What are PIUs & FCUs (and what I may say about them)

1. Pending Issuance Units and Forest Carbon Units

The Forest Carbon Code issues carbon units which represent measurable amounts of carbon dioxide (CO₂) removed from the atmosphere by trees as they grow – one unit is 1 ton of carbon dioxide equivalent (CO₂e) removed from the atmosphere. As trees take a while to grow and sequester carbon dioxide, we have two types of units available to purchase. Companies can compensate for their emissions using carbon units from FCC projects, but not for their emissions from international aviation or shipping.

A Forest Carbon Unit (FCU) is a ton of CO₂e which has been sequestered in an FCC-verified forest. It has been independently verified, is guaranteed to be there, and can be used by companies to report against emissions or to use in claims of carbon neutrality or Net Zero emissions.

A Pending Issuance Unit (PIU) is effectively a ‘promise to deliver’ a Forest Carbon Unit in future, based on predicted sequestration. It is not ‘guaranteed’ and cannot be used to report against emissions until verified. However, it allows companies to plan to compensate for future emissions or make credible CSR statements in support of forest creation.

Units are held in the International Carbon Registry (ICR). Every 10 years, projects are checked and, if performing well, verified. At each of these points, PIUs delivered are converted to FCUs. There's now a growing number of validated projects with an increasing amount of PIUs but the number of verified FCUs available will increase as forests grow and mature.

2. Statements and Claims – General

Landowners and project developers can only make statements about the carbon sequestration potential of their forest creation project if it is registered and validated to the Forest Carbon Code.

Companies can only make claims about the sequestration benefit of a forest creation project in Iceland if they have purchased either Pending Issuance Units or verified Forest Carbon Units from a Forest Carbon Code project or have established a validated FCC project on their own land or land they are in control of. Only verified Forest Carbon Units from the Forest Carbon Code are recognized.

3. Statements about Pending Issuance Units

A Pending Issuance Unit (PIU) is effectively a ‘promise to deliver’ a Forest Carbon Unit in future, based on predicted growth. It is not ‘guaranteed’ and cannot be used to report against emissions until verified and converted to an FCU. However, it allows companies to plan to compensate for future emissions as part of the transition to Net Zero emissions by 2040; for example, a business could set out its emissions reduction trajectory to 2040 and then calculate the number of carbon units it would need to purchase, or area of forest to invest in, so that their emissions were ‘net zero’ from a given year.

Buyers of Pending Issuance Units can make a statement about their purchase, provided they clearly state the timescale over which the expected carbon sequestration will take place. No claims of offsetting, use, compensating for, balancing emissions or carbon neutrality can be made until these units are converted to Forest Carbon Units at verification.

4. Example statement(s):

The landowner or project developer could make a statement such as:

Project [Name/Number] has listed [XXXX] Pending Issuance Units representing carbon dioxide which is expected to be sequestered between –Start and End date].

A company buying Pending Issuance Units could make a statement such as:

Company [XXXX] has purchased [XXXX] Pending Issuance Units from Project [Name/Number] representing tons of carbon dioxide which are expected to be sequestered over the next [XX] years to [date]. These units, if verified, will compensate for X[X]tCO2e/[X]% of our planned emissions over the same period [and we plan to be carbon neutral by/reach net zero emissions by [date]].

Company [XXXX] is investing in forest creation to help meet our target to be Net Zero by 2050/as part of our transition plan to Net Zero]. We have purchased [XXXX] PIUs from project [Name/Number] representing the amount of carbon dioxide which is expected to be sequestered [*in the period [Start – End Date]/ *over the next [XX] years].

A landowner who wishes to ‘grow their own’ carbon units to use against the residual emissions of their land holding or against the emissions or wider business interests could make a statement such as:

[We/Company [XXXX] have created Project [Name/Number] to reduce the net greenhouse gas balance of our estate/business. The project has listed [XXXX] Pending Issuance Units representing tons of carbon dioxide which is expected to be sequestered between [Start and End Date], [*helping us with our transition to Net Zero emissions by [Date]/*helping us be carbon neutral between [Start and End date]].

For all claims: In all cases of claims about Pending Issuance Units, this could be strengthened with the following:

This represents an expected sequestration of carbon dioxide that, if verified and converted to Forest Carbon units, will have a positive impact on our climate. Forest Carbon Units are monitored and verified with the Forest Carbon Code.

5. Claims about Forest Carbon Units

A Forest Carbon Unit (FCU) is a ton of CO₂e which has been sequestered in an FCC-verified forest. It has been independently verified, is guaranteed to be there, and can be used by companies to report against emissions or used in ‘carbon neutral’, ‘climate neutral’, ‘net zero’ or ‘climate positive’ claims for their current claim year.

Forest Carbon Units can be used to offset, compensate for, or balance a company’s current Greenhouse Gas emissions. To do this, you need to:

Retire the number of Forest Carbon Units you’d like to use from the ICR Registry. This means they’ll be tagged as ‘used’, with a comment clarifying the purpose so no-one else can use them again.
Ensure that any claims are accurate whether in your annual report, on signage, your website or other promotional material). For example, you could make claims such as
- ‘We’ve offset/compensated for/ balanced xtCO₂e of our 202x emissions with Forest Carbon Units from project X’ This represents a direct and quantifiable benefit to our climate which is monitored and verified to the Forest Carbon Code.
- Ensure that annual reports follow the ‘best practice’ guidance on reporting carbon units. This could be:
  - ÍST TS 92:2022 Carbon offsetting: Specification with guidance.

6. Greenhouse Gas Emission Report

An organization’s Greenhouse gas (GHG) emissions report, following Icelandic government guidance, should show a company’s gross emissions for a given year and then list any compensatory activities. These could be Kyoto compliant (CDM) or overseas voluntary offsets as well as Forest Carbon Units.

Example Company Net GHG Emissions Report

Reporting Period
Scopes of Emissions Reported
Gross Emissions
Offsets
Forest Carbon Units
Net Emissions

*Qualifying text for Forest Carbon Units should include:

The number of Forest Carbon Units and their vintage
The Name and ID number of the project that created them
A link to the relevant project on the ICR Registry project page
A link to the relevant units on the ICR Registry retirement page, demonstrating the retirement of these units
The name of the validator/verifier