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Northern Institute of Applied Climate Science

Carbon Accounting and Trading

The ability of trees to absorb and remove carbon from the atmosphere and store it long-term in wood and wood products is a new venture for many forest landowners and managers. Forest carbon sequestration helps to maintain the ecosystem services forests provide and may also serve as a source of revenue for landowners through participation in various carbon trading programs.
Carbon accounting is the process used to determine the total amount of emissions produced or carbon sequestered by a government, organization, or individual. In forests, carbon accounting generally focuses on determining how much carbon is stored in the forest as wood, roots, other biomass, and soil, as well as how fast new carbon is being sequestered into biomass. Some inventories also consider the effect of long-lived wood products—wood and other items that are produced from the forest and continue to store carbon long beyond the life of a tree. Some of the methods that are used to quantify forest carbon are featured on the Forest Service Northern Research Station carbon tools page.

Carbon Registries

After carbon accounting has been performed, the results can be reported to a carbon registry. Carbon registries pool the data from reporting groups to provide data on how much carbon is being emitted or sequestered, and data from several years can be used to monitor changes in carbon levels. The Department of Energy’s Energy Information Administration manages the Voluntary Reporting of Greenhouse Gas Program. Other voluntary registries also exist at a more regional level.

Carbon Trading

Concern over increasing carbon dioxide levels in the atmosphere has resulted in the creation of carbon markets—systems meant to decrease carbon emissions using economic incentives. Similar to cap-and-trade programs developed for air pollutants, a cap (limit) is set on the amount of carbon that an organization, such as a factory or company, can produce. The organization is given credits that allow it to emit the amount of carbon specified by the cap. Organizations that exceed their cap must buy (or “trade”) credits from those who didn’t use their entire allotment. In this way, entities that exceed their cap must pay to do so, while those that reduce their emissions below the cap receive an incentive. Many countries, especially those that adhere to the limits set by the Kyoto Protocol, are participating in carbon markets. Although the US has not set mandatory caps on carbon emissions, several voluntary initiatives have been started regionally and nationwide.

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Last Modified: 08/02/2017