The Planet Needs Forest Carbon 2.0
Zack Parisa
Zack Parisa
21 June, 2022 min read

Climate change poses a huge threat to the planet, and forests are a key part of the solution. Done right, forest carbon projects can hold gigatons of carbon out of the atmosphere.  

However, a steady drumbeat of articles has pointed out the shortcomings of traditional forest carbon projects. Projects are burning up a few years into decades-long contracts. Researchers and journalists are raising questions about project quality. There’s a supply crunch because it’s too expensive and too slow to bring new projects online.  

The “Forest Carbon 1.0” approaches of the 20th century simply can’t deliver the speed and scale of high integrity impact demanded by the 21st century climate crisis. We can and must do better.

The planet needs a new “Forest Carbon 2.0” approach to restore confidence in forest carbon markets and deliver high integrity climate impact with speed and scale. Forest Carbon 2.0 should learn from the past and take advantage of the tools of the present.  

This article is the first installment in a series exploring how Forest Carbon 2.0 can set a new standard for transparency, accountability, and impact. Let’s get started.

Principles

Throughout this series, we’ll be guided by several foundational principles for Forest Carbon 2.0:

What we do today matters

The time for climate action is now, not decades in the future. Forest Carbon 1.0 rewards promises for climate impact that won’t be delivered until we’re well past our 2030 and 2050 climate goals. Forest Carbon 2.0 should incentivize present-day action so that climate impact is maximized now, when it matters most.

Every acre matters

Solving the climate challenge will take all of us. Every acre of forest and every landowner needs to be able to participate. However, the decades-long commitments and prohibitively expensive project costs of Forest Carbon 1.0 keep most landowners from participating. Forest Carbon 2.0 leverages available technology and innovation to democratize access so that everyone can be part of the climate solution.

There is no permanence in nature

Forest Carbon 1.0 relies on claims of “permanence,” but the truth is that forests are dynamic, constantly changing ecosystems. Trees grow, compete, reproduce, and die in a natural cycle. Every acre of forest is unique and is constantly changing. Sometimes the changes are slow, like the steady growth of an oak. Sometimes the changes are fast, like a wildfire that burns up a forest. But there is always change. Forest Carbon 2.0 recognizes that forests are dynamic natural systems and accounts for impact accordingly.

Measure and pay for performance

Forest Carbon 1.0 operates on a “pay and pray” model that rewards promises of impact decades in the future. A project developer commits to a decades-long contract to deliver climate impact but receives most of the payment upfront. Then, for the next several decades, all parties involved pray that there is no “reversal” due to a wildfire, hurricane, or other disturbance.

In contrast, Forest Carbon 2.0 uses a “pay for performance” model that holds project developers accountable for delivered results and creates incentives for constant improvement. Crediting happens after climate impact is delivered and verified. Now that technology makes it possible to measure every acre of forest every year, robust measurements can and should underpin every aspect of forest carbon projects.

Forest Carbon 2.0 also takes the limits of measurement and forecasts into account. Forests are complex systems and perfect measurements are unobtainable. Instead, imprecision and uncertainty should be explicitly quantified. To incentivize real climate impact, Forest Carbon 2.0 rewards higher precision measurements and penalizes imprecision.

Build in the ability to learn and adapt

Forest Carbon 1.0 assumes we already have all the information we need to impose 100 year obligations on the landscape. But the world never stands still. Science improves. Technology gets better. Landowners’ needs change. The landscape changes. Society’s values evolve. Locking acres into fixed 100 year contracts – as in Forest Carbon 1.0 – does not allow us to learn, adapt, and improve as new science becomes available.

Instead, Forest Carbon 2.0 builds in the ability to continuously improve by incorporating the best science and technology available each year. Forest Carbon 2.0 acknowledges that we don’t have all the answers right now and expects us to constantly learn and improve.

Every Project is a Tonne-Year Project

One of the core principles of Forest Carbon 2.0 is that there is no permanence in nature.  

This is in direct contradiction with one of the most obvious failings of Forest Carbon 1.0 – it pretends to be permanent. Forest Carbon 1.0 units which are represented as “permanent” often have decidedly finite time horizons, often 100 years or less.

Let’s stop pretending. Carbon storage in forests can’t be permanent.

Let’s also stop pretending that only permanent carbon storage has value. Forest carbon storage is both temporary AND valuable.

We need a way to think clearly about carbon and time.

The solution is a simple but powerful concept called tonne-year accounting. Its foundation is a unit called a tonne-year which represents one tonne of carbon dioxide equivalent held for one year.  

Because any carbon contract can be denominated in tonne-years, this allows us to rigorously compare the climate impact of different contracts of different durations.

Forest Carbon 1.0 in Tonne-Years

To see how tonne-year accounting works, let’s consider the California Air Resources Board forest carbon credit. This contract requires a forest carbon project to hold 1 tonne of carbon in the forest for 100 sequential years.

Using tonne-year accounting, we can represent this project as a stream of 100 tonne-years that are delivered one per year for 100 years:

Bar graph showing tonne-year delivery of a 100-year project

In voluntary markets, some contracts have terms shorter than 100 years. For example, a 20 year carbon contract could likewise be represented as a stream of 20 tonne-years delivered one per year for 20 years.

Viewed this way, it’s clear that Forest Carbon 1.0 contracts deliver tonne-years over decades. These contracts give full credit for the climate impact in the first year, even though only one tonne-year has been delivered at that point.

Forest Carbon 2.0 in Tonne-Years

A core principle of Forest Carbon 2.0, on the other hand, is “what we do today matters.” Climate impact delivered today is more valuable than climate impact delivered a century from now.

Tonne-year accounting lets us be precise about when the climate impact of forest carbon projects is actually delivered. Because time matters in our current climate crisis, accounting for time properly is a key element of Forest Carbon 2.0.

A major innovation in Forest Carbon 2.0 is “accelerated delivery” of tonne-years. For example, a Forest Carbon 2.0 contract might specify delivery of 100 tonne-years all at once in year 1, rather than a Forest Carbon 1.0 contract that delivers 100 tonne-years, one tonne-year at a time, over the course of a century.

Forest Carbon 1.0Forest Carbon 2.0
# of tonne-years100100
Delivery scheduleOne tonne-year per year for 100 years100 tonne-years in year one

Note: the selection of 100 tonne-years is arbitrary and is an expression of time preference. Different time preferences will result in different numbers. This topic will be covered later in this series.

Both of these contracts deliver 100 tonne-years but there’s a big difference in the delivery schedule. Compared to a Forest Carbon 1.0 project which doesn’t fully deliver 100 tonne-years until 100 years from now, a Forest Carbon 2.0 project can deliver 100 tonne-years of carbon this year. Not only is this better for achieving our climate goals, but it also ensures that credits are delivered only after the full climate impact has occurred. This also eliminates the need for long-term monitoring or buffer pools – in this way Forest Carbon 2.0 reduces non-delivery risk, an important benefit for buyers and sellers alike.

A graph showing delivery of carbon with one-year versus 100-year terms

Direct Air Capture in Tonne-Years

Some new “direct air capture” project developers are claiming to have truly permanent (e.g. infinite) storage of carbon. Even “permanent” projects like direct air capture can be measured with tonne-year accounting. A truly permanent carbon contract could be represented as an infinite stream of tonne-years starting now and continuing on forever into the future.

Measurements Make Markets

Tonne-year accounting is a very simple concept that gives us a quantitative basis for the comparison of the climate impact of different carbon contracts. By using tonne-years to put different carbon contracts on the same footing, carbon buyers can make apples-to-apples comparisons of the wide range of projects in the market.

20x Climate Impact in this Critical Decade

Climate action can’t wait. We know this is a critical decade, and one of the core principles of Forest Carbon 2.0 is that what we do today matters.

The most recent IPCC report stressed the urgency of climate action. To avoid the worst consequences of climate change in the future, we need to act now.

Big Climate Impact Now with Accelerated Delivery

In this critical decade, Forest Carbon 2.0 projects can have 20x the climate impact of Forest Carbon 1.0 projects. Because Forest Carbon 2.0 projects can have “accelerated delivery” of tonne-years, the difference in climate impact this decade is immense:

Climate Action this Decade

To understand why Forest Carbon 2.0 delivers so much more impact, imagine that you’re the Chief Sustainability Officer of your family. Let’s say you want to purchase one carbon credit each year starting in 2020.

Now that we understand that every project can be denominated in tonne-years, we have an easy way to compare Forest Carbon 1.0 to 2.0. By evaluating how many tonne-years each approach generates over different periods of time, we can understand the real climate impact each is delivering.

A single Forest Carbon 1.0 credit promises to deliver 1 tonne-year of carbon each year for the next 100 years. The graph below shows the delivery of tonne-years over time. By 2030, your purchases – at one credit per year, with each credit delivering climate impact in the form of a stream of tonne-years beginning the year it is purchased – will have resulted in 55 tonne-years of climate impact being delivered. Promised but not yet delivered tonne-years will stand at 945.

A graph of Forest Carbon 1.0 promised versus delivered

A Forest Carbon 2.0 credit that delivers 100 tonne-years in the year of purchase results in a very different graph. By 2030, your purchases will have already resulted in 1,000 tonne-years of climate impact being delivered. There is no remaining promise of future delivery of tonne-years because those contracts are already fully delivered.

A graph of Forest Carbon 2.0 promised versus delivered

Over longer time horizons, Forest Carbon 2.0 projects still deliver multiples of the climate impact of Forest Carbon 1.0 projects. Even if we extend our example out to 100 years, the Forest Carbon 2.0 approach still delivers double the impact.

A graph showing climate impact over time

What we do today matters. When it comes to delivering climate impact now, when it matters most, Forest Carbon 2.0 is a massive upgrade from Forest Carbon 1.0.

Seeing the Forest AND the Trees

How does Forest Carbon 2.0 actually work in the real world?

To start, let’s look at plantation pine forests in the US South. Roughly speaking, landowners typically grow their trees to age 26 (on average) before cutting down and replanting, so the average age of pine forests is 13 years. This is the economically optimal approach for landowners if they are only being paid for timber and not for carbon. Currently, the total amount of carbon (CO2e) held in plantation pine trees across the US South is around 850 million tonnes.

By paying for carbon, Forest Carbon 2.0 can incentivize these landowners to grow their forests slightly longer before harvesting. If the harvest age rises to 28 years, then the average age across the landscape rises from 13 to 14. In aggregate, this holds 170 million more tonnes of carbon on the landscape than otherwise would have been held in those forests1.

Graph showing the increasing average age of forests and how it increases the amount of carbon on the landscape

This is a very different theory of change than Forest Carbon 1.0. In Forest Carbon 1.0, the idea is to prevent timber harvests by locking up acres for very long (decades or centuries) periods of time.

Forest Carbon 1.0 misses the forest for the trees. After all, there’s only one atmosphere – what happens on an individual acre is less important than what happens across the landscape as a whole. What really matters is increasing the total amount of carbon held in forests overall.

Forest Carbon 2.0 sees both the forests AND the trees. The theory of change is different. By nudging lots of individual landowners to grow slightly older, slightly more carbon rich trees, Forest Carbon 2.0 efficiently creates a lot of small changes that add up to enormous impact across the entire landscape.

For the economics wonks in the audience, Forest Carbon 2.0 gets marginal economic incentives right to create a large overall impact. This approach dramatically increases the scale and economic efficiency of climate impact relative to Forest Carbon 1.0.

Stay Tuned

Now that we have a firm understanding of how tonne-years work, stay tuned for Part 2 of this series where we explore how Forest Carbon 2.0 can reduce risk in carbon markets.


1 Based on an average carbon density of 44.5 tonnes/ha and an annual accretion rate of 0.9 tonnes/ha (Hoover & Smith, 2021). Note this assumes that every acre is under risk of harvest each year, for the purposes of demonstrating the theoretical maximum carbon sequestration from 10 years of annual deferral.

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about the author

Zack Parisa

Zack Parisa

Co-Founder and CEO
Zack Parisa is the co-founder and CEO of NCX. Over the last decade, he has developed and pioneered precision forestry tools that are revolutionizing the way that forests can be measured, valued, and managed. Using satellites, cloud computing, and machine learning, NCX worked with Microsoft to create “Basemap,” the first high-resolution forest inventory of the United States. It is now using this data to build new markets for forest values beyond timber, such as carbon, wildlife habitat, and fire risk. Zack is a forester and biometrician by training. He earned an MFS from Yale University, and a BS in forestry from Mississippi State University.
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