BLOG POST

Comparative Guide: REDD+, ARR, and IFM Forest Carbon Projects

Nature-Based Solutions

Last edited: August 28, 2024

Published: April 19, 2024

Konstantinos Madias

Konstantinos Madias

Sustainability Copywriter

The Role of Forest Carbon Projects

In the face of climate change, a narrative of hope and action is emerging through the concept of forest carbon offsets. These initiatives stand as a testament to our collective ability to not only confront but also mitigate the impacts of global warming. By valuing and preserving forests, we harness nature's own mechanism for capturing and storing carbon, turning vast green expanses into powerful allies in our fight against greenhouse gas emissions. This approach doesn't just spell good news for the planet; it also opens up avenues for economic development in communities deeply intertwined with forest ecosystems.

The narrative of forest carbon projects took on a significant shape after the implementation of the first phase of the Kyoto Protocol in 2005. This pivotal moment required such projects to be validated by entities like the Clean Development Mechanism (CDM) under the United Nations Framework Convention on Climate Change, or through recognized carbon programs such as VERRA and GS in the Voluntary Carbon Market. This validation process was a crucial measure to ensure that the emission reductions achieved were genuine, lasting, and verifiable. It lent credibility and real value to the carbon credits generated, marking a milestone in our journey towards environmental accountability.

At the core of forest carbon offset strategies are three principal methodologies: Reduced Emissions from Deforestation and Forest Degradation (REDD+), Afforestation, Reforestation, and Revegetation (ARR) Projects, and Improved Forest Management (IFM) Projects. Each type of forest carbon project plays a unique role in protecting, conserving, and sustainably managing forests, presenting a comprehensive approach to not only enhance the health of our planet but also ensure the well-being of the communities that rely on these verdant landscapes.

As we delve deeper into the essence and impact of these projects, we embark on a journey of discovery—a quest to understand how, in the vastness of our forests, lies a potent solution to one of the most pressing challenges of our time.


REDD+ Projects

Understanding REDD+ Projects

The REDD+ initiative established under the United Nations Framework Convention on Climate Change (UNFCCC), represents a significant effort in the global battle against climate change. Born from the need to address the critical issue of deforestation—a contributor to nearly 20% of global greenhouse gas emissions—REDD+ has evolved into a comprehensive strategy for conserving forest carbon stocks, promoting sustainable management, and fostering conservation efforts across the world.

Sustainability and Impact of REDD+ Projects

REDD+ projects are pivotal in the global fight against climate change, offering more than just carbon sequestration—they embody a holistic approach to sustainable forest management and economic resilience for forest-dependent communities. For stakeholders like carbon developers, understanding the tangible impacts and sustainability of these projects is crucial for informed decision-making and strategic planning.

Based on UNFCCC reports REDD+ activities cover an impressive 1.35 billion hectares, which accounts for about 62% of forest areas in developing countries. This extensive involvement has played a crucial role in preserving critical habitats and substantially reducing carbon emissions. To date, 16 countries involved in implementing REDD+ projects have collectively reported a reduction of almost 11 billion tons of CO2—a figure that nearly doubles the net greenhouse gas emissions of the United States in 2021, thereby highlighting the significant global impact of these initiatives. Additionally, it has been estimated that each dollar invested in avoiding deforestation and forest degradation over the next 70 years could save between $6 to $7 in global mitigation costs needed to reduce carbon emissions to net-zero. This underscores the cost-effectiveness and environmental benefit of investing in REDD+ projects as a strategy for climate change mitigation.


High-Quality REDD+ Projects

A high-quality REDD+ project is characterized by its additionality, robust baseline emissions measurement, and effective leakage monitoring. With third-party verification and a focus on permanence, these projects ensure that emissions reductions are real, significant, and long-lasting. However, the essence of REDD+ transcends carbon metrics, deeply embedding co-benefits that respect and enhance local community rights, biodiversity conservation, and sustainable livelihoods.

A high-quality REDD+ project is characterized by its additionality, robust baseline emissions measurement, and effective leakage monitoring. With third-party verification and a focus on permanence, these projects ensure that emissions reductions are real, significant, and long-lasting. However, the essence of REDD+ transcends carbon metrics, deeply embedding co-benefits that respect and enhance local community rights, biodiversity conservation, and sustainable livelihoods.

High-quality REDD+ projects are not only characterized by their robust mechanisms for emissions measurement and effective leakage monitoring but also by the transparency of their processes. Making this data as public as possible is vital for maintaining the integrity and trust in REDD+ projects. Ultimately, transparency is key to their success, underpinning accountability and the effectiveness of the projects in meeting both environmental and social goals.

REDD+ strategies embody a comprehensive framework designed to confront the dual challenges of deforestation and forest degradation, pivotal factors in the global climate change scenario. These strategies are not merely about curtailing emissions; they represent a holistic approach towards enhancing the carbon sequestration capacity of forests through a variety of forest protection measures.

REDD+ Project Carbon Credits

The cost of implementing REDD+ projects is subject to considerable variation, influenced by a myriad of economic, environmental, and methodological factors. Early literature hinted at the possibility of very low emissions reduction (ER) costs, with some estimates even falling below $1/tCO2, presenting scenarios of negative opportunity costs. However, more recent studies reveal substantially higher costs, with site-specific estimates spanning from $1.9/tCO2 to $250/tCO2 (Griscom et al., 2017; Busch et al., 2019; Griscom et al., 2020; Trove Research, 2021)

In recent market activities, pricing inconsistencies are evident even within the same REDD+ projects, depending on the vintage of the credits and the timing of transactions. For instance, Vintage 2021 credits from an Asia-based REDD+ project were traded at $16 per metric ton in February 2024, whereas in January, credits from the same project were offered at just $1.25/mt. In a similar vein, credits from a Latin American REDD+ project were traded at prices ranging from $10.10/mt to $6.50/mt within the same period.

Moreover, high-quality projects are not immune to price volatility. For example, credits from a highly-rated Latin American REDD+ project fluctuated between $8/mt and $13.45/mt for Tier 3 volumes since December 2023, demonstrating the market's sensitivity to factors beyond project quality. Additionally, from October 2023 onwards, credits of various vintages from an Africa-based REDD+ project have been transacted between $1.70/mt and $5/mt.

These discrepancies highlight the complexities of the voluntary carbon market, where the valuation of credits can vary significantly based on factors such as credit vintage, transaction volume, and market perceptions of quality. As the market continues to evolve, these pricing dynamics underscore the need for greater transparency and standardization in how REDD+ credits are assessed and traded.

Image

ARR Projects

Understanding ARR Projects

In the vast landscape of climate action, Afforestation, Reforestation, and Revegetation (ARR) projects emerge as fundamental strategies for both carbon sequestration and the enhancement of biodiversity. By leveraging forests, one of Earth's most formidable natural carbon sinks, these projects play a critical role in our collective efforts to mitigate climate change, driving us towards a more sustainable future.

ARR projects are characterized by three core activities, each designed to augment forest cover and rehabilitate lands impacted by degradation or deforestation. Their distinct roles within the environmental spectrum are as follows:

1. Afforestation: This process involves the establishment of new forests on lands that, historically, have not been covered by forests for a significant period. It aims to introduce forest cover to regions previously devoid of such natural infrastructure.

2. Reforestation: Centered on the restoration of forest areas that have been cleared, typically due to logging activities or agricultural expansion, reforestation replenishes tree cover in regions once home to vibrant forests.

3. Revegetation: With a broader approach, revegetation efforts focus on the planting or natural regeneration of vegetation across disturbed or degraded terrains, extending beyond the confines of forested areas.

Together, these practices are formidable in reducing atmospheric CO2, as they store carbon in the growing biomass of trees. This method hinges on photosynthesis, where trees absorb CO2 and store it within their structure. This trio of actions represents a holistic approach to combating climate change, facilitating the growth of trees and shrubs, and restoring soil health on lands impacted by degradation.

As of May 2023, ARR projects have seen significant engagement, with 290 projects registered under standards like Verra and Gold Standard, among others. Notably, South America and East Asia emerge as focal regions for these projects, with Uruguay and China leading in project initiation.


This surge underscores the growing recognition of ARR projects as pivotal components of global strategies to combat climate change, highlighting their integral role in the transition towards a more sustainable and resilient future.

Image

Sustainability and Impact of ARR Programs

Forests, as one of the planet's most significant natural carbon sinks, play a crucial role in the global carbon cycle, absorbing billions of tonnes of CO2 annually. Through the restoration of trees on degraded lands, Afforestation, Reforestation, and Revegetation (ARR) projects can sequester between 6-11 GtCO2 each year, marking a significant stride towards mitigating global emissions.

Carbon sequestration, the process of capturing and storing atmospheric CO2, is predominantly achieved through photosynthesis, with plants converting CO2 into oxygen and storing carbon within their structure and the surrounding soil. This natural mechanism is vital for curbing climate change by reducing atmospheric CO2 levels, thereby diminishing the greenhouse effect responsible for global warming.


ARR Project Carbon Credits

ARR projects hold a vital position within the voluntary carbon markets (VCMs), yet they are still not fully utilized. ARR initiatives effectively contribute to carbon sequestration and sustainability goals. While most REDD+ projects, which are priced at their highest in Brazil at $16.17, dominate the landscape there, ARR projects reach their peak price in China at $24.66 (as for January 2024), indicating their dominant position in that region.

Image



High-Quality ARR Projects

Transparency

In high-quality ARR projects, transparency regarding the data related to the trees on the ground is paramount. ARR projects rely heavily on accurate tree growth measurements. This critical task should be performed by experts who are thoroughly versed in forest inventories and other effective monitoring techniques such as satellite data.

Choosing the Right Place

The terrain plays a pivotal role in the success of forestation efforts. Projects in unsuitable locations, like deserts or mountaintops, face survival challenges despite intensive human intervention. Moreover, assessing a project's additionality is crucial, ensuring that the reforestation efforts are truly needed and not occurring naturally in the area.

Financial and Environmental Integrity

The carbon market, while offering financial incentives for reforestation, can also lead to exploitative practices. Some developers might plant trees only to harvest them later, negating any environmental benefits. A thorough evaluation ensures that projects are designed for durability and that their positive impacts are lasting.

Community Involvement

The engagement of local communities is paramount. Projects that overlook the aspirations and needs of local populations risk failure. Conversely, those that involve communities in planning and implementation often see enhanced protection and sustainability of forest projects. Successful forest restoration relies on community support to ensure the long-term stewardship of restored areas.


IFM Projects

Understanding IFM Projects

Improved Forest Management (IFM) projects are initiatives designed to enhance the carbon sequestration capacity of forests by modifying existing forest management practices, often referred to as business as usual (BAU) practices. These changes aim to increase net carbon stocks or reduce greenhouse gas (GHG) emissions within a forested area. The specific management activities undertaken in IFM projects can vary widely but may include extending the rotation period between harvests, employing thinning techniques, and altering harvesting methods to reduce impact. The allowable management activities for any given project are typically defined by the methodologies of certifying registries.

A notable aspect of IFM projects is their geographic concentration, with 93% of issued IFM credits originating from North American projects, and a significant majority, 78%, registered within the Climate Action Reserve (CAR) registry. This prevalence in North America, especially in Canada and the United States, is largely a legacy of the California compliance market and the California Air Resources Board (ARB) compliance forest offset protocol.

IFM projects play a crucial role in mitigating the risks of forest degradation or conversion, risks that are exacerbated by the volatility of timber markets and land transactions driven by timber value and alternative land uses. By ensuring monitored, reported, and verified carbon sequestration over long periods, typically over 100 years, IFM projects contribute to the development of larger, older, and more resilient forests. These forests are not only better at sequestering carbon but often exhibit enhanced productivity, making IFM projects a pivotal strategy in the fight against climate change and for the conservation of forest ecosystems.

Image

Sustainability and Impact of IFM Programs

Improved Forest Management (IFM) projects are essential in optimizing forest growth and maturity to maximize carbon storage, effectively capturing CO2 per hectare through sustainable practices. While less visually dramatic than conserving ancient rainforests or extensive reforestation efforts, IFM projects implement sustainable forest management to enhance carbon storage capabilities significantly.

These practices extend rotation lengths to increase forests' average age, thin out diseased trees to improve productivity, manage non-native species competition, and protect high ecological value areas to boost ecosystem services. The goal of IFM is to replicate the natural regeneration cycle of forests, providing communities with sustainable wood sources that do not deplete the forest's carbon reserves or its ecological benefits, such as water filtration and species habitat.

Globally, 293 IFM offset projects have contributed to producing 11% of offset credits by voluntary registries, directing substantial climate mitigation funds into forest management projects. Research suggests that IFM could augment carbon stocks by 0.2–2.1 Gt CO2e/year globally (Griscom et al., 2017; Roe et al., 2019; Austin et al., 2020) without compromising the fiber and ecosystem co-benefits provided by managed forestlands.

A range of IFM practices are included, which enhance carbon in forests and forest products. For instance, extending rotations can increase carbon stored on the landscape while maintaining or boosting timber production, especially in forests not managed at maximum productivity. Reduced-impact logging in tropical forests not only reduces forest degradation but also preserves or increases soil carbon stocks, making forestry more sustainable and less likely to be converted to agriculture. Moreover, improved forest management can bolster forests' resilience against future carbon reversals from wildfires, drought, and pests.

Image

High-Quality IFM Projects

Distinguishing high-quality IFM projects involves certain quality benchmarks, such as setting conservative project baselines, preventing economic leakage, and assessing project durability. High-quality projects consider local harvest rates and market demands for timber to develop realistic baselines, avoiding overestimated carbon impacts. They also manage to maintain harvest levels close to baseline levels to prevent leakage and take proactive measures to ensure the captured carbon remains sequestered over time.

To qualify for offset crediting within the forest carbon market as an "improved forest management" (IFM) project, the land must be demonstrably at risk of conversion to non-forest use or subjected to unsustainable harvesting practices. This risk is substantiated through comprehensive regional economic assessments and consultations with key stakeholders, including property owners and local forestry experts.

One key strategy for generating high-quality improved forest management credits is extended rotation forestry, where the time between commercial forest harvests is lengthened. While harvesting younger trees may be economically optimal, allowing trees to grow larger and capture more CO2 can be costly. Issuing carbon credits compensates forest owners for these additional costs.

Remarkably, the distribution of issued IFM credits showcases a distinct geographic concentration, with a staggering 93% originating from North American projects. Furthermore, a significant majority, 78%, of these projects are registered under the Climate Action Reserve (CAR), contrasting sharply with only a modest 4% associated with Verra. This distribution highlights the strong legacy and ongoing prominence of North American projects within the IFM space, largely influenced by the California compliance market and the stringent standards set by the California Air Resources Board (ARB).

The geographic specificity of IFM projects underscores their significance, particularly for the regional forestry sector. IFM credits offer a viable pathway for generating income for both public and private forest owners, thereby bolstering economic incentives for engaging in sustainable forest management practices. The methodologies developed to quantify and transfer the carbon credits generated primarily through carbon stock enhancement are gaining attention globally. These strategies are increasingly recognized as valuable tools within the broader climate change mitigation agenda, appealing to both developed and developing nations.


Comparative analysis of carbon forest projects

Image

Related blog posts

4 mins read

September 20, 2024

Nature-Based Solutions

9 mins read

September 12, 2024

Nature-Based Solutions

10 mins read

August 30, 2024

Nature-Based Solutions

Solutions

Platform

Resources

Community

Company

Customer StoriesPricing