1. More Land Could Earn Enough to Attract Investment
Methane income could allow some projects to earn the required return at a lower biomass credit price.
Tropical reforestation
How Methane Payments Could Help Fund Reforestation
Trees remove methane through their bark. This study models how revenue from that uptake could change tropical reforestation finance, project completion and forest area.
We use GWP20 to estimate possible methane payments. It compares methane’s warming effect with CO₂ over 20 years. The calculation assumes a price of $50 per tonne of CO₂ stored in trees and $50 per tonne of CO₂-equivalent methane removal. Projects must earn an annual return of 12% over 30 years.
+5.0 Mha
of additional land could meet the required return with payments based on GWP20.
Meeting that return does not mean the land will be planted.
+2.2 Mha
of additional forest could be completed on land where projects already meet the required return without methane income.
This central scenario assumes how completion improves with income. Project records have not yet established that relationship.
35.7MtCO₂e GWP20 per year
could be removed each year by the additional forest in that completion scenario, once it reaches the modeled full rate and after the stated deductions.
This combines 33.4 MtCO₂/yr of biomass CO₂ with 2.26 MtCO₂e GWP20/yr of methane. It excludes the climate effect of carbon from the removed methane, which we have not estimated.
Mha means million hectares. Mt means million tonnes. No registry credits bark methane today. The estimates below depend on the model’s assumptions about project returns, completion and annual removal.
Project finance
Five Ways Methane Income Can Affect Reforestation
2. More Projects Could Get Funding and Begin Planting
Extra income could help projects that already meet the required return secure funding and begin planting. The model tests an assumed response to that income.
3. Fewer Projects Stop After Work Starts
Income could help pay for maintenance and monitoring. The study has no separate area estimate for this effect.
4. Projects Could Need Less Outside Funding
The model adds up spending and revenue through each year of a project. It finds the largest shortfall, then tests how methane income reduces it.
5. Funds Could Be Reused for Planting Sooner
A separate project example tests when total revenue covers total costs. Recovering the initial investment sooner could help fund more planting.
The completion scenario includes more project starts and fewer later failures. The study cannot say how much of the extra forest comes from each effect. Land that meets the required return and forest that reaches completion are reported separately. We do not add them.
How the Methane Payment Calculation Changes the Results
The model compares payments based on methane’s warming effect over 20 years (GWP20), over 100 years (GWP100), and on changes in uptake over time (GWP*). Each comparison uses the same maps, uptake assumptions and project costs. Each also assumes the same price per tonne of biomass CO₂ and per methane payment unit. GWP* payments require future buyer and registry acceptance. This comparison assumes they start when the project starts; it does not calculate the effect of switching to GWP* later.
| Effect | GWP20 | GWP100 (factor 27) | GWP* (conditional) |
|---|---|---|---|
| Additional financially viable land | +5.0 Mha | +1.8 Mha | +6.1 Mha |
| Additional completed forest, central scenario | +2.24 Mha | +0.78 Mha | +2.84 Mha |
| Projects avoiding later failure | No separate estimate | No separate estimate | No separate estimate |
| Reduction in peak funding need | $48/ha (4.3%) | $18/ha (1.6%) | $61/ha (5.4%) |
| Sustained break-even, illustrative project | year 7 | year 8 | year 7 |
The first and fourth rows come from the model of costs and income across mapped land. The completion estimate assumes how project returns affect completion. The break-even estimate comes from a separate 9,000 ha example with a $20 price and payment in the year of removal. That example excludes income forgone from other land uses and does not discount future income or costs.
1. More Land Becomes Financially Viable
Biomass carbon income alone lets projects on 62.5 Mha meet the required return at the stated price. Methane payments based on GWP20 increase this to 67.5 Mha. The model uses mapped forest growth and agricultural income for each area, together with an assigned project type and fixed costs.
Buyers are unlikely to all pay the same price. The model tests three assumed mixes of purchase prices. These give an additional 1.8 to 4.6 Mha with GWP20 payments, 0.7 to 1.5 Mha with GWP100, and 2.2 to 5.7 Mha if GWP* payments are accepted.
The central calculation deducts an 18% buffer for reversal risk and 10% for leakage. A separate test makes an additional 36% deduction for possible delivery losses. In that test, 32.0 Mha meets the required return without methane. The 36% deduction is an assumption; it has not been measured for reforestation.
2. More Projects Could Be Completed
This calculation covers only land where projects already meet the required return without methane. It tests how extra income might affect the chance that a project secures funding, plants trees and completes its work.
The central assumption gives +2.24 Mha of additional forest with GWP20 payments. The other assumptions tested give 1.88 to 2.30 Mha. For GWP100, the range is 0.64 to 0.84 Mha; conditional GWP* payments give 2.43 to 2.85 Mha.
These estimates depend on assumed relationships between income and completion. We have not yet tested those relationships against records of completed reforestation projects.
3. Income Could Reduce Later Project Failure
Projects still need funds for maintenance and monitoring after planting begins. Methane revenue could help meet these costs. The completion scenario includes this possible effect together with more project starts.
The study has no separate estimate of project failure rates. It cannot estimate how many hectares would be retained by preventing failures.
4. Methane Income Could Reduce the Funding Shortfall
For each mapped area, the model adds up spending and revenue from the project’s start through each year. It finds the largest shortfall during the project, then averages that shortfall across the 62.5 Mha where projects already meet the required return without methane, giving each hectare equal weight. The average shortfall is $1116/ha. Methane payments based on GWP20 reduce it by $48/ha, or 4.3%.
The model counts removal from year 1 to year 30 and payment one year later, from year 2 to year 31. It assumes the restored forest takes up methane at the mature rate from its first year. That assumption has not been tested. The calculation excludes advance purchases that could fund planting.
Reduction in peak funding need
GWP20$48/ha
GWP100 (factor 27)$18/ha
GWP* (conditional)$61/ha
5. Earlier Break-Even Could Help Fund Another Project
A separate 9,000 ha example divides planting into 3 equal groups. Without methane income, total revenue covers total costs and stays above them from year 8. With GWP20 methane payments, this happens in year 7, 1 year sooner.
This example covers 20 years. It assumes a price of $20 per biomass and methane payment unit, with payment in the year of removal. Each group of trees takes up methane at the full rate from its first year. The calculation applies a 15% buffer, a 15% methane fee and a planting cost of $300/ha. It excludes a separate leakage deduction and income forgone from other land uses. Future income and costs are not discounted. These assumptions differ from the homepage example, which uses an 18% buffer, 10% leakage and SelvaFlux’s proposed 30% share. The example does not estimate how quickly an investor could fund new projects across a portfolio.
The year when total revenue covers costs and stays above them
No methaneyear 8
GWP20year 7
GWP100 (factor 27)year 8
GWP* (conditional)year 7
Annual removal
Annual CO₂ and Methane Removal in Two Scenarios
The first scenario estimates how extra income could help projects complete their work on land where they already meet the required return. The second identifies additional land where methane income could make projects meet that return. Both use payments based on GWP20 and add biomass CO₂ storage to methane removal expressed with GWP20. Both apply the 18% buffer and 10% leakage deduction. The totals exclude other project emissions and the climate effect of carbon from the removed methane, which we have not estimated.
More Projects Are Completed
35.7MtCO₂e GWP20 per year
The estimate covers 2.2 Mha. The model estimates how much more forest could be completed on land where projects already meet the required return without methane.
- Biomass CO₂
- 33.4 MtCO₂/yr
- Methane mass after modeled deductions
- 27.9 kt CH₄/yr
- Methane, GWP20
- 2.26 MtCO₂e GWP20/yr
- Same methane, GWP100 (factor 27)
- 0.75 MtCO₂e GWP100/yr
Reporting methane with the GWP100 factor of 27 gives a combined total of 34.2 MtCO₂e GWP100/yr for the same forest area and completion assumptions. All rates assume biomass has reached its modeled full rate.
More Land Meets the Required Return
75.2MtCO₂e GWP20 per year
The estimate covers 5.0 Mha. This estimate assumes that all the land where methane makes projects meet the required return is planted.
- Biomass CO₂
- 70.2 MtCO₂/yr
- Methane mass after modeled deductions
- 61.8 kt CH₄/yr
- Methane, GWP20
- 5.02 MtCO₂e GWP20/yr
- Same methane, GWP100 (factor 27)
- 1.67 MtCO₂e GWP100/yr
Reporting methane with the GWP100 factor of 27 gives a combined total of 71.9 MtCO₂e GWP100/yr for the same forest area and completion assumptions. All rates assume biomass has reached its modeled full rate.
We report these two effects separately and do not add their forest areas or removal totals. The removal rates are model estimates; they have not been observed and do not predict delivery. Expressing methane removal from the same completion scenario with GWP* gives 3.01 MtCO₂-we/yr in years 1 to 20 and 0.19 MtCO₂-we/yr from year 21. This assumes uptake reaches the full rate immediately. Reporting the result with GWP* leaves the assumed forest area and chance of completion unchanged.
Methane Income Has a Smaller Effect on Forest Protection
The central forest-protection calculation uses Hansen forest-loss data. At the stated price, methane income lets protection projects on an additional 0.09 Mha meet the required return with GWP20, 0.05 Mha with GWP100 and 0.10 Mha if GWP* payments are accepted. As a project prevents further forest loss, it preserves more methane uptake relative to its baseline. The study does not apply its reforestation completion or capital-reuse assumptions to forest protection.
Methods and Sources
The GWP20 calculation multiplies methane mass by 81.2, from IPCC Table 7.SM.7. This factor excludes methane-carbon accounting. We have not estimated the climate effect of carbon from the removed methane. Our GWP100 comparison uses 27, the non-fossil value in AR6 Table 7.15. That value treats methane carbon differently. The supplementary table gives 27.9 when methane-carbon accounting is excluded. The GWP* calculation is 27 × (4qₜ − 3.75qₜ₋₂₀), where q is annual methane uptake and the subscripts refer to the current year and 20 years earlier. In each year, all three calculations use the same methane quantity. Changing the metric has no effect on revenue if the payment per tonne of methane stays the same.