Frequently Asked Questions
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What is the voluntary carbon market?
Should I participate in the voluntary carbon market?
What’s in it for me?
How much revenue can I expect to receive?
What does it cost to participate in the Chicago Climate Exchange (CCX)?
How much carbon is in my forest?
How do I enroll?
What is the difference between carbon and carbon dioxide?
What is actually traded in the voluntary carbon market?
What tools are available for carbon inventory (link to Carbon inventory in glossary), management, and reporting?
Why is it important to measure and quantify carbon in forests?
What are these terms – additionality, permanence, and leakage – that are so often used in connection with forest carbon, and what do they mean?
What is the voluntary carbon market?
The Chicago Climate Exchange (CCX) and the over-the-counter market together constitute the U.S. voluntary carbon market. The CCX is a voluntary but legally binding trading platform (similar to a stock market and exchange for carbon) with relatively transparent rules and regulations. The over-the-counter (OTC) market consists of myriad retail shops, each selling offsets that vary in the degree to which they represent real, measurable, verifiable, and additional quality offsets. The most streamlined and straightforward opportunities for private forest landowners currently exist through the CCX. This Web page focuses on enrollment options in CCX, as the OTC market is less accessible for most private forest landowners.
Should I participate in the voluntary carbon market?
Your forest must meet a few criteria in order for you to participate in the CCX:
- Forest size should be at least 100 acres. The initial investment and transaction costs involved generally make it uneconomical for those owning fewer than 100 acres of forestland to enroll in the voluntary market at the present time.
- The forest must be sustainably certified. Certification can be obtained through the Sustainable Forestry Initiative (SFI) Program, Forest Stewardship Council (FSC), or American Tree Farm Group. The Forest Service can help you create a Forest Stewardship Plan, which will also help satisfy the certification requirement.
- You must make a long-term commitment (minimum 15 years) to keeping your forest as forest; harvesting may occur, as long as carbon stocks are not reduced below the baseline enrollment level.
What’s in it for me?
Landowners have different reasons for wanting to engage in the voluntary carbon market. Some enroll in the market solely as a means by which to generate an additional revenue stream. Many other landowners enjoy the personal, ecological, or recreational values, or all of these, which they derive from their land, and are seeking to find economic incentives to keep their forests as forests over the long term.
Participating in the CCX may also be a suitable option if you are considering an afforestation project (planting trees where they had not existed before).
How much revenue can I expect to receive?
The amount of revenue that your forest generates ultimately depends on how much carbon it sequesters annually, less the costs of enrollment, participation, and annual verification of carbon stocks. The amount of carbon sequestered depends on a number of factors, including enrolled acreage, condition, age, and class of forest; and the risk of carbon loss through catastrophic events (fire, insect and disease outbreaks, blowdowns). Generally, carbon creditshave been trading on the CCX for between $2.50 and $7.00 per ton. You can check out current prices here.
What does it cost to participate in the Chicago Climate Exchange (CCX)?
Both (fixed) start-up and (variable) ongoing costs are associated with participating in CCX.
Startup requirements and costs include creation of a management plan (if not already established), and inventory and certification costs. Each of these can range widely in price, making a generic estimate difficult to determine. Contact any of the aggregators listed below, or send e-mail to carbon_inquiries@fs.fed.us, for a more accurate estimate.
Ongoing participation costs include the aggregator fee (typically 10 percent of total revenue), verification fee ($0.25 per ton of CO2), and trading fee ($0.20 per ton of CO2).
How much carbon is in my forest?
Depending upon age and health, a typical hardwood forest in the Northeast may sequester up to 2 tons of carbon (approximately 7 tons of carbon dioxide) per acre per year. For more specific information, consult the standard lookup tables by the Northern Research Station, Forest Service.
Additionality is a commonly used term when it comes to forest carbon offsets. It refers to carbon storage that is above and beyond what would have happened in a “business as usual” scenario. Interpretations of what constitutes “additionality” abound. The CCX has an arguably lenient definition and will credit any carbon accumulated in living trees after the baseline (or beginning) year.
Providing any generic and credible cost-benefit or Net Present Value (NPV) economic analysis for participating in CCX remains a challenge, given a range of start-up scenarios and costs, a constantly fluctuating price for carbon, and individual differences in forest age, class, and type. Please contact Sarah Hines at 610-557-4218 or send e-mail to carbon_inquiries@fs.fed.us, if you’d like help determining a rough estimate.
How do I enroll?
The (CCX) is currently the only carbon credit market in North America trading emission allowances that can be gained through verified net increases in forest carbon stocks. The over-the-counter (OTC) market also exists, but is generally composed of organizations and companies that sell offsets (that are not necessarily real, additional, or verified) on a project-by-project basis.
Currently, the only way for a private forest landowner to engage in the CCX is to work through an aggregator. Aggregators pool carbon (and risk) and sell verified credits over the exchange in large quantities. For their services they generally charge a 10 percent fee (on the carbon revenue stream that you receive) for their services. Several aggregators work in the Northeast and Midwest. (The use of trade or firm names is for reader information and does not imply endorsement by the U.S. Department of Agriculture of any product or service.)
Forecon, 716-664–5602
Delta Institute, 517–482–8810
Agra-Gate, 866–633–6758
What is the difference between carbon and carbon dioxide?
Carbon (C) is an element, which by itself does not contribute to global climate change. When a carbon atom combines with two oxygen atoms—such as during respiration and combustion – carbon dioxide (CO2), a greenhouse gas, is formed. Trees absorb carbon dioxide from the atmosphere; they fix, or sequester, the carbon, while releasing the oxygen back into the atmosphere. When a tree dies, burns, or decomposes, it releases the stored carbon, which recombines with oxygen to form carbon dioxide. One unit of carbon, when released, forms 3.67 units of carbon dioxide.
What is actually traded in the voluntary carbon market?
The voluntary carbon market buys and sells greenhouse gases, and the common standardized measure is carbon dioxide equivalent (CO2e). Therefore, if your trees have sequestered 1 ton of carbon, then they have essentially absorbed 3.67 tons of CO2 from the atmosphere. (The molecular mass of carbon dioxide is the sum of the atomic mass of one atom of carbon and two atoms of oxygen. This is essentially 3.67 times the mass of one molecule of carbon alone.)
Six greenhouse gases contribute to climate change:
- carbon dioxide (CO2),
- methane (CH4),
- nitrous oxide (N2O),
- hydrofluorocarbons (HFCs),
- perfluorocarbons (PFCs), and
- sulphur hexaflouride (SF6).
Some of these gases are far more potent and trap more heat than others. Global Warming Potential (GWP) refers to the relative strength of a specific greenhouse gas. Carbon dioxide is considered the standard frame of reference, and has a designated GWP of 1. Methane, for example, is 23 times more potent than carbon dioxide, and therefore has a GWP of 23.
Carbon dioxide equivalent (CO2e) is a related method of standardization. The Chicago Climate Exchange provides a platform for buying and selling carbon dioxide equivalents. These are often referred to as “carbon credits.”
What tools are available for carbon inventory, management, and reporting?
Forest Service scientists have developed a number of tools, to help you get a rough estimate of the quantity of carbon on your land, as well as predict the amount of carbon that your forest may sequester into the future. These tools include:
When you work with an aggregator to quantify and sell the carbon credits on your land, they will typically use a lookup table or model based upon one of these Forest Service Tools. Find more information here.
Why is it important to measure and quantify carbon in forests?
Accurate estimates of carbon in forests are crucial for different purposes:
- Forest carbon management
- Carbon credit trading
- National reporting of greenhouse gas inventories to the United Nations Framework Convention for Climate Change
- Registering forest-related activities for regional greenhouse gas registries and trading schemes
Being able to accurately measure and quantify forest carbon may be critical to potential future national climate change policy in the United States.
What are these terms—additionality, permanence, and leakage—that are so often used in connection with forest carbon, and what do they mean?
See the Glossary of Terms for the definitions of these common terms, and more.
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