2.3 Management of risks and permanence
- Contributing to the buffer
- Accounting for reversals
- Replenishing the buffer
- End of a project duration
The landowner shall demonstrate a commitment to permanence by:
- Identifying risk factors and developing appropriate mitigation strategies as set out in the project's risk assessment
- Contributing to the Woodland Carbon Code Buffer
- Ensuring re-stocking where projects involve harvesting
- Replanting or undertaking alternative planting should woodland area be lost due to wind, fire, pests, diseases or development.
- Managing as per the longer-term management intentions for the project duration and beyond
- Inform future landowners of the commitment to the WCC and any carbon contracts.
Should a project experience a loss of carbon, the landowner shall:
- Submit a Loss Report to the WCC Secretariat within six months of discovery of the loss
- Quantify the magnitude of the loss at the subsequent verification/ in the next Project Progress Report
The main risk assessment is checked at validation. Any changes to project risk will be checked at each verification. Loss reports will be checked as and when necessary and the magnitude of any Loss should be confirmed at the subsequent verification.
Permanence describes the issue of ensuring removal of carbon dioxide from the atmosphere is permanent, and not reversed at a future point in time. Woodland projects carry a risk of reversibility and as such safeguards must be in place to minimise that risk as well as to guarantee replacement or compensatory woodland planting should a reversal occur.
Woodlands sequester carbon from the atmosphere, but can also lose carbon either through natural causes (pest and disease attacks, extreme weather events or fire) or through management (felling and not replacing the trees). Project managers need to make every effort to ensure that any claimed carbon store remains in the woodland for the duration of the project and beyond.
The measures set out below ensure that the risk of loss is minimised, and that if there are any unavoidable losses, there is a process for these to be dealt with. Where there is an avoidable loss (e.g. where the management regime set out in the Project Design Document is not followed by the landowner/manager), this can be dealt with by legal and contractual means.
Projects validated/verified to the Woodland Carbon Code can manage their woodland in a variety of ways, including periodic clearfelling. The Project Design Document should clearly state the management intentions for the project over the project duration and beyond consistent with the WCC Carbon Calculation Spreadsheet. These management intentions should be realistic for the type of woodland as well as the conditions at the site.
Whatever the management regime, the maximum sequestration that can be claimed is the long-term average carbon stock of the woodland type and management on the site. Clearfelling should be carried out in line with plans set out in the Project Design Document; restocking should be carried out in line with any Felling Licence conditions.
A risk assessment should be included in the Project Design Document at validation, in order to insure against unforeseen losses of woodland carbon. Any updates to risk should be given in the Project Progress Report at verification. For each project the potential risks should be identified, and strategies developed to mitigate these risks. As a minimum, the following areas should be considered:
- Legal/ Social
- Natural Disturbance: Fire
- Natural Disturbance: Wind
- Natural Disturbance: Drought/Flood
- Natural Disturbance: Pest and Disease
- Species suitability in current and future climate
The WCC buffer safeguards the investment made by carbon buyers and maintains and protects the integrity of verified Woodland Carbon Units (WCUs). Thus WCUs issued for a project are permanent and would never have to be cancelled or ‘paid back’ should that project subsequently fail; we will ensure there are always sufficient units in the pooled buffer to cover any unanticipated losses from individual project failures.
The WCC Buffer is a single account held in the UK Land Carbon Registry and managed by Scottish Forestry. It contains the contributions from all verified projects.
For avoidance of doubt the following would not be covered and losses would be borne by the project:
- Pending Issuance Units (PIUs)
- Sequestered carbon which is not yet verified
From Version 2.0 of the WCC, projects each contribute 20% of the project’s net carbon sequestration to the buffer. With previous versions of the standard, projects contributed a variable amount (15%-40%) based upon project risk.
At validation, 20% of PIUs are transferred into the WCC Buffer account managed by Scottish Forestry. This indicates the potential size of the buffer over time. It will not be possible to make claims from the PIUs in the buffer account.
Upon verification of each vintage/ monitoring period, PIUs will be converted to WCUs; 20% of verified WCUs from that vintage will be allocated to the WCC Buffer account managed by Scottish Forestry. Verified WCUs in the WCC Buffer can be drawn upon in case of any losses of verified WCUs from a project. Buffer units are not tradable.
A ‘loss’ of carbon is defined as when the woodland loses some of its trees and standing volume, and therefore carbon, due to avoidable or unavoidable circumstances.
The project must submit a Loss Event Report within 6 months of discovery of the loss. The Loss Event Report shall include estimates of carbon losses and an indication of the accuracy of the report. The relevant number of WCC buffer units to cover the loss will be put on hold.
The project will then conduct their next regular verification as per the verification schedule.
A reversal is defined as when the net greenhouse gas benefit of the project, taking into account the baseline, leakage and project carbon sequestration, is negative in a given monitoring period/vintage. The size of the reversal is the net carbon sequestration at the current verification minus the net carbon sequestration at the previous verification.
Reversal: If at the next regular verification there has been a reversal since the previous verification:
- If desired, any unsold WCUs in the project-developer’s account which are not part of the amount lost, can be cancelled to cover the reversal.
- Should this be insufficient to cover the loss then the relevant number of WCC Buffer units already put on hold will be cancelled to cover the remaining proportion of the shortfall. If this number is insufficient additional WCC Buffer units will be cancelled. If too many were put on hold the ‘surplus’ will be released back into the WCC Buffer.
- The Project Design Document shall be reviewed with a view to taking Corrective Actions to make good the losses in a reasonable time-frame of, perhaps, 10-20 years.
No Reversal/Increase: If at the next regular verification there has been a net increase in carbon sequestration since the previous verification, then there is no reversal and any WCC Buffer units put on hold at the time of the loss event report will be released back to the buffer.
An unavoidable reversal relates to a loss due to natural disaster (e.g. severe storms, flooding, drought, fire, pest & disease attacks) or man-made events over which the project has no control (e.g. terrorism, war).
If a reversal has occurred, then:
- If the reversal was avoidable (e.g. poor management or early/over-harvesting of timber) the project shall reimburse the WCC Buffer for all credits cancelled to compensate for the loss before further WCUs are issued to the project.
- If the reversal was unavoidable the project is only required to repay the WCC Buffer for carbon units cancelled in excess of the contribution their project had previously made (e.g. if a project had contributed 50 units but 60 were cancelled to cover their loss, the project would only have to repay 10 units). Further WCUs can then be issued.
The project would then continue to contribute a proportion of verified carbon units (based on risk assessment) into the WCC buffer at each subsequent verification.
At the end of a project’s duration, all remaining buffer units which were contributed by that project will be cancelled and there is no further requirement to monitor the project.
The landowner of a Woodland Carbon Code project, has to commit to a permanent land use change to woodland, and to maintain the woodland as a woodland carbon sink. Any unavoidable losses due to natural disturbances such as fire, pest, disease or wind damage will be eligible to make a claim from the 'buffer' of unclaimed carbon. Avoidable losses (e.g. the landowner choosing to fell and not replace the trees) must be dealt with by legal or contractual means.
Contractual Obligation Where a contract is in place with a buyer covering the landowner's obligations to provide carbon sequestration through woodlands, claims may be made by the buyer in the event of a breach of contract.
In addition to any contractual obligations set up under the Woodland Carbon Code, projects are subject to existing legislation that would guard against deforestation or the removal of woodland.
- Environmental Impact Assessment Regulations (1999) require an Environmental Impact Assessment for deforestation over 1ha.
- The Forestry Act (1967) prevents the felling of trees without the permission of the Forestry Commission, Scottish Forestry, Natural Resources Wales or Northern Ireland Forest Service, through a Felling Licence.
- We will develop recommendations for standard terms to be included in contracts between landowners, project managers and investors.
- We will provide further examples on avoidable and unavoidable reversals and replenishing the WCC Buffer.