Forestry projects jump-started the global carbon offset market in the early 1990s, when environmental non-profits and industrial companies initiated partnerships to conserve and plant forests with the aim of balancing greenhouse gas emissions (GHG) by capturing carbon in trees. Although forestry transactions were the first-ever carbon offsets, they were soon sidelined in emerging global GHG regulations and a narrow band of forestry offsets were recognized under the Kyoto Protocol.
This left the voluntary markets to pick up the slack. Some buyers have been drawn to this tangible, land-based offset category and others have veered away from the complexities and risks of forest carbon offset projects. Over time, however, the role of forests in mitigating climate change has increasingly gained credence – thanks largely to the resolution of scientific disputes over how to measure and monitor the amount of carbon captured in trees, as well asgrowing political consensus on the need to reduce emissions as quickly and cost-effectively as possible.
This acceptance has begun to impact global climate policy. In 2007, at international climate change negotiations, the Bali Action Plan laid out a strategy for developing consensus on how to recognize reducing emissions from deforestation and degradation (REDD). In 2009, the Copenhagen Accord explicitly stated the need to develop mechanisms that would reward sustainable land-use practices that capture carbon in trees. Around the same time, landbased carbon offsets were explicitly included in the text of proposed US climate bills. These regulatory developments have the potential to stimulate tremendous demand for land-based carbon credits.
Currently, the forest carbon market is diverse on both the supply and demand fronts. Many offsets have been developed and purchased
purely for the sake of philanthropy, while others have been created as commodity products to be sold as units of trade on global regulated and voluntary markets. In this context suppliers employ significantly varying project designs, methodologies and implementation strategies to create credits.
To read the full State of the Forest Carbon Market report, click here