Sebastian Engelmann MSc Climate Change Finance and Investment

In the last two years, ton-year accounting (TYA), a practice developed in the wake of the Kyoto Protocol, has re-emerged as a way to incentivize the development of temporary carbon storage in the forestry sector. This study explores the generally accepted non-permanent ‘permanence’ period of 100 years and provides a worst case scenario model for the potential implications of different carbon accounting methodologies on credit issuances and temperature given project crediting period durations.

Estimated credit issuances from all existing Verra forestry projects up to December 14th 2022 were analysed under 7 different methodologies and compared to the ton-ton accounting (TTA) method to measure crediting factors using the Joos 2013 Impulse Response Function. Crediting factors were used to model future emissions and climatic projections under the Shared Socio-Economic Pathway 2.6 (SSP1-2.6) using the MAGICC7 climate model.

Under a 100 year time horizon, all methodologies serve as an improvement to current TTA practice which boasts the highest atmospheric over-crediting factor of 175%. Moreover, it boasted median warming at 2100 of 0.15 Kelvin higher than temporary crediting methods.

However, when considering infinite time horizons, all carbon accounting methodologies with the exception of temporary crediting methods provide no benefits to cumulative emissions and long-term temperature change. Thus, a transition from TTA to TYA would only serve to reinforce the arbitrary application of a 100 year time horizon. Ultimately, a separation between permanent and temporary storage is needed to ensure continued integrity in forestry projects.

08 February 2024