Carbon offset projects Previous Next Page 5(11)


Feasibility Phase



2.1 

Pre-feasibility Stage

Prior to beginning a full feasibility study, there are several benchmarks that can be used to determine, within broad parameters, if the area under consideration is suitable for a carbon sequestration project. A project may pass through this first filter yet later be deemed unfeasible due to the outcome of the study. However, if a project does not meet the basic criteria below, it is highly unlikely to be feasible.

Preliminary Project Site Evaluation

Box 2 Site Selection Criteria

Given the current investment and policy environment, and taking into consideration the conservation goals of project developers, carbon projects that are most likely to be successful have the following characteristics:

  1. The project site should be an area of high conservation priority as determined within a conservation or land management plan. Since conservation interests often want to preserve intact functioning ecosystems, restoration activities in fragmented areas often make attractive carbon projects. Reforestation of non-forested riparian or floodplain areas also make good candidates.
  2. Carbon offsets must be at least 50% from sequestration: e.g. if at least half of the project area has been completely deforested and will be reforested. From the perspective of many investors, the greater the proportion of the offsets from sequestration the better. For projects to be valid under the CDM, only areas that were not forest on 31 December 1989 are likely to meet the definitions of afforestation and reforestation.
  3. It must be easy to demonstrate that the additional carbon storage was made possible by the project, not by some other event or opportunity, or by changes in policy or management that have already taken place (additionality). The baseline has to be credible and defensible.
  4. Biomass and carbon storage will be high relative to the baseline. Moist temperate and tropical forests are therefore generally the most attractive.
  5. Costs per ton of (CO2) offset are less than US$10. Since most forests will store no more than about 500 to 740 tons of CO2 per hectare (200-300 tons per acre) at maturity, costs to be covered by offset sales should generally be less than US$5000 to US$7400 per ha/US$2000-US$3000 per acre.). Many investors would be reluctant to invest in projects at this time unless they cost only about one-quarter of this amount ( US$1,00- US$1900 per ha/US$500-US$750 per acre total). In non-forested systems that store less carbon, such as grass or scrubands, the value of offsets per area unit would be lower still.
  6. The project has positive economic impacts on local stakeholders and encourages them to not simply move their carbon emitting activities to other locations (leakage).
  7. The project area is relatively safe from significant carbon stock loss due to either human or natural risks (permanence). In developing countries, having clear land tenure helps.
  8. Project co-benefits, such as protection of biodiversity, water quality, and poverty alleviation are emphasized and quantified when possible. Projects located in regions that are a priority to prospective investors are often looked upon favorably.
  9. The project is not of the "one-off" variety but is scaleable to allow for expansion and contraction to meet investor needs. This also helps to reduce transaction costs and ensure that the project idea provides a replicable model that can be applied at a meaningful scale.

Source: Bill Stanley, The Nature Conservancy's Climate Change Initiative

Table 2 provides first order project screening criteria. It is a tool for project developers to begin to ask and answer basic questions about the viability of a proposed carbon offset project, and to organize the information gathered.

Table 2 - PROJECT SCREENING CRITERIA

PROJECT NAME __________________________________________

CATEGORIES

Key questions

Issues to be addressed

1) Additionality

1) What will happen to forest cover on the site if the project is not carried out?

2) Is the area officially designated as protected from deforestation? Is forest protection and/or restoration legally required to occur (legal reserve areas)?

3) If so, how effective are protection measures?

4) Is forest restoration likely to occur in the absence of the project?

5) Is there a documentable threat to the area (evidence and/or maps of recent deforestation, public plans to develop area, build a new road, etc.)?

 

2) Leakage

1) Will the land-use threats to forest cover that are addressed by the project simply find other forested areas to impact?

2) Where are these areas likely to be? How far are these from the project?

3) What are the current and future land-uses that are being changed by the project?

4) Are they being displaced by the project?

 

3) Reliability

1) What experience does the project executor have with protected areas management?

2) Is the land purchasable or otherwise able to be secured?

3) What experience does the project executor have with large-scale, long-term, multi-million-dollar projects?

4) How stable is the executing group for carrying out a multi-decade project?

5) How likely are the project actions to produce the results expected for the project?

6) How might local, state or national politics affect the success of the project?

7) How might local community issues affect project implementation?

 

4) CO2 quantification

1) Do forest inventories of the area (region) exist?

2) Does the area (region?) have an updated forest cover or vegetation map? (This can be done AFTER the project is approved and financed.)

3) Has there been any forestry research carried out on the project area recently?

4) Is it possible to estimate accurately the forest-cover and topography (to evaluate risk of deforestation without project) of the proposed project site?

 

5) Co-benefits

1) What threatened or endangered species or ecosystems will be protected by the project?

2) Is this a generally agreed-upon priority area for biodiversity conservation?

3) What is the state of conservation in the area's ecosystems (excellent, good, fair, poor)?

5) Are there benefits to downstream human communities from protecting or restoring forest cover on the project site?

6) What public relations opportunities exist in the region for a potential investor?

 

6) Cost-effectiveness

1) What would it cost to carry out the actions described in the project?

2) What is the average purchase cost per hectare/acre of land in the project area?

3) Are only those activities necessary for project success included in the budget?

4) Have other funding sources been identified to cover those beyond the value of the carbon offsets, and to deal with potential cash flow problems?

 

7) Overall/ General?

1) Why is your organization interested in climate action projects?

2) What is special about this area?

3) Why is this area appropriate for a climate action project?

4) Would your organization be prepared to accept a major investment from a large multinational "polluter?"

5) Is your organization able and prepared to take on a project that binds it contractually for 40+ years?

 


Carbon offset projects Previous Next Page 5(11)