Menu
FR
search
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
  • 11/28/2025 Foreword of the week
    COP30: The missed turn to implementation – and the coalitions moving ahead anyway

    COP30 concluded with an agreement, proving that multilateralism is still alive. However, the results are underwhelming: no push to transition away from fossil fuels, no decision on deforestation, and mixed outcomes on adaptation metrics.  On climate finance, Belém failed to shift from ambition to implementation. Negotiations quickly drifted back to a battle on yet another high-level quantitative target. The decision to triple adaptation funding by 2035 disappointed many, with its distant time horizon, lack of baseline and non-binding wording. COP30 also missed the opportunity to engage with – and build consensus around – concrete measures outlined in the Baku to Belém roadmap to get to $1.3 trillion. Instead, it defaulted to launching new processes – a work programme on climate finance and a ministerial roundtable on the NCQG.  

  • 11/21/2025 Foreword of the week
    How to strengthen climate risk management and supervision to protect financial stability

    Climate change does not conform to business, political or supervisory regime cycles– its adverse long-term impacts lie beyond such horizons. Ten years ago, when Mark Carney highlighted this paradox in his landmark Tragedy of the Horizons speech, climate change was not considered a financial stability risk. Today, European supervisory stress tests estimate up to €638 billion in banking losses over 8 years, while the European Central Bank (ECB) reveals that over 90% of eurozone banks face climate and environmental risks. A key question arises: Is the supervisors’ primary focus on greening the financial system sufficient in the face of rising risks, especially stranded assets? 

  • 11/13/2025
    How solidarity levies can help bridge the climate and development finance gap

    The climate and development finance gap is large and widening, as Official Development Assistance (ODA) declines and needs multiply. With shrinking fiscal space in vulnerable countries, solidarity levies are gaining attention as a predictable source of international finance. Launched at COP28 by Barbados, France, and Kenya, the Global Solidarity Levies Task Force (GSLTF) is the main initiative in this space.

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