Publications

Key elements and challenges in monitoring, certifying and financing forestry carbon projects

7 November 2018 - Climate Brief - By :

The amount of finance for forest carbon projects has never been as high as in 2015 when it reached USD 888 million (Goldstein & Ruef, 2016). In most cases, a reliable monitoring, reporting and verification (MRV) of carbon removals or emissions reductions is necessary to access most carbon payments.

After an overview of forest carbon finance, this Climate Brief presents the different options and challenges associated with forest carbon MRV.

First, projects developers face three key choices:

  • The definition of th project scope (carbon pools to be considered, geographical perimeter and the related leakages),
  • The different techniques and tools for forest carbon monitoring (field measurements, modeling or) remote sensing)
  • The baseline definition and additionality demonstration.

Despite the different tools and guidelines available to help projects developers trigger impactful mitigation action, six main technical and political challenges are identified:

  • The non-permanence risk and carbon debt: while standards provide tools (eg. buffer account, ex-ante credits) to deal with this challenge, finding the right balance between environmental integrity and project profitability remains delicate.
  • Monitoring uncertainty is often put forward as a barrier to the implementation of carbon pricing in the forestry sector. Reduce uncertainty is costly and the interest of doing so depends on whether carbon pricing is voluntary, on the importance of information asymmetry and on projects profitability.
  • The risk of windfall effects: additionnality can never 100% guaranteed. There again, striking the right balance between avoiding both the “false positives” (non-additional projects getting registered) and the “false negatives” (additional projects that are shut out by the cost and risk of the additionnality demonstration) is delicate.
  • Verification costs: verification can weight up to half the MRV costs and cannot usually be internalized.
  • Low carbon prices: typical MRV costs for forestry projects are around 0.15-1.4 € per tCO2e which is substantial when carbon prices average around 3 € per tCO2e on voluntary markets. How to combine a robust certification with the financial viability of carbon projects in this context is challenging.
  • The double-claiming of climate action issue: the Kyoto Protocol safeguards against double-counting between countries have been adapted by some voluntary carbon standards to prevent that a private entity and a country claim the same emission reduction. This has slowed down projects implementation in Annex I countries, but several standards, including the Gold Standard, are moving towards a new paradigm for voluntary carbon markets.

Key elements and challenges in monitoring, certifying and financing forestry carbon projects Download
To learn more
  • 10/09/2025 Hors série
    10 years of I4CE, our partners talk about us

    This year marks an important milestone for I4CE: we are celebrating a decade of commitment to the climate economics. We would like to thank our partners who agree to say a few words at the occasion of this anniversary.  

  • 09/26/2025 Foreword of the week
    A decade of commitment to advancing economic policies for the climate

    This year marks an important milestone for I4CE: we are celebrating our 10-year anniversary. Setting sails the year the Paris Agreement was adopted, our mission was clear from the outset: to promote effective, efficient and fair policies for the climate transition.  Since then, we have focused our economic analysis on public policies with an emphasis on assessing the investment needs and policy options for the transition. Our ambition has been to advance the public debate on climate with facts and figures, promoting long-term investment plans as an essential tool to turn political ambitions into reality. Over the years, we have applied this approach to a growing number of policy areas and expanded our geographical scope from France to Europe and internationally.

  • 09/05/2025 Foreword of the week
    2030 and Beyond: Budgeting Europe’s Climate Transition

    The next long term EU budget will take us through the 2030 goal posts, by when GHG emissions should be down by 55%. It will also lay the groundwork for investing in a climate-neutral future for the continent towards the yet-to-be agreed objectives for 2040. So, when the European Commission presented its proposal for a €2 trillion multiannual financial framework (MFF) just before the summer break, there was good reason to carefully study the details from the perspective of closing the EU’s climate investment deficit.  

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer