Forests are major carbon sinks—repositories of vast amounts of carbon. This report describes current markets for forest carbon sequestration, the potential for using forests to offset other sources of GHG emissions, and the concerns and drawbacks related to forest carbon sequestration efforts. Projects that sequester GHGs or reduce GHG emissions from unregulated economic sectors, such as forestry, can generate offsets, or credits, to sell to regulated entities or to those who wish to reduce their carbon footprints. In either case—for regulated entities or for voluntary reductions—forestry activities (e.g., afforestation, reforestation, and avoided deforestation) typically present opportunities to offset GHG emissions. One concern for offset markets, in addition to the drawbacks discussed below, is the potential for double-counting the offsets—that is, that sellers might try to sell the same offset to multiple buyers. For forestry projects, the CDM includes only afforestation (planting trees where none were previously growing) and reforestation (replanting trees on recently cleared forest sites). Regional Initiatives in the United States

Even though the United States is not a signatory to the Kyoto Protocol, many states are participating in regional initiatives for mandatory reduction of GHG emissions. These technical guidelines could provide a consistent basis for carbon reporting and for offset projects in both voluntary and compliance markets. Forestry Projects for Offsets

Several types of forestry projects might qualify as offsets for compliance or voluntary carbon markets. This is particularly significant for forestry, since tropical deforestation and forest degradation have been estimated to cause as much as 17% of anthropogenic carbon emissions. (See " Avoided Deforestation ," below.) Long-Term Wood Products

Some have suggested that harvesting timber for long-term wood products should be included as possible carbon offsets. Sawmill wastes are almost entirely used for paper or energy (burned as a substitute for fossil fuels). Paper products have a relatively brief duration, often releasing their carbon in less than a year, but paper is commonly recycled, reducing the carbon release as well as reducing the demand for wood from the forest. Some argue that harvesting increases carbon sequestration by storing carbon in long-term products and sequestering large amounts of carbon in reforestation. However, avoiding deforestation is particularly prone to leakage—deforestation of another site to provide the desired products or outcomes. Potential Drawbacks of Forestry-Related Projects

Although forestry-related projects may offer considerable opportunities to mitigate climate change, several issues with offsets generally and with forestry projects in particular have generated controversy. Additionality means that the offset project is an activity beyond what would have occurred under a business-as-usual scenario. For instance, does the activity represent a common practice or conform to an industry standard? Is the forestry project required under other federal, state, or local laws? For some markets and practices, assurance of sustainable forest management can be obtained through forest certification. Product Leakage

Forest products face another type of leakage: product leakage. Forest offset projects are typically expected to generate offsets (via sequestration) for decades. Some are concerned that the emission offsets will be subsequently negated by human activity (e.g., change in land use) or a natural occurrence (e.g., forest fire, disease, or pestilence). An analysis of four particular carbon offset market standards found that one required a 10% buffer (i.e., only 90% of the estimated carbon offset could be sold); another required a 30% buffer, while the other two used variable buffers (from 5% to 60%) depending on an assessment of the risk of the project. This relies on accurate measurement and monitoring to assure that payments are for net carbon sequestration. Forward Crediting

Many biological sequestration projects, such as afforestation or reforestation, present a unique challenge because of the significant time gap between the initial project activity (e.g., planting trees) and the actual carbon sequestration.
Forests are major carbon sinks (storehouses), and activities that alter forests can release or sequester carbon dioxide (CO2), the most common greenhouse gas (GHG). Some carbon markets have been formed under mandatory GHG reduction regimes, such as the Kyoto Protocol and various regional and state initiatives in the United States. Other markets have formed for voluntary efforts to reduce GHG emissions. Offsets, or credits for sequestering carbon or reducing emissions in unregulated sectors, are typically allowed in both mandatory and voluntary markets. Forestry activities are among the largest-volume and lowest-cost opportunities for generating offsets.
Various forestry activities may be feasible for carbon offsets. Afforestation (planting trees on open sites) and reforestation (planting trees on recently cleared sites) are the activities most commonly included for offsets. Some propose that the carbon stored in long-term wood products, such as lumber and plywood, could be credited as carbon offsets, and mill wastes often substitute for fossil fuels to produce energy; however, short-term products (e.g., paper) and the biomass left in the woods after timber harvesting release carbon, making the net carbon effects uncertain. Some forest management practices also might qualify for carbon offsets; certified sustainable forest practices provide a system of assured, long-term forests, while activities to increase tree growth face many of the same concerns as long-term wood products. Finally, deforestation is a major source of GHG emissions, accounting for as much as 17% of anthropogenic emissions. Thus, avoided deforestation, especially in the tropics, potentially provides an enormous opportunity to reduce GHG emissions. However, avoided deforestation is particularly prone to leakage (see below), as well as many of the concerns about forest carbon offsets generally.
Forestry projects may offer considerable market opportunities for carbon offsets, but several issues have generated concerns and controversy. One concern, especially for compliance markets, is whether projects are additional to business as usual. An activity that is common practice or industry standard, or a project that is required under current federal, state, or local laws, cannot be used as an offset. Functional carbon markets also require cost-effective practices to verify carbon sequestration. Current measurement and monitoring practices are costly and have several implementation challenges. Another concern is that, compared to other types of offsets, forestry projects present substantial risk of leakage. Emission leakage can occur if carbon sequestered in one location (e.g., by avoided deforestation) leads to carbon release (e.g., from increased harvesting) in another location. Product leakage could occur if forest carbon sequestration induces use of more carbon-intensive substitutes (e.g., cement or steel). Forest carbon projects are expected to generate offsets for decades. Some are concerned that the sequestration will be negated subsequently by human activity (e.g., change in land use) or a natural occurrence (e.g., forest fire or disease). Although there are legal and accounting mechanisms that can address this concern, implementing these options may present challenges, particularly for projects in developing nations. Finally, forward crediting to allow early credits for expected sequestration faces many of the same concerns about not fulfilling expectations.