Understanding Carbon Offset Development
Main Points
It takes an average of two years to develop a forest carbon project
The process involves many steps, including time working on the ground and using the best available technology
Inventories are conducted by independent third-party verifiers
All of the data and documentation is reviewed by an independent carbon Registry
Carbon credits are only issued if the Registry agrees with the data submitted by Anew and the third-party verifiers
This blog post was originally written by Bluesource in 2021, and has been been revised to reflect the new company name, Anew.
We are often asked if Anew Climate is a broker, trader, retailer or advisor. The answer is we serve all of these functions. This is what continues to set us apart from our rapidly growing field. But perhaps the real question to ask is, why?
Our depth of expertise in capital markets and environmental services, combined with our company culture of experimentation, naturally puts us on the leading edge. We are committed to environmental change first and foremost, and we have created opportunities within other industries where that mission has not yet been prioritized.
Most of our portfolio is created in-house, but what does that mean?
For the majority of the offset credits we market and sell, we discovered and created the opportunity.
Our forestry work has always been at our core, and in October of 2021, we announced a ground-breaking investment to expand upon the three million acres we currently manage for carbon offset creation. In addition, we also develop projects from 20 different technology types with protocol developed through scientific review and public stakeholder processes. Oversight for these projects comes from the Climate Action Reserve, Verified Carbon Standard, American Carbon Registry, California Air Resources Board, Alberta Environment, and Canadian Standards Association. In most of these cases we saw an opportunity, developed it, and sold the credits in the marketplace.
How does one “create” a carbon offset? What is the process to bring credits to market?
To illustrate this complex, rigorous, and sequential process, I am going to use our forestry projects as an example.
Forest carbon projects take time. The process often begins at least two years before any credits become available in the marketplace. It is important to note that while Anew has been working to bolster conservation and sustainable forestry practices for over 20 years, the idea of forest management for carbon offsets is still new to too many as only 2% of the eligible forestland in the US is enrolled in a carbon offset program. Our goal is to continue to grow this market so that more forestland is protected.
We work with property owners with holdings of 3,000 acres or more that are interested in carbon management as an alternative to timber, cropland, or development. In order for a project to be eligible for offset crediting through Anew, it must legally be considered at risk for development or aggressive harvesting. We verify this through regional economic assessments, distance from nearby timber mills, and interviews with property stakeholders and local foresters. That information is reviewed alongside satellite imagery, LiDAR, and synthetic aperture radar data, which provides a high-level assessment of the property’s potential. If the landowner and Anew agree to move forward, we sign a Carbon Marketing and Development Agreement which ensures alternative uses of the land are taken off the table for the full lifetime of the project. To help more landowners get involved, we take on the responsibility and costs required to bring credits to fruition.
Once a project is officially underway, we contract forestry crews who head into the woods to complete a detailed forest inventory. This is critical for ensuring the accuracy of the project and quite simply, cannot be replaced by technology alone. Although we use cutting-edge, proprietary technology to complement our teams on the ground. This step involves meticulous data collection about the height, circumference, and species of the trees.
Inventory data is then entered into our complex models that follow the associated methodology for the project. The methodologies, also known as protocols, determine how emission reductions can be quantified. Anew tends to work most closely with the American Carbon Registry, Climate Action Reserve, and Verified Carbon Standard’s Improved Forest Management and Avoided Conversion methodologies. By following these protocols, we are able to calculate the amount of carbon sequestered in a given forest.
Then, importantly, comes the external review and verification by third-party foresters followed by the accrediting registry. Our calculations are reviewed against twelve months of tree growth, along with a report about the land’s potential use if not for the carbon project. We visit the project site with the verifier for onsite verifications every five years while desk verifications occur on the interim years. Anew rotates the verifiers we work with to ensure independence. If the registry is in agreement with the number of offsets calculated and the eligibility of the project to begin with, then the offsets are issued.
Once sold, the retirements of offsets are made public so that greenhouse gas reduction claims and pledges can be checked against reality.
This is the thorough and transparent process of the creation of a forestry offset. So, when asked if we are a broker, retailer, trader, or advisor, we are really all four, but most importantly, we are the offset developer for the vast majority of the offsets we market and sell.