Why do we prefer to buy all the carbon from a project?
The Woodland Carbon Code has inbuilt conservatism in its carbon calculations, which can lead to projects achieving more WCUs at verification than was predicted.
At Forest Carbon, when we commit to purchasing a project’s carbon, our contract stipulates that we are also buying any extra WCUs that arise during future verifications. This is in contrast to some Project Developers, who offer the extra WCUs to the Project Host (landowner).
While we understand that the prospect of extra carbon credits is appealing, we believe it is misguided to treat any WCUs as surplus until the project completion date.
Our rationale is as follows:
- Woodlands face a growing list of threats, primarily from climate change and the associated risk of pests and disease overwhelming growing trees. To sell surplus WCUs after early verifications removes any cushion against a future carbon shortfall:
- For landowners looking to sell their land or pass it on to family members, selling surplus WCUs increases the possibility of a carbon shortfall for the new owner, who will not have benefitted from the sale of those surplus WCUs.
- If a landowner’s project ends up with a carbon shortfall, the carbon buyer will need to be reimbursed. Forest Carbon’s contract stipulates that landowners must “buy back” any carbon they have been unable to deliver at a RPI-indexed price. In reality, the price of carbon is likely to rise far faster than the RPI, leaving Forest Carbon with a liability.
- The 'Woodland Carbon Code’ has a buffer for WCUs but there is no equivalent for PIUs, the carbon product Forest Carbon buys and sells.
For all of these reasons Forest Carbon store any surplus WCUs in our own internal buffer. We do not sell any of these WCUs, but instead retain them as a safeguard to reduce the likelihood of a carbon shortfall at any stage in a project’s lifetime. We believe that this approach is the most responsible, risk-averse strategy available to Project Developers operating within the voluntary carbon market.
If you have any questions, or would like to know more about carbon finance, get in touch!