What is a forest-based carbon credit?

Forest carbon credits are promises that companies, individuals and governments can purchase to counteract their emissions by paying to plant or protect trees.

To comply with the Paris Agreement, we must reduce our present greenhouse gas emissions by 50% by 2030 and achieve a “net-zero” status by 2050. Carbon credits can be used to offset emissions from activities that are currently unable to be made carbon-free, by purchasing carbon reductions or capturing them elsewhere.

A carbon credit denotes the permanent elimination of one metric ton of CO2 from the atmosphere or the prevention of the discharge of one metric ton of CO2 by modifying energy generation or land use practices.

Nature-based solutions involve collaborating with nature to tackle global challenges, resulting in advantages for both biodiversity and human well-being. Forest-based carbon credits are an excellent example of a nature-based solution that addresses the climate emergency. Forests, through photosynthesis, absorb greenhouse gases, including CO2, and produce energy while releasing oxygen. Unfortunately, we are losing approximately 27 football fields of forests every minute.

Protecting them from being destroyed is one of the most cost-effective ways to combat climate change. Forest conservation also yields quantifiable and positive economic, social, and environmental benefits for local communities. Verified forest-based carbon credits have been demonstrated to be a viable approach to finance the preservation of natural ecosystems, allowing local resource owners to generate income from verified forest conservation initiatives.

Preserving forests, among other natural climate solutions, can provide up to 37% of the required emission reductions necessary to meet the Paris Agreement objectives and maintain a safe climate.


Picture a forest at risk of being cut down to make pasture for livestock or fields for crops. A broker arrives and promises to pay the forest owner — which could be a government — to stop that from happening.

The land gets formally designated a carbon credit project. After that the trees are not supposed to be cut or destroyed by fire. The developer sells these promises and keeps a cut of the money. Far away, a polluting company buys the credits instead of reducing its own emissions by a certain amount.

Trees store carbon in their tissue, which means that the taller and healthier a tree grows, the more carbon it can store. Soils and vegetation also store carbon. When a tree is chopped down, the carbon stored within it is often released into the atmosphere. If the trees are milled into large timber pieces, some of the carbon remains stored.


One forest carbon offset, like any carbon offset, is equal to one metric ton of carbon dioxide that is avoided, removed or absorbed. A typical passenger car emits about 5 metric tons of carbon dioxide per year, according to the U.S. Environmental Protection Agency.

Forest carbon offsets are a subset of the multibillion-dollar carbon ‘offset’ market.

Three main types of forest carbon offsets exist: credits that sequester carbon by replanting trees, those that protect trees at risk of being chopped down, and others that promise to improve a forest’s management and increase its carbon storage.



Trees absorb carbon through their leaves, which makes them crucial for maintaining a livable climate. Via photosynthesis — the process within plants that turns sunlight into chemical energy — they breathe out oxygen as a byproduct. Carbon is permanently stored in a tree’s fibers until it dies and decomposes.x

Deforestation accelerates climate change in a couple of ways: It halts plant photosynthesis, so the trees are no longer taking up carbon. It’s also often accompanied by burning, which releases lots of carbon dioxide.


The same problem facing all types of carbon offsets: Do they actually work?

The market for forest carbon offsets has ballooned over the past decade, with many policymakers seeing them as a way to combat climate change and even finance a transition to renewable energies. However, environmental groups, scientists and other experts say offset programs can be misleading.

“The issue here is that most voluntary carbon markets are self-regulated,” said Arnaud Brohe, chief executive officer of Agendi, a climate consulting firm, and an expert on carbon markets.

Assessing the climate benefit of a credit is often hard. For a forest carbon credit to be viable, it must do something for the environment that wouldn’t take place otherwise, a crucial concept known as ‘additionality.’ Credits are valid only if those trees were at active risk of being chopped down. If the trees were already protected, the offsets are meaningless.

Another issue is leakage, which is when the protection of one stretch of forest leads to deforestation in another. There are also sometimes problems of double counting, when the same credits are tallied in two different ledgers. For example, with limited regulation, credits issued for trees protected in one place might be counted by that country plus the country that bought the credits, or some other entity.

Experts say sellers of forest carbon offsets often exaggerate the benefits to the environment.

“Even though projects might end up protecting and conserving some lands, the question is how much?” said Danny Cullenward, a California-based energy economist and lawyer who studies carbon emissions.

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