Owing to their forward-looking nature, FMUs are not to be used like conventional offset credits. While the program and approved methodologies are designed to take into careful consideration the risk that forecasted climate benefits may not come to fruition, Climate Forward does not offer a crystal ball with perfect clarity of the future. Quantification of FMUs take this into consideration, as should the use of FMUs by any buyers. While a project’s FMUs provide an indication of what can reasonably be expected in the future, they represent something different from conventional ex-post verified offset credits.

As future emission reductions, they can be paired with projections of future emissions by an entity to signal mitigation that will similarly be occurring in the future. For some entities, this may serve a highly specific purpose, such as compliance with regulations that require demonstrable efforts to mitigate anticipated future emissions outcomes (e.g., California Environmental Quality Act [“CEQA”] mitigation). For others, this may simply provide a means to demonstrate actions taken to address long-term corporate ESG commitments.

FMUs can also provide an avenue for buyers to secure, in advance, a stream of conventional offset credits. To do this, the Climate Forward forecast methodology must have a companion protocol in the Reserve’s offset program recognizing the same project activities and providing a means to conduct monitoring, reporting, and verification of the emissions reductions and/or removals after they have been achieved. In this instance, FMUs can be viewed as a “futures” contract for conversion to conventional offset credits at some point in the future.

Examples of FMU Uses:

• CEQA or CEQA-like mitigation obligations, where FMUs are mitigating a future stream of GHG emissions. This usage was the original intent of the Climate Forward program.
• Addressing ESG goals without specific quantifiable claims (e.g., we’re supporting reforestation of 500 acres that will provide a variety of benefits)
• Private funding clearinghouse for restoration activities
• Mitigation of Scope 3 emissions (any application in this area could be controversial as some advocates reject the use of any ex-ante crediting for such purposes)
• Addressing historical (non-recent) emissions (e.g., A company’s commitment to mitigate all of its emissions throughout its history)
• Forward contracting with the intention to convert FMUs to offsets at some point in the future

FMUs should never be used to mitigate emissions that have recently occurred (e.g., FMUs should not be used to mitigate last year’s emissions). As a result, they are not appropriate for mitigating historical Scope 1 and 2 emissions to claim carbon neutrality

FMUs are also not appropriate for addressing emission reduction obligations in a compliance program (e.g., cap-and-trade).

No. While it is recommended that the Project Proponent have a buyer for their FMUs, given the limited use of the credits, it is not required that the FMUs be sold prior to project listing. However, the Reserve cautions anyone from developing FMUs without fully understanding their uses and the resulting restrictions on their marketability.

An example of a FMU serial number is: CF-1-US-120-293-CA-2018-102-1 to 29251

This serial number identifies batch number 102 containing 29251 FMUs issued by Climate Forward to Project Proponent #120 for project #293. The year 2018 is the start date of the project. All FMUs issued are tagged with the project’s start date year, not the year the emissions reduction/removal is expected to occur.

It is recommended that a project’s crediting period should align with when the expected emissions they wish to mitigate are to occur. However, depending on the intended use, this may not be necessary (e.g., when a company agrees with local authorities under CEQA that such timing is not necessary).