V 1.0 The CAR Forest Project Protocol: A Case Study in Verification Christie Pollet-Young, Senior Verification Forester September 19, 2011

V 1.0 SCS Background Mission: Verify and reward outstanding performance in the private and public sectors in terms of environmental sustainability and social responsibility. Services: SCS has specialized in third-party certification of environmental claims, auditing, testing, and standards development around the world for over 25 years.  Life Cycle Assessment  Forest Stewardship Council  Coffee Certification  Food Safety  Indoor Air Quality

V 1.0 Selection of Environmental Claims Certified by SCS

V 1.0 SCS Forestry Background  Forest-Sector Certification/Verification Services:  Forest Stewardship Council certification since 1993  Over 40 million acres certified; over 2000 chain of custody certificates  Greenhouse Gas Verification Program  Greenhouse Gas Inventory  Forest carbon offset projects  Global reach  Verified all registered forest carbon offset projects under the Climate Action Reserve

V 1.0 Forest Carbon Offerings Methodology Reviews and Project Validation and Verification: South Africa, Papua New Guinea, Malaysia, Cambodia, Indonesia, Belize, Uganda Project Validations: Papua New Guinea, Indonesia, United States, Peru, Australia, Colombia, Brazil, Belize All Registered Project Verifications: California, North Carolina, South Carolina All Project Types: Improved Forest Management, Avoided Conversion, and Reforestation

V 1.0 Key Concepts for Evaluating Standards Real Emissions – verifiable, not double- counted emissions reductions often addressed by inclusion in Registries Permanence – ensuring that carbon benefits are not lost in the future Baseline – business-as-usual GHG scenario Additionality – demonstrating that the benefits would not have occurred without the offset project Leakage - minimizing unintended increases in carbon emissions outside the project boundary Amazon Rainforest

V 1.0 Key Concepts for Evaluating Standards Measurement & Monitoring –independently quantifying the carbon benefits Co-Benefits – generating additional benefits to biodiversity and local communities, one of the original goals of carbon offsetting that fetches a higher return Buffer Pool – Contributions made based on risk factors: over-harvesting, natural disturbances, Third-Party Verification – increases transparency and reduces Conflict of Interest. Only as good as the standard it is verifying. Dipterocarp Forest

V 1.0 What is Verification? Third Party Verification is required for most carbon offset protocols Rationale- Ensure accuracy, additionality, and credibility of forest carbon sequestration Goal- Assess conformance to applicable standards Process- Perform an audit consisting of desk and field assessment activities (risk-based sampling approach) Result- Develop a verification report and verification statement outlining audit results Note: verifiers cannot consult for the same project they verify (limited to interpretation of the standard and outlining technical deficiencies) High Cascade Mountains Forest

V 1.0 ISO Accreditation  Required for many forest carbon offset standards:  Climate Action Reserve  Verified Carbon Standard  SCS is audited annually by ANSI  Office Visit (review records and procedures)  Witness Audit (follow us on an audit) 9

V 1.0 Launch dateMay 2008 CRTs registered (issued)2.6 Million Account holders402 Listed Forest Projects73 Project Types - Improved Forest Management - Reforestation -Avoided Conversion Prices$ per CRT Climate Action Reserve Basic Forestry Stats (Information from September 2011)

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Climate Action Reserve Vintages Climate Reserve Tonnes (CRTs) Annual Average CRTs Annual Project Revenue $4/CRT) Potential Revenue from Registered CAR Forest Projects * * Projected revenue based on the range of current market value for CRTs. Not based on actual transactions.

V 1.0 What is Verification under CAR?? Step 1: Desk Review, Part I Step 2: Site Visit Step 3: Desk Review, Part II Step 4: Submit Documentation to the Reserve for Registration

V 1.0 Step 1: Desk Audit, Part I Inventory Methodology Inventory Analysis Baseline Modeling Reversal Risk Calculation Harvested Wood Products Calculation Worksheet Review of the Project Design Document General Description of Project Activity Start Date Project Area Definition and Description Additionality Eligibility Requirements Natural Forest Management Verification Process

V 1.0 Step 2: Site Visit Office Meeting  Discuss audit plan & scope  Interview relevant personnel  In-person review of maps, data management, carbon calculations & growth and yield model  Cracking open the “black box” Verification Process

V 1.0 Step 2: Site Visit  Forest Field Audit  “Verification cruise”- inventory plots installed  Compare described inventory methodologies to field observations  Site reconnaissance

V 1.0 Verification Process  Statistical Test of Inventory Data  Issuance of Findings  Drafting of the Verification Report and Verification Opinion Step 3: Desk Review, Part II Bottomland Hardwood Forest

V 1.0 Verification Process  Submit Documentation to the Reserve for their Review  Registration and Issuance of CRTs Step 4: Submit Documentation Coastal Redwood Forest

V 1.0 Lessons Learned  The inventory is the product  Higher level of precision  Other pools measured (down wood, soil, etc.)  Create clear timber cruising instructions Inventories to Support General Forest Management are Insufficient for Carbon Accounting

V 1.0 Lessons Learned  Many do not adequately understand the governing protocols  Many do not retain staff and consultants with adequate technical capacity  Many have unreasonable timeframe expectations for completing verification  Poorly prepared documents result in substantially higher verification costs Goal: Well-written, complete and organized Project Design Document Many Project Developers are Ill-Prepared

V 1.0 Lessons Learned  Provide evidence to defend such polemic topics as additionality and the baseline scenario  Be ready to show the verifier “proof”  The PDD will need to stand-alone for over 100 years  As needed, don’t hesitate to seek written guidance from CAR staff Be Prepared to Defend Your Project!

V 1.0 Contact SCS Scientific Certification Systems 2200 Powell St. #725 Emeryville, CA Christie Pollet-Young Senior Verification Forester