Forest carbon credits fall short as climate risks grow

For decades, forests have been central to optimism about tackling climate change. Governments conserve them, businesses fund tree planting, and carbon markets have built multi-billion-dollar frameworks around them.

Trees take carbon dioxide from the air and retain it in their timber, roots and soils. In principle, having more trees should leave less carbon in the atmosphere.

This premise has influenced climate policy worldwide.

Forest carbon credits fall short

Forest schemes became an important element of net zero strategies, particularly for firms seeking to compensate for emissions they cannot entirely remove.

Against costly industrial carbon-capture technologies, forests appeared to be an affordable and workable alternative.

However, fresh research indicates that the calculations underpinning many forest carbon programmes may not hold up through the coming century.

A significant study of forests throughout the contiguous United States concluded that the insurance mechanism underpinning forest carbon credits is far too small for the climate hazards already emerging.

Forests became climate solutions

Forests became widely favoured in climate policy because their benefits extend beyond holding carbon.

Well-managed forests provide habitat for wildlife, safeguard water resources, limit soil erosion and offer places for recreation. They can also remove carbon without requiring vast industrial equipment.

Yet the scientists responsible for the new research caution that an excessive reliance on forests brings increasing dangers.

“Getting to net zero emissions will take a portfolio of solutions,” said Anna Trugman, a forest ecologist at UC Santa Barbara and co-author of the study.

“But in many regions, escalating disturbance associated with climate change makes it riskier to count on forests to sequester carbon.”

Climate disasters threaten forests

Trees retain carbon only for as long as they are living and in good condition.

Wildfires, drought, insect infestations and disease may quickly undo decades of accumulated carbon storage. When woodland burns or trees die, a substantial proportion of the carbon they held is released back into the air.

Most forest offset schemes use a mechanism known as a buffer pool to shield purchasers from these losses.

Carbon markets use insurance

A buffer pool functions as collective insurance: each forest project places a share of its carbon credits into it.

When a disaster hits and a project loses trees, credits are cancelled from that buffer rather than from the affected project.

The model rests on a crucial premise: the buffer pool has to be sufficient to meet future losses across lengthy periods, commonly 100 years.

The researchers say this premise may now be seriously out of date.

“Forests are facing increasing durability risks due to climate change,” said William Anderegg, biology professor at the University of Utah and senior author of the study.

“Those risks have been underappreciated to date in multi-billion-dollar carbon markets.”

Testing future forest risks

Using forest inventory records, satellite data, machine learning and climate-disturbance models, the team assessed long-term risks to forests across the United States.

Rather than relying on past conditions, they considered what forests could face in future as temperatures increase, fire seasons lengthen and insects expand into new regions.

The greatest threats were identified in California and the Intermountain West, which are already contending with intense wildfire seasons, drought and bark beetle outbreaks.

Across large areas of Idaho, Arizona, New Mexico and Southern California, there was an 80 percent or higher likelihood of wildfire-related carbon losses during the next century.

Across the country, climate-informed forecasts show the proportion of forests expected to experience carbon reversals caused by wildfire increasing substantially.

Future losses increase nationwide

Based on historic conditions, roughly 10 percent of forests were expected to suffer these losses. With future climate projections, the figure rises to 33 percent.

“Compared to other natural disturbances, we found that wildfire is the largest climate-sensitive risk to durability for forest nature-based climate solutions,” said co-lead author Chao Wu, now at Tsinghua University in Beijing.

“Our analysis shows for the first time what a robust, climate-informed buffer pool would look like to handle accelerating climate threats.”

Insurance funds fall short

The team next measured these projected risks against the buffer pool operated by the United States’ largest forest carbon programme.

They found a substantial deficit: on average, the buffer pool seemed to be undersized by a factor of 6.3.

Even using more favourable climate scenarios, the scheme continued to underestimate the risk by more than double.

A gap of this scale would raise concern in almost any financial insurance system.

Why credibility matters

Carbon credits function only when they are trusted. Each forest carbon credit is a commitment that one tonne of carbon dioxide will remain out of the atmosphere.

When forests subsequently burn or fail under climate pressure, that commitment is undermined.

“Nature-based climate solutions in forests aim to store carbon and keep it out of the atmosphere,” Anderegg explained.

“Sometimes that forest carbon is claimed as a ‘carbon offset’ for fossil fuel emissions elsewhere. Somebody’s buying that credit, assuming that a ton of carbon in the trees is the same as a ton of carbon in fossil fuels that you emit to the atmosphere.”

That comparison relies wholly on storage lasting over the long term. Should the forests vanish, so does the associated climate benefit.

Climate rules need updating

The researchers are not making the case against forest-based climate solutions. Conserving forests remains among the most practical climate measures available.

Instead, they contend that carbon market regulations need to align with current climate science.

“But with better science, we can set these policies up to potentially work better,” Anderegg said. “We’re providing a potential solution as well.”

Possible measures include bigger buffer pools, tougher requirements in high-risk locations and frequent revisions as climate conditions shift.

Smarter forest planning ahead

Anderegg says planning led by science could still make forest carbon programmes more dependable.

“There is some positive news here,” he said. “Once you have the best-available science and data directly incorporated into programs and policies, you can then inform and strategically guide where new projects get developed.”

Such an approach could steer forest projects towards areas where stored carbon has a greater chance of remaining in place for decades.

“This ability to choose and really focus on forest carbon in low-risk areas is very promising,” Anderegg added.

“This can incentivize these forest activities where they’re likely to last, and then maybe steer clear of areas where forests are likely to be gone in 100 years.”

Forests continue to have an important place in climate action. Nevertheless, the research indicates that the accounting systems around them need to adapt rapidly before climate risks exceed the commitments associated with forest carbon credits.