### General

What is Afforestation?

Afforestation is a process of planting trees on land that has not been recently forested. Arbonics offers landowners the opportunity to earn carbon revenue through our Afforestation projects and uses Verra’s [afforestation, restoration and revegetation methodology ](https://verra.org/methodologies/vm0047-afforestation-reforestation-and-revegetation-v1-0/)for carbon removal verification.

What is Impact Forestry?

Impact Forestry is a solution for existing forests being developed by Arbonics. Impact Forestry aims to maximise the carbon return of forested land by adjusting harvesting plans, changing rotation lengths and using conservation if needed. It’s a custom-made plan developed in collaboration with the landowner to ensure that forested land continues to earn at least the same as it would have under usual management plan, while driving significant carbon and biodiversity benefits.

How is Arbonics and our projects structured?

Afforestation and Impact Forestry both include grouped projects, which involve multiple landowners. Grouped projects save landowners money because they generate monitoring and verification efficiencies. Grouped projects have a much lower unit cost base than single landowner projects and can also generate larger volumes of carbon credits, which offers sales and marketing advantages. Carbon credit buyers often want to buy large volumes of specific carbon credits (e.g. carbon credits from afforestation) from a single vintage (i.e. produced in a specific year). Arbonics will group landowners based on their regional risk profile and management objectives (e.g. managing forests for timber versus managing forests for conservation). Members of a grouped project are likely to come from a similar region (e.g. Baltic states) and manage forests in a similar way. Arbonics will develop and manage carbon monitoring and verification for each grouped project. The monitoring and verification activities of each group member will be synchronised to meet the reporting requirements of Verra (see [**What is Verra?**](https://www.arbonics.com/en/faqs/#carbon-credits)). However, Arbonics will not operate our grouped projects as a single carbon pool or as a cooperative. Arbonics will monitor the performance of each group member and as far as possible, distribute carbon payments based on the performance of individual group members. Group members will not receive an average share of each grouped project.

### Payment and finance

How much extra income can I earn from my land?

The exact income will depend on the type of trees planted, land quality, project length, etc. As an example, a birch afforestation project on high-quality land in Latvia is expected to generate approximately 205 VCUs/ha over a 50-year contract. If VCU prices are at 50 EUR, an afforestation project may generate around 10 250 EUR/ha. This is an estimated income and depends on specific conditions as well as the carbon credit price at the time of sale. Your lands’ potential income is calculated in a Carbon Opportunity Assessment.

How and when do I get paid?

You have two options for payment - you can choose to receive VCUs (credits) (see [**What are carbon credits and VCUs?**](https://www.arbonics.com/en/faqs/#carbon-credits)) or you can choose to have Arbonics sell VCUs on your behalf and pay you in cash. **The VCU (credits) option** - VCUs are issued based on proven carbon removal on your land. - VCUs will be transferred to you at the end of each monitoring period, once Verra has verified your carbon removals and issued VCUs. - In the case of Afforestation: - VCUs are likely to be issued every five years, while tree growth is relatively slow. Once tree growth accelerates you are likely to receive VCUs every year. - You will continue to receive VCUs until the total number of VCUs issued equals the long-term carbon storage potential of your afforestation activities. The long-term storage potential will vary from plot to plot, however, it is normally reached approximately halfway through the harvest cycle (e.g. a plot with a harvest cycle of 50 years will reach its long-term storage potential between 25-30 years). - Once you receive the maximum number of VCUs for a plot, you won’t receive any further VCUs until the Arbonics Agreement ends. - At the end of the Arbonics Agreement, you will receive your share of any VCUs released from the Verra buffer account. - VCU issuances are front-end-loaded over the first half of your afforestation activities, however, to realise the maximum value of your afforestation activities, you are required to manage each plot over the life of the Arbonics Agreement in accordance to the Grouped Project’s description. **The cash payment option** - Arbonics can help sell your credits when they are issued by Verra and pay you in cash. - We are exploring ways to annually pre-sell the carbon your land has sequestered (but which is not yet validated by Verra). While this might mean a discount on the carbon price, you would receive payments more frequently. If this is of interest, let us know. - In the case of Afforestation: - Given that cash payments will be based on actual VCUs issued, the same front-end-loaded logic as above applies. That means cash payments are likely to stop before the end of the contract but the land under contract needs to stay under management until the end of the contract.

If I choose VCUs, how do I hold and manage them?

To have full control of VCUs you will need a Verra Registry account. Any registered business can open a Verra Registry account. It costs 500 USD - it’s a one-off cost and there’s no maintenance costs. You do need to go through Verra’s KYC process, which takes around two weeks. Alternatively, if you wish to receive VCUs but choose not to open a Verra Registry account, we can hold the VCUs on your behalf. If you wish to sell credits that you own but are held in our account, you can let us know and we will make necessary transfers on your behalf. We also offer cash payment option, which means you can receive funds (from VCUs sold) to your account directly. See [**How and when do I get paid?**](https://www.arbonics.com/en/faqs#payment-and-finance)

Are there any restrictions on additional financial incentives (e.g. governmental grants, subsidies etc) I can receive for the lands under Arbonics agreement?

It depends on the timing, value and nature of the financial incentive and how these might affect additionality of the project. For example, applying for or signing up to financial incentives after signing an Afforestation agreement, small grants for training support and/or indirect incentives for monitoring and biodiversity are generally allowed. Large incentives or incentives tied to regulation may cause issues and should be discussed on a case-by-case basis with Arbonics.

Do I need to declare any subsidies or financial support the lands are already receiving before entering the agreement with Arbonics?

Yes, financial incentives such as grants and subsidies can affect the additionality of carbon projects and therefore need to be declared before entering the lands under agreement with Arbonics.

### Carbon credits

What are carbon credits and VCUs?

A carbon credit is a certificate that can be bought with the purpose of offsetting greenhouse gas emissions. One credit usually represents one tonne of carbon dioxide equivalent (CO2e) avoided or removed from the atmosphere. VCUs (Verified Carbon Units) are one type of carbon credit and one VCU represents a reduction or removal of one tonne of carbon dioxide equivalent (CO2e) achieved by a Verra project as part of their Verified Carbon Standard (VCS) program.

What is Verra?

Verra operates the world’s largest carbon credits registry. They have defined different methodologies (e.g. afforestation) under which project developers like Arbonics operate. Verra has defined monitoring, reporting, verification requirements for each methodology which need to be followed by Arbonics and the landowner. Verra manages and issues Verified Carbon Units (VCUs). You can read more about Verra and other verifiers [here](https://www.arbonics.com/knowledge-hub/abc-verra-and-gold-standard).

How is the carbon sequestration calculated in a project?

We measure real tree growth on your land and use trusted Verra methodologies to calculate accurate carbon value. Your carbon revenue is calculated based on your lands and is generally minimally affected by other landowners in the project.

Is there a cap on the number of VCUs I can generate?

Yes, there is a project based cap that is calculated based on the contract length and the average sequestration on your land. This is defined by Verra’s methodologies and relates to the actual forest growth. We will give you an estimate of this when we first do a carbon opportunity assessment of your land. In practice, this means that you will earn VCUs throughout the project up until the point when the cap is reached.

What is the Verra buffer pool and when is it used?

The Verra buffer pool is used to protect issued VCUs when a project generates a net carbon loss across a monitoring period. If the size of an accidental loss detected during a monitoring period is greater than the measured emission removal, then the monitoring period will generate a net carbon loss. In this instance Verra will retire buffer credits to offset the net loss. If the size of an accidental loss detected during a monitoring period is less than the measured emission removal, then the monitoring period will generate a net carbon removal. In this instance Verra will issue VCUs for the net removal, and the Verra buffer pool will remain unused.

Will I ever have to pay back credits I have received?

If you fulfil your obligations for the full duration of the contract, no, never. However, if you choose to exit early, then exit requirements apply. Please see [**Can I leave the contract?**](https://www.arbonics.com/en/faqs/#contract) for more information.

Who buys the credits created?

Credits can be bought by any organisation who doesn’t have a legal obligation to manage GHG emissions. These are usually companies looking to offset their environmental impact and invest in nature-based carbon removal. They first measure and reduce their emissions, and then look to offset the remaining carbon emissions.

Can I use my own credits to offset my emissions or sell low carbon products?

Yes, if you’ve opted to receive VCUs from us - you can use these however you like. That includes retiring the credits to offset your own emissions. If you’ve instead opted for cash payments, your credits have already been sold and you cannot use them to offset your own footprint, as that would be double-counting.

Will the carbon credit price be fixed within the contract or will it change?

The credit (VCU) price will not be fixed within the contract. The price will be determined by the market prices and decided between the seller and buyer at the time of sale. Arbonics works hard to ensure the highest quality of credits and is building relationships with buyers to secure the highest price for your credits. If you choose to receive credits and sell them yourself, it is your decision at what price point to sell them. Read more about how the price is formed and how it might change in the future from our article [**ABC: where does the carbon tonne price come from?**](https://www.arbonics.com/knowledge-hub/where-does-the-carbon-price-come-from)**.**

### Contract

How long is the contract period?

The contract length is based on your planned harvesting cycle, and can vary from 30-80 years. The expectation is that the land stays under contract until just after your full harvest. Exact contract length is agreed between the landowner and Arbonics.

Is there a fee to join Arbonics projects?

There is no initial joining fee. Arbonics covers the cost of an initial carbon opportunity assessment and all internal onboarding costs. As a payment, we keep 10% of the carbon credits generated. This means we only earn when landowner earns. Additional fees might apply for other services such as selling credits through us.

Can I add additional land to projects?

Yes. Landowners who have contracted land to an Arbonics project can add extra land parcels to the project, if the new land parcels meet all Arbonics eligibility criteria. Different solutions offered by Arbonics might have different criteria and land requirements. For example, only unused or empty land can be added to Afforestation compared to Impact Forestry which targets already forested land. You can have different types of lands enrolled in both Afforestation and Impact Forestry.

Can I leave the contract?

Yes, you can leave the contract at any time - but depending on the stage of the project, different rules apply regarding compensation: - If no VCUs have been issued, then nothing must be compensated; - If VCUs have already been issued, there may be an obligation to refund and/or compensate damages due to departure. There is no damage when the forest keeps growing.

Are there restrictions on adding lands that are part of Natura 2000 network or otherwise protected areas?

Yes, unfortunately areas that are already protected under law can not be added to Arbonics programmes because they wouldn’t pass the additionality test. See also [**Are there any restrictions on additional financial incentives I can receive for the lands under Arbonics agreement?**](https://www.arbonics.com/en/faqs/#payment-and-finance)

### Land and forest management

What is a Carbon Opportunity Assessment (COA)?

Carbon Opportunity Assessment (COA) is an automated analysis of your lands’ carbon revenue potential subject to changes in management practices. These can include planting trees and adjusting harvesting plans. Arbonics will provide you with a COA as part of the onboarding process.

Who pays for planting the trees?

Since the landowner continues to benefit from the timber value, they are expected to cover the initial planting costs. We currently do not offer financial support for planting costs, however, we may do in the future.

Can I sell my land that is under agreement with Arbonics?

Yes, but you have to ensure that the new owner shall become a party to the contract instead of you. The transfer is important to ensure the [permanence](https://www.arbonics.com/knowledge-hub/abc-what-is-permanence-and-why-is-it-relevant-to-forest-carbon-projects) of forest carbon credits. If no transfer happens then the new owner has no obligation to follow the same forest management principles and the credits may be considered to be issued without grounds. If the new owner declines to take over the contract, the contract will be considered to be terminated prematurely (read more on the consequences of leaving early under [**Can I leave the contract?**](https://www.arbonics.com/en/faqs/#contract)) and you may be liable for the actions done by the new owner (e.g. when the new owner decides to cut down the forest prematurely).

Can I harvest the timber produced?

Yes, as per the Grouped Project’s description and national forestry laws.

Can I plant on the same plot different tree types with different rotation times?

Yes, you can - in fact, we encourage mixed-species planting as it leads to higher biodiversity and resilience in your newly planted forests. If you do decide to plant mixed, your contract length will depend on your management plan - for example, if you choose to harvest at different times, the contract length will be decided based on the longest-rotation species (but you can still have multiple harvests of the shorter-rotation species). If you are planning a single harvest, that will define the length of the contract.

Can I grow Chaga mushroom on the trees in the forest under Arbonics Agreement?

Yes, there are no restrictions on growing mushrooms on the trees. See also [**Are there any restrictions on additional financial incentives?**](https://www.arbonics.com/en/faqs/#payment-and-finance)

When do I need to change the land parcel(s) legal status (land use designation) to forest land?

The parcel(s) land use designation must be changed during a reasonable time after entering into to Agreement and planting, but in any case before the first VCUs are issued.

### Monitoring, reporting, verification

Who does the verification and monitoring of my land?

Arbonics arranges for and covers the costs of the Verra certification and validation process (usually undertaken by a third-party Verra partner). However, as a landowner, you are required to share monitoring data (e.g whether you’ve harvested any timber, any fire or pest impacts etc) with us every 5 years, throughout the length of the contract. The monitoring is needed to pass verification, which enables landowners to maximise carbon revenues. Where-ever possible, we use data you are already gathering for government reporting etc, but at times this may require additional data gathering from you. We are also continuously working on automating the process and using remote sensing technologies such as satellite imagery combined with AI-based analysis in order to reduce the monitoring burden on landowners. [Read more on monitoring afforestation projects](https://www.arbonics.com/knowledge-hub/monitoring-afforestation-projects).

What do I have to monitor and report on?

We expect you to support us by providing occasional monitoring data relating to your lands and forests under contract. This will help us correctly model future carbon revenues and prepare for verification before carbon credits are issued. This monitoring data can include but is not limited to basic biomass data, fertiliser use and any changes to the land such as harvests, fire and damage. [Read more on monitoring afforestation projects](https://www.arbonics.com/knowledge-hub/monitoring-afforestation-projects).

How long do I have to monitor my project?

You have to provide data for monitoring throughout the length of the contract, at certain intervals (usually every 5 years, occasionally more frequently if you’ve opted to receive payments more frequently). [Read more on monitoring afforestation projects](https://www.arbonics.com/knowledge-hub/monitoring-afforestation-projects).

Why do I need to monitor my land?

Monitoring is used to measure the real growth of the forest and forms the basis of Verra’s VCU calculation - this will allow landowner to get the carbon revenues. So ensuring the data is high quality and accurate is key to maximising the amount of VCUs generated. [Read more on monitoring afforestation projects](https://www.arbonics.com/knowledge-hub/monitoring-afforestation-projects).

### Exceptional circumstances

What if the project is damaged by fire or storm?

Any carbon loss (whether it be accidental or deliberate) directly affects the potential number of VCUs issued to all members of a grouped project. Arbonics believes that landowners should not be penalised for losses incurred by other landowners, but we also believe that landowners should be incentivised to minimise carbon losses wherever possible. Arbonics is developing a landowner protection mechanism to limit the collateral damage caused by accidental losses. The protection mechanism works like this: - The Arbonics MRV system will monitor all project instances separately. The system will monitor and report both emission removals and carbon losses. - Landowners that generate a carbon loss during a monitoring period (Affected Landowners) will not receive VCUs, however, they will not have to return previously earned VCUs. - Landowners that generate emission removals during a monitoring period (Non-affected Landowners) will be allocated VCUs proportional to their removals measured for the monitoring period. - Allocating all VCUs earned to Non-affected Landowners will create an issuance gap, as Arbonics will distribute more VCUs to landowners than Arbonics receives for the affected monitoring period (with or without the Verra buffer contributions). - Arbonics will cover the issuance gap, up to the maximum extent of the Arbonics Insurance Pool (5% of the total VCUs issued by the project to date; it is separate from the Verra buffer pool and its aim is to protect the interests of all our landowner partners by ensuring loss by one does not significantly impact others). - Affected landowners will not receive VCUs in subsequent monitoring periods until their newly generated VCUs from their land have covered their share of the issuance gap to the Arbonics issuance pool - after that, they will continue to receive VCUs as normal.

What if the State (government) acquires land within the project area?

If the land under contract is acquired by the State, then Arbonics will remove the area from the project. If the area in question has not generated VCUs, then there is no issue. The landowner notifies Arbonics of the sale, and we either terminate the contract (if all the land under contract is acquired) or re-adjust the project area and reset the landowner’s baseline (if only part of the land under contract is acquired). If the land has generated VCUs, then the acquisition would trigger a loss event (or a project reversal). Following the land acquisition, Arbonics would calculate the losses associated with the area of land removed from the project, and then report the loss to Verra. Arbonics would then seek to recover the losses from the landowner and the landowner could then seek to recover losses from the State.

What if the project developer goes out of business?

If the original project developer (such as Arbonics) goes out of business, a new project developer can take over the project ownership. If faced with this situation, Arbonics would first consult with participating landowners and then find a suitable project developer to take over the project. Given that the Verra registry includes over 1800+ unique projects, we believe that finding someone to take over an existing project would be very viable. In the unlikely case that there is no other project developer willing to take over, the landowners involved in the project would have the opportunity to become the project developer themselves (either jointly or by choosing one amongst them to take on the role).

If you have any questions and would like to get in touch, please use our contact form.

Arbonics OÜ

Tallinn, Estonia