Hopetoun Falls, Australia 

What are carbon credits?

 

Forests are our greatest natural ally in the fight against climate change, yet in many places they are more valuable dead than alive.

Conservation International is working to flip the script by valuing the carbon that trees remove from the atmosphere and store in their trunks and soils. Through carbon projects, we help to protect the climate by protecting forests — and the people who depend on them. As one solution to the climate crisis, forest-carbon projects are helping humanity bend the climate curve.

 

What is a carbon credit?

A carbon credit represents a reduction of 1 metric ton in greenhouse gas emissions to compensate for 1 metric ton of emissions made somewhere else. A credit can be bought, sold or traded before it is “retired,” meaning it cannot be traded again, assuring that only the buyer can claim emissions cuts associated with that credit.

What carbon credits are not

  • A license to pollute: Carbon credits are a “bridge” for emitters working to reduce their emissions, not a pass for business as usual. In fact, companies that invest in nature-based credits are leaders, not laggards: Three recent studies found that companies that bought voluntary carbon credits did more across the board to cut emissions than companies that did not.
  • A silver bullet: Carbon projects alone will not solve climate change — they are a vital way to flatten the carbon curve while the world transitions away from fossil fuels.
  • Doomed by technical challenges: Carbon projects have been implemented in various forms for more than two decades, passing from the experimental to the commonplace thanks to testing and scientific advancements. Over the past several years, science and technology have advanced to ensure that carbon projects are having their intended benefits.
  • A ‘land grab’: High-quality carbon projects are necessarily built on the free, prior and informed consent of local communities in the project area. These projects do not separate people from their lands, but rather are predicated upon strengthening and upholding their rights to their lands. 

 

What is a ‘carbon project’?

The idea behind a forest carbon project: pay people to not cut down their forests and restore ecosystems through the sale of “carbon credits.” Governments, companies and individuals can buy and trade credits to supplement the cuts made to their emissions, with revenue going to local communities as an incentive to keep forests standing or restore them. The result: Credit buyers compensate for a portion of their carbon footprint, and forests survive to absorb climate-warming carbon from the atmosphere while supporting local communities. Our carbon projects » 

 

What are the benefits of carbon projects?

Wildlife

Forests are home to countless species that exist nowhere else — including many plant species that are critical to medicine, and pollinators crucial for agriculture.

 

Water

Forests are powerhouses of the water cycle, contributing to rainfall, holding and filtering water — and providing flood control — for adjacent communities.

 

Food and jobs

Millions depend directly on the goods and services that forests provide, including those related to clean water, food security and jobs.

 

Sustainable development

Revenue from carbon projects funds social, educational and health programs in forest communities, and support sustainable and economically resilient jobs for millions.

 

Requirements for carbon projects

To be considered high-quality and successful, carbon projects must meet stringent criteria, including: 

  • Additionality: Emissions cuts would not have occurred without the carbon project investment. 
  • Permanence: Emissions reductions or removals represented by a carbon credit must endure for the long term. 
  • Leakage: Deforestation is not simply displaced from one area to another. 
  • Benefit-sharing: Beneficiary communities of carbon projects are equitably compensated.

 

How these requirements are being met

All forest carbon credits traded internationally are guided by United Nations requirements, including:

  • Baseline: A baseline against which deforestation, degradation, conservation and restoration are measured to ensure that emissions are being reduced or removed.
  • Monitoring: A monitoring system to measure forest-cover changes against the baseline to ensure additionality.
  • Safeguards: Adherence to social safeguards to ensure respect for Indigenous rights and the participation of local stakeholders, as well as environmental safeguards to mitigate the risk of forest loss.

 

What is ‘REDD+?’

Some carbon projects are designed under a framework called REDD+ — Reducing Emissions from Deforestation and forest Degradation — a UN-backed policy and incentives framework that enables countries to protect forests to achieve the emissions cuts required by the UN and the Paris Agreement. Read more about REDD+ »

 

Principles for Investments in Natural Climate Solutions

Nature is one of the most effective ways to stop climate breakdown, yet natural climate solutions receive less than 3 percent of all global climate funding. Conservation International’s Principles for Investments in Natural Climate Solutions guide our engagement with companies that are helping to protect ecosystems that store climate-warming carbon and keep it from the atmosphere. Read our six principles »

 

From our blog

What on Earth is ‘HFLD’? (Hint: It’s about forests)

© Robin Moore/iLCP

Editor’s note: From “blue carbon” to “ecosystem services,” environmental jargon is everywhere these days. Conservation International looks to make sense of it in an occasional explainer series we’re calling “What on Earth?"

In this installment, we explore the role “HFLDs”  play in storing climate-warming carbon.

You climate people and your acronyms. 

Yes, we really do use a lot of them.

IPCC. UNFCCC. REDD. You even made ‘TREES’ into an acronym. I can’t keep them all straight.

I know. It’s a lot. To be fair, “U-N-F-triple-C,” as we in the climate world call it, is a lot easier to say than “United Nations Framework Convention on Climate Change.” 

I guess so.

Thanks for clicking on this story, anyway.

Well, I’m here now. So — what does ‘HFLD’ mean? I assume it’s an acronym for something. 

It is. It stands for "High Forest cover, Low Deforestation.” 

And what does that mean?

It’s used to describe places — countries, usually — with relatively large areas of intact forests and low rates of deforestation. 

In other words, countries that haven’t cut down most of their forests.

More or less. Strictly speaking, HFLD countries are defined as having more than 50 percent of their forest cover and a deforestation rate under 0.22 percent per year. In other words: Half their original forest cover is still there, and they’re trying to keep it that way. 

And this is important because forests are important …

… Indeed. We’ve covered this amply elsewhere, so no need to recap it all here. For this discussion, though, the most important thing to remember about forests is that they absorb and store a lot of the climate-warming carbon pollution that we humans produce: Intact, undisturbed forests can remove something like 436 million metric tons of carbon per year. That’s the same amount of greenhouse gases produced by 344 million gasoline-powered passenger vehicles driven for one year — more than the number of vehicles registered in the United States.

Wow. So we want more countries to be considered ‘HFLD.’ 

Well, yes — but perhaps the most important thing for now is to keep deforestation low in current HFLD countries. 

OK. So how many HFLD countries are there now?

At present, 33 countries meet this definition; the top three are Guyana and Suriname in South America, and Gabon in Africa. 

Great. So … some countries have a lot of forests and have managed to keep them. What’s the problem, then?

The problem, simply put, is that just because those countries have large, intact forests now doesn’t mean those forests are safe in the long term. According to the board of the Architecture for REDD+ Transactions, known as “ART” — another fun climate acronym for you! — “future deforestation is projected to extend into intact, high-carbon forests, resulting in greenhouse gas emissions of an estimated 170 billion tons of [carbon dioxide] by 2050 — four times current annual emissions.” 

So there is a real risk of more countries losing HFLD status if they can’t afford to maintain — or steer toward — a low-deforestation, low-carbon-pollution economic path. It’s a warning sign if countries lose their HFLD status — in fact, five countries lost this status between 2010 and 2019: Cambodia, Laos, Samoa, Sao Tome and Principe and Zambia. 

So these countries need money to maintain their forests, I take it.

That’s a big part of it. Unfortunately, it pays to clear forests — that’s the main reason people do it. You can sell the timber, plant crops or raise livestock in their place.  A lot of countries — including HFLD countries — need financing to help reverse the economic equation that values forests more when they’re dead than when they’re alive. 

But there’s more to it than just money — some need technical help,  others need to resolve issues related to carbon rights and land tenure. 

Do HFLD countries receive financial support now?

They do, but not that much. Since 2007, HFLD jurisdictions have received less than US$ 2 billion in climate finance. This may sound like a lot, but it pales in comparison to the markets that drive deforestation. For instance, cattle production nets US$ 80 billion per year in the United States alone. Meanwhile, the global timber industry has topped US$ 1 trillion in value this year. Without dedicated finance to help countries maintain their forest cover, they are likely to be overwhelmed by the scale of these pressures. 

So what are HFLD countries supposed to do? Like, why are we talking about this?

I’m glad you asked. It comes down to carbon markets. 

Oh, no. 

Oh, yes.

That’s the carbon credits stuff?

That’s the carbon credit stuff. Of course, we’ve already talked about carbon credits. In great detail. But to refresh your memory, carbon credits are generated by projects that pay communities and countries to NOT cut down their forests, with each credit representing a metric ton of carbon. 

Briefly, they work like this: Companies can pay for credits to compensate for some of the impacts of their greenhouse-gas pollution. That compensation is passed onto the people who maintain forests in developing countries as an incentive to continue their efforts. Done well, this process generates a double benefit: Companies are encouraged to reduce their emissions so they don’t have to pay for so many credits, while the forest protectors receive a financial benefit as long as they keep the forests standing. These forests then can continue to absorb more climate-warming carbon from the atmosphere.

So are there HFLD credits?

Indeed. They’re just like other forest-carbon credits, only they’re created using a different kind of approach and labeled as such. 

But let me guess — there’s a catch. 

Well. Yes. The catch is that, according to critics, HFLD areas should not be eligible for investments like this … 

… because those areas aren’t at a high enough risk of deforestation. 

Precisely! Some people and organizations believe that HFLD credits don’t actually lead to reductions in carbon emissions1 — that they don’t fulfill the requirement of “additionality.” 

Remind me: What does ‘additionality’ mean?

You already came close to answering that: Additionality is the idea that forest protection — and the carbon reductions associated with it — would not have occurred without the investment. This is a fundamental concept behind carbon credits. To earn a credit, the forest protectors must demonstrate that the forest is at risk. That’s difficult to establish in places that don’t have a long track record of deforestation — even though we know those risks are real. 

In a way they were victims of their own success.

True. It was a perverse situation for forest communities: The harder that people worked to protect their forests in HFLD areas, the less eligible they were for incentives to support their work. So, you end up with a situation where the best way for communities to get access to finance is to stop trying to protect their forests, and instead let deforestation rates rise. 

Yikes.

Exactly. And getting that finance is critical. It’s much easier (and better for the climate) to protect existing forests than to plant new ones.

Wait: Why? Like, why not just plant new trees?

New trees don’t grow fast enough to compensate for the loss of older ones, which contain decades of stored carbon. There’s also the fact that mature forests are significantly better for wildlife, for protecting water supplies, for reducing erosion, and so on. We should plant new trees, it’s true — but we should do that while protecting the old ones, not instead of protecting them. 

William Moomaw, an environmental scientist, explained this in a 2019 interview:

It’s not that we shouldn’t do afforestation [planting new trees] and we shouldn’t do reforestation. We should. But recognize that their contribution will be farther in the future, which is important. In order to meet our climate goals, we have to have greater [carbon] sequestration by natural systems now. So that entails protecting the carbon stocks that we already have in forests, or at least a large enough fraction of them that they matter. 

I see — so we have to protect forests even if they’re not under threat.

Here’s the thing: Forests everywhere are under threat. From 2000 to 2020, the world lost roughly 12 percent of intact forest landscapes, according to a report published in November 2022. At that rate, more than half the world’s intact forests will be damaged or cleared by 2100. And the study indicates that the rate is growing

Ouch.

I know. So, better to figure out ways to protect these places now, before it’s too late — and carbon credits can help to do that, at a big enough scale, right now. It’s time to give HFLD credits their due and pave the way for them to be part of the equation. 

I can see that. And I’m sure you people will come up with a few new acronyms along the way. 

Sadly, you’re probably right. 

Further reading: 


1Carbon offsetting refers to compensating for carbon dioxide emissions arising from activities (often emitted by corporations) by buying an amount of so-called ‘credits’ that equate to emissions having been reduced.


Bruno Vander Velde is the managing director of content at Conservation International. Want to read more stories like this? Sign up for email updates. Also, please consider supporting our critical work.