SCS Background

1. The CAR Forest Project Protocol:A Case Study in Verification Christie Pollet-Young, Senior Verification ForesterSeptember 19, 2011

2. 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

3. Selection of Environmental Claims Certified by SCS

4. 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

5. Forest Carbon Offerings All Registered Project Verifications: California, North Carolina, South Carolina All Project Types: Improved Forest Management, Avoided Conversion, and Reforestation 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

6. 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

7. 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

8. 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 auditconsisting 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

9. 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)

10. Climate Action Reserve • Basic Forestry Stats • Launch date May 2008 • CRTs registered (issued) 2.6 Million • Account holders 402 • Listed Forest Projects 73 • Project Types • - Improved Forest Management • - Reforestation • Avoided Conversion • Prices$7-12.5 per CRT (Information from September 2011)

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

13. 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

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

15. Verification Process • 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”

16. Step 2: Site Visit • Forest Field Audit • “Verification cruise”- inventory plots installed • Compare described inventory methodologies to field observations • Site reconnaissance

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

18. Verification Process • Step 4: Submit Documentation • Submit Documentation to the Reserve for their Review • Registration and Issuance of CRTs • Coastal Redwood Forest

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

20. Lessons Learned • Many Project Developers are Ill-Prepared • 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

21. 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!

22. Contact SCSScientific Certification Systems 2200 Powell St. #725Emeryville, CA 94608www.SCScertified.comChristie Pollet-Young Senior Verification Forester510-236-9017cpollet-young@scscertified.com