New guide for forest carbon projects

A new guidebook for forest carbon project developers and financiers aims to help kick-start the sector. “Bringing forest carbon projects to market” recognises a much under-utilised sector of carbon reduction effort and identifies opportunities for profitable forest carbon project development.

The guide was authored by a team at French environmental consultants ONF International and funded by UN Environment Programme’s Department of Technology, Industry and Economics, the UNEP Risoe Centre, the French Development Agency (AFD), and the World Bank’s BioCarbon Fund.

It runs through the types of project activities - afforestation and reforestation (A/R), REDD, improved forest management, biomass energy - and identifies the various carbon markets and mechanisms available. Section 3 of the report offers a comprehensive nuts and bolts guide for developing a forest carbon project, addressing set-up, costs, risks, financing, revenue potential, credit generation and sales. The guide uses a number of case studies to illustrate best practice, success stories and pitfalls.

While acknowledging the slow take-off of forest carbon action compared to other project types in the carbon market, the combination of project, methodology and standards innovation in the voluntary market, along with the moves toward a compliance-based REDD+ mechanism under UN auspices from 2013, offers potential for a dramatic increase in this market segment, the guide concludes.

Its survey of the market found 434 forest carbon projects across all types either registered or seeking registration, up from 178 in 2007. It found 31 per cent had achieved either achieved registration with an independent forest carbon standard, or was applying for registration.

While the nature of a future global REDD+ mechanism under the UN is still unclear, the report looks at the possible forms it could take including or excluding the private sector. This is of particular importance to project developers given the uncertainty over the role of project-based activity (along the lines of the voluntary market) in a structure that appears increasingly headed towards nationally administered programmes.

The progress of US federal climate laws and the finalisation of the EU ETS rules for its third phase from 2013 also stand to be important for the development of the forest carbon market, the report says.

The English version has just been released, following the French release earlier this year. A Spanish version is also to be available.

Bringing forest carbon projects to market [, PDF 5.8 MB]