Answering buyers' questions about Native CCUs, Additionality, and the CarbonCrop Methodology
Carbon offsets are not all created equal. If you're buying carbon units to offset your emissions, it's important to question their source and ensure they align with your values.
In this post we’ll try to answer some of the burning questions you may have about our new offering, Native CarbonCrop Units (CCUs). We’ll explain why Native CCUs exist, how they’re issued, and why we believe they’re a significant step forward.
Can all native forests earn Native CCUs?
No, we only issue Native CCUs to New Zealand forests which meet our criteria. To qualify, the forest must be actively growing and sequestering new carbon. We don’t award CCU to mature forests that have reached a steady state.
Native CCUs are designed for permanent forests, rather than trees intended to be harvested.
What about forests established before 1990?
Land that started to regenerate prior to 1990 may be eligible for Native CCU if it’s still actively regenerating and sequestering new carbon now.
You can read more about this in our previous blog post here.
What are Native CCUs?
Every Native CarbonCrop Unit (CCU) represents:
1 tonne of CO2 as assessed by CarbonCrop’s methodology
Removed from the atmosphere within the last 5 years
Durably stored in the growing biomass of regenerating native forest
Regardless of the initial establishment date of that forest
Placing a binding obligation on the landholder to ensure CO2stays sequestered for the next 100 years
How do you measure Native CCU?
We use aerial and satellite imagery, and apply machine learning to tell us the recent carbon sequestration (removal of carbon).
Our technology estimates carbon stock, sequestration rates, and species composition at a resolution of less than 1 sqm which means we can recognise native forest and exclude any detected pesky wildling pines and other invasive species from being counted. A native CCU is designed to only recognise the value of our native New Zealand forests.
Does CarbonCrop follow the guidelines set by the Ministry for the Environment on voluntary carbon offsets?
You can read more about how we compare point-by-point to their guidelines.
Are Native CCUs third party certified?
The landowner is the owner and core beneficiary of the offsets they earn from their land and trees.
CarbonCrop is a third party who assesses and issues CCUs in relation to the project - we do take a share of the offsets to cover our service costs, but we don't own the land. CarbonCrop’s technology is assessing their carbon stock and carbon removals, ongoing, and issuing units according to the growth of their forest. At this stage we are not accredited or certified by any other major agency in the carbon market space, though this is our ultimate goal.
Does CarbonCrop measure baselines?
We very much do set and use baselines - a carbon sequestration calculation is inherently unmeasurable without one.
First we set the base sequestration rate, which is the carbon removal rate prior to the forest being established. That’s usually zero - consistent with the historic use pattern of grazing or periodic land clearing. To be clear, we don’t issue CCUs for old growth forests that are in a steady state of carbon removals. We only issue CCUs to forests where carbon removals are increasing each year i.e the forest is still growing.
Then we determine the temporal sequestration boundary, which gives us a baseline of carbon already stored, and stops us issuing CCUs recognising historic carbon removed as we only recognise new carbon removals from the atmosphere within the last 5 years.
I heard that you don't set baselines, what's changed?
In a particular section of our methodology referencing the baseline scenario, it stated “there is no need to calculate a baseline rate”.
What we should have said was that under our methodology there's no need to speculate about the landholders current or historic intentions with the land. This means that we don't need to determine a baseline associated with the risk of them clearing their forest, because we don't recognise the avoidance of forest clearance with the award of CCUs, which some methodologies do.
We’ve updated the wording in our methodology now to clarify our position and the details of our calculation so that confusion doesn’t happen again.
Why do baselines matter?
Where an offset is being issued to recognise the reduction in carbon or an activity that would result in increased carbon if there wasn’t a financial incentive in place, that is where this becomes most critical to establish.
Example 1
Consider a regenerating forest with a current carbon stock of 5,000t CO2, and sequestering 100t of additional Co2 per year.
A project developer might make the case that in the absence of carbon finance the landholder intends to clear the forest, and so the ‘baseline’ for the project is an emission of 5000t of carbon immediately, and then 100t/yr ongoing, and therefore claim entitlement to 5000 avoided emission carbon offsets initially in addition to the 100 removal offsets per year ongoing, all based on a difficult to prove assessment of the landholders intent to remove the forest if they don’t earn credits.
Example 2
A similar scenario is often applied to justify the issuance of offsets for the conversion of a dirty power plant to a slightly cleaner power plant. Consider a coal power plant, generating electricity. That’s one of highest emission generation sources - money could be invested in converting the same power plant to use natural gas as fuel, reducing CO2 emissions per unit of electricity output. Let’s say (purely for the sake of example) that with the coal fuel, the plant emitted 4 million tons of CO2 per year, and that with gas as fuel that reduced to 2 million tons for the same electrical output. If the gas power plant could be argued to be ‘additional’ vs the baseline of the coal power plant… hey presto, you’ve an argument for issuing 2 Million offsets every year for the remaining ‘life’ of the replaced coal plant, and the power plant is still emitting 2 million tons per year!.
The majority of traded offsets in voluntary carbon markets are justified on the basis of ‘avoided emissions’ such as this, which may surprise many buyers in the marketplace who don’t even realise that the ‘offsets’ they buy may not actually be associated with the ‘removal’ of any carbon from the atmosphere at all.
CarbonCrop doesn’t feel this is consistent with an effective response to climate change that will get us to net zero emissions, and therefore doesn’t give any issuances for avoided deforestation.
That’s not to say that avoided deforestation offsets are fundamentally wrong in all cases, just that they’re notoriously difficult to assess regarding additionality (and leakage), don’t result in any true removals of carbon, and can create wildly perverse incentives such as a push to deforest land in the absence of an incentive to establish the credibility of the claimed counterfactual… woops, carbon offsets accidentally incentivised deforestation!
Does there need to be a change in land use to earn a Native CCU?
Where a historic land management change has been implemented but that forest has achieved a carbon steady state, we do not issue CCUs - we look to recognise and incentivise ongoing sequestration.
As CCUs are issued in recognition of a tonne of CO2 recently pulled from the atmosphere and stored in the biomass of a tree, this will generally only occur as a result of a land management change - whether that’s tomorrow, yesterday, or four decades ago - as land which hasn’t been the subject of a management change will be in a carbon steady state. We do not issue CCUs to stable old-growth forest, even if an argument is made of deforestation risk.
Where the landholder makes further active management changes post-registration that increase or decrease the rate of sequestration, CCU issuances will increase/decrease proportionally. This has the effect of directly incentivising further activities that drive sequestration - that’s what we want for fighting climate change - and also of recognising, rewarding and sustaining those activities where they are already underway.
In all cases, CCUs carry an obligation on the landholder to assure the durability of the carbon sequestration outcome associated with any past/future management change.
This is consistent with the generally applied principle of additionality - whereby the CCU drives a behaviour consistent with an increase in net carbon sequestration.
Does CarbonCrop set a baseline for pest control or other additional measures?
Our landholders may introduce pest control programs to maximise the sequestration on their property (and our methodology strongly incentivises this, along with stock removal, fencing and enrichment planting and many other possible interventions!), but either way they'll be recognised for the actual carbon sequestration outcome they achieve, not the intention behind it.
But don't you need to measure the impact of pest control for sequestration to be additional
We don't speculate about the potential impact of a pest control program that would be almost impossible to accurately assign a baseline, as there are many variables that would influence this, and many activities that could be undertaken or not to improve the growth of the forest. Attempting to measure this would decrease the accuracy of our assessment and be more misleading to buyers of offsets. It would also introduce an onerous barrier to the landholder that would disincentive their participation, meaning less carbon sequestered overall.
On balance, we think this is the fairest, most accurate and most impactful approach, and this is where the nuance of the additionality comes into play. We’re practical people, wanting to take the principle and apply it to something measurable, scalable and provable.
How do others do additionality?
Approaches vary considerably, but the strictest interpretation advocated by some methodologies and standards requires that the offsets be issued only relative to a baseline representing the current state in the absence of offsets. This could mean the avoidance of deforestation where it might otherwise happen, or the planting of new trees where none are currently established - although in this latter case a strict interpretation would require that even the new planting would not occur in the absence of finance; otherwise it’s ‘not additional’.
This principle is complex and nuanced due to its subjective nature of needing to prove intent and/or prove a counterfactual. Even the Gold Standard(R) guidance acknowledges that ‘definitions on additionality vary’ and that testing for additionality is “not a perfect science”.
The consequence of this complexity and nuance is decidedly mixed results in practice. Some published independent reports suggest as many as 52% of units issued under international voluntary offset standards have material limitations regarding the additionality.
While CCU issued to our projects will not always meet the strictest definition of additionality (although many actually will - especially those that plant a tree next year because we enabled their ability to earn Native CCUs!), our view is that this issue is widespread in any case, and that the approach we take to additionality will enable and drive more additional action overall through improved transparency, objectivity, and certainty in the market.
Is your approach common?
Our approach is similar to others certifying net carbonzero farms and recognising carbon zero meat - and we support those applications!
Not to mention the NZ Emissions Trading Scheme. Yes, we do recognise the NZ ETS compliance market is a separate thing from voluntary carbon markets, but it’s pretty important to acknowledge that the Ministry for Environments guidelines indicates it’s appropriate for businesses to buy and ‘cancel’ Post-1989 forestry NZUs on the voluntary market to ‘offset’ their emissions - these NZUs are routinely issued to forests which are already established and growing at the time of registration and may have no competing land use, and these are used for offset applications the same as Native CCUs.
We believe carbon zero is carbon zero, whether you're talking about beef, wool, or jet fuel. New Zealand has declared a climate emergency, and if we want to scale our response, we have to allow landholders to scale their impact beyond recognising it in their own commodities.
What’s less common about our approach is the use of AI technology to assess forests, calculate carbon sequestration and speed up the process of issuing carbon offsets at scale.
What are some more scenarios of how CarbonCrop measures offsets?
Additionality is a pretty abstract concept, so we want to give you some examples about how we apply additionality versus the strict definition and leave it for you to decide for yourself.
Note: indicated values are presented as indicative averages over time for clarity.
I’ve read about offsets being for removals or reductions. What are your offsets?
We only issue a CCU for one tonne of CO2 removed from the atmosphere. We never issue CCUs for reduced emissions, which is what many offsets represent.
We’re able to do that in a precise, scalable and auditable form, recognising ongoing sequestration in regenerating native forest, which is enabled by our technology. It is actually the first time this has been possible in New Zealand, which means we are forging new ground and that can be controversial.
What makes CarbonCrop think it can write its own methodology?
What makes anyone think they can write a methodology? We want to fight climate change. There are thousands of methodologies that exist but we did not find any which we could effectively apply to democratise access to carbon incentives for scaling the restoration and protection of existing native forest in New Zealand. We could propose a new methodology through an existing international standards provider, and may ultimately do so, but that process currently can take years, and we need to drive forest restoration now. We are confident we can do a world class job that moves the needle and moves us all forward, and think the market will ultimately recognise that.
Do you recognise a tree planted 40 years ago?
Yep, but not for the 40 years of carbon sequestration, only for the recent and ongoing carbon sequestration. Native CCUs are issued for carbon sequestered within the last five years, and every year forward on an ongoing basis for actual increases in sequestration. This last principle is similar to the ETS, which awards NZUs within carbon accounting periods which typically last five years.
In the strictest form of additionality, could I count a tree planted yesterday or last year?
Nope, it would need to be planted tomorrow or next year - it only represents a future activity, even if your motivation was environmentally driven when you planted the tree yesterday or last year or four decades ago (hats off to you fine folk). This is because in most cases where a tree has been planted recently, now that it is in the ground and growing, landowners won't cut that new tree down just because they can't now get carbon credits. In fact, strictly speaking, even trees planted next year shouldn’t count unless you can prove you weren’t going to plant it anyway. Good luck verifying that!
Further, if a landowner said that, without access to carbon credits, they would cut the tree down then they would qualify under a pure form of additionality, which creates a perverse incentive to deforest.
How long does the carbon need to be stored for?
Landowners that register their forests with CarbonCrop enter into a binding contractual obligation to ensure CO2 sequestered in CCUs stays sequestered for the next 100 years. The registration and CCU issuance results in a binding contractual commitment linked to the land title, and transfers as ownership transfers.
How do you know that the forest is still there?
Our technology enables ongoing monitoring at scale. We measure the forest each year to identify changes in height, density and species mix and are able to measure sequestration. If the forest has less carbon than the previous year, we would not issue new offsets until the forest recovers - and again the landholder has an obligation to enable this recovery.
What happens if some, or all of the forest, is accidentally destroyed in a fire or storm?
For every landholder that we issue Native CCUs to, we hold 10% back in a “buffer pool”. This means if someone’s forest is accidentally damaged and there is a reversal of carbon, we are able to use the buffer pool to substitute units while the forest recovers. This is consistent with best practices across the voluntary forest offset sector.
If the buffer pool is exhausted, then affected CCUs on issue cannot be traded until that forest recovers.
How do you prevent double-counting?
CCU registered forests must not be classified as Post-1989 forest by MfE (Ministry for the Environment), or already registered under the Emissions Trading Scheme, or have their sequestration recognised under any other voluntary carbon market scheme. We enforce this by contract, and confirm it ourselves through register checks.
Each CCU comes with a location and a unique ID, which can be cross referenced against CarbonCrop’s systems to provide full details of the area of forest. This enables buyers to be confident in the origins of their offsets, and perform any necessary audits. This transparency and traceability also enables third party quality assurance audits generally - we enable the broader community to confirm we’re delivering on our principles.
How can I trace a Native CarbonCropUnit?
Every CarbonCropUnit is a full token with metadata (describing data) detailing the specifics of the carbon sequestration and commitment that backs it. This data is stored with the token wherever it goes, including any of our approved marketplaces. The data includes a unique identifier for that token, which can be reconciled with our systems to find even more information, such as the location and the status of the associated regenerating forest. Additional functionality will be available shortly to make this information easily accessible via our website, but in the interim, if you’d like further details please contact us at hello@carboncrop.nz.
How does CarbonCrop make money?
If you’ve read this far, you probably really care. So with that in mind, we’d invite you to join a dialogue with us. We’re keen to listen, learn, improve but most importantly drive positive, practical and scalable outcomes for our climate.