Carbon Buffer Pool
Definition
A carbon buffer pool is a reserve of credits withheld from projects to compensate for future reversals or underperformance.
Why it matters
Buffer pools are the main loss-absorbing mechanism for many carbon standards. Their strength determines whether a reversal is isolated to one project or socialized across the system.
Technical details
How it works
A project contributes a percentage of issued credits to a shared reserve.
If a reversal occurs, credits can be canceled from the buffer pool to compensate for the lost carbon benefit.
The contribution rate should reflect project-specific risk, not just a generic default percentage.
Weak spots
Buffer pools can be undercapitalized if climate, wildfire, or land-use risks are correlated across many projects. Investors should ask whether the pool is large enough for systemic losses, not just isolated events.