"Biological sink projects carry a risk of carbon reversals, in which the sequestered carbon is released back into the atmosphere; for example, through forest fires or intentionally changing farm management practices. Since an offset credit must represent a permanent removal of carbon from the atmosphere, there must be a mechanism in place to address this risk of reversals.
The permanence of biological sink offset credits is ensured in the Offset System by requiring the replacement of credits in the event of a reversal anytime throughout the project’s registration periods and for a further 25-year liability period after the project’s final reporting period in its final registration period.
Furthermore, to address the risk that a Project Proponent may not be able to replace the credits when a reversal occurs, the Project Proponent is required to apply a discount factor to offset credits claimed for biological sink projects. The discount factor will be specified in the Offset System Quantification Protocol and will reflect the risk of defaulting on a replacement obligation for different project types. The Project Proponent will be required to replace credits if a reversal occurs any time during a 25-year liability period. Project Proponents are required to provide evidence to the Minister on a regular basis during the liability period and provide a certification statement that the sink has been maintained. However, verifications will not be necessary during the liability period." Page 27My understanding is that the current draft of the Waxman-Markey Bill in the U.S. proposes instead to deal with impermanence through a 'buffer reserve' approach, which would set aside a percentage of each forest carbon offset...if the carbon is reversal is unintentionally, 50% could be covered by this reserve. I'm not sure what the liability period is.
Both these approaches differ from that used for afforestation projects within the Clean Development Mechanism (CDM), which only issues temporary credits for forest projects. This seems the most robust approach, but it doesn't appear to be taken very seriously in any of the offset regimes that are under development... apparently because people doubt the market demand for temporary offsets.
Anybody know of any other approaches being considered out there?