Why Carbon Finance?
To stave off the worst effects of climate change, the world needs to not only dramatically slash greenhouse gas emissions, also to actively remove these gases from the atmosphere. Forests are the best nature-based way to capture carbon from the atmosphere and lock it away long-term. In fact, reforestation is the largest and lowest-cost pathway to removing carbon pollution from the atmosphere. There is ample opportunity for reforestation in the United States, with an estimated 133 million acres of former forest suitable for restoration.
As recognition of the climate value of our forests grows, corporations, governments and other groups are increasingly embracing carbon finance to fund large-scale efforts to conserve and regenerate forests. Carbon finance is a group of financial tools that put a price on carbon and other greenhouse gas emissions. The goal is to reduce or sequester these emissions and accelerate the rate and scale of adoption of key natural climate solutions like reforestation.
The Carbon Finance Challenge
Carbon finance has already been widely employed to protect existing forests or improve their management. However, only a handful of reforestation projects have successfully accessed carbon financing.
Reforestation can be expensive and may involve funding activities as diverse as seed collection, site prep and years of post-planting follow-up to ensure seedling health and survival. The high up-front costs of reforestation are out of sync with the decades it takes a forest to grow and produce a significant quantity of marketable carbon removal.
American Forests’ Approach to Carbon Finance
American Forests is evolving how we work to better include carbon finance opportunities that address the challenging finances of reforestation-based carbon removal. We are advancing an innovative approach that overcomes existing barriers to reforestation carbon finance and produces carbon removal in ecologically rich and climate-adapted forests. Securing payments for future carbon overcomes the financial barriers to reforestation.
This approach is a form of outcome-based reforestation. Instead of paying for outputs like number of trees planted or acres reforested, outcome-based reforestation funds measurable improvements in wildlife habitat and enhanced carbon sequestration. American Forests’ outcome-based partnerships generally cover more of the costs involved in reforestation over a longer period of time than do traditional tree planting partnerships.