  They have added transparency and assurance that what the buyer is purchasing will be quality greenhouse gas offset and instrument for sustainable development.  For the voluntary marketplace, this should make them stand out as a unique commodity. 

As the voluntary market for carbon offsets grows around the world, I believe that the efforts by project developers to deliver better than expected carbon offsets will keep pace.  Consumers will demand it.

This week, The Economist warns of “dubious” methods used to create and calculate carbon offsets, and warns that the invited regulation may “stifle a flourishing business.”  The warning should be well taken.  Further The Economist writes that “Voluntary-offset firms have prospered because they are able to produce emissions reduction more cheaply and often more imaginatively, than those that are bound up in the red tape of the Kyoto process…” This is a point that deserves a moment of analysis and reflection

The more free and open the marketplace, the more of a premium will be placed upon high quality projects and transparency.  To be sure, consumers need to be warned that there are dubious projects out there, but ultimately people in a free market vote with their dollars for the best methods and practices.  Would you pay for an offset created from “clean energy” credits like a wind farm? Or perhaps prefer to support a project that passes out florescent light bulbs in an African village to decrease the load on a dirty coal power plant? Or perhaps you would rather help protect a local forest by purchasing the carbon credits from its owner in exchange for the assurance that the forest will remain.  There are diverse examples of creative, voluntary efforts to reduce greenhouse gasses. 

There is more than a glimmer of hope in the voluntary cap and trade system created by the Chicago Climate Exchange, which is self regulated.  This system actually makes an effort to keep transaction costs low so that even small projects can participate.  Nothing smaller than industrial scale could ever clear the Kyoto red tape, but through the self-regulation of the voluntary market anything that is in fact “dubious” becomes a threat to the entire market’s credibility.  That credibility is worth preserving in a voluntary marketplace because it is the measure value for the carbon offsets being bought and sold. 

Hello! 

Welcome to the new Standard Carbon website!  We hope that you have a chance to look around and learn about how Carbon Offsets and carbon aggregation work.  Standard Carbon is just one of many entrepreneurial endeavors trying to harness the creative and resourceful power of markets to fight global warming.

 We are commited to being a business you can trust to bring the best value for your dollar, whether it is a carbon offset project or the sale of offset credits.  Please don’t hessitate to contact us if you have any questions.