Podcast Episode 1.29

Do you get what you pay for? Monetizing Forests via Carbon Credits

A rapidly expanding list of companies have announced plans to go “carbon neutral” or “net zero”. Often, these plans include at least some offsetting of greenhouse gas emissions by purchasing credits from forest carbon offset programs.

But buyers beware: our look into how forest carbon offsets are determined and sold suggests that there is a lot of work to be done before we will be able to monetize the carbon absorptive power of trees in our effort to reduce net emissions.

Climate Now spoke with four experts: Dr. Charles Canham of The Cary Institute, Dr. Danny Cullenward, Policy Director of CarbonPlan, Dr. Grayson Badgley of Black Rock Forest and Columbia University, and Christine Cadigan of the American Forest Foundation to better understand what is and is not working in the forest carbon offset market.


Charles Canham
Forest Ecologist


Charles Canham

Forest Ecologist

Dr. Canham is a Forest Ecologist at The Cary Institute of Ecosystem Studies, one of the world’s leading independent environmental research organizations. Previously, Charles served as a volunteer trustee of a Nature Conservancy chapter for more than 20 years before being asked to resign after voicing his concerns about their approach to forest carbon offsets.

Christine Cadigan
Senior Director of the Family Forest Carbon Program for the American Forest Foundation


Christine Cadigan

Senior Director of the Family Forest Carbon Program for the American Forest Foundation

Christine Cadigan serves as the Senior Director of the Family Forest Carbon Program for the American Forest Foundation (AFF). The Family Forest Carbon Program is a partnership between AFF and The Nature Conservancy, dedicated to empowering family and individual woodland owners to actively care for their woods and increase the carbon sequestered and stored in them. She has her Master of Environmental Management and Master of Forestry from Duke University’s Nicholas School of the Environment.

Danny Cullenward
Policy Director at CarbonPlan


Danny Cullenward

Policy Director at CarbonPlan

Danny Cullenward is the Policy Director at CarbonPlan, a data hub that aims to improve transparency and scientific integrity of carbon removal and climate solutions. He is an energy economist and lawyer focused on the design and implementation of scientifically grounded climate policy. He holds a JD and PhD from Stanford University, where he teaches classes on energy law and climate policy.

Grayson Badgley
Postdoctoral Fellow at Black Rock Forest and Columbia University


Grayson Badgley

Postdoctoral Fellow at Black Rock Forest and Columbia University

Grayson Badgley is a Postdoctoral Fellow in Forest Ecology at Black Rock Forest (BRF) and Columbia University. Grayson is an ecologist studying how leaf-level physiology affects global-scale biogeochemical cycles. His work at BRF focuses on refining new methods for quantifying whole-canopy light capture. Grayson holds a PhD in plant physiology from Stanford University and an MSc in environmental management from the University of Oxford.

Hosted By:

James Lawler
Climate Now Host


James Lawler

Climate Now Host
James Lawler is the founder of Climate Now. James started Climate Now as a way to learn about climate change and our energy system. Climate Now’s mission is to distill and communicate the science of our changing climate, the technologies that could help us avoid a climate crisis, and the economic and policy pathways to achieve net zero emissions globally. James is also the founder of Osmosis Films, a creative studio.

Katherine Gorman
Climate Now Host


Katherine Gorman

Climate Now Host

Katherine Gorman is a podcast host for Climate Now. She has worked for terrestrial public radio stations across the US, and is also co-host of the podcast “The Talking Machines”. She is excited to democratize the climate conversation and to learn and share knowledge from experts in the field.


Katherine Gorman (00:04):

You are listening to Climate Now. I’m Katherine Gorman.

James Lawler (00:07):

And I’m James Lawler. And our episode today is a little different from what we usually present as we wanted to take you, the listener, along with us on the unexpected path that we took in learning about forest carbon offsets.

Katherine Gorman (00:20):

This all started when we spoke with Susan Cook-Patton of The Nature Conservancy about re-growing or better managing forests as a tool to draw down carbon dioxide, CO2, from the atmosphere.

James Lawler (00:31):

In our conversation, which you can check out in our podcast with Susan and in our video on the carbon dioxide removal potential of forests, we learned that more than 300 million tons of CO2 could be sequestered in forests in the United States.

Katherine Gorman (00:44):

And based on the information on their website, reforestationhub.org, about 86% of land opportunity for developing this natural carbon sink is privately owned, which raised the question for us: How do we get this land off the sidelines, and working as a part of the solution

James Lawler (01:01):

The answer seemed to be the carbon offset marketplace, a system that monetizes the CO2 that is being sequestered, thereby providing a financial incentive for private landowners to grow more trees. Susan put us in touch with a partner of The Nature Conservancy, the American Forest Foundation, which is developing a forest carbon offset project. This episode of the Climate Now podcast will detail our dive into the forest carbon offset marketplace. We speak first with Dr. Christine Cadigan at the American Forest Foundation about what a forest carbon offset is and how the forest carbon offset market works. Then we speak with Drs. Grayson Badgley, an ecologist, and Danny Cullenward, a lawyer and economist, about their findings of gross over-crediting in the California forest offset market. Then we speak with Dr. Charles Canham, an ecologist, about some of the fundamental issues with forest carbon offset mathematics. Finally, we speak with Christine again, to understand how the offset project that she is helping to develop is designed to try to address the concerns brought up by doctors, Badgley, Cullenward and Canham and others about forest carbon credits.

James Lawler (02:13):

We started our investigation by interviewing Christine Cadigan. Christine is the senior director of the Family Forest Carbon Program at the American Forest Foundation, a project that would allow small family forest owners to participate in the carbon offset marketplace. This project is still in the development phase with approval to enter the carbon offset market anticipated by the end of 2021.

Katherine Gorman (02:37):

Welcome Christine. And thank you so much for speaking with us. So I’m wondering if we can start with just some basics. Can you walk us through what is a carbon offset market and how does it work?

Christine Cadigan (02:48):

So a carbon market is a marketplace that connects the producers of carbon storage to the buyers seeking to reduce or offset their greenhouse gas emissions. And the tradable commodity on a carbon market is a carbon credit. A carbon credit represents a claim that one ton of carbon dioxide equivalent that would have otherwise been in the atmosphere is now not in the atmosphere. So either because it was avoided from being admitted or because it has been sequestered or removed out of the atmosphere. So that is the unit of measure most used by companies on their path to these net zero goals.

Katherine Gorman (03:25):

And is a forest carbon credit different than that like fundamental idea of a carbon credit?

Christine Cadigan (03:32):

A carbon credit is a carbon credit. It represents that one ton of carbon dioxide equivalent. It’s just that there are a variety of options where you can seek that benefit and forests and other natural climate solutions can provide that carbon benefit that you’re seeking. And of course there are other ways, right? Renewable energy, developing direct air capture technologies, things like that can all provide us with options to get that carbon credit or that one ton of carbon dioxide equivalent. But it’s important as I sort of alluded to before to understand that carbon credits have other benefits too. Namely, via carbon markets they’re the fastest growing conservation finance tool to incentivize these other forest stewardship and conservation outcomes that we’re seeking. So in our world at AFF, you know, as I said before, we work to empower these family forest owners to care for their forest and do that good work. And that might be enhanced wildlife habitat, improved water quality in the west, we focus on reducing wildfire risk. So all of these things can be financed to be a carbon markets because the activities, the stewardship really has multiple benefits.

Katherine Gorman (04:44):

So land owners are one kind of potential seller in the carbon marketplace. Who are the buyers that would be using these markets to buy carbon credits?

Christine Cadigan (04:53):

There are two types of carbon markets, and this is where it might get a little bit confusing. First there’s the compliance market. Some probably know that as a cap and trade system. And that’s for example, used in the European Union and also in California. So in a cap and trade market, the government actually puts a cap on greenhouse gas emissions by an industry or sector of the economy. And then businesses are given an allowance of how many metric tons of CO2 equivalents they can emit. So those who emit less than their allotment can sell the extra to other businesses, pushing everyone to further reduce their emissions. Other markets are voluntary carbon markets, and these markets are driven by companies and individuals that are taking responsibility for their own emissions based on a variety of considerations related to corporate social responsibility, ethics, or maybe some supply chain risks that they’ve recognized in light of climate change. Voluntary markets tend to have a little bit more flexibility and they self-regulate. So that’s in contrast to compliance markets.

James Lawler (06:01):

So specifically with regard to forests, can you explain how we think about quantifying the ability of forest to sequester carbon? We’ve heard the terms, additionality, permanence, and leakage as important concepts to keep in mind for measuring forest carbon sequestration. Can you explain what those concepts are?

Christine Cadigan (06:21):

So at its most basic additionality asks is the carbon generated from a forest carbon project additional, is it actually providing an additional benefit to the atmosphere or would it have happened absent the particular program or intervention? Additionality can be really difficult to determine as it commonly involves some degree of subjectivity, right? Since we’re looking for a counterfactual world that we can’t actually observe directly. And that’s where a baseline comes in. The baseline is what helps us determine what that counterfactual looks like. A baseline is the alternate scenario, it is used as a starting point to calculate how much additional carbon we can expect on the property that’s enrolled in the program. Most existing forest carbon projects today use a projected baseline. Typically this baseline is standardized across specific geographies. Using average data from potential alternative land uses from what the landowner would otherwise be doing with the enrolled property. When it comes time to actually measure the carbon on that specific property. It’s the difference between what’s stored on that property and then what we would have anticipated using the model baseline.

James Lawler (07:40):

So additionality or additional carbon is how much more CO2 is being drawn down from the atmosphere because of your specific intervention or practice. That is how much more is drawn down compared to what otherwise would have been the case as measured against some businesses usual baseline. So it seems to me that how this baseline is measured is totally critical as in, we don’t just want to average a bunch of very different ecosystems or forests together because that wouldn’t create that representative measuring stick. The baseline has to be representative of the project plot.

Christine Cadigan (08:19):

Modeled and projected baseline are of course, based on the best available science and data. Again, as I mentioned, they can have some subjectivity. But despite that it is really important that carbon projects and carbon methodologies keep a high degree of integrity and credibility when creating their baseline.

James Lawler (08:39):

So what about these other parameters, permanence and leakage?

Christine Cadigan (08:42):

So permanence in carbon project asks, can we ensure that emissions that have been sequestered are kept out of the atmosphere for a really long time? So if a company is investing in carbon credits indicates that a certain amount of carbon was taken out of the atmosphere, and we want to be sure that it’s not reversed the next year with improper forest management or, you know, a forest being converted to a non-forest use, something like that, where we would see that the activity was otherwise negated. So permanence is really important.

James Lawler (09:16):

Okay. So permanence is difficult to ensure because you can’t control whether a forest catches fire or becomes infested and then loses all of its carbon back to the atmosphere. What about leakage?

Speaker 3 (09:29):

Leakage occurs when there’s reductions in emissions at a project site that is basically negated by increased emissions at another site. So meaning if we pay landowners to do something and they implement the climate smart practice, but then maybe their neighbor sees the opportunity that the enrolled landowner didn’t capitalize on. And so there, we see some potential losses as a result of that action. You’re sort of just shifting the bad activity onto another property. So we know that occurs and we should address that right at the outset. And of course, try to minimize it as much as possible by kind of elevating the forest management across the landscape.

James Lawler (10:18):

So to ensure the quality of a forest carbon credit a project must have a proper baseline against which to compare the project land, to accurately measure the additional carbon being sequestered from the intervention. The project must ensure that the trees are well taken care of and protected from fire or other risks that might kill them and rerelease the CO2 into the atmosphere. That’s the permanence of the sequestration. And finally, the project must make up for leakage. The fact that the activity in question such as, you know, halting deforestation, for example, might simply open up a different area to deforestation. Christine spoke with us about some of the solutions that carbon registries have developed to address the issues of leakage and permanence. They involve setting aside a percentage of carbon credits collected across sellers for a specific registry to use as a kind of insurance or buffer against the reduction of CO2 sequestration that could occur due to leakage or due to unexpected losses in forest stocks, such as fires.

James Lawler (11:24):

Of course, that raises the question as to whether or not that buffer is sufficient. But as we were doing some additional research, we came across a number of articles that put everything about the validity of these markets into question for us. One of these articles was written by Dr. Grayson Badgley of Black Rock Forest and co-authors about the problems they had identified in the California offset market. We spoke with Dr. Badgley and his coauthor, Dr. Danny Cullenward, a lawyer, economist, environmental scientist. They sat down with us to discuss what they had discovered.

Katherine Gorman (12:03):

Today we are talking with Dr. Cullenward and Dr. Badgley, who are the co-authors of an academic paper, systemic overcrowding of forest offsets, which I believe gentlemen is in pre-prints for the general biology, is that right?

Grayson Badgley (12:17):

We submitted it to the preprint server Bio archive, and it’s currently under review. So it’s going through the, sort of more of the traditional peer review process. In the meantime, all of the paper and all of the data and everything behind it, is out now.

Katherine Gorman (12:33):

And I’d love to dive in a little bit more to the specifics that you explore in the paper, thinking about the California markets. And so Grayson, take me through, you know, offsets are great. We all agree we need offsets, but you know, there’s, accounting problems quite literally is what you found in the paper. Yes? Can you take us through those?

Grayson Badgley (12:52):

So yeah, there are accounting problems and the way it works in California in the system, or way that it works is that there’s these large regional averages. So like for Northern California, there’s a lookup table. There’s like literally an Excel spreadsheet that you download and you sort of look up a number of like, what does a forest typically look like? How much carbon does it typically store in this broad region for if I have a Douglas Fir forest, you know, so, you know, some representation with species that I have, and what happens in the program is that you get to go out there and you say, okay, what’s the average and how much carbon do I actually have in my forest? And there’s a lot of complexity in how the calculations actually work, but for all intents and purposes, you basically get the difference between the two.

Grayson Badgley (13:40):

So if you have a forest that has a lot more carbon than whatever that average is calculated, as you get a really large upfront payment. And in fact, it turns out the vast majority of forest carbon offsets in the California system move through this kind of upfront payment, sort of, the difference between the amount of carbon that’s in the forest versus, what has been calculated is what an average forest in this region looks like. And what we found is that there are some really basic problems with how those averages are calculated. They do a couple of things. They average over really large spaces, you know, Northern California, and they also average over really dissimilar species. And it turns out that species really does matter when it comes to sort of how much is the average amount of carbon that you have in your forest.

Grayson Badgley (14:31):

And, you know, the example I like to give that, in Northern California, we have these really beautiful sort of coastal ecosystems that have a steady marine influence where it’s a little bit rainier, It’s a little bit cooler, it’s just a little bit better to be a tree it’s just a little bit easier, and the fires happen a little bit less. The trees grow a little bit bigger. So you’ve got trees that had a whole bunch of carbon inside of them, and you got a bunch of species that can grow to be really big. And the way that the program works is it takes those really big species. And it actually averages together with a bunch of inland drier species, things like Ponderosa pine. And so what happens is that just because you have a big forest and you compare it against a bunch of small forest, you end up getting credit for the fact that your forest is different than a forest that looks nothing like it.

James Lawler (15:21):

So the baseline is totally skewed and effectively meaningless.

Grayson Badgley (15:26):

We went through an enormous number of steps in order to sort of quantify how that works and sort of the implications of that sort of false comparison. And we do that by basically just asking a simple question is if you have a forest that has a bunch of Douglas Fir or Redwoods on it, let’s just compare it against other forests that are primarily Redwood and Douglas Fir, let’s not, let’s not include all the little stuff. Let’s just, let’s just compare you against, you know, your friends, the trees that look like you. And when you do that simple lookup, it turns out that something like 30% of the credits that we were able to analyze in the California system, they seem to be over credited. And our analysis is that they’re issued off the basis of the way that average is set, having some statistical and ecological problems.

James Lawler (16:15):

So what this means is that companies are paying for the carbon they put into the atmosphere to be sequestered by these trees. And these trees are not sequestering as much carbon as the registry selling the credits say they are because they’re compared to a faulty baseline average. Danny, what does this mean when we’re talking about carbon markets, because this is people’s money, companies’ money, and they aren’t getting what they’re paying for. Right?

Danny Cullenward (16:38):

If you don’t mind, let me just add a little color to that because Grayson’s described the ecology here, you’re averaging the big stuff and the little stuff. And so you have an average, that’s not representative of the actual forest types that are out there. So over in my sort of lawyer, econ brain land, I think financial arbitrage. So there’s a protocol rule that says, if you’re better than the average, you get the difference. That creates an incentive for project developers, to look for projects in these areas where the averages are particularly misrepresentative, and to find the projects that cluster in the areas that are naturally better than the average. And we were able to show this is going on, not just like a little bit, but in the case of some developers, like it’s clearly a dominant strategy, because if you look at this from a financial perspective, you find a plot of land with Doug Fir on it in the Northern California area, you just get credit because it’s Doug Fir, not because you managed it well, or you change the management. It’s just compared to a dissimilar average that’s lower.

Danny Cullenward (17:31):

We saw this in a couple of other areas of the country. The private standard setting registry that wrote these rules that were adopted in without really any changes, they said forests in central New Mexico, don’t have any carbon. There’s clearly an error in the numbers. And for years it went unacknowledged until a project developer associated with a firm that has done a lot of this kind of behavior filed for credits and earned something on the order of $50 million for the credits for finding a forest in New Mexico that got compared against the carbon average of zero. And that’s just an example of like the kinds of bad games that can occur that add this additional behavioral and financial complexity on top of the ecological problem of how do we deal with the fact that trees are extraordinary species and so different and so interesting and so important. And people lie cheat and steal.

Katherine Gorman (18:17):

Yeah, Danny, it seems like we’re taking a really great idea that follows very logically, trees, good more trees, yes, better. And turning it into snake oil, which is just like sort of miscalculated and sort of bent around. And it makes for a really nice PR package. You talked earlier about these private organizations writing the rules essentially, but who are we seeing take part in these markets and are all of the numbers on that order of the New Mexican example you gave?

Danny Cullenward (18:45):

The example of New Mexico is an outlier, now I want to be clear like that is an extreme problem. But as Grayson said, we did basically a full audit of the whole California program and found about 30% of the credits were off. I want to just distinguish a couple of things. So first of all, we’re looking at what’s called a compliance program. This is, credits that are issued for companies in California and in Quebec that can use this to satisfy legally binding climate policies imposed by the governments. So there’s a couple of things to say. One is that basically every large scale compliance program, these government run programs has ended up in a state of pretty serious dysfunction. In compliance markets, you have companies like power plants and refineries that are subject to these carbon markets and what those buyers want is a high volume of low-priced offsets, because they want to keep their compliance costs down. There’s not a lot of concern for quality. And what you end up seeing is conservation groups and other environmental groups who might in theory have an interest in protecting the integrity of these markets, they get really interested in the money that could flow to the incredibly important agenda of forest conservation. And so they tend not to focus on quality either. So you end up in a system where the structural political economy tilts you towards low quality outcomes.

James Lawler (19:55):

Okay. So to make sure that I’m understanding you correctly, I just want to walk through how this works. A seller of a carbon offset is stating that with the money that you will pay to me, I will implement a different practice than the one that is currently implemented. Right? And then this will have a certain effect on the trees that I manage that will increase their carbon sequestration ability by a certain amount. And for that, you’re going to pay me a certain amount of money that is directly commensurate with the additional carbon that is sequestered. And so this is the additionality, right? But, the problem is the way in which this is determined vis-a-vis the baseline, where the baseline being used might not be representative of the baseline for the acreage in question. Right? So, you’re looking at a baseline of desert and you have a stand of trees. This is not a good comparison. Yeah?

Danny Cullenward (20:42):

And the only nuance I would add is, is our study on the baselines issue, doesn’t ask whether or not the projects are additional. We sort of assume that that issue has been resolved appropriately. We just say, how many credits should you be getting for the land management practice you’ve claim as additional, I don’t know, Grayson, maybe you want to say actually the additionality standards is pretty revealing. When you look at the tests that these protocols use. So maybe that’d be a helpful illustration here.

Grayson Badgley (21:04):

Yeah. I mean, so you basically can imagine a future and as long as it’s legally allowed, and it doesn’t lose you money, you’re allowed to sort of claim that’s how you would manage your forest. And so what that means in the California system is that we essentially see, I think it’s like 90% of the projects actually claim we would have cut our forest to the maximum allowed by the rules in the program, because it was legally and financially possible.

Grayson Badgley (21:32):

So essentially they’re saying we could do it because it’s legally and financially possible. So, because we could, not that we would, because we could, you need to pay us, you need to give us the difference between how much we have and that sort of long, that long-term average. And so you know, I think there’s a number of cases that pop out in California’s program where it’s pretty clear that it wasn’t a foregone conclusion that the trees were going to be cut down. It’s also not the case that there are many forests out there where there’s zero risk of something being cut down. So what’s the right probability? How do we figure out where between zero and one that we should be, and this is, this is a counterfactual. I can’t think of a clean way to do that at scale, that doesn’t require. I just, it’s just, it seems like it’s such a, it’s such a hard problem.

Danny Cullenward (22:28):

And just to, just to drive this home, I mean, the additionality, we talked about it as if, if you pay me, I’ll do this positive change in land management, you can frame it in the positive. I find sometimes framing it in the negative is a really helpful way to understand the concept. It’s like extortion. Give me the credit, or I’ll cut down the trees. And I’m not saying that that’s what, like a lot of landowners want to do the right thing. A lot of the groups that support this want to do the right thing, but the claim they are making when they file their paperwork is if you don’t give me the money, I will cut down the trees. And the problem is some people are at risk of cutting down their trees. Other people are not. How do you tell the difference, the protocols all sort of assume everybody’s telling the truth. And I have a hard time with that.

Katherine Gorman (23:09):

From our conversation. It was clear that the system had been constructed differently than the ideal that Christine had described to us. In the current market, credits don’t just represent new, additional carbon that land owners are drawing down. It may also include, and certainly has included credit for not cutting down the trees that you currently have, whether or not you ever really plan to. Danny and Grayson pointed out that these problems weren’t news to those involved in the marketplaces scientists have been raising concerns for years.

James Lawler (23:40):

Grayson and Danny pointed us to a recent example, an expose from Bloomberg written by Ben Elgin about forest carbon credits sold by The Nature Conservancy to companies like Disney, JP Morgan and BlackRock. The carbon credits had been advertised as preventing the harvest of thousands of acres of forest in the Northeast. But the reality was that much of that forest was in fact already protected. We will provide the link to the article by Ben Elgin on the page for this episode on the Climate Now website.

Katherine Gorman (24:12):

Dr. Charles Canham, emeritus senior scientist at the Cary Institute and at chapter trustee with The Nature Conservancy for over 20 years had voiced his concerns to The Nature Conservancy leadership. He sat down with James to talk about what happened.

James Lawler (24:25):

So I’d like to go into some of your personal story, which I think is quite interesting, as it pertains to The Nature Conservancy. So I’d love for you to first just describe, you know, what is The Nature Conservancy and then what happened?

Charles Canham (24:40):

I was a chapter trustee for more than 20 years of the Adirondack chapter of The Nature Conservancy. The Nature Conservancy is by far the world’s largest conservation organization and an incredibly effective organization in so many ways. And I’m proud of the work they’ve done worldwide. The Nature Conservancy grew out of a committee of ecologists, it must have been about 80, 90 years ago, well, 75 maybe – who actually got frustrated that academic ecologists weren’t doing enough real on-the-ground conservation, started, essentially The Nature Conservancy. Originally it was a local chapter based organization where, you know, the organization as a whole shared best practices and, and the strength, um, by tying together a lot of grassroots, local chapters. Some of the things that I’m most proud of with the Conservancy has always been their willingness to just seek out solutions that didn’t necessarily involve buying the land and setting it aside or putting an easement on it. Just understanding how to work with private land owners or industries to, uh, to improve their practices. But, you know, last fall, I, I began to learn details of some of the forest carbon offset deals they were doing. I only learned about them because they were trying to partner with a land trust whose board I also serve. And as a land trust fiduciary trustee, they had to sort of reveal the details.

James Lawler (26:03):

But they were, they were selling offsets. Is that right?

Charles Canham (26:06):

Well, they were brokering. So, so typically what a deal would involve was you’ve got a landowner that may not have any protection on its land, except for their good intentions. And, and, and in many cases, long-term good management. The Conservancy was looking to secure long-term protection for that often by paying for an easement on that land to strip the development rights from the land. And that’s gonna involve a lot of money on a 6 or 10,000 or a hundred thousand acre tract. And TNC would have traditionally had to raise that money from donors, right? And then use that to purchase the development rights and protect the land. And in the Adirondacks that meant raising tens of millions of dollars from private donors to protect a half million of acres. Most of which had a very strict easement put on to prevent development and require the land to be managed sustainably under forest certification. So, the offset deals all of a sudden bringing money to the table and significant money to the table. And so it’s quite understandable that the Conservancy was all in on this. It seemed like instead of having to go out and ask donors to contribute the money, here’s a new source of funding, to secure easements and, odd deals. But that’s where I discovered what I considered to be grossly exaggerated estimates of the offsets.

James Lawler (27:31):

So what was it about the offsets The Conservancy was selling that you found troubling?

Charles Canham (27:35):

Basically everyone in this realm has agreed that you shouldn’t just pay people for doing what they would already be doing. That if a company wants to claim that it’s actually benefiting the atmosphere and mitigating climate change, it ought to be doing something to increase that. Now I have to say that I actually don’t have any ethical problem with paying a forest owner for the public service, their forests already provide. But everyone in this space has agreed, all of the registries, the task force on scaling voluntary markets, everyone agrees that in principle, we should only pay landowners and the companies should only claim credit for how much they can increase. Well, the question is, in order to do that, you have to know what that, that business as usual baseline is. What is it 38, well, 36% of US forest land is owned by private individuals.

Charles Canham (28:35):

The vast majority of them do not consider their forest to be a source of economic return. They own them for all sorts of other reasons, and they have no concrete plans to log at all, if they do log often they’ll just take some firewood off their land. And so the corporate owned lands are very different. They are very intensively managed, but they’re not the site where you would look for sequestration because they intend to keep managing, to feed the mills and so forth and provide the economic benefits. If you look at large, you know, regions and categories of owners and different forest types, you can actually statistically define what that baseline looks like. And it’s very different from what the baseline is that’s allowed by the various carbon registries. California uses a slightly different protocol for calculating that baseline then does the voluntary market. California markets sets, what’s called a common practice baseline and sort of averages for a region and says, this is the low. this is what you could manage down to. The voluntary market allows an even more egregious exaggeration of the additional credits by basically saying, what could you legally cut? And what harvest regime would maximize your profit over a hundred years, your net present value. In most cases for people with a high, you know, very healthy, mature forest right now, it means log it like mad, draw it down and then let it regrow for a hundred years.

James Lawler (30:07):

So even if the chance that a forest would be cleared down to a legal baseline is low, aren’t the credits being sold, at least guaranteeing that won’t happen. Like what, what’s wrong with that?

Charles Canham (30:17):

What you’re doing is you’re selling credits for all the carbon that was accumulated over those last 50 to 100 years. And that number has already been baked in, calculated into why we’re not worse off than we are.

James Lawler (30:31):

So the way you’re describing these forest offset markets seems fairly illogical. Like what would be the motivation for setting up the market this way, like where it’s clear that some of the carbon credits are not offering a removal benefit?

Charles Canham (30:43):

Well, let me give a sort of a calculation that to me explains how and why the methods went off the rails. So colleagues and I have have spent years trying to nail down our most accurate estimate of the carbon sequestration potential for forests from New York to Maine. The number that comes out is 4.2 metric tons CO2 per hectare per year, over the next 50 years. And that’s, sequestration within the forest, live biomass in the soil, carbon pools in the deadwood, as well as the forest products that are produced because that four state region has a lot of active forest. We convert that to per acre, that’s 1.7. So that’s the baseline, that 1.7 tons of CO2 sequestration per acre per year is the baseline. But, if you halted all harvest, ignore this leakage problem, which we should talk about, but it’s really gnarly, you could increase that we’d estimate 33%. And our model includes the most detailed quantitative assessment of regional harvest regimes that anyone has. So that’s an additional, basically half a ton, okay. Half a ton of CO2 per acre per year. That’s the maximum potential additionality ignoring leakage, which should be at least half, if not more of that. So, the maximum value to a landowner, and let’s say, let’s be generous and say, it’s $20 a ton. So now you’re at $10 an acre right now, that’s the gross, benefit from the offset deal, $10 to an acre, that’s being generous. But out of that, you’ve got the, you know, the compliance costs probably are $5 an acre for the next, for the whole term. You have to pay people to come in and remeasure your forest. There’s paperwork. So that’s about half of it.

Charles Canham (32:43):

You’ve got the, broker’s going to take somewhere between 20% to 40%. There’s an accounting for how much is likely to be lost due to insects, fire, wind, and so forth. That’s another 15%. You’re talking about a couple of dollars per acre, as the, as the realistic estimate of how much a landowner could get. No land owner in their right mind is going to sign up for a long-term compliance cost of $5 an acre. If their net benefit is, is a couple of dollars an acre. And I think the registries looked at this early on and said, how are we ever going to get this market started when prices back when they started were a couple of dollars a ton. And so they came up with rules that they can, you know, they somehow in their own minds made some sense, that allow a calculation that produces an initial benefit. That’s in the range of $300 to $400 an acre. And at that amount of money, most landowners, particularly if they’re being told, this is good for the planet, most landowners are going to jump and they’re going to be willing to make that commitment.

James Lawler (33:55):

Why don’t they just say that you have to pay more per ton CO2 cause that would, if it’s not $10, but $100, then this problem goes away or no?

Charles Canham (34:06):

That would sort of be price fixing. So who’s going to set the price, right? You’ve got many of these problems go away if the value of the offsets, the pricing of the offsets comes anywhere close to the true social cost of carbon. On the other hand, we do need to manage our forests. You know, trees are one of humanity’s original, renewable resources. Forestry is an important economic driver of rural economies across this country. Halting all harvesting in the US would simply mean it would be off-shored and done far more destructively in the tropics. So if a landowner was going to get paid a hundred dollars a ton that wouldn’t convince them to stop logging up, you know, a high quality log of Cherry that they could, that was worth three or four times that much, but all of the low quality wood, which is about half of our harvest, you know, for things like wooden pallets and paper and, and so forth, that market would be destroyed. You know, those companies would go out of business overnight at those prices. And so someone has to think about the unintended consequences of coming up with a forest offset price that would begin to make sense to a landowner, to a seller and reflect the true social cost of carbon. I see real issues that have not been addressed.

James Lawler (35:31):

Dr. Canham sent his first email outlining his concerns to The Nature Conservancy in December of 2020. For five months, he repeatedly reached out to senior TNC staff about addressing issues with their forest carbon offset program. A meeting was never arranged, but Dr. Canham was promised that an internal review of the program was taking place.

Katherine Gorman (35:50):

In May of 2021, Dr. Canham published an opinion piece detailing his concerns. The Nature Conservancy asked him to resign from his position as a chapter trustee. He agreed to their request. Weeks later, The Nature Conservancy released a statement saying that from their six month internal review, they found opportunities to improve their approach to setting baselines. And that these findings would be used to reassess elements of some of the “projects” under development.

James Lawler (36:18):

We reached out to The Nature Conservancy for comment regarding these issues. And they provided a statement that we include at the bottom of the transcript for this podcast on our website. The statement reiterated their commitment to improving their approach as advances are made in offset market accounting methodologies. And they had this to say regarding their disagreement with Dr. Canham: “The Nature Conservancy’s Adirondack chapter is deeply committed to its work in New York state, and Dr. Canham played a significant role within this community for decades as a close advisor. The Nature Conservancy recognizes there are disagreements at times among scientists and conservation practitioners about the best actions and strategies. Dr. Canham has every right to express his views and share his expertise. It is simply incorrect that we weren’t listening to him or providing him with information, and his resignation did not result from his opinions.”

James Lawler (37:16):

One of the projects associated with The Nature Conservancy that is under development is Christine Cadigan’s, the Family Forest Carbon Program. We wondered if this program would represent the improved approaches The Nature Conservancy mentioned. So we asked if Christine would speak with us again this time, giving us more specifics about how their program works.

Katherine Gorman (37:36):

So Christine, can you tell us a little bit more about the program that you work with?

Christine Cadigan (37:40):

The Family Forest Carbon Program is a partnership between the American Forest Foundation and The Nature Conservancy specifically designed to provide carbon market opportunities to small family forest owners. We have a goal as a program to engage family forest owners nationally, but we’re piloting and launching our program in the central Appalachian region of the US. We are actually simultaneously working to develop existing or complimentary regional modules in other areas, but have been signing contracts and really standing up the program in the central Appalachians. And that is, Pennsylvania, West Virginia and Western Maryland with the opportunity to potentially add some, some additional neighboring states that qualify as the central Appalachia ecoregion.

Katherine Gorman (38:31):

What stage is the project in?

Christine Cadigan (38:33):

So we anticipate that our accounting methodology will be approved by the end of the year. We’re in the very final stages of getting our carbon accounting methodology approved by Verra because our methodology is so innovative and we’re handling things in different ways. There are actually a couple of modifications that Verra needs to make at the requirement level, and they have to get board approval in order to make those adjustments. And once they get the stamp of approval on those, which they’re fairly non-controversial requirements, then they can officially give us the stamp of approval on our methodology. And we have a letter from Verra kind of outlining exactly that process, that it’s not our methodology that’s being delayed. It’s sort of the, the Verra process.

Katherine Gorman (39:18):

For our listeners. Verra is one of the international carbon credit verification programs. Could you explain what is different about your methodology that is new to Verra? How does it set your program apart from the existing programs in the carbon offset marketplace?

Christine Cadigan (39:33):

Yeah, I think the biggest thing to highlight about what makes our methodology, well it’s, well, two things make our methodology unique or innovative: are that we are measuring stock change, following the implementation of a specific practice or intervention. And that’s different from existing methodologies, which measure stocks. So just to reiterate on day one, our carbon clock is zero, right? We have, our landowners have generated no carbon whatsoever. There’s nothing for us to monetize. It’s only after they’ve implemented the intervention, and then the trees and the forest have had time to grow that you start to see a carbon benefit accrue to the program and to the landowner. The other thing that’s different about our methodology is how we determine the baseline with some traditional forest carbon accounting methodologies. You’ll see that they develop a standardized kind of model baseline. And in many cases, you know, this is based on the best available data. They’re, you know, certainly trying to make it as accurate as possible. But what you don’t necessarily see is the ability for that baseline to be adjusted over time, particularly as it relates to any external factors, which might affect how forest management is occurring in those particular places or policy changes, which might affect how forest management is being implemented. And so it’s a little bit trickier to truly isolate the carbon benefit and attribute it to the property that’s been enrolled. So what we’ve done in our methodology is kind of taken a lesson from medical trials and try to use a control group, right? And this means that we have a real observed dynamic baseline. And this is, this is actually one of the things that, because it’s so innovative, it’s not even within Verra’s requirements yet, and this is why they need to sort of tweak and get the board approval.

Christine Cadigan (41:28):

So it’s really cool. As external factors are affecting all of the projects that are enrolled, it’ll similarly affect the baseline. So every time we go through a verification process, we update the baseline. And of course we update the properties that are enrolled. We update the measurements. And so we should truly be able to isolate what’s going on through the implementation of the specific intervention in question. And the matching process gets very specific. We’re not just kind of picking any land out there to match to our landowners who are enrolled we’re, we’re picking properties that are similar. They have similar attributes. If they’ve been poorly managed for decades, then we’re going to match them to properties that have very similar conditions to the properties that are enrolled in the program. And then, you know, vice versa, if it’s a really good property that’s enrolling in our program, it’s been managed really well up until now. We’ll match them with properties that have those like conditions associated with historical management.

James Lawler (42:33):

Explain a bit more about these similar attributes that you’re using. Are there others, besides how it is managed? Like I’m guessing the properties would need to be close by, right. That they’d need to be sort of the same type of forest.

Christine Cadigan (42:45):

Yeah. There’s the, the process we use to match our baseline plots, which are, you know, our control plots with our enrolled plots involves something like 14 different covariates. So we’re filtering the matching process based on those attributes, which our scientists have said are most likely to determine their likeness with the project plot. And so of course, geography, I mean, some of them are already sort of no-brainers, but you know, there’s a number of different variables, which say, yep, this means that we’re matching a property which is very similar to our enrolled property.

Katherine Gorman (43:21):

So let’s talk a little bit about the actual measurable benefits you’re anticipating. You mentioned to us when we first spoke that your target was to enroll 20% of all family owned lands by 2030, and this could lead to a benefit of about 50 million tons of carbon dioxide removed annually. So that estimate is anticipating that your practices will produce an additional draw down of a little over one ton per acre annually. Do you have any results yet to indicate if that’s actually a reasonable estimate?

Christine Cadigan (43:51):

Yeah. So, so one thing to highlight is that we haven’t yet done our first remeasurement. So we can’t yet see the potential benefit that’s been generated until we’ve measured once, right, the initial measurement, and then we’ve gone back and done a remeasurement to determine the Delta, right. And the Delta between the project plot and the control group or the baseline. So that’s, what’s going to happen in the early part of next year when we go back and do the remeasurement on our first cohort of landowners. So we’ll see how our enrolled landowners are performing compared with our expectations on the amount that we think we can sequester per acre per year. So that’s, you know, that’s still in question, right? One of the things that we have learned over the past year, which kind of answers your questions, is how we can better focus on enrolling those landowners. And subsequently that land that we feel like has the potential to provide the greatest sequestration benefit. And so we’ve done a lot of analysis on the likelihood of these lands to otherwise experience a harvest, specifically an unsustainable harvest, and try to target those landowners in particular because the intervention that we’re offering will be most meaningful from a carbon perspective, when implemented on those particular properties.

Katherine Gorman (45:13):

The Family Forest Carbon Program is still in development, so it remains to be seen if it will succeed, but it is clear that this project is trying to develop approaches that reduce the possibility of creating meaningless credits.

James Lawler (45:25):

Across all of our conversations, our guests made it clear that the work of managing our forests has value beyond its benefits to climate change, and making a forest carbon offset program work would be a win for everyone. We asked each of them what changes could be implemented that would improve the integrity of the forest carbon offset market.

Grayson Badgley (45:44):

It’s a good question. I think we want this to be a really simple solution and I think it, you know, it’s unquestionable that trees are a good thing. It’s just really hard to quantify, you know, exactly the, all of these, all of the messiness that is ecology. I think one thing that, that allowed us to do our analysis is that all the data, you know, the, or there was at least some data to analyze. And I think that to me going forward, I think that making sure that there’s public public data so that people can come in and sort of try and ask these questions of quality, I think it would be a really, really helpful change, going forward.

Danny Cullenward (46:24):

We need to have really good science plugged into the policy conversation and a two-way dialogue, and I worry sometimes that we’ve broken that connection and focused more on marketing and good feelings rather than ongoing rigorous scientific evaluation of the effectiveness of climate policies. You need people like Grayson to be in the room and not random consultants, you know, working on six-month timeframes, picking numbers out of thin air, putting them in dense protocol documents, and then walking away for a couple of years and checking how much bad stuff happens after the fact. It’s a really tough problem and we have a much broader issue to deal with around making sure that science is part of these conversations and not polluted by the politics.

Charles Canham (47:07):

You know, in the US, we can only do so much particularly without causing these leakage problems. The big levers are in the tropics really, which are 45% of the world’s forests, and in reducing deforestation, and to some degree, the spreading of peatlands, particularly in the tropics. So that’s where the leverage lies. Changing forest management by essentially halting harvests is being vastly overestimated as a tool for natural climate solutions.

Christine Cadigan (47:50):

These topics are complex. And as long as we, as a community are committed to further innovation and refining our techniques and our strategies, then it’s worth the investment because the climate crisis is just too urgent to not actually attempt to solve these problems with some of the low cost really efficient opportunities that we have with nature based solutions. We do think that the community writ large needs to focus on quality and integrity of the carbon credit. And that’s from the demand side, right? The onus s not just on the suppliers and the project developers, those who are generating the carbon credits, but also on the demand side, such that they’re asking for a specific quality and they’re willing to pay for that quality as well.

Katherine Gorman (48:41):

That was Grayson Badgley, Danny Cullenward, Charlie Canham, and Christine Cadigan. That is it for this episode of the podcast. You can find other interviews, watch our videos and sign up for our newsletter at climatenow.com. And if you want to get in touch, email us at contact@climatenow.com or tweet at us @weareclimatenow. We hope you’ll join us for our next conversation.


Statement from TNC:

Climate Now Statement

Oct. 5, 2021

Attributed to a TNC Spokesperson

Carbon Offsets

Our planet faces the dual crises of rapid climate change and biodiversity loss. We have years, not decades, to address these existential threats.

For decades, TNC has worked with partners on innovative, scalable, science-based solutions that match the urgency of these crises. These emergencies require myriad solutions, and we need them all. Carbon offsets are one approach used by businesses to reduce their overall carbon footprint.

The transition to a low-carbon economy is happening; however, the technologies available to many companies today are not sufficient to meet many of their ambitions in the short term. Offsets provide an additional option for companies that want to do more. Carbon offsets must be coupled with reducing emissions, accelerating the shift to clean energy, fuels, and low-carbon materials, and other strategies designed to increase the protection, restoration and improved management of forests, grasslands, farms, and wetlands.

As climate change science and policy evolves and grows, we strive to ensure our carbon projects do the same so we can achieve our goals for a low-carbon future. TNC meets or exceeds the requirements of the latest methodologies of market-leading standards, which themselves are developed through an open process of public consultation, transparency, and independent third-party assessment.

TNC’s projects are all verified and follow market-leading standards – including the Verified Carbon Standard (VCS), Climate Action Reserve (CAR), American Carbon Registry (ACR), and California Regulatory Program.

We are deeply committed to the development of new, scientifically rigorous methodologies and we support ongoing improvements – through revisions and adaptations – of existing standards as science progresses.

Time is of the essence. We’re serious about getting this right – and doing so transparently, inclusively, and equitably. If we’re going to make any progress in tackling the climate crisis, we need “all of the above solutions,” and we need informed public discussions to maintain progress.

Family Forest Carbon Program

In the U.S., 39% of forest land is owned by families and individuals.

Most family forest landowners have been excluded from the opportunity to participate in the carbon credit markets, which could both provide families with new sources of revenue and fund meaningful climate-friendly forestry and conservation practices on their lands.

One of the barriers to their participation is that traditional carbon projects require landowners to invest significant up-front capital before receiving any carbon revenue. We are working with American Forest Foundation to develop the Family Forest Carbon Program to remove this barrier. The FFCP model provides incentive payments to landowners to implement sustainable practices that sequester additional carbon. In return, the landowners partner with the FFCP to bring carbon credits to market. The FFCP manages all aspects of carbon project development, sustainable forest management planning, verification, and more, with carbon credit revenues funding the program.

To facilitate the FFCP, we have developed a new carbon methodology with the American Forest Foundation, under the Verified Carbon Standard. This methodology is a good example of our ongoing commitment to bring the latest science to improve carbon markets and to fight the climate crisis. The methodology learns from an approach from the biomedical field used for testing medications and vaccines. It adapts this approach in order to detect the additional carbon sequestration that occurs in forests enrolled in the FFCP compared to highly similar forests that do not join the program.

Regarding Dr. Charles Canham

TNC’s Adirondack Chapter is deeply committed to its work in New York state and Dr. Canham played a significant role within this community for decades as a close advisor. TNC recognizes there are disagreements at times among scientists and conservation practitioners about the best actions and strategies. Dr. Canham has every right to express his views and share his expertise. It’s simply incorrect that we weren’t listening to him or providing him with information and his resignation did not result from his opinions.

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