New Research Shows Opportunity to Improve California Forest Carbon Market

(SAN FRANCISCO) New research from Environmental Defense Fund finds that part of California’s forest carbon crediting program has overestimated the amount of carbon storage attributable to the program in one ecologically diverse region. The research, published February in Ecological Applications, offers new insights and opportunities for strengthening the integrity of temperate forest carbon credits by accounting for differences in forests' geography and tree species composition.  It builds on previous work that raised concerns about the risk of over-crediting in the first generation of forest carbon projects under the California program.  

"Using this research, we can continue to refine methodology to ensure that forest carbon credits truly represent carbon storage that goes beyond business-as-usual forest management,” says Nina Randazzo, an EDF postdoctoral fellow and the study’s lead author.

Establishing a baseline

In the California cap-and-trade carbon market, improved forest management (IFM) projects generate carbon credits if their carbon stocks are greater than a baseline, encouraging management that allows for greater carbon storage. This baseline is informed by an average of the carbon density of privately-owned forests in the same region and general forest type.

However, these general forest types include a wide variety of environments and ecosystems with significantly different carbon densities. In these cases, forest carbon projects may be compared to forests that are less carbon dense for reasons other than superior management in the project area, providing credit for business-as-usual practices.

EDF scientists used the same forest survey dataset as in the current method devised by the IFM methodology but developed a new approach that more precisely integrates tree species composition, particularly differences in tree species composition that correspond with differences in geography and environmental conditions. They then applied these methods to an ecologically diverse region of California and discovered that in many cases, the credits for additional carbon storage the earlier method had awarded were not warranted.  

EDF’s methodology refines previous work regarding this type of over-crediting by characterizing even more environmental variability across this diverse region to inform more accurate baselines.

Reducing the risk of over-crediting

California’s program issued credits mostly to landowners with more carbon-dense forest types than other forests within the region and general forest type, even with business-as-usual management. In this case, the baseline calculation methods used by the California carbon market used methods that over-generalized baseline carbon storage, allowing for a bias in the forests that generate carbon credits.

The team looked specifically at the state’s Mixed Conifer Assessment area in the Southern Cascades, which stretches from near the coast of northern California and southern Oregon to more inland areas just to the north of the Sierra Nevada Mountain range. This assessment area includes diverse forest types associated with a variety of climate conditions, all of which affect carbon storage and carbon storage potential.

Forests along the coast, for example, are much moister and include trees that can establish a high density of carbon. In other parts of the assessment area, however, more arid forests cannot build up as much biomass. Yet, these diverse areas are averaged together to create a baseline. As a result, landowners along the coastal regions are receiving credits for greater carbon density, when they may not have made any adjustments to their management practices at all.

“Recent research, including our study, can be used to update estimates of baseline carbon storage in a way that better accounts for relevant factors that affect carbon storage, and these updated baselines in turn can inform more accurate estimates of additionality in the market,” Randazzo said.

“By using new, independent methods, we confirmed and built on earlier research that had called into question the integrity of these credits. By refining the methodology to account for greater diversity within regions, we feel we’ve provided the state with a roadmap so it can develop credits with even greater integrity,” Randazzo added.

Improving integrity, increasing confidence in the market

“The ability of carbon markets to move the needle on climate change depends on the integrity and quality of the credits themselves,” says Eric Holst, Associate Vice President, Natural Climate Solutions at EDF. “This research presents an opportunity to improve on the existing system as we look toward the next generation of forest carbon credits. We look forward to working with the state of California to improve upon the existing system, making these credits even more impactful.”