Carbon is stored in your trees and soil, but the process for actually turning that carbon into an asset that can be bought and sold is complex. To get familiarized with the basic structure of a carbon contract, the main players, and key risks, start by reading NCX’s Forest Carbon Guide. In this blog, we will go into more detail on the detailed process you’ll go through if you choose to develop a carbon project on your land.

While the size of the project, the distribution of the land enrolled, and type of project created all affect the process for developing a carbon project, there are key steps that have to be taken before you can be paid for your carbon. For this blog, we’ll use Improved Forest Management (IFM) projects as our example and assume that your land is eligible.  While requirements vary, most IFM programs require at least 25 acres of forest.

Here are the general steps involved in creating carbon credits from your forest:

1. Find a project developer – there are multiple project developers and flavors of forest carbon programs.  NCX can help you find and compare project developers in your area.  This choice is important.  Not only will the project developer handle all the administrative work to make sure the credits can be marketed and sold, they will also be the counterparty to a multi-decade contract with you and your family.
2. Negotiate offer – Landowners have a lot of power when it comes to negotiating forest carbon contracts.  After all, you can always choose to harvest your trees instead.  Make sure that you fully understand the risks and rewards so that you can negotiate a deal that makes sense for you and your land.  NCX can help you understand the tradeoffs to consider in your carbon contract.  We also recommend that you review the contract with an attorney.  
3. Wait – You may have to wait for the project developer to aggregate enough landowners to kick off a project in your area.  There also may be high demand for enrollment in your area so the project developer’s resources could be spread thin.  If the project developer leaves you waiting, make sure you understand why. 
4. Property visit – The project developer will send someone to your property to take some initial measurements of your forest.  This information is used to determine the initial state of your land and to develop forecasts about future forest growth.
5. Project officially starts – Once the certification body accepts the project developer’s documentation, the project has officially begun.  The clock has started on the “performance period” for the carbon credits.
6. Initial credits issued – A few years after the project officially starts, the certification body will issue the initial carbon credits.  Note that even though the credits have been issued, you still have a long-term obligation to not cut down your trees.  If you do, the credits may be in default and you may have to pay the price.
7. Periodic property visits – To ensure that your trees are still standing and in compliance with the project rules, the project developer will periodically send people to your property to check on your forest.
8. Future credit issuance – As your forest continues to grow, there may be opportunities to generate more carbon credits under the umbrella of the initial project.  Make sure you understand how your payments are structured, how long they will last, and any incentives for overperformance. 
9. Term ends – Although it may be decades in the future, eventually the term of your contract will come to an end.  At this point, you should no longer have any restrictions on your ability to harvest your trees.  Make sure that you understand any restrictions or encumbrances on your property that outlast the nominal term of your contract with the project developer.  

Enrolling in a carbon project can feel daunting, but can be an attractive opportunity for some landowners. At NCX, we make sure that you see all your opportunities before putting a long term encumbrance on your property.

Get started today to see what programs you are eligible for.