Addressing the Climate and Biodiversity Crises:
WCS and Everland Forge a New REDD+ Partnership

3 March 2022 | A new agreement between the Wildlife Conservation Society (WCS) and Everland will scale a portfolio of forest conservation REDD+ projects to achieve at least 10 million tons of verified emission reductions (VERs) annually with an estimated value of $2 billion over the next decade. Everland will provide funding for the creation, development, and implementation of up to 15 REDD+ projects globally, and serve as the exclusive marketing agency for the VERs generated by the projects.

This collaboration with Everland stems from a mutual interest in scaling REDD+ as a mechanism to halt deforestation, mitigate climate change, protect wildlife, and support local communities through market-based carbon financing.

The program builds on WCS’s long history of working on the ground to save wildlife and wild places in nearly 60 countries worldwide. WCS sees REDD+ as a critical tool for fighting climate change and keeping global warming within 1.5 degrees Celsius—the target agreed to in the Paris Agreement to avoid the worst impacts of climate change.

Through this agreement, WCS will facilitate the development of new projects in collaboration with and on land owned or controlled primarily by national governments, as well as local governments, communities, and private landholders.

Consistent with a recent civil society consensus agreement on high-quality tropical forest carbon credits, WCS and Everland share the goal of transitioning from project-based REDD+ support to jurisdictional or national programs or nesting projects within larger-scale programs where they exist and can maximize emission reductions and mitigate climate change impacts.

Everland is a specialized marketing company exclusively representing a portfolio of some of the most impactful REDD+ projects across the globe that protect wildlife and enhance the well-being of local forest communities, including WCS’s flagship REDD+ project in the Keo Seima Wildlife Sanctuary in Cambodia.

The Keo Seima REDD+ project started in 2010 and protects one of the most important remaining intact forests in Cambodia. It is home to the Indigenous Bunong people and has one of the greatest diversities of species in any protected area in Cambodia. The project has issued over 16.7 million VERs by avoiding over 21,500 hectares of forest loss. Last year, the project achieved a long-standing goal: to become financially sustainable through the sale of its VERs. As part of this project, WCS has helped to secure land and resource tenure for local communities, improve protected area management, and establish sustainable alternative livelihoods.

Todd Stevens, Executive Director of the WCS Markets program, said:

“We must eliminate the source of 10 percent of annual global emissions by keeping forests standing. REDD+ is a means for generating the much-needed financial support for on-the-ground forest protection, wildlife conservation, and local communities. We are excited to partner with Everland on this work. They continue to serve an important role in the success of the Keo Seima project, and they share WCS’s values and ambition to scale REDD+ projects that contribute to the nature-positive mitigation action we need.”

Gerald Prolman, Everland’s CEO and co-founder said:

“Since 1895, WCS has established itself as one of the world’s most trusted, respected, and effective wildlife conservation organizations. We are extremely proud to have been chosen as WCS’s exclusive marketing partner and we’re excited to bring 15 new high-impact REDD+ projects to the market. The projects will help meet the surging demand for high-quality VERs that companies can use toward their climate and SDG targets.”

PHOTO CREDIT: Adam Roberts

About Wildlife Conservation Society (WCS)

WCS saves wildlife and wild places worldwide through science, conservation action, education, and inspiring people to value nature. WCS, based at the Bronx Zoo, harnesses the power of its Global Conservation Program in nearly 60 nations and in all the world’s oceans and its five wildlife parks in New York City, visited by 4 million people annually. WCS combines its expertise in the field, zoos, and aquariums to achieve its conservation mission. Through understanding critical issues, crafting science-based solutions, and taking conservation actions that benefit nature and humanity, WCS focuses on the biggest challenges facing long-term conservation efforts: climate change, sustainable financing, economic and food security, and data and science gaps. Visit newsroom.wcs.org. Follow @WCSNewsroom.

About Everland

Everland markets high-impact forest conservation projects in Southeast Asia, Africa, and Latin America that help governments and local communities prosper from protecting their forests and wildlife. Everland brings forest communities and corporations together in a common cause to protect some of the world’s most important and vulnerable forests. Visit https://www.everlandmarketing.com/.

Vietnam’s timber legality program not making a dent in risky wood imports

Reposted from Mongabay.com, originally published on 2 February 2022. Photo by Mongabay.

  • Despite new regulations to clean up Vietnam’s timber sector, importers continue to bring large volumes of tropical hardwood into the country from deforestation hotspots in Africa and Asia for use in products sold domestically.
  • In 2018, Vietnam signed a Voluntary Partnership Agreement with the EU to eliminate illegal timber from the country’s supply chains and boost access to the strictly regulated European markets.
  • However, importers say the new legality requirements introduced in 2020 to verify the legitimacy of timber brought into the country are “too confusing,” and customs data indicate few signs of a reduction in high-risk timber imports from countries including Cambodia, Cameroon, Gabon, Laos and Papua New Guinea.
  • Although Vietnamese authorities are taking steps to improve the situation, meaningful change is expected to take time; a switch by domestic consumers to products that use sustainable, locally grown timber instead of imported tropical hardwoods could solve many underlying problems, experts say.

Vast quantities of tropical hardwood from deforestation hotspots around the world continue to enter Vietnam, in spite of new regulations to clean up supply chains. In 2018, the country signed a deal with the European Union to reform its timber sector and, in return, boost access to the strictly regulated EU markets. But recently introduced mechanisms to eliminate illegal timber are failing, experts say.

“Basically, nothing has changed,” Phuc Xuan To, a senior policy analyst at Forest Trends, told Mongabay. “The authorities allow the importing companies to bring in high-risk timber … just as they did before.”

Thousands of enterprises import 5 million to 6 million cubic meters (177 million to 212 million cubic feet) of timber into Vietnam from more than 100 countries every year. At least one-third of this is tropical hardwood from locations such as Cambodia, Laos, Papua New Guinea and around 20 countries in Africa. The majority of these tropical imports are considered “high-risk” in terms of the legality of their source.

Given the range of sources and actors, “implementation to meet [the new EU-Vietnam legislative] requirements was always going to be a challenge,” Phuc said.

Forest in Massaha community forest in Gabon, one of Vietnam’s major timber-supply countries. Photo by ZB / Mongabay

The Vietnam-EU deal is a Voluntary Partnership Agreement under the EU’s Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan. It represents a commitment to work together to clean up Vietnam’s domestic timber market to ensure its exports comply with EU timber regulations. When fully implemented, all Vietnamese timber exports to the EU will be issued certificates that assure legality of origin and production.

Following the signing of the agreement in 2018, legality requirements were incorporated into domestic legislation in October 2020 via the Vietnam Timber Legality Assurance System (VNTLAS). This framework applies to both export and domestic supply chains, essentially entailing that all timber imported into the country is clean.

Distant timber meets domestic demand

Most imported high-risk tropical timber is destined for Vietnam’s domestic market, according to Phuc, where demand for luxury hardwood furniture is high. Locally sourced wood used to suffice, but Vietnam’s 2016 blanket ban on domestic logging of natural forests forced manufacturers to look elsewhere. At the same time, significant supplies from neighboring Cambodia and Laos dwindled due to increased efforts in those countries to curtail exports of unprocessed timber.

To plug the supply gap, roughly 1.3 million m3 (46 million ft3) of timber enters Vietnam annually from more than 20 African countries, according to Forest Trends. Vietnam is now the second-largest importer of African timber in the world, behind China.

Cameroon is the principal supplier, providing roughly 60% of Vietnam’s tropical timber imports. Other major sources include Angola, the Democratic Republic of Congo, Gabon, Nigeria and Suriname, each of which exports more than 10,000 m3 (353,000 ft3) of logs and sawn wood to Vietnam each year.

Customs data compiled by Forest Trends indicate no signs of a reduction in high-risk timber imports since the VNTLAS regulations came into effect. Between January and October 2021, more than 400,000 m3 (14 million ft3) of wood entered Vietnam from Cameroon — around two-thirds of the total imported during the whole of 2020. Furthermore, the volume of timber from Laos and Cambodia during the same period had already exceeded figures for the whole of 2020.

Maintaining such imports “will continue to bring bad reputations to the Vietnamese timber industry, and could have unpredictable consequences for the timber industry,” says a recent Forest Trends report.

A critically endangered red-shanked duoc langur in Vietnam. Natural forests in the country are among the species’ last remaining habitats. Image by Rhett A. Butler for Mongabay

Complex framework obscures mitigation

The persist import of high-risk timber can be mostly attributed to poor implementation of new “due diligence” requirements. Under the new VNTLAS rules, Vietnamese importers must perform additional control measures when they deal with high-risk timber, such as compiling documentation that clearly proves the legality of the wood. But regulations in many supply countries are opaque and the necessary documents are challenging to procure and verify.

Importers say the due diligence process is “too complicated,” and they don’t know which authorities in supply countries issue the necessary paperwork, according to Phuc. In some cases, timber brokers in supply countries refuse outright to share information pertaining to harvest permits and concession permits because they are considered confidential.

“If you don’t know what the legality framework is in the source countries, then how can you know whether the import is legal?” Phuc said. “And if you are heavily relying on paper documents, how can you guarantee the legality? Paper can be bought.”

Phuc said further issues arise when importers buy wood from Chinese companies operating and liaising with harvesting, processing and transportation firms in many African supply countries. “The Vietnamese importers outsource that type of paperwork to the Chinese companies, who pass documents on, but they are not sufficient for the Vietnamese authorities or the VNTLAS requirements.”

Chinese timber companies operating in Africa have a murky track record. A 2019 investigation led by the Environmental Investigation Agency (EIA) uncovered claims of concessions obtained through bribery, along with allegations of tax evasion and overharvesting of trees in the Republic of Congo and Gabon. Meanwhile, Chinese traders in Cameroon reportedly incentivize the harvesting of African zebrawood (Microberlinia bisulcata), a hardwood species listed as critically endangered by the IUCN.

Reliance on paper documents and third parties to verify timber legality leaves room for malpractice: “[Importers] have to have additional mechanisms to make sure that the documents given to [them] are authentic,” Phuc said. “What is needed here is much more than documents.”

A 2021 Forest Trends report urges the Vietnamese government to do more to open bilateral dialogue with authorities in supply countries to find better ways to cooperate on timber legality issues.

Deforestation near Nam Et-Phou Louey National Protected Area. Image by Rhett A. Butler for Mongabay

Exporters exasperated by slow progress

The slow implementation of the VNTLAS controls has frustrated companies engaged in Vietnam’s lucrative export markets, according to Phuc. The relentless influx of high-risk timber for domestic products could jeopardize trade with not only the EU, but also the U.S., a market worth more than $7 billion in 2020.

Exporters were threatened with tariffs in October 2020, when the Office of the U.S. Trade Representative investigated allegations that illegally harvested or endangered timber was being imported into Vietnam in violation of its own laws, those of the source country and CITES regulations.

Although ultimately no tariffs were imposed, the investigation resulted in an agreement on illegal logging and timber trade between the U.S. and Vietnam in which the Vietnamese government committed to strengthening the VNTLAS and developing memorandums of understanding with high-risk timber-producing countries.

Consequently, in November 2021, Vietnam’s Ministry of Agriculture and Rural Development proposed MOUs with Cameroon, Laos and several other timber supply countries. Given that several of these countries already have Voluntary Partnership Agreements with the EU to address illegal logging, experts are hopeful they will be receptive to cooperation.

“Strengthening bilateral dialogue with Vietnam’s major supplying countries, and with Vietnamese importers, will be critical in allowing the government to make timely adjustments in policy implementation and improvements of its effectiveness,” the Forest Trends report says.

Wood Truck removing a large emergent tree. District of Ebolowa, Cameroon. Image by Ollivier Girard for CIFOR via Creative Commons (CC BY-NC 2.0)

Progress to improve the system underway

Notwithstanding the current shortcomings, measures to improve the situation are underway. Vietnamese authorities, in cooperation with EU partners, are taking steps to review, clarify and reinforce the VNTLAS related legislation, including the regulations on imported timber, according to Bruno Cammaert, forestry officer at FAO’s regional office for Asia-Pacific and regional coordinator for the FAO-EU FLEGT Programme.

“During 2022 the Vietnam Administration of Forestry plans to evaluate implementation of VNTLAS Decree No 102 and other VNTLAS related legislation so far, which will likely lead to some adjustments to strengthen the Decree,” Cammaert told Mongabay in an email. He added that guidance on import controls has been developed in consultation with Vietnam’s customs and forest protection agencies and training programs are being rolled out nationally.

“A recent report found that in 2020 there were 4,500 enterprises and 1,690 other types of organizations and individuals involved in importing timber and timber products [into Vietnam],” Cammaert said. “It will obviously take some time and effort to build awareness, capacity and compliance amongst all these importers, as well as build the capacity of the large number of Customs Officers and Forest Rangers [but these] combined efforts should have a positive impact on the reinforcement of import related controls and due diligence in the coming period.”

Rainforest timber awaiting transport and processing in Indonesia where FLEGT licensing is operational. Image by Rhett A. Butler for Mongabay

Toward FLEGT licensing

The objective of the EU-Vietnam Voluntary Partnership Agreement is to introduce a licensing system, whereby Vietnam can issue EU FLEGT licenses to accompany verified legal timber exports into the EU. While there is still a long way to go until Vietnam’s timber legality assurance system fully complies with EU requirements, lessons can be learned from other countries’ experiences.

Of 15 countries that currently have VPAs with the EU, Indonesia is the only country to currently operate a FLEGT licensing system. Since the country signed a VPA in 2013 and began FLEGT licensing in 2016, annual deforestation rates have dropped by 56%. Nonetheless, “there are still many weaknesses” with the system, Deden Pramudiana, a campaigner for the Indonesian Independent Forest Monitoring Network (JPIK), told Mongabay.

Independent monitoring by JPIK in cooperation with Indigenous peoples and local communities in 2020 and 2021 uncovered multiple violations of Indonesia’s timber legality system. Many of the breaches echo those encountered in the nascent Vietnamese system. Violations ranged from logging companies cutting down trees outside their concessions, to woodworking shops manipulating delivery records to obscure timber origins, and exporters selling forged certificates.

Furthermore, critics of VPA implementation in Indonesia say strict enforcement of regulations disproportionately impacts micro, small and medium-size enterprises (MSMEs) that lack the financial resources to adapt to new international standards. “In Indonesia, the businesses benefiting from FLEGT licensed timber are mainly large-scale,” Phuc said. “The small, medium and micro operators are not benefiting.”

Woodworking shop in Vietnam. Photo by Katina Rogers via Creative Commons (CC BY 2.0)

Domestic focus could resolve many issues

To avoid similar outcomes in Vietnam, experts say the government should focus on building the capacity of MSMEs and domestic plantations, most of which are operated by smallholders. Vietnam produces more than 20 million m3 (706 million ft3) of plantation wood annually, but it is rarely used for furniture because plantation timber, such as acacia, is deemed inferior to hardwoods. Consequently, the majority is exported as woodchip.

According to Phuc, many problems that underly Vietnam’s timber sector could be solved simultaneously if domestic consumers would switch to products that use sustainable, locally grown timber instead of imported tropical hardwoods.

Such a consumer shift would boost opportunities for smallholder plantation growers and reduce transport-related delays and costs, thereby improving the resilience of domestic supply chains. It would also lower the risk of sanctions in lucrative export markets. And, crucially, it would mean Vietnam would no longer risk contributing to deforestation in other countries.

“Some say that it would incentivize clearing natural forest to grow plantation timber, but domestic policy and implementation can be there to make sure that doesn’t happen,” Phuc said. On the other hand, “if you continue to allow tropical high-risk timber imports as an alternative, then you are a source of deforestation to another country.”

Opinion:
Where Does Healthy Critique End and Cynical Denial Begin?

11 February 2022 | A friend of mine, after losing a jiujitsu tournament, praised her opponent.

“Fighting her was like grappling with air,” she said. “There was nothing to get hold of.”

I felt the same grappling with science deniers back in the day – not because they’re nimble (they’re not), but because they don’t play fair.

Liars lie, and we all make mistakes, but science deniers deploy half-truths and innuendo. They don’t necessarily distort their facts but instead embed them in a false narrative, often by building half-truths on half-truths with long strings of rationality between them. In the hands of a skilled denier, half-truths are like signposts that take you just a half-step off course. That might not sound like much, but if ten are lined up with skill and spaced along familiar-looking roads, you’ll find yourself a lot more than five steps from reality.

Whack-a-mole doesn’t work against half-truths and innuendo. Context does, and that’s what I’m trying to provide in this series – first with a look at past media failures, then with a history of Natural Climate Solutions (NCS), and now with a look at the tropes of science denial, drawing heavily on the work of Mark and Chris Hoofnagle.

The two brothers began exposing science denial in the mid-2000s, and scientists from several disciplines kicked their ideas around until broad agreement emerged on the following telltale tropes:

  1. Setting impossible expectations for what science can achieve,
  2. Deploying logical fallacies,
  3. Relying on fake experts (and denigrating real ones),
  4. Cherry-picking evidence, and
  5. Believing in conspiracy theories.

John Cook of the Center for Climate Change Communication coined the acronym FLICC, for “Fake experts, Logical fallacies, Impossible expectations, Cherry-picking,” and he created an extensive taxonomy to provide some structure.

He readily concedes that all these tropes are subsets of the second one, “Deploying logical fallacies,” but he provides a framework that emphasizes those logical fallacies most common to science denial. It’s illustrated here:

 

Trope 1: Setting Impossible Expectations for Science

Science isn’t about absolutes. It’s about a preponderance of the evidence and concurrence of experts, especially when you have social sciences layered on top of physical sciences, as is the case with forest-carbon methodologies.

Strip away the half-truths and innuendo, and you’ll find that all of the stories I’m discussing in this series do have germs of truth in them, but those germs are pretty innocuous. They all boil down to the fact that forest-carbon methodologies aren’t magical or eternal but instead represent best efforts underpinned by a lively debate over how to improve them. Like the right-wing merchants of doubt who turned the strengths of climate science upon itself throughout the 1990s and 2000s, carbon market opponents are bending over backward to portray lively debate as something dark and sinister while ignoring the complex nature of the challenge we face.

Nearly all of the questionable coverage, for example, takes issue with the use of counterfactual analysis to construct project baselines, often relying on the mere sound of the term to imply that something shady is happening in secret recesses of the climate community.

This is absurd.

Counterfactual analysis simply means you’re looking at a situation and asking what would happen if things were different. It is a cornerstone of the impact analyses, and social scientists have long argued that people use too little counterfactual thinking in environmental policy, not too much. Impact analysis is how government agencies and NGOs around the world determine what works and what doesn’t. It includes process tracing, which means you’re looking beyond correlation to a clear series of causes and effects.

Greenpeace is technically correct when it points out that “it’s difficult to judge if the emissions reductions claimed by REDD+ projects are real,” and I’m sure they’re accurately quoting ecosystem scientist Alexandra Morel as saying, “It’s impossible to prove a counterfactual.”

She’s right, but no one claims otherwise – at least, not since Karl Popper and the triumph of fallibilism. Even physicists don’t “prove” anything. They provide actionable models that work well enough until something better comes along, at which point we change – but only after that better way passes the same tests that the earlier ones did. Living systems are more complex than rocks and crystals, while social systems are more complex than squids and mollusks. That’s why we look at a preponderance of evidence and the majority views of experts rather than outlier events or isolated opinions when harvesting the lessons of the past decade to develop more effective approaches going forward. The goal is continuous improvement in the real world, not imaginary perfection in textbooks.

The late, great statistician George Box used to tell his students that “all models are wrong, but some are useful.” It’s a statement he elaborated on in 1976. “Since all models are wrong, the scientist must be alert to what is importantly wrong,” he wrote. “It is inappropriate to be concerned about mice when there are tigers abroad.”

Trope 2: Logical Errors

Logical errors are difficult to correct because, unlike simple lies, they can unfold across pages and paragraphs rather than sentences. The facts are often right, but the context is incomplete or the conclusions are, well, illogical.

The Greenpeace story, for example, opens with Britaldo Silveira Soares-Filho, a respected Brazilian cartographer who oversaw the creation of a well-known environmental modeling platform. In 2007, Greenpeace tells us, an unnamed Brazilian NGO invited Soares-Filho and “an array of other academics focused on the Amazon rainforest” on a three-day boat ride down the Rio Negro River to persuade him to “help rubber-stamp a carbon offsetting project.”

2007, you may recall, was a pivotal year for REDD+, and NGOs were trying to get input from as many experts as possible. I’m guessing that boat trip was part of this effort, but we don’t really know because Greenpeace doesn’t tell us the name of the Brazilian NGO, the name of the project he was expected to “rubber stamp”, how he had the power to rubber-stamp it, or who belonged to this “array of other academics” and what happened to them — did they drown? Were they eaten by piranhas?

All we know is that when Soares-Filho got back to his office, he “decided that he didn’t want his world-leading software used for [REDD+].”

I e-mailed him to find out why and he responded immediately.

“Models are used to avert an undesirable future, not predict the future,” he answered. “Models are not crystal balls. Models are a sign to help devise policy and evaluate policy choices.”

That’s not a controversial statement, and most of the people developing REDD+ projects would agree with it – even if they disagree with Soares-Filho’s conclusions on REDD+. He’s not revealing a deep, dark secret here but rather expressing his take on a very public philosophical disagreement that major outlets simply ignored for decades.

To its proponents, REDD+ is a de-facto policy tool. It fills gaps that current policies don’t address and it financially supports policies that exist but haven’t been funded, among other things. REDD+ is, again, a tool for implementing policy or for going beyond policy, but it’s not a magical replacement for policy.

From a REDD+ proponent’s perspective, REDD+ uses modeling the way Soares-Filho advocates: namely, to identify and avert undesirable futures. It does so, however, by using market mechanisms instead of relying purely on command-and-control approaches, and we know Greenpeace’s views on market mechanisms.

There could have been some value in unpacking this decades-old debate and breaking it down for a mainstream audience, but that’s not what Greenpeace did. They framed it as evidence of a deep, dark secret instead of what it is: namely, a philosophical dispute over which reasonable people can disagree, but where a clear concurrence of experts exists.

This is the appeal-to-authority fallacy – namely, framing an expert opinion as evidence rather than what it is – an opinion. Greenpeace does this throughout the piece, where almost every opinion they agree with becomes a “finding” or a “revelation” discovered through an “investigation”, while every program they want to slam becomes a “scheme”. They describe verified results as “promises”, ignoring the fact that funds are allocated for results, not promises.

This verbal sleight-of-hand leads a trusting reader to the next half-truth: an incomplete description of modeling and a dismissal of counterfactual analysis as “fantasy”.

Greenpeace also repeatedly begs the question — another logical error — by citing “findings” that pop up out of nowhere, and they seem to enjoy appeals to ignorance: comparing the probabilistic nature of reference levels to some magical, unattainable certainty.

The fountainhead of all their fallacies is the false dichotomy of offsetting vs reducing internally — the framing of offsets as a “license to pollute.” This is built on the premise that every offset purchased is a reduction not made. I’m sympathetic to this fear, but while plenty of companies certainly do believe they can buy offsets instead of reducing, that’s not what’s happened historically, and the answer isn’t to pretend the offsets themselves don’t work. It’s to enforce high quality on the offsetting front, which will drive up prices, and to embrace protocols for carbon-neutral labeling.

Ecosystem Marketplace conducted an analysis of buyers in 2016 and found companies that voluntarily purchased offsets tended to do so as part of a structured reduction strategy, and plenty of executives have told me that offsetting acted as a gateway strategy. Once they started offsetting, they had a price on carbon, and once they had a price on carbon, they started seeing places to cut emissions.  (For details, see “Debunked: Eight Myths About Carbon Offsetting.”)

Bloomberg, meanwhile, has run several pieces on a theme spelled out most clearly in “These Trees Are Not What They Seem,” which takes conservation groups to task for financing their operations through the sale of carbon credits – ignoring the fact that carbon markets emerged in part to overcome the short-term, fickle nature of philanthropic funding. This argument would make sense if money grew on trees, but it doesn’t – at least not without the help of carbon markets. In that piece, the usually reliable Bloomberg commits several logical errors, chief among being a misrepresentation of carbon finance, slothful induction, and oversimplification.

Trope 3: Relying on Fake Experts (and Denigrating Real Ones)

I don’t like the term “fake experts,” because it implies nefarious intent. That may have been the case with the original Merchants of Doubt, but I don’t think that’s always the case here. I instead prefer terms like “false experts” or “false authority.     ”

So, what is a false expert? It can be someone whose credentials are dubious, but more often than not it’s someone whose credentials are just not sufficient enough to warrant the status they’re being accorded. That could be a credentialed person whose outlier views are framed as being superior to scientific consensus, which is why Cook’s taxonomy places “magnifying the minority” under the “relying on fake experts” category.

You magnify the minority when you give outlier ideas and untested findings the same or higher status than ideas and findings that have passed the test of time. This is the fallacy the original Merchants of Doubt excelled at, and it’s also a Greenpeace favorite (ironic, since they’re also among the best at outing others who deploy the tactic).

I should emphasize that identifying a person or entity as a false expert doesn’t mean they’re bad people or all their research is flawed, just as even bona fide experts aren’t omniscient. All research should be evaluated on its own merits.

Speaking of research, I’d like to propose a new category called “Relying on Flawed Findings” – that is, findings that aren’t just minority views but are objectively, verifiably flawed – yet still garner inordinate amounts of media attention.

One of these is a paper called “UN REDD+ Project Study,” which comes from a company called McKenzie Intelligence Services (MIS). Greenpeace and the Guardian hired them to evaluate 10 carbon projects in the Amazon, despite the fact that MIS has no discernable expertise in forest carbon. Greenpeace and the Guardian have repeatedly referenced the paper to support their stories, but the paper itself is nowhere to be found.

Why not?

I’ve seen the paper, and the answer is: it’s about what you’d expect from a small company hired to perform analysis outside its area of expertise. Even the title is inaccurate. “UN REDD+” implies they’re looking at REDD+ under the Paris Agreement, when in fact they’re looking at voluntary REDD+ projects – or trying to. The entire analysis is based on how forested areas look from the sky, via low-resolution satellite images, and not on ground samples and models of socioeconomic forces. As if that weren’t bad enough, their photo analysis confused rivers with highways and used forested areas in Bolivia to model deforestation in Guatemala. In the end, it was too embarrassing for even Greenpeace to release publicly, but they and the Guardian continue to cite the fake findings of this phantom analysis in their ongoing coverage.

Another organization to garner undue influence is a small operation called CarbonPlan, which has produced a simple numerical rating system for grading the quality of carbon projects – one of several such efforts underway.

Initiatives like this can be useful as carbon markets finally go mainstream and millions, perhaps billions, of people try to engage them with little prior understanding. Done right, rating systems can provide a useful adjunct to the pass/fail approach carbon standards take as well as additional backstopping to auditors. Done wrong, however, they could institutionalize the practice of magnifying the minority. That, I fear, is the direction CarbonPlan is going.

For one thing, they’re not limiting their ratings to projects that have already gone through broad technical review and public consultation, and they haven’t published any structured methodologies that I know of. Instead, they’re anointing themselves as a sort of de facto standard and putting their stamp of approval on pet projects that are, at best, promising pilots. This could lead to the kind of wildcatting and information asymmetry that George Akerlof warned about in “The Market for Lemons.” That’s a recipe for more confusion and less certainty in a market, which is the opposite of what they claim to be offering.

It wouldn’t be a problem if CarbonPlan hadn’t convinced a handful of reporters and technology companies that they’re the supreme arbiters of quality in carbon projects rather than one voice among many. The fact is they embrace the outlier views of a tiny school of thought spread across a few universities, but those views happen to resonate with a narrow community of well-meaning but deep-pocketed technologists who are acting as a vector to the broader population. In elevating CarbonPlan above the overwhelming majority of experts, these entities are magnifying the minority in a dangerous and destabilizing way.

Specifically, CarbonPlan embraces immediate adherence to pure additionality and pure removals, which I’ll try to summarize simply, based on their published opinions. Pure additionality, as their policy director seems to see it, means carbon finance shouldn’t be used to support activities that do more than just lock up carbon, on the premise that it’s hard to disentangle the carbon benefit from the other benefits. Pure removals means they believe carbon finance should only be used to pay for activities that pull carbon from the atmosphere and inject it into the ground, not those that reduce emissions. CarbonPlan also argues that nature won’t deliver permanence but that untested technologies will, despite reams of evidence on the permanence of natural systems and a dearth of evidence on untested technologies (and the fact that urgency is more important than permanence).

So, why is this a problem? After all, everyone agrees we need to end up at a state of pure removals once we’ve reduced emissions as deeply as possible. That’s the end game. It’s what the whole net-zero movement is all about.

The problem is we’re not there yet.

If we ignore reductions in the present, we’ll face impossible removals in the future, as we saw in the second installment of this series.

It’s great that technologists are pumping money into technological removals, and we should certainly encourage them to keep that work going, but CarbonPlan’s purist approach dismisses existing practices that drive emissions down now. This will take us further away from net-zero if everyone follows it.

Their additionality argument also makes little sense. First, complexity isn’t a reason to avoid something, and second, additionality gets simpler and simpler as prices rise, which they’re doing now. Indeed, there’s plenty of research showing what kinds of interventions become feasible at higher price points, which further demonstrates their additionality.

By ignoring all of these dynamics, however, CarbonPlan gives high ratings to unverified, unvalidated offsets from tech darlings like Charm Industrial while giving low marks to offsets generated under transparent but more complex methodologies that were developed through extensive technical review and public consultation.

That’s not to belittle Charm, or their geosequestration approach, or the technologists who’ve belatedly awakened to the enormity of this challenge. We need to constantly be testing new approaches, and I laud companies like Stripe that are willing to finance new ideas at the pilot phase.  It’s wrong, however, to unilaterally anoint this one as ready for prime time, especially if you’re dismissing hundreds of others that really are.

If Charm’s approach really is ready for prime time – meaning if it’s mature enough to warrant the über-high rating CarbonPlan is giving it – they should write up a methodology and submit it to one of the carbon standards. Then it can go through the wringer of peer review and public consultation, where bona fide experts can pick it apart and suggest improvements and broader stakeholders can then provide additional feedback.

I’d love to see them do that and succeed. It would be great for the world, and if they’ve secretly taken steps in that direction, I applaud them. But from what I’ve seen so far, they’ve adopted the “move fast and break things” approach that Silicon Valley loves.

Haven’t we had enough of that?

I understand that the process of developing a credible carbon methodology can be tedious, and it also means putting your ideas out there to be critiqued by experts and opportunists alike. That can be disconcerting, but these review processes evolved for reasons, as we saw in the second installment of this series.

Legitimate carbon standards don’t just provide a stamp of approval based on some media-savvy consultant’s pet theories. They provide a forum through which entities that want to produce a methodology can do so by exposing their ideas to bona fide experts in a formal process of technical review and then passing it out for public consultation and updating as new findings emerge.

Peer-review processes and public consultations are hallmarks of scientific advancement, and CarbonPlan is circumventing them with its unilateral stamps of approval.

Another case of magnifying the minority took place when a paper with the provocative title “Overstated carbon emission reductions from voluntary REDD+ projects in the Brazilian Amazon” went viral over the course of last year.

It came out in 2020 and was one of many using a popular social impact tool to evaluate project baselines. The authors look at deforestation rates in several forested areas and create “synthetic” deforestation rates to serve as proxies for what would have happened if the projects hadn’t come into existence. It’s a process called the “synthetic control method,” which researchers have used to evaluate everything from the impact of decriminalized prostitution on public health to liberalized gun laws on violent crime. The synthetic control method is designed to isolate the effects of an “event or intervention of interest [on an] aggregate unit, such as a state or school district,” according to MIT professor Alberto Abadie, who pioneered its use.

It works not by comparing the impacted city or state to a comparable unit but to a synthetic city or state modeled from multiple states, school districts, or other population centers. Similar approaches have been used to construct baselines under some methodologies, and the paper was an attempt to bring more (not less) counterfactual thinking into environmental impact analysis.

There are lots of challenges in deploying the synthetic control method, not least of which is the selection of covariates. In this case, the authors readily acknowledge a mismatch.

“The construction of our synthetic controls may not have included all relevant structural determinants of deforestation,” they wrote.

Specifically, in constructing their synthetic controls, they excluded everything unique to the human impact on individual projects from the criteria they used to identify their synthetic forests. It’s not clear yet whether this is or is not a limitation, and the authors deserve credit for trying a new approach that may still prove insightful. Indeed, most of the research they draw on has already been incorporated into new methodologies already under review in the move from stand-alone projects to jurisdictional programs under the Verified Carbon Standard. Specifically, VCS has proposed a shift from modeling based on reference areas to risk mapping based on proximity to indicators of deforestation, such as nearness to the forest’s edge or to recent past deforestation. As you may recall from the second installment of this series, jurisdictional programs are designed to distribute risk between jurisdictions and projects, which is a different dynamic than stand-alone projects were created to address, while all methodologies are designed to update over time as reality changes and science advances.

As we’ll see in a moment, several other studies using similar approaches reached the opposite conclusion from West et al, but all have been roundly ignored by the same outlets and “research” groups, including CarbonPlan, that continue to hype West’s conclusions.

This isn’t a knock on West et al. They generated honest work that’s part of the broader discussion moving the process forward. It’s a knock on those who are magnifying the majority by cherry-picking their conclusions and ignoring all others while assuming that this approach is automatically superior to existing methodologies, which even the authors don’t claim.

That’s unforgivable, but it’s how the hype cycle works. Having built market-based Natural Climate Solutions up into something they could never be, some reporters are now tearing them down instead of digging into them and trying to explain them in all their glorious complexity. To keep the narrative clean and simple, they ignore papers that support the efficacy of carbon markets, and there are plenty.

The most extensive peer-reviewed analysis to date came out after West et al*, but it was roundly ignored by every publication that hyped West’s conclusions, as well as by CarbonPlan, which continues to tout the West et al paper while ignoring anything that contradicts it. In “A global evaluation of the effectiveness of voluntary REDD+ projects,” Coutiño et al looked at all 81 REDD+ projects in tropical forest countries that were over five years old, filtered out those that couldn’t be evaluated for sampling reasons, and settled on 40 that could. Then they concluded that deforestation was 47 percent lower in project areas than in synthetic controls, while degradation rates were 58 percent lower, and the reductions were most pronounced in areas facing the greatest threats. Projects in areas removed from the arc of deforestation weren’t much different from synthetic controls, but the reasons were not addressed, and many of those excluded were in the roughest areas, meaning the overall impact may be greater than they concluded. Findings like that have been emerging across the spectrum, and while not conclusive, they inform the next generation of REDD+ methodologies as we move to jurisdictional crediting and the nesting of projects in jurisdictional programs.

This is the central narrative of REDD+, but it’s been either ignored or, worse, misrepresented as some sort of “fix” to a “broken” system rather than the latest step in an evolutionary process that was baked into the system at its inception, has yielded tremendous results in the past, and will continue to evolve as reality changes and science advances.

Among the many papers that our crusading anti-REDD+ reporters have missed are a 2017 paper by Seema Jayachandran et al, which looked at the efficacy of payments for avoided deforestation in Uganda, a 2019 paper by Gabriela Simonet et al, which found a 50-percent reduction in deforestation compared to synthetic controls in REDD+ projects along Brazil’s Trans-Amazon Highway, and a 2020 paper by Rohan Best et al that looked at 142 countries over a period of two decades and found CO2 emissions grew at slower rates in countries with carbon pricing than in countries without it. Previous research by Erik Haites et al found reductions were deeper in countries with cap-and-trade markets compared to those with carbon taxes, even though the market prices tended to be lower than the taxes – contradicting a foundational CarbonPlan dogma that high prices are what matter in carbon markets.

Haites et al also showed that cap-and-trade programs become more effective as methodologies are updated, which to me serves again to highlight the importance of constructive criticism and the destructive power of turning the process of discovery upon itself. Patrick Bayer and Michael Aklin found similar results in the European Union Emissions Trading Scheme (EU ETS), where emissions were reduced through cap-and-trade even before prices started rising – largely because low prices followed on the heels of reduced emissions, enabling the ratcheting down of caps even further.

All of these studies – and many more – paint a much healthier picture of carbon markets, but you don’t see market proponents running out and spiking the ball every time one of them comes out. Instead, you see standard-setting bodies incorporating these and other findings into new methodologies, while opponents like Greenpeace and CarbonPlan are constantly spiking their balls, real and imagined.

That’s not a hallmark of honest inquiry. It’s a hallmark of our next trope.

Trope 4: Cherry-Picking Evidence

A related tactic, and another favorite of Greenpeace et al, is cherry-picking, or the practice of selecting only those findings that support your bias.

In efforts as complex as forest-carbon projects, there are plenty of cherries to pick in the form of community members who oppose a given project (and receive inordinate attention despite expressing clear outlier views) or parts of a project that went sideways while the overall effort succeeded. The defense, of course, is to focus on the big picture and a clear preponderance of the evidence, although that can be difficult if the cherries were cleverly picked and packaged.

For a look at systemic cherry-picking, I’ll stick with CarbonPlan and the research they submitted to ProPublica and the MIT Technology Review, which summarized their work in a piece that ran under this headline:

The Climate Solution Actually Adding Millions of Tons of CO2 Into the Atmosphere.

The paper focuses on the California Air Resources Board’s (ARB’s) methodology for Improved Forest Management (IFM), which lets project developers create baselines based on “business as usual” practices, meaning landowners can generate credits by doing more than what’s considered common practice without doing the kind of modeling I described in the second installment of this series.

The methodology arose to prevent aggressive harvesting on thousands of small family forests, hundreds of which change hands every year, and it’s designed to lock those forests up under sustainable harvesting regimes for a century. I won’t weigh in on the actual methodology other than to say it evolved for reasons that critics ignore and which are laid out in the reams of public consultation that were submitted at the time. Much of this is summarized in a court decision that resulted from a failed challenge.*

In its paper, CarbonPlan zeroes in on the way projects estimate the amount of excess carbon that projects keep in trees. Specifically, CARB lets developers use the US Forest Service’s Forest Inventory and Analysis (FIA) Program, which is based on random samples of forest plots across the landscape. Unfortunately, the FIA didn’t have enough plot points to generate the degree of certainty required for carbon inventories, so CARB created “supersections” of forest that contain enough plot points to reach this.

The problem is that some of the supersections cover areas where one type of tree gives way to another type of tree, meaning that some parts will have higher carbon stocks than others, and some projects will end up getting credit for more carbon than they actually sequester. This shouldn’t happen, and there’s value in calling attention to it, but the authors ignore a remedy CARB applied (and which I don’t know enough to comment on) while implying this anomaly exists across the entire program, which it doesn’t.

This is the cherry-picking part. They zoomed in only on those areas where they knew the anomaly would show up and found that some of the projects probably did get too much credit. They also, however, found that others got too little, and then they declared the entire program a failure.

The paper has lots of other problems as well. The authors back up their claims, for example, by pointing out that an inordinate number of projects end up barely achieving the objectives needed to turn a profit, which to them means the game is rigged. This is silly, because the program is designed to achieve exactly those results.

On top of all this, they mention in passing that they were using the most recently available FIA data to critique old baselines, ignoring the fact that ARB will be updating its program to incorporate that data soon.

One of my great frustrations is that reporters ignore public consultation, which accompanies all of the incremental improvements these standards are constantly making. Some of the comments are technical and wonky, but most are accessible. These public consultations are like ready-made stories: real experts have weighed in on both sides of the issue, and their contact info is always there. Reporters and organizations interested in a better world can engage in and amplify this process, not circumvent it by bringing pet theories to a vulnerable population without providing the context they need to understand it.

That’s not how the process works, and it’s not how methodologies improve. It’s how they get blown up.

Trope 5: Believing in Conspiracy Theories

At the root of all the critiques is a belief that hundreds of biologists, foresters, economists, anthropologists, indigenous leaders, and entrepreneurs have spent 40 years conspiring to create a rigged system that exists to give Big Oil a license to pollute.

It’s the very essence of a conspiracy theory, because there’s no evidence this is the case – and plenty of evidence it isn’t.

None of this means these markets are perfect or that Big Oil is going to transition into clean energy without pressure from above and below. It means there are advantages and disadvantages to every approach, but they all fit together like the pieces of a giant jigsaw puzzle.

One advantage of well-run markets is that imperfections are pushed into the open, but that can easily become a liability if we let people exploit it to muddle public discourse instead of raising it to the level it must be if we’re to meet the climate challenge.

We can debate the role of markets all we want, in part by paying attention to the very transparent public consultations that accompany these processes, but we can’t let people who lost the debate run around with baseless claims that “the debate was rigged,” “the markets don’t work,” or “Nordhaus is a fascist.”

Above all, we can’t let a too-compliant media amplify that message. We’ve seen this script before, and it doesn’t end well.

Further Reading

Point-by-point rebuttals exist to all of the coverage I’m discussing here. You can read the rebuttal to the Greenpeace/Guardian story that standard-setting body Verra wrote, as well as the rebuttal I wrote to a ProPublica piece two years ago (and a follow-up I wrote to that one), and the correspondence with ProPublica that the California Air Resources Board (CARB) published after more questionable coverage this year, or one Permian Global Capital wrote after an especially shoddy piece in Nikkei in December. The American Carbon Registry also rebutted a Bloomberg story, but only in PDF format as far as I know.

Opinion:
Six Lessons from the History of Natural Climate Solutions

7 February 2022 | Once upon a time, not that long ago, environmental NGOs were utterly dependent on the generosity of others to finance their programs. It’s an arrangement that worked for some, but not for most and rarely for those engaged in activities requiring decades to reach fruition, such as ecological restoration and rural development. Some got funded, but most did not, and many of those that got off the ground ended up treading water when their short-term funding dried up.

Meanwhile, in the corporate world, a handful of companies were taking climate change seriously, and they found themselves in a related quandary.

Carpet maker Interface, for example, joined the climate challenge decades ago, and at some point, it decided to develop a line of “carbon negative” carpets.

The idea was simple: by replacing vinyl backing with something made of plants, they’d flip their production process from being a source of greenhouse gasses to one that pulls more carbon from the atmosphere than it emits. That simple idea, however, proved difficult to realize, and the company wasn’t able to bring its carbon-negative carpets to market until 2020.

Fortunately, however, they’d been able to offer carbon-neutral carpets long before then.

How?

In part by helping NGOs finance activities that reduced greenhouse gas emissions from deforestation and forest degradation while enhancing the ability of land systems to store carbon – activities that would eventually come under the rubric of “REDD+.

When Interface started offsetting its emissions, it financed activities directly, with no clear consensus on how to measure its impacts. Those early days were a wild west of sorts, with companies taking disparate approaches and sharing little in the way of lessons learned.

Over time, however, environmental standards emerged.

Drawing on the latest scientific literature and input from a broad array of stakeholders, these standards encouraged a process of scientific review, stakeholder engagement, and public consultation. This yielded detailed methodologies for everything from identifying endangered forests and quantifying human impacts to generating verified reductions and removals. Different standards had different philosophical approaches, but they built on the same science and evolved in surprisingly similar ways. Furthermore, they were designed to update over time as science and experience provided new insights.

The methodologies made it possible for companies to drive emissions down deeper and faster than they otherwise could, and many did just that. A 2016 analysis by Ecosystem Marketplace found corporations that used voluntary carbon markets tended to do so as part of a strategy to reduce overall emissions — by, for example, creating an internal price on carbon, among other things.

Then came the Great Awakening of 2019, when the world finally started taking the climate challenge seriously. Suddenly, companies that never thought of climate before started taking action – albeit with varying degrees of sincerity – and reporters found themselves struggling to understand complex mechanisms that hadn’t been taught in school.

It’s a steep learning curve, especially if you come to it fresh, but here are six things I’ve learned over the years that may at least get you pointed in the right direction.

Lesson One

Carbon markets started with natural climate solutions more than 45 years ago.

Natural Climate Solutions (NCS) date back to a seminal 1976 paper entitled “Can We Control the Carbon Dioxide in the Atmosphere?”

“The long-term response [to climate change] must be to stop burning fossil fuels and convert our industry to renewable photosynthetic fuels, nuclear fuels, geothermal heat and direct solar-energy conversion,” it said. “But a worldwide shift from fossil to non-fossil fuels could not be carried out in a few years, [and an] emergency plant-growing program would provide the necessary short-term response to hold the CO2 at bay while the shift away from fossil fuels is being implemented.”

The author of the paper was Freeman Dyson, a visionary physicist, statistician, and mathematician known as much for rock-solid breakthroughs in his core disciplines as for his more speculative ideas outside them. He had some wacky ideas that I should probably acknowledge. He believed, for example, that we could turn comets into space-borne farms, and later in life he drastically overstated the potential for Natural Climate Solutions to fix the mess.

Visionaries are like that, and there’s a bonus lesson here. Even geniuses have crackpot ideas, especially when venturing outside their core disciplines, and individual papers mean nothing if they’re not substantiated by later exploration.

Fortunately, decades of exploration have substantiated his tree-planting idea, and nature has been central to the climate challenge since 1979. That’s when the UN held its first World Climate Conference (WCC). There, delegates unanimously declared that “deforestation and changes of land use” were two of the three leading sources of man-emitted carbon dioxide. The third cause was “the burning of fossil fuels.”

That unanimous declaration also stated “that some effects on a regional and global scale may be detectable before the end of this century and become significant before the middle of the next century” and called for continued research. This spawned the Intergovernmental Panel on Climate Change (IPCC), which provides a compendium of the latest climate science in context. The IPCC’s most recent report tells us that deforestation alone still generates about 13 percent of anthropogenic emissions, while land use more broadly accounts for about 30 percent.

Around the time of the first WCC, William Nordhaus and others started to model the interplay between climate change and economic growth. Nordhaus focused on the ability of high carbon prices to drive change, while others focused on the ability of carbon markets to drive finance into the most cost-effective reductions – two approaches that critics often contend are contradictory but which I’d argue are complementary if properly implemented.

Meanwhile, in 1992, the Rio de Janeiro Earth Summit gave us the three Rio Conventions: the Convention on Biological Diversity (CBD), the United Nations Framework Convention on Climate Change (UNFCCC), and the United Nations Convention to Combat Desertification (UNCCD). All of them impact forests, and the UNFCCC called for the “conservation and enhancement, as appropriate, of sinks and reservoirs of all 11 greenhouse gasses not controlled by the Montreal Protocol, including biomass, forests and oceans as well as other terrestrial, coastal and marine ecosystems.”

The UNFCCC also brought the possibility of creating a global currency to finance change: namely, carbon credits, which work globally because greenhouse gasses have the same impact on the atmosphere no matter where they’re emitted or where they’re removed.

Interest in carbon markets has always fluctuated with climate awareness, which has in turn fluctuated with media attention. As media finally give the climate challenge the coverage it requires, markets are responding. As a result, we now see that the “high carbon price” and “most efficient abatement” approaches are not mutually exclusive. Prices for compliance offsets in the European Union are north of €90 per ton, which forces companies to reduce emissions internally, while prices for voluntary offsets are all over the place. This gives companies the ability to finance reductions and removals above and beyond what’s required by law and in ways that suit their own goals and aspirations.

To reiterate: a high compliance price is designed to force internal reductions, while low prices in the voluntary markets funnel money into the most cost-effective mitigation opportunities or next-generation technologies. The low-hanging fruit, however, is rapidly being depleted as finance moves to ever-greater challenges. Voluntary prices, in other words, are going up.

Lesson Two

Every acre of forest we save now means 50 fewer hectares we have to plant down the road, but conservation is expensive.

In 2019, an analysis in the journal Nature concluded that a hectare of deforestation pumps 355 metric tons of carbon dioxide into the air, while reforesting the same area absorbs just 6.7 metric tons per year. That means we’ll have to reforest 50 hectares for every hectare of forest we lose in a given year (or wait 50 years for that hectare to recover).

The insight is hardly new, and it’s woven into the history of Natural Climate Solutions. Take, for example, an agroforestry project called Mi Cuenca (My Basin). It was launched in 1974 by the NGO CARE to help Guatemalan farmers improve their water. It delivered clear social and environmental benefits, but it struggled to attract long-term funding.

Then, in the 1980s, an electric company called Applied Energy Services (AES) tried to offer its customers renewable energy and realized that large-scale renewables weren’t commercially viable. Undaunted, AES asked the World Resources Institute (WRI) for help.

WRI pointed AES to Mi Cuenca and helped CARE calculate the amount of carbon its activities could sequester if properly funded. AES then decided to finance Mi Cuenca based on that sequestered carbon, and the project was rechristened “Mi Bosque” (My Forest).

The real epiphany, however, came two years later, when WRI decided “to put some hard numbers into what was then a very soft debate.” It began modeling Mi Bosque’s impacts on surrounding forests and concluded that the project’s biggest climate impact came not from the new trees it had planted or the soil it had revived, but from the forests it had saved. By helping farmers increase yields, it turned out, they’d reduced their need to chop additional trees.

By all accounts, those early calculations overstated the project’s impact, but they also sparked decades of experimentation and adjustment that brought us to where we are now.

Lesson Three

Carbon methodologies have evolved through 45 years of trial, error, and adjustment.

NGOs, governments, companies, and UN agencies started building on WRI’s work almost from the start, with pilot projects across Latin America, Eastern Europe, Asia, and Africa. The goals were twofold. To promote scalability, they wanted to create standardized methodologies. To prevent greenwashing, they had to make sure those methodologies were solid.

If they succeeded, they’d be able to create a tangible asset – a verified claim on emission reductions that emitters could use to reduce their carbon footprints in the present while reducing internally for the future.

Proponents knew from the start that the process of developing such methodologies would be tedious. It would require peer review from scientific experts in disciplines as disparate as forestry and rural development, and it would require public consultation among stakeholders in forest communities.

As a result, it wasn’t until 1997 that we saw the first standardized, verified credits associated with tree planting. That’s when the Scolel’te community forestry project was certified under the Plan Vivo Standard in Chiapas, Mexico.

It took even longer for the first REDD+ units to be generated and sold. That happened in 2011, when the Kasigau Corridor REDD+ Project was certified under the Verified Carbon Standard (VCS).

The pilot projects that ran throughout the 1990s were as diverse as the terrains and types of deforestation they addressed – from “frontier deforestation” in areas where large-scale agriculture was devouring forests to “mosaic deforestation” where smallholders were being forced to cut trees for survival. The methodologies were equally diverse and complex, as reflected in scores of scientific papers published throughout the 1990s and early 2000s.

It was clear from the start that there would never be universal agreement on any methodology and that every project would have outcomes that were partly subjective. Rather than let the perfect become the enemy of the good, proponents set out to identify procedures and activities that could be verified, and that would deliver environmental benefits on the whole. Some projects would underperform, but others would overperform, and it’s what they did in aggregate that mattered.

It was also clear that stand-alone projects, which are designed to address locally-specific drivers of deforestation in areas with weak governance, would face a different dynamic than would the next generation of projects embedded in jurisdictional programs, which would be designed to drive systemic change. More on this in a bit.

In 2007, Winrock International asked some of the world’s leading deforestation experts to summarize the current thinking on stand-alone projects in a paper entitled “Mitigation and Adaptation Strategies for Global Change.” Since then, the process of creating methodologies and related projects has tended to unfold along these lines:

To create a carbon methodology, some entity will identify a challenge that isn’t currently being addressed, such as the inability of smallholders to defend their land from illegal loggers. They will then develop a stepwise approach to addressing it and present it to a standard-setting body. The proposal will then go through a series of expert reviews, where it is amended before being put out for public consultation. At that point, stakeholders will have a month or two to make comments, and then the procedure may be amended further before finally being adopted as a recognized methodology.

Once a methodology exists, a project developer can follow it to create a project design document (PDD), which is a detailed explanation of the specific challenge and how the project hopes to address it. A recognized third-party auditor must then validate the project design to ensure its legitimacy. If the design is approved, the proponent will develop the project, which another third-party auditor must then verify to ensure it has been properly implemented. Only then can credits be issued.

It’s obviously more complicated than this, and I’ve explained the process in more detail here, while Tanya Dimitrova has done so here. Several leading NGOs did so here, and the public-private BioCarbon Fund did so here.

As a result of all this, large-scale conservation efforts that previously struggled to make ends meet have managed to scale up, and not by relying on goodwill alone. They’re scaling up by delivering verified ecological benefits which are, in turn, adjusted to reflect scientific uncertainty.

Over the past decade, research has shown a simpler way of projecting short-term deforestation by looking at fewer variables, and the process is evolving dramatically as the lessons from the last decade are incorporated into new approaches and the world shifts from stand-along projects to jurisdictional programs. As more people and resources enter the space, it will be possible to construct simpler reference levels with more third-party input rather than just oversight.

Lesson Four

REDD+ is just one component in a global mosaic of interconnected solutions, none of which can meet the climate challenge on their own.

REDD+ won’t magically fix the climate mess alone, but nothing will. Instead, it dovetails with government policies, private-sector initiatives, and NGO-driven solutions. The Forest Stewardship Council (FSC), for example, emerged in the wake of the 1992 Rio Earth Summit – not to replace government policy, but to compensate for its failure. The FSC develops standards for certifying sustainably sourced timber, and it works by stimulating demand for sustainably harvested timber products. Getting certified is expensive, and REDD+ is emerging as a tool for jump-starting that process.

Another initiative emerged in 2004, when NGOs and corporates launched the Roundtable on Sustainable Palm Oil (RSPO) to promote the use of sustainably produced palm oil. This was followed in 2006 by the Round Table on Responsible Soy (RTRS). In each case, the criteria were squishy at first, and consumer demand was slow to materialize.

Things are improving on both fronts, but for our purposes the important thing is that the extra cost of producing certified product outweighs the market premium, and REDD+ is emerging as a tool for bridging this financing gap.

Meanwhile, as consumer awareness grows, so do corporate initiatives. In 2010, for example, 400 private companies passed a resolution via the Consumer Goods Forum (CGF) to purge deforestation from the supply chains of cattle, soy, oil palm and pulp & paper. Then, in 2014, UN General Secretary Ban Ki Moon launched the New York Declaration on Forests, which is a cluster of ten pledges designed to end deforestation by 2030 while restoring hundreds of millions of acres of degraded land.

These efforts work on the demand side of supply chains, and while they haven’t ended deforestation, they have led to a major restructuring of corporate supply chains. REDD+ provides targeted funding to scale these initiatives up, and the transparency they bring can provide leverage points for government regulation.

Lesson Five

The move from projects to jurisdictional programs was planned from the start.

Many countries are implementing jurisdictional REDD+ programs, or programs that cover an entire country or state, instead of the smaller areas that stand-alone projects focus on. This is not, as the Guardian and others claim, a response to news coverage of project shortcomings. Instead, it’s baked into the evolutionary process and has been for well over a decade.

The UNFCCC focuses on jurisdictional REDD+, but negotiators recognized early on that it would take years for countries to agree on international protocols and still longer to develop the monitoring and management systems needed to implement them. To promote early action, the Paraguayan delegation proposed a “nested approach” in 2008. This made it possible for countries to start with isolated projects that would eventually be absorbed into jurisdictional systems within countries that chose to pursue them.

From the start, it was clear that stand-alone projects are different from projects that nest in jurisdictional programs – largely because stand-alone projects address site-specific drivers of deforestation in areas where weak jurisdictional oversight is treated as a separate issue, while projects that nest in jurisdictional programs are designed to encourage systemic improvement by sharing risk between projects and jurisdictions. For this reason, the baselines of nested projects will probably be lower than for stand-alone projects, as Simeon Tegel pointed out in 2010.

“The risk is that these projects could be punished for their early success through discrepancies with an eventual national REDD methodology,” he wrote in Ecosystem Marketplace.

This reality is finally upon us, albeit a decade later than expected, and it’s sure to provide a jolt. Projects will complain about more conservative baselines, and critics will claim the whole system needs to be abandoned. This, however, is how evolution works. Stand-alone baselines come from a time when projects were doing all the heavy lifting on their own and the data was scarce, while nested baselines come from a time when the jurisdictions are supposed to be helping them and more data is available. At the same time, the methodologies for establishing baselines in stand-alone projects are cumbersome and complex, while those for nested projects are streamlined and simple. As I see it, we’re stepping sideways in order to get a better footing for the future. It’s something we have to do, but that sideways step could be disastrous if we land on mushy ground. That’s why it’s important to get a critical mass of minds engaged in doing it right. For the sake of encouraging future development, it will also be necessary to recognize existing projects that were created in good faith, and there will certainly be a contentious period of adjustment.

But I digress.

When negotiators failed to reach a global agreement at the 2009 Copenhagen climate talks, governments and NGOs encouraged a proliferation of stand-alone projects and subnational initiatives to promote early action.

At the same time, donor countries such as Norway, Germany, and the United States continued offering “results-based” payments to jurisdictions that were able to document reductions in emissions from deforestation. These payments are different from offsets in that they do not involve the creation of a carbon asset. As a result, the accounting is less rigorous than that required for offset-quality payments.

Many projects began as cash-strapped conservation efforts that were struggling to cover costs, while some indigenous projects began as unfunded Life Plans, which are indigenous management strategies designed to revive traditional agricultural practices. Over time, the projects and methodologies became more sophisticated while global climate talks ground on.

At the 2013 climate talks in Warsaw, negotiators signed off on the Warsaw Framework for REDD+. Under the framework, countries that want to receive jurisdictional REDD+ funding must first calculate a Forest Reference Emissions Level (FREL), which is an estimate of future emissions from deforestation. Countries then submit their FREL to the UNFCCC, which provides a technical assessment but neither accepts nor rejects it.

As the Paris Agreement takes effect, a country’s FREL will serve as a pie from forestry-based emission reductions, including those associated with carbon projects, are sliced.

Although a FREL isn’t a baseline in itself, it can serve as the basis of one.

The upshot is that the methods of identifying priority areas within a jurisdictional system are different from those used to develop baselines for stand-alone projects. They focus, for example, on geospatial indicators such as proximity to recent past deforestation instead of intricate, site-specific modeling.

The challenge now is aligning these two systems without losing projects that have already delivered ecological results.

Lesson Six

Ideologues of all stripes believe their TRUTH trumps anyone else’s facts.

In the early 1990s, the science underpinning carbon finance was untested, while the uncertainties were unknown, and the methodologies were non-existent. But the science improved, the uncertainties came into focus, and the methodologies came into being. As evidence mounted, opposition to market-based NCS waned, but a small yet vocal contingent of NGOs remained opposed.

In 2001, biologist Philip Fearnside, then with Brazil’s National Institute of Amazonian Research, analyzed the disparate views and found that opposition to including forests in the Kyoto Protocol’s Clean Development Mechanism (CDM) came almost exclusively from a small cluster of European NGOs or their affiliates in developing countries, while support for including forests in the CDM came from NGOs based in the United States or in countries facing deforestation loss – primarily Brazil.

“The reasons for these differences are not scientific, despite the debate frequently being couched in scientific terms,” he wrote. “It is very important to distinguish between what is a scientific conclusion and what is a moral judgment.”

This doesn’t mean forest-carbon methodologies have evolved to a state of perfection, and Fearnside hasn’t been shy about criticizing shortcomings when he sees them, but it shows how long this ideological rift has existed.

In the next installment, I’ll provide a framework for differentiating legitimate critiques from ideological bias and science denial.

Opinion:
Will Coverage of Climate Solutions Suffer the Same Fate as Coverage of Climate Science?

1 February 2022 | Early last year, the Guardian published a story under the following headline:

Research findings that are probably wrong cited far more than robust ones, study finds

The story focused on the work of two behavioral psychologists who’d examined reams of research and concluded that bright, shiny bunk is 100 times more likely to be cited than is bland, boring truth – a ratio that triples in social sciences.

The science editor who wrote the piece dutifully reminds us that the finding “is itself not exempt from the need for scrutiny” but that, historically, “the more dramatic the results, the more likely they are to be wrong.”

Unfortunately, the piece came too late for the Guardian’s environmental team, which had already published a dramatic piece under this headline:

Carbon offsets used by major airlines based on flawed system, warn experts

The Guardian produced that story together with Greenpeace’s Unearthed unit and a nonprofit called SourceMaterial, all of which claimed to have uncovered hidden flaws in the ways carbon markets support forests – flaws that hundreds of scientists had failed to identify over 45 years of research but that a handful of intrepid reporters uncovered in a matter of months.

It’s a compelling narrative, but like those dramatic findings above, it’s also wrong – not because the system is perfect (it isn’t), but because the narrative assumes a perfect solution exists, while the”flawed” system assumes imaginary perfection is the enemy of the good.

Specifically, the system provides a framework within which the best available solutions are implemented while their imperfections are pushed into the light. It supports early action and promotes evolutionary improvement within a mosaic of solutions that the simplistic narrative above not only ignores but undermines.

Nature-based carbon markets have evolved to fill gaps in the broader response to the climate challenge, and those markets adapt as the gaps shift and new solutions emerge. The first generation of nature-based carbon markets, for example, have often served a first responder function to protect the world’s most ecologically valuable and vulnerable forests. As new approaches emerge, however, they’re shifting to a broader approach that was planned from the start but impossible to implement until recently. By ignoring this context, some reporters are generating simple but deceptive narratives that echo the sloppy coverage of climate science that got us into this mess.

Naomi Oreskes and Erik Conway documented that coverage in 2010’s “The Merchants of Doubt.” They showed how a “loose-knit group of high-level scientists” driven by “the ideology of free-market fundamentalism” and “aided by a too-compliant media” (emphasis mine) turned the process of scientific discovery against itself to undermine trust in climate science and create a muddled public discourse.

Specifically, as the scientific consensus coalesced throughout the 1980s and 1990s, right-wing ideologues, many funded by ExxonMobil and Koch Industries, plucked outlier voices from choirs of debate, stripped them of their context, and framed honest inquiry as proof of something nefarious. In their narrative, bright shiny charlatans became brave prophets of revealed truth, standing up to an incestuous cabal of eggheads and bureaucrats. Conservative-minded reporters ate it up, and legitimate publications followed suit, drawing more and more outlets into the narrative until “a wide spectrum of the media…felt obligated to treat these issues as scientific controversies.” The result was a decades-long delay on climate action.

Something similar is happening in coverage of market-based Natural Climate Solutions (NCS), with decades-old ideological disputes being framed as newly-unearthed findings and legitimate areas of debate being framed as evidence of something dark and nefarious. This time, it’s not free-market fundamentalists who are contaminating public discourse but others, including ideologues from the opposite end of the spectrum: those who see the market economy as the root of all evil and carbon offsets as a tool for perpetuating that evil. In their view, markets got us into this mess and markets can never get us out.

“One must question the motive for this ongoing reliance on market-based mechanisms, the very system that has led humanity to what is now a point of systems collapse,” wrote Greenpeace last year.

“The environment, and the cultures living in harmony with it, should be the basis for human development and societies; not an item of the market economy,” declared Barzilian NGO CIMI.

I’m no free-market fundamentalist, and I’m even sympathetic to some of these views, but no one’s allowed to support their arguments with findings that are cherry-picked, decontextualized, and distorted.

If the Guardian/Greenpeace/SourceMaterial stories reveal anything, it’s that the climate challenge isn’t a puzzle book with an answer key in the back; it’s a wicked problem that makes COVID-19 look like grammar school arithmetic. As in medical treatments, climate solutions are based on probabilities instead of certainties. They are, by necessity, implemented with incomplete information, and they often work in tandem with other treatments. What’s more, their efficacy is measured against viable alternatives, and not against pet theories, miracle cures, or imagined states of perfection.

But the outlets above tell us to do exactly that with market-based NCS, encouraging us to jettison imperfect solutions that improve over time while endorsing the equivalent of magic bullets and mythical elixirs.

And idealogues aren’t the only ones putting narrative over substance. In the past year, ProPublica and the MIT Technology Review have produced similar content, as have Bloomberg, National Public Radio (NPR), and a handful of others. None of them are making stuff up, but they all present an incomplete and dangerously misleading narrative at a time when the public needs context.

My goal with this series is to provide that context – and not, as it may first appear, to convince you that carbon markets are perfect.

Instead, I hope to put these markets into perspective by showing how they evolved to their current state, how they’re continuing to evolve, and how that evolution addresses uncertainty. I won’t go into deep detail on specific methodologies, but I will provide links to pieces I and others have written. I’ll also try to offer some insight into how market solutions fit into the Jenga tower of interlocking climate solutions, and why the sum is greater than the parts.

I’m offering a broad sweep, and I apologize for not offering point-by-point rebuttals to specific articles. Those do exist. Standard-setting body Verra published this rebuttal to the Greenpeace/Guardian story, while I wrote two rebuttals to a ProPublica piece two years ago — one here and another here. The California Air Resources Board (CARB) published its correspondence with ProPublica after questionable coverage last year, and the American Carbon Registry rebutted a Bloomberg story as well, although it’s not online as far as I can tell.

If I do my job right, those rebuttals will make more sense when you finish this series than they do now, and you’ll be able to distinguish the sensationalist coverage I’m critiquing from the workhorse coverage that comprises the bulk of what’s out there. For me, this is the story of a system that’s managed to emerge imperfect but intact despite decades of neglect from the larger world. Now that the world has awakened to the enormity of the climate challenge, these markets can help accelerate our efforts to meet it, but only if a critical mass of people understand how they work and what their limited role is.

In this installment, I’ll offer my take on how media can run amok in covering complex issues like climate change, with or without ideological bias, and in part two I’ll offer a brief history of Natural Climate Solutions. In part three I’ll introduce a framework for identifying science denial and see how this coverage fits into it.

I cover a lot of territory here, and while I’ve checked a few things with friends, there’s been no formal review. This series isn’t the final word on anything, but rather the opening words to what I hope is a deeper exploration on your part, and it’s opinion, not reportage (although the opinions come from decades of reporting).

Before diving in, however, I’ll offer a brief look at what I see as the fundamental misunderstanding that fuels all muddled coverage of carbon markets.

The Great Conflation: Offsets and Internal Reductions

Most of the people who get carbon markets wrong start out by conflating two fundamentally different questions:

  1. Will companies use carbon markets to avoid the deep restructuring needed to meet the climate challenge?
  2. Do carbon markets work?

(A corollary question, which I don’t have space for here, relates to whether we should emphasize reductions or removals. I address that false dichotomy in Episode 69 of the Bionic Planet podcast.)

To the first question: some companies may think they can buy their way out of reducing emissions, but they’ll soon be disabused of that delusion – in part because the price of quality offsets will rise, but also because emerging protocols for what does and doesn’t constitute carbon neutrality emphasize internal reductions. Even if the size of the voluntary carbon market increases 15-fold, as the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) argues it must, there won’t be enough offsets to decarbonize the global economy. These markets exist to accelerate decarbonization, not replace it. (For details, see “Debunked: Eight Myths About Carbon Offsetting“).

To the second question: yes, carbon markets work, but they don’t always work the way people think they do, and their impact can be subjective. This especially applies to projects that reduce emissions by financing Natural Climate Solutions (NCS), an umbrella term for a broad array of interventions that slow climate change by improving the way we manage forests, farms, and oceans. These involve science-based methodologies that incorporate varying degrees of certainty and uncertainty into their accounting. This ensures environmental integrity, but it also makes the methodologies hard to communicate and easy to distort.

In my view, most of the people trying to undermine trust in market-based NCS are doing so because they don’t trust the answer to the first question – or in some cases because they think we should use markets to punish oil companies instead of finance cost-effective mitigation. There is an argument for a high carbon price to drive change, which I’ll explore later, and I’ve also argued that we should hold purveyors of science-denial accountable for their lies, but that’s a different issue.

Many of those criticizing market-based NCS argue that fossil-fuel emissions should only be offset through industrial Carbon Capture and Storage (CCS), which pulls carbon dioxide from the atmosphere. CCS includes machines that have meters on them, which theoretically makes for simpler accounting than you get in NCS. I see the argument, and it’s a legitimate debate – one where reasonable people can disagree – but it’s not an either/or situation. It’s a how much of each situation.

I see the mechanisms I’m exploring in this series as dominoes that we’ve been lining up for 45 years, waiting for the world to finally awaken to the enormity of the challenge. With that awakening, we can tip those dominoes to trigger a global restoration of nature, and we can do it fast, but only if a critical mass of people see how this all fits together.

Bottom line: if people want to argue that certain industries should only be allowed to use certain types of offsets, that’s their prerogative. But if they lose that argument, they can’t go trying to discredit market-based NCS with cherry-picked findings and outlier opinions that run contrary to a preponderance of the evidence.

Why we need Natural Climate Solutions

Natural Climate Solutions address some of the most vexing components of the climate challenge. Deforestation, for example, generates 13 percent of the greenhouse gas emissions associated with human activity, and it’s the epitome of a wicked problem, with multiple underlying drivers and no perfect solution.

NCS, as we’ll see, can get us roughly a third of the way to meeting the Paris Agreement’s 1.5-degree C target, but they were garnering just 1 percent of climate-related media coverage until 2018. This changed after a seminal paper called, appropriately enough, “Natural Climate Solutions” put NCS on the map.

 

Climate mitigation potential of 20 natural pathways. We estimate maximum climate mitigation potential with safeguards for reference year 2030. Light gray portions of bars represent cost-effective mitigation levels assuming a global ambition to hold warming to <2 °C (<100 USD MgCO2e−1 y−1). Dark gray portions of bars indicate low cost (<10 USD MgCO2e−1 y−1) portions of <2 °C levels. Wider error bars indicate empirical estimates of 95% confidence intervals, while narrower error bars indicate estimates derived from expert elicitation. Ecosystem service benefits linked with each pathway are indicated by colored bars for biodiversity, water (filtration and flood control), soil (enrichment), and air (filtration). Asterisks indicate truncated error bars. Source: “Natural Climate Solutions

 

Coverage of Natural Climate Solutions

Media now cover NCS, but it’s sometimes a blend of exuberant, unexamined support for nature and condescending dismissal of the financing mechanisms that enable it. In 2019, for example, the Guardian was among several papers gushing over the “mind-blowing potential” of “tree planting” to slow climate change.

That’s a problem, but not because tree-planting can’t help meet the climate challenge.

It can, and it must.

The problem is that all the stories overstated the solution by making claims that are impossible if you do the math while presenting 50-year-old solutions as new and revolutionary ideas. This distracted from a half-century of methodological progress. Any one of those could have provided opening hooks into a deeper exploration of these methodologies, but few did. On top of this, the flurry came a few months after Ecosystem Marketplace published the 2019 “State of Voluntary Carbon Markets” report, wherein experts listed such naively positive coverage as one of the more dangerous developments of 2018.

Why?

Because, they feared, naïve coverage would promote naïve demand, and this would encourage fly-by-night tree-planting schemes and embolden “carbon cowboys” – a euphemism for shady operators who claim to offer carbon credits but ignore recognized standards and eschew third-party oversight.

As feared, dubious tree-planting projects did proliferate, but so, thankfully, did critical coverage of these operations.

Then the Guardian teamed up with Greenpeace to “investigate” NCS programs operating under methodologies that had evolved over decades of peer review and public consultation, and that’s where it gets weird.

Within NCS, they focused on a cluster of mechanisms and interventions called “REDD+” (Reducing Emissions from Deforestation and forest Degradation, plus fostering conservation, sustainable management of forests, and enhancement of forest carbon stocks in developing countries). The term itself is enough to put people to sleep, but it describes an effective yet complex and interdependent array of financing mechanisms that are being used to counter deforestation, albeit not yet at the scale needed and not yet in a way that’s fully integrated into government policies.

Unlike simple tree-planting schemes, which offer nothing in the way of accountability, verified carbon projects follow detailed methodologies that were developed through a public process of peer review and response. Each project, as a result, has its own prepared documentation that describes the design of the carbon credit project (known as project design documents, project description templates, and other terms), that lay out the rationale for the project’s climate benefits as well as the probabilities of the project succeeding (or failing) and the risk management strategies to be undertaken based on those probabilities. This transparency is their greatest strength, but it also makes them vulnerable to cherry-picking and distortion.

Uncertainties are inevitable in carbon finance, as they are in weather forecasting and climate modeling; but while individual projections are uncertain, hundreds will average out to something predictable.  Forest carbon project developers use uncertainty levels to adjust the number of credits coming from their projects and buffer pools to provide insurance against reversals from events like forest fires or incursions. Independent, third-party project validators check these uncertainty levels, and the methodologies underpinning these projects are updated as the science improves. What matters to the system is whether the risk adjustments, insurance pools, and buffers prescribed in the rules and methodologies make up for the uncertainty.

Carbon standards are in the midst of major updates right now, with new methodologies out for public consultation and new criteria for verifiers and validators, as well as new training regimes. These updates began years ago and are not, as the Guardian has implied, a response to their reporting. They’re part of the evolutionary process, as are new treatments for COVID-19 and other diseases. Improvements don’t invalidate the earlier generation of treatments, but turning the process of improvement upon itself can do a lot of damage.

Bugs in the System: Our Brains on Science

Every journalist I know agrees we blew it on climate change, and for reasons Columbia Journalism Review editor Kyle Pope elucidated in 2020:

Journalism has always been good at fast. The home team won. An old woman was shot. A president was elected. The quicker a story moves, the more compressed the drama, the better we are at reporting it.

Slow is harder. Stories that contain subtlety, that evolve, that don’t have an ending – those aren’t our strength. Racism, systemic poverty, the long-term effects of outdated policy – these are subjects that we’ve consistently failed to get our arms around. We chase the immediate, the ephemeral, and ignore the seismic, the fundamental.

If you think things were better in the golden days of journalism, check out what New York Sun editor John Bogart said more than a century earlier.

“When a dog bites a man, that is not news, because it happens so often,” he said. “But if a man bites a dog, that is news.”

This is less a media failure than a bug in the human psyche. We’re drawn to novelty and clear story arcs because they’re how we learn and assimilate information. The problems come when novelty distracts us from boring reality, or when the clear arc is a false narrative.

In academia, they talk of “publication bias,” which means studies that confirm the consensus rarely get published. Scottish psychologist Stuart Ritchie recently bemoaned this phenomenon.

“Scientists [are] dependent on grants to support their research and work in an atmosphere that favors showy and ostentatious findings over workhorse studies that only add small pieces to our knowledge,” he wrote.

Marta Serra-Garcia and Uri Gneezy, who wrote the study I opened with, pointed out that such ostentation contaminates public discourse because “these [wrong] studies are also more likely to receive media coverage and become famous.”

And once they’re famous, they’re dangerous – especially when they get hard-wired into our political brains. Once that happens, they become “zombie ideas,” which Paul Krugman defines as “ideas that should have been killed by contrary evidence, but instead keep shambling along, eating people’s brains.”

Viral Bunk and the Hype Cycle

Nobel laureate Robert Shiller likened the spread of bad ideas to pandemics that erupt when viruses move from a population with high immunity (the experts of academia) to one with low immunity (us) via a vector (media) that converts them into something easily absorbed into the prevailing narrative, spawning a “contagion of oversimplified and easily transmitted variants.”

Former science reporter Ryan Mandelbaum wrote how this phenomenon plays out in bad science reporting:

It’s really not that hard to write a science news story, I promise. Some new scientific results come out, you talk to a scientist on the phone and ask them what they did, then you ask a few other people who know about the research if the results made sense. It’s a lot like, well, any other reporting.

But there’s just something about science news that makes people really, really bad at covering it. Reporters blow single papers out of proportion, publish their own assumptions that the research doesn’t actually support, or plop a super-speculative headline on top of preliminary results. Then there’s the hype cycle, where writers might opt to cover overblown, one-sided university press releases instead of the actual science.

Vox science reporter Brian Resnick wrote about the hype cycle in 2019, when he showed how an academic study on the behavior of lonely investors spawned a flurry of news stories on the perils of urban living. This viral variant emerged as the research passed from a population with high immunity (the academic world) to a vulnerable population (reporters) via a vector (the university’s press department) that had inadvertently caused a mutation in the message.

“Many journalists just follow the lead of press releases,” Wrote Resnick. “If we can’t evaluate the claims of press releases, how can we evaluate the merits of studies (which aren’t immune to shoddy methods and overhyped findings themselves)?”

As he was publishing his piece, a new hype cycle was emerging: the one in Natural Climate Solutions.

As I mentioned earlier, the term Natural Climate Solutions entered the vernacular in a 2017 paper that examined a range of interventions – from planting trees to improving fertilizer management to revitalizing soil – that can be leveraged to meet the climate challenge. The hype cycle, however, began later, when a far less rigorous paper overstated both the potential and the revolutionary nature of NCS. It provided, in other words, exactly the kind of oversimplified variant that goes viral. This is the paper the Guardian gushed over above, and they were far from alone.

To be fair, prominent climate leaders did reference the paper to amplify understanding of NCS, so a reporter on deadline can be forgiven for running with it, but a simple Google search would have led them to the full story. The fact is that afforestation/reforestation (tree planting) was already a mature mitigation approach, and it was underpinned by carbon market methodologies which, as we’ll see in the next installment, had evolved through a long and transparent process of stakeholder review. REDD+ was also mature then, and it includes afforestation/reforestation.

When the hype cycle turned to these mature approaches, the transparency that’s core to their constant improvement became a patch of raw cherries to be picked and offered, context-free, to a newly-woke public hungry for fully-baked pies. Partly as a result, the mood shifted from blind infatuation to abject scorn – with little effort to first understand, let alone explain, the dynamics.

The great tragedy in all of this is that we need informed skepticism from diverse stakeholders. That’s what drives the whole process forward. Both REDD+ and the larger suite of natural climate solutions have evolved substantially over the past 30 years, and they’ve evolved explicitly because healthy critiques drive evolutionary improvement.

But the pieces I’m addressing don’t offer healthy critique. They offer sensationalist headlines highlighting issues that either no longer exist, never existed, or are known limitations in workhorse mechanisms that are functioning in their own little way but being whipped and beaten for not managing to pull the entire load on their own. Infuriatingly, many of those doing the whipping and beating have also done the most prancing and the least pulling.

In part two, I’ll offer a brief history of REDD+ before segueing into a more focused summary of the parallels between bad science reporting and outright science denial.

Looking Back on COP 26 and the Emerging Role of Indigenous People and Carbon Markets

17 December 2021 | Brazilian indigenous leader Francisca Arara bristles when Westerners tell her that forest people should oppose carbon markets.

“We know what we offer the world, and we know what kind of resources we require to deliver it,” she said at year-end climate talks (COP26) in Glasgow, Scotland.

The talks made history both for the massive indigenous presence, which included 28 indigenous representatives engaged directly in the talks and hundreds of others representing their people informally. It closed with the adoption of the Glasgow Pact, which formally recognized “the important role of civil society, including youth and indigenous peoples, in addressing and responding to climate change, and highlighting the urgent need for action”.

For Arara, carbon markets are a way of empowering Indigenous People by paying them for protecting the world’s forests.

“Indigenous People don’t want to be under anyone’s umbrella, regardless of whether they’re in the government or the private sector,” she said. “Markets can deliver the resources we need and the autonomy to utilize them, but only if they’re done right.”

Several traditional and indigenous communities have already engaged carbon markets, but many more are either skeptical of their value or unsure how to engage.

California’s Yurok people, for example, used carbon markets to save their forests and expand their territories, and Indigenous People across Latin America have leveraged carbon markets to solidify their land rights. Non-indigenous forest people, like the Afro-Colombian people of the Tolo River, have used carbon finance to implement sustainable cattle farming, while traditional people across Africa have used carbon markets to both secure their tenure and implement sustainable land-management strategies.

Some NGOs oppose indigenous involvement in carbon markets because, they say, the market economy taints indigenous culture, but prominent indigenous leaders have taken a more pragmatic approach.

“When we hear about carbon markets, it’s not always clear what proponents expect from Indigenous People,” said Chadian indigenous leader Hindou Ibrahim in Glasgow. “If you think you can just show up with money and tell us what to do, that won’t work, but if you start by asking us how we can engage as partners, then we can talk.”

Unfortunately for most Indigenous People, carbon markets that finance the protection of endangered forests (REDD+) are often out of reach – due, ironically, to rules created to ensure environmental integrity. Specifically, at the project level, REDD+ payments can only flow to forests that pass “additionality” tests showing the forests are at high risk of being lost without the payments.

This works against Indigenous People, because they tend to protect forests even at great cost to themselves and with no compensation from the rest of us. Indeed, Carbon Market Watch recently accused an indigenous project in Colombia of overstating its baseline, or the probability of loss, because “indigenous management of the land is generally associated with lower deforestation threats” than was the neighboring land.

The tragic irony isn’t lost on Arara.

“Those who pollute the most and destroy the forest end up making the most money,” she said. “Meanwhile, those of us who preserve the forest barely see a penny for the work we do.”

She represents the Arara nation in the Governors’ Climate and Forests Taskforce (GCF Taskforce), a global alliance of states, provinces, and indigenous territories working to slow climate change by saving forests. She also heads the indigenous caucus within the GCF Taskforce, and she came to Glasgow to support the launch of another alliance: the Peoples Forests Partnership (PFP), which unites indigenous organizations, NGOs, and green businesses.

The PFP promotes direct carbon payments to indigenous communities but is agnostic on the source of those payments. They can come from markets, governments, or other sources, but they have to come in support of time-tested indigenous land management practices, and they must flow directly to indigenous organizations, with the goal of delivering $20 billion annually by 2030.

Antoinette Royo, Executive Director of the International Land and Forest Tenure Facility, sees the  Glasgow Leaders’ Declaration on Forests and Land Use as an opportunity for indigenous organizations to stand up for themselves by demanding control over $1.7 billion that the United States, United Kingdom, Germany, Norway and the Netherlands have committed to supporting indigenous forest management.

“Indigenous Peoples and local communities need to receive this directly,” she said. “But the reality is that just 1 percent of climate finance goes to Indigenous Peoples.”

Long Time Coming

Although the PFP launched in Glasgow, it’s built on concepts that indigenous leaders of the Amazon have been advocating for more than a decade, beginning with the Peruvian indigenous organization AIDESEP (Interethnic Association for the Development of the Peruvian Rainforest).

AIDESEP is an umbrella organization of 109 indigenous federations representing 1,800 indigenous communities, and in 2010 they initiated a program called REDD+ Indigena Amazonico (Amazon Indigenous REDD+, or “RIA”).

RIA aimed to promote  REDD+ based on indigenous Life Plans (Planos de Vida), or indigenous land-management strategies.

Life Plans originated in Colombia in 1992, and they typically identify and map important hunting and harvesting areas, sacred historical and ceremonial sites, and of course, forested areas categorized by the quality of cover and species.

RIA gained support across the Amazon when Shuar leader Juan-Carlos Jintiach championed it as head of COICA (Coordinator of the Indigenous Organizations of the Amazon Basin), which coordinates the activities of nine national indigenous organizations, including AIDESEP.

“It was obvious from the start that additionality was going to work against Indigenous People,” said Jintiach. “I understand why additionality exists, but ironically it only works for us if we give up our dedication to the forest, which is not what we want to do.”

By the 2014 climate talks in Lima, other indigenous leaders had begun pressing the point. Fermín Chimantani, then serving as co-president of Peru’s Amaracaeri Reserve, presented his people’s Life Plan there and passionately argued that carbon finance should flow to his people based on these activities, rather than on standards imposed from outside.

“I’ve been working on our Life Plan since the 1990s,” he said. “We’ve created governance structures; we’ve valued our ecosystem services such as water filtration, biodiversity conservation, and evapotranspiration, and we’ve shown that we can use our indigenous vision to save and manage our forest.”

Point-by-point, he argued that by following their Life Plan, his people were already achieving what top-tier REDD projects aspired to: they had empowered women, they had restored degraded habitat for endangered species, and they had created livelihoods built on sustainable agricultural activities that led to a healthier forest community — and, therefore, a healthier forest. What they lacked was the seed funding to fully implement their plans.

Seven years on, most Indigenous People of the Amazon are still facing the same challenge.

“You could argue that Indigenous People are self-sufficient if we have a territory, and that’s true in terms of food and water,” said Harol Rincon Ipuchima, General Secretary of the Organization of Indigenous Peoples of the Colombian Amazon (OPIAC). “But it’s not true if we’re to continue combatting illegal logging, illegal mining, and illegal encroachment, or to participate in the cash economy with sustainable agriculture, including fish farming and non-timber forest products.”

He, like Jintiach and Chimantani before him, argues that Life Plans should form the basis of carbon payments because they represent forest management programs that are preventing forest loss.

It’s a concept that seemed to be gaining momentum after the 2015 Paris Climate Talks, in part because jurisdictional approaches to REDD+ made it possible for state and federal governments to spread carbon finance based on activities they felt would do the most good for forests within their jurisdictions – instead of codified additionality tests.

Over the past year, two developments took the wind out of this approach. First, Peru agreed to base its national forest reference level on historical deforestation rates instead of trends within its jurisdiction. The Peruvian government argued the shift was necessary to attract international finance, but it put a definitive cap on REDD+ finance flowing into the country. At the same time, emerging risk allocation mechanisms, drawing on new research, started prioritizing areas near recent past deforestation – another blow to indigenous territories.

Three Peruvian indigenous organizations – AIDESEP, the Confederation of Amazonian Nationalities of Peru (CONAP), and the National Association of Administration Contract Executors (ANECAP) – cried foul, and the Peruvian government says its exploring new tools for financing the maintenance of standing forests

Proponents of the PFP say they may already have one.

New Financing Mechanisms

Mike Korchinsky founded wildlife conservation company Wildlife Works more than 25 years ago, and he says corporates may now be willing to support forest maintenance in ways they weren’t back then.

Wildlife Works is one of several organizations facilitating the PFP – together with Ecosystem Marketplace publisher Forest Trends, the Center for People and Forests (RECOFTC), Everland, and Greencollar.

In Glasgow, Korchinsky said new technologies and practices make it possible to model the impact that Life Plans have on both carbon stocks and biodiversity. He plans to submit a draft methodology to standard-setting body Verra for public consultation soon, but said the idea isn’t to generate offsets.

“The idea is to quantify the impact of their activities on the forest in a verifiable way and then to see if companies will pay for it,” he said.

“This wouldn’t be an offset because we want to move beyond the model of preventing loss and towards the model of supporting maintenance,” he added. “It’s the kind of thing no one would have paid for 20 years ago, but times have changed, and we won’t know if they’ll pay until we try.”

Direct International Funding

While project-based funding can and does flow directly to indigenous organizations, intergovernmental funding has always been elusive, as Jintiach pointed out in 2015.

“We’ll find ourselves talking to governments directly and asking them why they always have these bilateral government-to-government discussions, and then we’ll see $100 million change hands, and we’ll say, ‘What’s that for?’, and they’ll say, ‘That’s for indigenous people,’” he told Ecosystem Marketplace then.

The problem persists, and many indigenous leaders attribute it to a paternalistic attitude from governments, NGOs, and even reporters.

“A journalist once asked me if we had the capacity to actually govern ourselves,” said Wrays Perez, Social Technical Coordinator of the Autonomous Territorial Government of Wampís Nation (GTANW).

“I answered: ‘Why shouldn’t we have this capacity? We’ve been doing it for thousands of years.’”

A New Indigenous Fund

Gustavo Sanchez, President of the Red Mexicana de Organizaciones Forestales Campesinas (Red MOCAF), pointed out that the Measoamerican Alliance of Peoples and Forests has managed millions over the years and launched a new fund at COP26.

“This fund is based on the experience of the communities, and it comes with plenty of flexibility to react to their realities and not the priorities of the donors,” he said.

His organization works with thousands of communities across Mexico, and he stressed that not all of them have the same objectives.

“One community may want to engage in a more business-friendly model – by sustainably harvesting timber,  for example – while another may take a more purely conservational approach,” he said. “It’s crucial that funds come in with the flexibility to finance activities that support the goal of sustainable forest management and not the idealized goals of someone thousands of miles away.”

He added, however, that indigenous people must also continue making inroads in Western institutions such as the United Nations Framework Convention on Climate Change (UNFCCC), which inaugurated its Local Communities and Indigenous Peoples Platform (LCIPP) at the 2018 talks in Katowice.

In Glasgow, Parties adopted the LCIPP’s second three-year work plan, and Arara emphasized the need for Indigenous People to seize the moment – for their benefit and the benefit of the world.

“We need to learn how to engage bureaucracy and not just dismiss it,” she said before addressing the audience. “But we also need to remind people that we’re not here to be colorful props for the selfies you send home. We’re here because we’re doing the most to save the world and the forest, and you need us.”

What does the Article 6 Rulebook mean for REDD+?

Correction (20 December 2021): The article has been updated to reflect The Gold Standard Foundation’s current and updated approach to corresponding adjustments and credit issuances.

16 December 2021 | The carbon market community had eagerly—and excitedly as much as nervously—awaited the decisions on Article 6, attaching a lot of hope that these decisions would bring clarity to regulated as well as voluntary carbon markets. Agreement didn’t come easy as negotiators fought over the rules in 6.4 of the transition from the Clean Development Mechanism (CDM), the criteria for cooperative approaches, and whether a ‘share of proceeds’ for adaptation would apply to such approaches in 6.2.

However, the most contentious issue and greatest headache for market participants was the definition and application of ‘corresponding adjustments’ to Article 6 transactions and the impact of agreed rules on the voluntary carbon market. Further to these issues, friends of nature-based solutions saw themselves confronted with an additional set of worries—namely, how REDD+ would relate to Article 6 and whether nature-based solutions would be considered in the newly-defined cooperative modalities.

As countries close this chapter of multilateral negotiations and move on to contemplate how to implement what has been agreed, uncertainties about what these decisions mean outside of UN negotiation rooms create prevailing insecurities for practitioners. How international carbon markets will develop will depend a great deal on the desire in capital cities around the globe to embrace, regulate and engage in such markets. But with or without further elaboration by governments, Glasgow is the bearer of good news for those that have invested in voluntary markets, REDD+ and nature-based solutions in recent years. Here are my main takeaways for nature from the Article 6 rulebook:

REDD+ is eligible under Article 6.2 and 6.4 of the Paris Agreement.

The implementation guidance of Article 6.2 that defines criteria for ‘cooperative approaches’ and corresponding adjustments, and the rules and modalities for ‘Article 6.4 activities’ embrace all sectors and do not exclude any activities or methodologies. In doing so, they retract past discrimination against nature-based solutions by the CDM.

REDD+ activities, such as avoided deforestation or avoided conversion, afforestation and reforestation, or sustainable forest management, can be developed under both implementation modalities of Article 6 (Art. 6.2 and 6.4), provided that they comply with the respective international and national rules.

The modalities and procedures guiding Article 6.4 will be familiar to those market participants that remember the CDM. The Art. 6.4 Supervisory Body will have to approve methodologies that account for emission reductions and removals, and any activity must obtain host country approval to qualify for Article 6 transactions.

While nature-based solutions do not suffer from regulatory discrimination, it will take a while until they operate on a level playing field: They face the obstacle that they cannot rely on a body of accredited CDM methodologies, which are likely to be prioritized by the Article 6.4 Supervisory Body. The approval of methodologies for nature-based solutions may therefore take more time than the approval of methodologies that sit in the comfort zone of UNFCCC institutions.

Since Article 6 treats the land sector like any other sector, there is no special treatment.

REDD+ gets neither discriminatory nor preferential treatment. In a last-minute effort, the Coalition of Rainforest Nations led by Papua New Guinea wanted to secure a broad recognition of all REDD+ emission reductions generated under the Warsaw Framework for REDD+ (WFR) since its adoption in 2015, but this attempt failed. There were significant concerns about whether the WFR would meet the quality criteria of Article 6.2 or 6.4.

Instead of receiving a blank check, the forest sector, including REDD+ programs, must comply with Article 6 rules, like any other sectoral mitigation effort. Cooperation under Article 6.2 gives participating Parties significant flexibility to define the modalities of their engagement. To participate in an Article 6 transaction, Parties must comply with involved reporting requirements, and have the ability to account for mitigation outcomes, track carbon credits, and make corresponding adjustments.

Further, activities that do not generate emission reductions or removals cannot generate mitigation outcomes under Article 6. The Glasgow decisions clarify that “emissions avoidance”— formulated to respond to proposals to credit decisions not to extract fossil fuels, but also applicable to protect forests that are not under immediate threat—cannot generate any eligible mitigation outcomes.

The authorization of Article 6.2 mitigation outcomes and Article 6.4 emission reductions defines the need for corresponding adjustments.

All cooperative approaches and Art. 6.4 activities must be approved by host countries. Host countries also have to authorize companies and other non-state actors that participate in activities. Nothing new here. But Glasgow cut through the Gordian knot of corresponding adjustments by defining an additional authorization: Host countries can decide to authorize mitigation outcomes generated by Article 6.2 cooperative approaches and Article 6.4 emission reductions (A6.4ERs) for specific uses – some requiring a corresponding adjustments, others not.

Mitigation outcomes and A6.4ERs can be internationally transferred and used against another country’s NDC if so authorized. Countries can also authorize the use of emission reductions and removals for ‘other international purposes,’ generally understood to refer to offsetting schemes defined for international aviation or, in the future, international shipping. A third category of use authorizations cover ‘other purposes,’ which includes current voluntary carbon markets that generate credits that are used to offset company emissions. Any of such authorization requires a corresponding adjustment.

However, a host country “use authorization” specifying the destiny of a carbon credit is not mandatory. A government can decide to engage in cooperative approaches and approve Article 6.4 activities without authorizing the resulting emission reductions for specific (offsetting) uses. In the future, the market will see adjusted and non-adjusted Article 6 credits, including for nature-based solutions activities.

The voluntary carbon market remains independent from Article 6.

The Glasgow decisions do not include any explicit reference to voluntary carbon markets. Implicitly, the reference to ‘other purposes’ recognizes that private entities may participate in Article 6 transactions to meet corporate climate goals. The decisions do not judge whether these transactions should generate ‘adjusted’ or ‘non-adjusted’ credits (the various pathways for carbon credits are illustrated in the graph.) Instead, the Article 6 rulebook leaves this decision to the willingness of host countries to issue corresponding adjustments, to carbon standards and crediting programs to label or distinguish credits with an adjustment, and corporates to decide whether they wish to procure such credits.

 

 

Voluntary carbon market standards have reacted differently to the question of whether to back carbon credits with corresponding adjustments. The Gold Standard has said that it considers corresponding adjustments necessary for carbon offsetting and carbon neutral claims. In June, Gold Standard announced that it would update its claims guidelines to reflect this. Verra announced that it will issue carbon credits for voluntary action with or without corresponding adjustments.  Both standards will distinguish between adjusted and unadjusted credits in their registries. Gold Standard’s approach would mean that all adjusted credits used for offsetting claims would fall under the category of Article 6.2 mitigation outcomes or Art6.4ERs that, once authorized, become internationally transferred mitigation outcomes (ITMOs).  Verra, on the other hand, does not regulate the use of carbon credits and leaves it to other initiatives, such as the VCMi, to develop guidance on corporate climate claims.

Host countries need to carefully consider when to offer authorized ITMOs.

In contrast to the CDM where engagement for host countries came at little cost, Article 6 can affect a country’s ability to meet its NDC, particularly if the country authorizes an inordinate amount of corresponding adjustments. Host countries will therefore have to carefully evaluate when and under which conditions they will offer authorizations that trigger corresponding adjustments.

The inherent quid-pro-quo (investment against transfer) of authorized uses challenges the idea of ‘common-but-differentiated responsibilities and respective capabilities’ of the international climate regime as it raises the price of engagement for host countries. In this context, it is notable that corresponding adjustments must also apply to authorized emissions not covered by the host country’s NDC. In such cases, the country is effectively paying double for ITMOs related to emissions not covered by its NDC: It has to make a corresponding adjustment without benefiting from a corresponding emission reduction within the scope of its NDC. Countries will therefore have to be extremely strategic in these instances, ensuring that the transfer is worth the resulting carbon finance benefit.

For some time to come, corporate demand for voluntary carbon credits without use authorizations, including for nature-based solutions, is likely to remain strong.

With Glasgow, the typology of carbon transactions and resulting units has increased significantly:  in time, there will be trades in adjusted and non-adjusted A6.4ERs, adjusted mitigation outcomes from Article 6.2 cooperative approaches, voluntary units with or without adjustments that fall under Article 6.2 or Article 6.4, or voluntary units with no direct link to Article 6. Eventually, the different categories of credits may allow voluntary standards and buyers to develop sophisticated portfolios of credits meeting different offsetting and non-offsetting needs.

However, considering the complexity of approvals and authorizations that comes with implementing Article 6 activities, the voluntary carbon market that operates separately from Article 6 is likely to remain the venue of choice for many corporate buyers, at least in the near term. It may be several years before host countries will be eligible and able to design Article 6.2 approaches, approve Article 6.4 activities, and comply with the rules governing corresponding adjustments.

Jurisdictional REDD+ seems to be a predestined cooperative approach under Article 6.2.

While nature-based solutions start with a handicap when it comes to approvals under Article 6.4, it enjoys a head start in the design of cooperative approaches under Article 6.2. The engagement of countries in jurisdictional REDD+ makes it a ready-made category for Article 6.2 cooperative approaches. Through existing implementation guidance by voluntary standards (JNR or ART/Trees) and multilateral programs (FCPF, GCF) countries are familiar with quality criteria of large-scale programs.  Many countries are in the process of developing jurisdictional programs, and guidance on nesting ensures that they can integrate voluntary carbon market projects in larger programs.

A REDD+ cooperative approach could consist of a jurisdictional program that generates adjusted and non-adjusted mitigation outcomes, and integrates voluntary carbon market and, in the future, Article 6.4 activities. While cooperative approaches enable the cooperation between two or more countries, REDD+ countries could also develop unilateral cooperative approaches that meet the requirements of Article 6.2 and are implemented in cooperation with authorized private entities. In parallel, project developers and other parties can submit avoided deforestation and other nature-based solutions methodologies for approval by the Article 6.4 Supervisory Board and develop activities under Article 6.4.

However, meeting the different accounting requirements of Article 6 will take time; time during which forests may be lost and ecosystems wait to be restored. It is therefore essential that investors do not halt their activities in expectation of the Article 6 requirements being fulfilled. The voluntary carbon market has grown rapidly in recent years, and remains nature’s best (albeit imperfect) chance to enjoy the support of international finance in the short term. Unfortunately, the climate crisis does not endow us with time to waste. Forests need to be protected based on the tools and mechanism that are available at any given moment. Invest in nature now!

Now Available: CORSIA Carbon Market Data from Ecosystem Marketplace
ICAO Environment CORSIA Newsletter

1 December 2021 | Today’s edition of the CORSIA newsletter marks the first publishing of data on carbon market transactions of CORSIA-eligible emissions units, following the August 2021 announcement on the ICAO-EM partnership (Ecosystem Marketplace (EM) is a non-profit initiative of Forest Trends). The information presented by EM here aims to enhance States’ and stakeholders’ understanding of the development of carbon markets, and to help States to better understand the effects of CORSIA on the international aviation sector.

EM has aggregated and anonymized reported carbon market transactions of CORSIA-eligible emissions units for 2020 and 2021 YTD. Information encompasses transactions as of 5 November 2021 from American Carbon Registry (ACR), Clean Development Mechanism (CDM), Climate Action Reserve (CAR), Gold Standard (GS), and Verra. In the table below, EM has provided annual summaries and totals for project categories derived from projects located in 17 countries in the geographic regions of Africa, Asia, Europe, Latin America and Caribbean, and North America.

When comparing the transaction periods of 2020 (1 January – 31 December) and 2021 YTD (1 January – 5 November), buyers have paid significantly different prices for CORSIA-eligible units ranging from less than USD 0.50/tCO2eq to more than USD 45.00/tCO2eq. The weighted average price for All Categories has dropped from USD 4.89/tCO2eq in 2020 to USD 3.08/tCO2eq in 2021 YTD. This drop is mostly attributed to an increased number of transactions of lower-priced Renewable Energy units in 2021 YTD. The weighted average price of CORSIA eligible Forestry and Land Use units has increased by about 26% between 2020 and 2021 YTD. This group of projects includes Improved Forest Management, Afforestation, and Reforestation. The shift in price was mostly driven by Improved Forest Management, the average price of which jumped by about 53%. More details can be found on the EM website.

As EM Respondents continue to report trade data to Ecosystem Marketplace, updated prices will be included in future editions of this newsletter.

View the data in EM’s Data Intelligence and Analytics Dashboard.

 

 

 

 

Article 6 and its Glasgow Rulebook: the Basics

16 November 2021 | Six years after negotiators adopted the Paris Climate Agreement, they finally completed the rulebook for implementing it at year-end climate talks in Glasgow (COP26) — an event that was supposed to happen three years ago, at the 2018 climate talks in Katowice, Poland (COP24).

The sticking point was Article 6, which became a lightning rod in Katowice and a dud in Madrid in 2019 before negotiators finally wrapped it up in Glasgow, with existential sticking points resolved and a few stubborn ones assigned to working groups for the coming year.

Article 6 is central to the agreement because it guides how countries cooperate to generate cheaper — and, thus, deeper — greenhouse gas reductions. In so doing, it should lead to more ambitious national climate action plans, which are called “Nationally Determined Contributions” (NDCs).

In 2019, the International Emissions Trading Association (IETA) looked at the NDCs then on the table and concluded that cross-border coordination in the form of carbon trading could cut the cost of meeting NDCs in half by 2030 – making it possible to cut emissions 50 percent deeper at no additional cost.

Internationally Transferred Mitigation Outcomes (ITMOs)

In the Paris Agreement, emission reductions that pass from one country’s greenhouse gas inventory to another country’s inventory are called Internationally Transferred Mitigation Outcomes (ITMOs).

Like all carbon credits, ITMOs are created by projects that either reduce emissions or remove gasses in one place, with the payments coming from another place.

They become ITMOs when those places are in different countries and the reduction is transferred from one country’s national greenhouse-gas inventory to another country’s greenhouse-gas inventory. This can happen at the government level, for example as when Switzerland purchased ITMOs from Peru. However, it’s more likely to happen at the corporate level when a company in one country purchases ITMOs from abroad to meet compliance criteria at home.

The Article 6 rulebook requires “corresponding adjustments” (CAs) when an ITMO is passed in this way.

A corresponding adjustment means that the “host” country, or the country where the carbon project is located, must first authorize the transfer and then adjust its own greenhouse gas inventory to reflect the fact that the emission reduction achieved inside its borders is being credited to another country. The buying country then adjusts its greenhouse gas inventory by the same amount.

Many developing countries, however, say they don’t want to transfer emission reductions abroad, and ITMOs aren’t the only international carbon assets.

Voluntary Emission Reductions

Voluntary Emission Reductions or Verified Emission Reductions (VERs) are emission reductions generated in the voluntary carbon market (VCM), and they don’t have to be entered into a national inventory because they aren’t created to meet a legal requirement. A host country can, if they choose, apply a corresponding adjustment to VERs that leave its border, but this is not required.

The VCM encompasses all transactions of carbon offsets that are not purchased with the intention to surrender into an active regulated carbon market. It does include offsets that are purchased with the intent to re-sell or retire to meet net zero, carbon neutral, or other climate claims.

In a cross-border voluntary transaction, a company in one country – say, Germany – can reduce its footprint by purchasing credits from a project in another country – say, Brazil – but the German company cannot use the credit to meet its legal requirements in Germany. Any reductions in greenhouse gas emissions are reflected in the activities on the ground in the host country, and that’s where they stay.

Some NGOs have advocated for imposing corresponding adjustments on voluntary carbon transactions, and there is a lively debate over what sorts of claims the buying company can make, but the Article 6 rulebook makes no reference to voluntary markets. For a deep dive, see “Corresponding Adjustments for Voluntary Markets – Seriously?

The Kyoto Legacy

To understand some of the confusion on Article 6, it helps to look back at the Kyoto Protocol and its Clean Development Mechanism (CDM), which was a centralized hub for executing cross-border compliance trades. Under the Kyoto Protocol, developing countries had no commitments, so no corresponding adjustments were necessary. In the lead-up to the signing of the Paris Agreement in 2015, many developing countries were surprised to learn they’d have to transfer their emission reductions abroad if selling ITMOs, and few have done so. This has led to an appetite for performance-based finance and voluntary transactions.

Also, the CDM included a transaction fee to finance its own operating costs and support the Adaptation Fund, which helps developing countries adapt to climate change. This fee is mentioned in Article 6.4 as of the Paris Agreement but not Article 6.2, which we’ll get to below.

Finally, the CDM generated an oversupply of credits, which several countries — primarily Brazil, China, India, and South Korea — wanted to see recognized in the CDM successor, while most countries were reluctant to let them in.

Paragraph 6.2 and its Rules

Paragraph 6.2 provides an accounting framework for bilateral and multilateral transfers, including programs that link the emissions-trading schemes of two or more countries. Here is the complete text of the paragraph:

Parties shall, where engaging on a voluntary basis in cooperative approaches that involve the use of internationally transferred mitigation outcomes towards nationally determined contributions, promote sustainable development and ensure environmental integrity and transparency, including in governance, and shall apply robust accounting to ensure, inter alia, the avoidance of double counting, consistent with guidance adopted by the Conference of the Parties serving as the meeting of the Parties to this Agreement.

Click here to view the 6.2 rulebook

The paragraph doesn’t create a trading system itself but instead provides a framework within which countries can create their own systems in ways that are consistent with UN rules and comparable to each other.

In the early days of the Glasgow talks, the most contentious issue focused on whether or not to implement a transaction fee to pay for adaptation in developing countries. Such a “share of proceeds” provision exists in Paragraph 6.4, as we mentioned above, but most developed countries pushed back on this provision, arguing that it was impossible to implement in a unified and fair way given the diversity of approaches being developed under 6.2.

The transaction fee didn’t appear in the final draft, but there is an invitation for the Adaptation Fund “to report in its annual reports to the CMA (the group of the countries who have signed and ratified the Paris Agreement) on funding related to participation in cooperative approaches.”

Negotiators also deemed several technical issues in need of further review, and these were assigned to the Subsidiary Body for Scientific and Technological Advice (SBSTA), which is a technical negotiating track that helps inform the next COP agenda. Among these are the treatment of corresponding adjustments after 2030, whether ITMOs can include reductions or be limited to removals, and how to handle corresponding adjustments for single-year NDCs. Ironically, single-year NDCs are more difficult than multi-year NDCs because the longer-term NDCs run on a carbon budget approach similar to the Kyoto Protocol.

The issue of reductions vs removals emerged in recent reports by the Intergovernmental Panel on Climate Change (IPCC), which has concluded that we must dramatically increase removals by 2050 to meet the climate challenge. Existing carbon credits tend to focus on activities that reduce emissions, activities that remove gasses were seen as a future activity. There is, however, an active debate among NGOs as to how to strike the balance between strategies that use ITMOs to support removals and those that use them to support reductions.

Paragraph 6.4 and its Rules

Paragraph 6.4 establishes a centralized hub to replace the CDM, and the biggest points of contention coming into Glasgow were whether countries would have to correspondingly adjust their carbon accounts when transferring emission reductions into non-Paris accords, such as the CORSIA program for international passenger flights, and the degree to which Certified Emission Reductions (CERs) generated under the CDM could be applied towards NDCs. Here is a complete text of the paragraph:

A mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development is hereby established under the authority and guidance of the Conference of the Parties serving as the meeting of the Parties to this Agreement for use by Parties on a voluntary basis. It shall be supervised by a body designated by the Conference of the Parties serving as the meeting of the Parties to this Agreement, and shall aim:

  1. To promote the mitigation of greenhouse gas emissions while fostering sustainable development;
  2. To incentivize and facilitate participation in the mitigation of greenhouse gas emissions by public and private entities authorized by a Party;
  3. To contribute to the reduction of emission levels in the host Party, which will benefit from mitigation activities resulting in emission reductions that can also be used by another Party to fulfill its nationally determined contribution; and
  4. To deliver an overall mitigation in global emissions.

Click here to view the rulebook

The stickiest issue was resolved on the night of November 12, when Brazil agreed to require corresponding adjustments on all new emission reductions generated under Paragraph 6.4, breaking a logjam that had existed since 2015. For background, see “Will Double-Counting Dust-Up Crush Katowice Climate Conference?

In a compromise that’s been widely criticized, however, the rulebook sets out criteria for countries to use CERs from projects registered after January 1, 2013 to meet their first NDC or first adjusted NDC, with no corresponding adjustment since the CDM predates that requirement. It designates a 12-member Supervisory Body to oversee the emerging hub and tasks it with reviewing baselines of recognized credits.

The total number of pre-2020 CDM credits meeting the criteria is just over 100 million, and their date will be clearly labeled. Most participants are encouraging buyers to avoid using them in their NDCs, even if they can legally do so. For details, see “Glasgow Outcome: Ambitious Carbon Market Rules”.

The rules may be written, but they will certainly be subject to deeper interpretation than we can offer here. Get ready for another interesting year.

Further Sources

Decoding Article 6, Version 2”, a deep dive from the Asian Development Bank

Article 6 Handbook”, from Carbon Mechanisms

Or watch the video below from Perspectives.cc

What COP26 Means for Forests and the Climate

12 November 2021 | Dubbed the “Nature COP,” forests were front and center throughout the UN climate summit (COP26) this year. Among the first and most significant announcements made at COP26 was the Glasgow Leaders’ Declaration on Forests and Land Use, in which 137 countries committed to collectively end forest loss and land degradation by 2030.

Panellists speaking at the Forest event at the SEC at COP26 in Glasgow
Above: Panellists speaking at an event on forests at COP26 in Glasgow. Photo by Karwai Tang/ UK Government

This pledge was followed by scores of forest-related announcements — including significant funding commitments from countries and foundations to support conservation of tropical forests, the communities best positioned to steward them, and the restoration of degraded land. Meanwhile, companies and investors pledged to reduce forest loss and support a transition to more sustainable land-use within their supply chains and financial portfolios.

What does this mean for forests and climate action? We walk through the numbers.

What Was Promised on Forests at COP26?

Countries signing on to the Glasgow Declaration affirmed the importance of all forests in limiting global warming to 1.5 degrees C (2.7 degrees F), adapting to the impacts of climate change, and maintaining healthy ecosystem services. They agreed to collectively “halt and reverse forest loss and land degradation by 2030 while delivering sustainable development and promoting an inclusive rural transformation,” without saying exactly what they would do to achieve this goal.

Funding pledges followed the declaration. A total of $19.2 billion ($12 billion from public sources and $7.2 billion in private financing) was pledged to help protect and restore forests globally. This included $1.7 billion to help Indigenous peoples and local communities exercise decision-making and design roles in climate programs and finance instruments.

New ways of doing business were promised. A group of 28 countries pledged to protect forests while promoting development and trade through the Forest, Agriculture and Commodity Trade Roadmap. Twelve companies with a major global market share in commodities such as soy, palm oil, cocoa and cattle, also committed to halt forest loss associated with agricultural commodity production and trade.

And financial institutions rose to the occasion. More than 30 financial institutions managing over $8.7 trillion in assets committed to work on eliminating agricultural commodity-driven deforestation risks in their investment and lending portfolios by 2025.

How Could These Forest Commitments Help Achieve Global Climate Goals?

A rapid reduction in forest loss is critical to preventing irreversible biodiversity loss and securing the rights, livelihoods and cultural heritage of the Indigenous peoples and local communities who live in and around forests vulnerable to deforestation. Forests also play a massive role in the fight against climate change. But what are the climate benefits to be had if all signatories to the Glasgow Declaration were to make good on their commitments?

Here’s a breakdown:

Emissions Avoided by Ending Forest Loss

We compared such success to a business-as-usual scenario to estimate the potential greenhouse gas mitigation impact of the Glasgow Declaration. Ending forest loss by 2030 within all the signatory countries would offer 32.8 million hectares of avoided loss and 18.9 gigatonnes of carbon dioxide equivalent (GtCO2e) in avoided emissions. That’s an area roughly the size of Malaysia and equivalent to a quarter of global greenhouse gas emissions from transportation from 2009-2018.

Approximately 98% of the estimated avoided emissions are in the tropics, while the remaining 2% are in other climate domains. Nearly three quarters of these avoided emissions are in just three countries: Brazil, Indonesia, and the Democratic Republic of the Congo.

 

 

How we read the data

Our estimates are derived from historical tree cover loss data. We differentiate tree cover loss that is more likely to be permanent (which we count as forest loss) from tree cover loss that is more likely to be temporary, and not associated with land-use change (which we do not count as forest loss).

To estimate global forest loss, we approximate the proportion of global tree cover loss that is likely to be permanent (i.e., where tree cover loss is associated with conversion of forests to new, non-forest land uses). This proxy uses data on the drivers of tree cover loss to estimate all tree cover loss driven by commodity production and urbanization, as well as tropical primary tree cover loss driven by expansion of small or medium-scale agriculture.

Tree cover includes woody vegetation with a height of at least 5 meters and a canopy density of at least 30% at a 30-meter Landsat pixel scale. Although wildfires and forestry are also major causes of tree cover loss and associated emissions, they are typically more temporary in nature and not associated with permanent land-use change. They are not considered as “forest loss” for the purposes of this estimate. Learn more about how we designate tree cover loss classes on the Global Forest Review.

To estimate the business-as-usual scenario, we extrapolated the 2015-2020 annual average forest loss and associated emissions for each signatory country up to 2030 and aggregated across all signatory countries. To calculate avoided forest loss and associated avoided emissions, we compared this business-as-usual scenario to a linear reduction in forest loss from 2022-2030.

This analysis does not consider overlaps with other Glasgow commitments, including Nationally Determined Contributions (NDCs) and net-zero pledges, and therefore does not make claims regarding the extent to which the avoided emissions from the Glasgow Declaration are additional to those commitments.

 

Climate Mitigation from Protecting Standing Forests

Ending the emissions released into the atmosphere from deforestation would be a huge climate win, but forests have even more climate potential to offer. As forests grow, they sequester more carbon from the atmosphere: Data shows that between 2001-2020, forests around the world sequestered an average of 7.3 GtCO2e per year. When these forests are removed, the carbon sink provided by them is also lost, reducing future carbon removals.

Halting forest loss in the Declaration’s signatory countries will secure the carbon removals that would have been lost had the current pace of forest loss continued. The carbon removals that would have been forgone under the business-as-usual scenario are approximately 0.47 GtCO2e by 2030 — equivalent to the removal of one year’s worth of  CO2e emissions from manufacturing and construction in the U.S.

Climate Benefits from Restoration

The goal of the Glasgow Declaration is not just to halt forest loss and land degradation, but to “reverse” it. Signatories pledged to strengthen efforts to accelerate the restoration of forests and other terrestrial ecosystems, but stopped short of setting a quantitative target for how much to restore. Many of the signatory countries have also made commitments under the Bonn Challenge, which has a goal of bringing 350 million hectares of degraded and deforested landscapes into restoration by 2030.

Restoration of forests, mangroves and peatlands offers great climate mitigation potential, in addition to the emissions avoided by halting their loss or degradation. To demonstrate the magnitude of this potential, here are estimates on the amount of carbon dioxide that could be removed annually from the atmosphere by 2030 from several forms of restoration (via a recent report on the transformations required to limit global warming to 1.5 degrees C):

  • 3.0 GtCO2e from reforesting 259 million hectares,
  • 0.4 GtCO2e from restoring 22 million hectares of peatlands,
  • 0.2 GtCO2e from restoring 7 million hectares of coastal wetlands.

Socially and ecologically conscious restoration will require close collaboration with communities that own or use land. Regional networks of community organizations, investors and governments — like Initiative 20×20 in Latin America and the newly relaunched AFR100 in Africa — can help to share knowledge and channel large financial commitments, such as The Bezos Earth Fund allocation of $1 billion for restoring landscapes, to local entrepreneurs and community groups working to restore land.

This Isn’t the First Pledge on Forests. What Will Make the Outcome Different?

What will prevent the Glasgow Declaration and related pledges from suffering the same fate as previously unmet forest commitments? To be sure, many of the same countries also signed the 2014 New York Declaration on Forests which pledged to halve deforestation by 2020 and end it completely by 2030. Despite some progress, the latest assessment shows signatories are still far from achieving this objective. For the Glasgow Declaration to succeed, its goals need to be embedded in new ways of doing business, and countries must feel fully accountable for achieving them.

Moving beyond a paper pledge to impact will require countries to work in concert to drive system change across all five areas of “transformative action” listed in the declaration: sustainable production and consumption; infrastructure; trade; finance and investment; and support for smallholders, Indigenous peoples and local communities, and their role in forest stewardship.

For this to happen, countries and companies must be accountable for following through on their pledges. They should develop clear implementation plans, specify measurable performance indicators, and set specific milestones of achievement on the pathway to 2030 goals. They should openly and regularly monitor, report and verify their progress. They should also be more transparent — the boundaries and owners of land-use permits or licenses should not be secret and companies should trace and disclose the origins of commodities they purchase.

While the Glasgow Declaration and related pledges are a welcome affirmation of political will to reduce deforestation and pivot to more sustainable land use, we’re watching for action.

Endnote:

Estimates of forest loss are derived using data from Hansen et al. 2013Curtis et al. 2018, and  Turubanova et al. 2018; estimates of avoided emissions were calculated based on forest greenhouse gas fluxes data from Harris et al. 2021.

Carbon Market Rules Formally Enshrined in Glasgow Package

Published 11:27 GMT on November 13, 2021  /  Last updated at 19:38 GMT on November 13, 2021

GLASGOW | 13 November 2021 | In approving the Glasgow Package, world leaders have formally approved rules for implementing Article 6 of the Paris Climate Agreement. The rules were finalized Saturday morning, and the package was adopted in the final plenary of the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC) here.

Article 6 itself was ratified along with the rest of the Paris Agreement in 2016, but the rules for implementing it proved complex and elusive.

Article 6 covers the ways countries can work together to generate deeper emission reductions and produce more ambitious national climate action plans, called “Nationally Determined Contributions” (NDCs) to the Paris Agreement. It includes cross-border compliance carbon markets, described as “ITMOs” (Internationally-Transferred Mitigation Outcomes).

The final agreement resolves sticky issues associated with paragraphs 2 and 4 of the article. Paragraph 2 covers bilateral carbon trades, while paragraph 4 covers the centralized hub that replaces the Kyoto Protocol’s Clean Development Mechanism (CDM).

To avoid double-counting of emission reductions, the Paris Agreement calls for rules on applying “corresponding adjustments” of national carbon inventories when one country uses ITMOs to reduce its carbon footprint. This can happen at the government level, as when Switzerland purchased ITMOS from Peru, but is more likely to happen at the corporate level, when a company in one country purchases ITMOs from abroad to meet compliance criteria at home.

Voluntary carbon markets are also designed to reduce overall emissions, but the transactions themselves are not registered in national carbon accounts. As a result, they do not require corresponding adjustments at this time. This is a subject we will revisit in the coming days.

Paragraph 6.2 Summary

Click here to view the text

Article 6.2 covers rules for bilateral and multilateral transfers between countries. In the early days of the Glasgow talks, the most contentious issue focused on whether or not to implement a transaction fee to pay for adaptation in developing countries. Such a “share of proceeds” provision exists in Paragraph 6.4, which focuses on the creation of a central hub to replace the Kyoto Protocol’s Clean Development Mechanism (CDM). Most developed countries pushed back on this provision, arguing that it was impossible to implement in a unified and fair way given the diversity of approaches being developed.

The transaction fee doesn’t appear in the current draft, but there is an invitation for the Adaptation Fund “to report in its annual reports to the CMA on funding related to participation in cooperative approaches pursuant to paragraph 36 of chapter VII of the annex (Ambition in mitigation and adaptation actions).”

The corresponding adjustments are easier for multi-year NDCs because they run on a carbon budget approach similar to the Kyoto Protocol, making the account easier. Single-year NDCs are more difficult and will need more technical work. This will be taken up by the Subsidiary Body for Scientific and Technological Advice (SBSTA), which is a technical negotiating track that accepts requests from the Conference of the Parties (COP) and also helps inform the next meeting’s agenda. Among these are the treatment of corresponding adjustments after 2030 and whether ITMOs can include reductions or be limited to removals.

The Intergovernmental Panel on Climate Change (IPCC) has concluded that we must dramatically increase removals by 2050 to meet the climate challenge, and there is an active debate among NGOs as to how to strike the balance between strategies that use ITMOs to support reductions and those that use them to support removals.

Paragraph 6.4 Summary

Click here to view the text

Paragraph 6.4 covers the creation of a centralized hub to replace the CDM, and the biggest points of contention coming into Glasgow were whether countries would have to correspondingly adjust their carbon accounts when transferring emission reduction abroad and the degree to which Certified Emission Reductions (CERs) generated under the CDM could be applied towards NDCs.

The proposed text sets out criteria for countries to use CERs from projects registered after January 1, 2013 to meet their first NDC or first adjusted NDC, with no corresponding adjustment since the CDM predates that requirement. It designates a 12-member Supervisory Body to oversee the emerging hub and tasks it with reviewing baselines of recognized credits.

Earlier in the week, negotiators had agreed to require corresponding adjustments on all new emission reductions generated under Paragraph 6.4, breaking a logjam that had existed since 2015.

Experts Speculate that Article 6 Rules will Pass Once Finance Package is Agreed

GLASGOW | 12 November 2021 | Negotiators and observes are increasingly optimistic about the prospect of achieving a viable set of rules for implementing Article 6 of the Paris Agreement before year-end climate talks (COP26) end here over the weekend, although some details may be put to a working group for consideration over the course of the year.

“In this morning’s text, the principle decisions are all there, and I assume Article 6 will go to plenary once the finance decisions are reached,” said former Dutch negotiator Jos Cozijnsen, who now serves as a legal advisor to the Carbon Neutral Group.

Norwegian Prime Minister Jonas Gahr Støre seemed to make a similar statement when he told the Norwegian Broadcasting Corporation that “If we get the financing done, Article 6 will be done as well.”

Ecosystem Marketplace was unable to speak directly with Støre.

Cozijnsen acknowledged that some sticky issues remain – primarily whether to charge a transaction fee on internationally-transferred mitigation outcomes (ITMOs) under Article 6.2 of the Paris Agreement to fund adaptation, and the fate of old Clean Development Mechanism (CDM) credits.

“I can see an agreement in principle on both issues, with details put off to a working group,” he said.

A transaction fee already exists under Article 6.4, which covers the central hub for transferring credits, but Article 6.2 is more challenging because of the diversity of arrangements. The US state of California and the Canadian province of Quebec, for example, already engage in cross-border trading, while several “carbon clubs” are in various stages of development around the world.

“It would be hard to implement, but not impossible, and there comes a time where you just have to say, ‘Let’s make a deal,’” Cozijnsen said.

It is not uncommon for rulebooks to be approved with some provisions assigned to working groups for the following year, and Cozijnsen added that a triage mechanism could be created for old CDM credits, with only some of them going into the 6.4 hub.

Adaptation funding increased dramatically in Glasgow, with $351 million being pledged for the adaptation fund and the broader negotiating text calling for the creation of a dedicated agency to manage climate-linked loss and damage within two years.

This would be separate from the $100 billion per year for both adaptation and mitigation that rich countries have pledged to developing countries – a pledge that looks likely to finally be achieved in 2022.

 

Breaking: New Carbon Markets Text Shows Progress on Article 6.4, but 6.2 Remains Stalled

GLASGOW | 12 November 2021 | As year-end climate talks enter their final day, clear rules have emerged for internationally transferred mitigation outcomes (ITMOs) transferred via a central hub under Article 6.4 of the Paris Agreement, which is now seen as the successor to the Kyoto Protocol’s Clean Development Mechanism (CDM).

As a negotiating text, this is subject to change.

The new text for Article 6.4 shows agreement on the need for host countries to apply a corresponding adjustment for emissions reductions transferred via the hub, as Brazil agreed to drop its insistence on a grace period for such adjustments, abandoning a stance it had held since the Paris Agreement was signed in 2015.

For background, see “Will Double-Counting Dust-Up Crush Katowice Climate Conference?

Meanwhile, several negotiators have told Ecosystem Marketplace that they see Article 6 as neutral on whether corresponding adjustments should be required for voluntary transactions, which is contrary to the interpretation many market participants have made.

“In Article 6, there is a differentiation between offsets that take place inside an NDC and outside an NDC, but that’s related to aviation and other semi-compliance markets and not to voluntary markets,” said one negotiator, speaking on condition of anonymity.

“The issue of corresponding adjustments and voluntary markets has been overblown,” he said.

There are still several unresolved issues, including provisions for imposing a transaction fee on transfers that take place under Article 6.2, which governs bilateral trades between countries. The transaction fee, technically referred to as a “share of proceeds” (SOP) provision, is intended to fund adaptation in developing countries. Such a fee is already included in the centralized hub under 6.4, but many say it would be unworkable in a multilateral market under Article 6.2.

The second issue is roughly 4 million tons of emission reductions generated under the Kyoto Protocol’s Clean Development Mechanism (CDM). Countries that generated many of these credits, including Brazil, China, and South Korea, want them to be recognized under Article 6.4, while most other countries do not.

Carbon Market Talks Remain Stalled

GLASGOW | 11 November 2021 | Ministers released a negotiating text for Article 6, which deals with international carbon markets, but the rules are virtually unchanged since Saturday, with areas of disagreement in brackets. You can find the documents here:

At issue is the treatment of transactions outside of NDCs and whether a transaction tax should be imposed on bilateral transactions to support adaptation.

Unlike years past, we are avoiding the gossip surrounding these final days and awaiting a concrete outcome.

Voluntary Carbon Markets Top $1 Billion in 2021 with Newly Reported Trades,
a Special Ecosystem Marketplace COP26 Bulletin

10 November 2021  |  As the UN Climate Change talks at COP26 continue this week, Ecosystem Marketplace (EM) has prepared this special State of the Voluntary Carbon Markets (SOVCM) bulletin update from our first installment of SOVCM 2021 that was published on September 15th. This bulletin follows our commitment to expand our Global Carbon Hub by working more consistently with carbon credit market participants and stakeholders as an on-demand centralized repository of over the counter (OTC) and exchange-based trades, more regular EM publications with updates on the latest trades and trends in carbon markets, and more intelligent access to EM Data via EM’s online data dashboards and tools.

In addition to EM’s unique offering of VCM and compliance market trade data and insights from a global network of nearly 180 EM Respondents reporting on projects located in over 80 countries, the EM Data Intelligence & Analytics Dashboard includes data from 14 carbon standards’ registries, as well as corporate climate commitment and carbon credit claims insights (in testing within the EM Respondent version only at this time). Contact us here to speak with our team for a demo.

The headline from ‘Markets in Motion’, State of the Voluntary Carbon Markets 2021, Installment 1, was that the size of the voluntary carbon market was on track to hit (and exceed) $1 billion in value by the end of 2021 within a calendar year for the first time in EM’s 16-year history tracking the markets. This was based on data demonstrating that total 2021 VCM value was already at $748 million (as reported by EM Respondents by August 31), which was just shy of the first three quarters of the year.

Based on recently reported trades by EM Respondents (listed below), the VCM has now exceeded the $1 billion milestone. These additional 59.1 MtCO2e of 2021 VCM carbon credit trades have a corresponding market value of $258.2 million. Note, this data is a combination of carbon credit trades for the full calendar year, if they hadn’t yet reported to EM in 2021, and newly contracted trades since August 31st, which was the cutoff reporting date for the first installment.

When breaking down the newly reported 2021 transactions into their underlying categories, we again see that Forestry and Land Use credits and Renewable Energy credits dominate volume traded. Forestry and Land use credits account for 61% while Renewable Energy credits account 38% of transactions reported.

Projects with accompanying co-benefits have again fetched a higher average weighted price at $5.95 per tonne while projects without had a weighted average price of $2.77 per tonne.

What else you need to know

These additional transactions occurred throughout 2021, not exclusively since August 31, as EM Respondents catch up on reporting transactions throughout the year. It is important to note that this latest data comes from a small but important subset of respondents; we made a special request to our network of respondents to provide updates to inform COP26. This new data comprises only 15 respondents, 3 of which told the EM team that they were sold out and won’t have new trades to report until their next issuance.

The full set of 2021 transactions will be fully compiled likely by the end of Q1 2022 to accommodate EM Respondents that report at an annual frequency. However, even this updated set of transactions, representing less than 10% of the respondents that provided data for the previous report, increased the total volume traded in 2021 by an additional 20% and an increase in 35% of the previously reported market value.

It should be noted also that additional trades reported by these EM Respondents increased 2020 volumes by 71.6 MtCO2e at a value of $309.5 million for an average weighted price of $4.32 per ton.

Draft Decision Shows No Progress on Carbon Markets

GLASGOW | 10 November 2021 | Ministers released a negotiating text as year-end climate negotiations enter their final phase, but the draft shows no progress on two thorny issues: how to measure and report emissions back to the UNFCCC and how to manage international carbon markets under the UNFCCC.

The rules for three key carbon market articles are virtually unchanged since Saturday, with areas of disagreement in brackets. You can find the documents here:

At issue is whether national governments will have to correspondingly adjust their carbon inventories to reflect voluntary carbon market transactions and whether a transaction tax should be imposed on bilateral transactions to support adaptation.

Carbon Market Negotiations Move to High-Level Negotiators

GLASGOW | 8 November 2021 | The draft text on implementing Article 6 of the Paris Agreement has passed from the technical negotiating track to the policy-level negotiating track with the same key issues still unresolved – namely, the role of corresponding adjustments, the fate of old Kyoto credits, and the shares of proceeds from trading markets.

Article 6.2 covers internationally-transferred mitigation outcomes (ITMOs) between countries; Article 6.4 covers the creation of a centralized hub; and Article 6.8 covers non-market mechanisms.

Here are the Saturday afternoon texts that were passed to high-level negotiators:

Share of Proceeds

One area of contention is whether to impose a global transaction tax on cross-border carbon transactions under Article 6 in order to fund general adaptation in developing countries. Such a tax is embedded in Article 6.4, where the disagreement isn’t over whether it should exist but how high it should be. A proposal to implement such a tax on all transactions, however, drew pushback from developed countries, primarily the United States and Europe. They argue that such a tax would be unmanageable, while developing countries have countered it’s no less manageable than is the challenge of tracking emission reductions. One proposal calls for a global registry to not only track trades to prevent double-counting but also to coordinate a transaction tax.

Corresponding Adjustments

While everyone agrees that corresponding adjustments should be required for emission reductions that pass between countries for compliance purposes, there is disagreement over how to handle reduction credits that take place outside a country’s NDC, including in voluntary markets.

Developing countries generally don’t want corresponding adjustments applied to voluntary markets because it means they will be transferring their emission reductions abroad. Developed countries do want them because they see it as a way of avoiding double counting.

Negotiators are exploring the creation of a “bridging mechanism” that will eventually require corresponding adjustments for voluntary markets as well, but the proposals, which are bracketed in the negotiating text, are diverse and often incompatible.

The argument in favor of requiring corresponding adjustments on voluntary transactions centers on concerns with the ways emissions are accounted for with countries, says Chirag Gajjar, who heads the sub-national climate program for the World Resources Institute (WRI) in India.

“It’s a legitimate concern because a lot of countries need capacity building for that,” he said.

Jos Cozijnsen, a longtime Dutch negotiator who now serves as an attorney and consultant to the Climate Neutral Group, disagrees.

“Corresponding adjustments make sense for compliance offsets and for some specific offsets outside NDCs, such as CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), but not for voluntary transactions,” he says.

He argues that calls for corresponding adjustments on voluntary transactions are a remnant of “old Kyoto rhetoric” and a misunderstanding of the intricacies of carbon accounting on the part of some NGOs and governments.

“Under the Kyoto Protocol, companies looked for offsets that were additional to country budgets, but the Paris Agreement doesn’t have these,” he said.

As we now move to week 2, the discussions will be held mostly at the ministerial level on all major items. The following ministers are assigned to facilitate respective theme, some have already started the work:

1.5°C ambition
Facilitator: Grenada and Denmark

Loss and Damage
Facilitator: Jamaica and Luxembourg

Finance
Facilitator: Sweden and Egypt

Transparency
Facilitator Minister: Antigua & Barbuda and New Zealand

Common Time Frame
Facilitator Ministers: Rwanda and Switzerland

Adaptation
Facilitator Ministers: Maldives and Spain

For a deep dive into the intricacies of Article 6, check out Episode 71 of the Bionic Planet Podcast, available on all podcatchers, including iTunes, TuneIn, and Stitcher, as well as on this device here:

New Global Partnership Opens Door for Indigenous People, Traditional Owners and Local Communities to Directly Benefit from Private Climate Finance

  • Peoples Forests Partnership members seek to mobilize $20 billion per year by 2030 in direct private investment in community-driven forest conservation and restoration projects, and set a high standard for equitable, accessible, and culturally appropriate mechanisms for forest communities to engage with climate finance.   
  • As tropical forest guardians, Indigenous Peoples, traditional owners, and local communities (IPLC) are essential partners for governments and countries in order to meet Paris Agreement goals.   

November 7, 2021 / The Peoples Forests Partnership, announced today at the United Nations climate summit (COP26), aims to fix a fundamental flaw in carbon financing by directing significant private funding to forest communities to reward their efforts to successfully stop deforestation.   

The Partnership will include Indigenous organizations, conservation groups, companies, and investors and seeks to mobilize and direct billions of dollars in private and public-sector investments to community-based forest conservation projects. While closing a major equity gap in climate finance, the partnership will support meaningful contributions toward Paris Agreement targets, voluntary corporate climate commitments, and Nationally Determined Contributions (NDCs).  

This announcement follows a November 1 pledge by a coalition of governments and philanthropic donors to channel $1.7 billion to IPLC, with a focus on improving tenure security. The Peoples Forests Partnership will provide a complementary platform for companies and investors to invest in community-based, values driven forest conservation and restoration projects.    

The platform will support both performance-based payments (such as for carbon credits) as well as other climate funding mechanisms, including a financing facility specifically focused on strengthening territorial governance to be managed by Partnership member Forest Trends.  

Role of IPLC in meeting Paris Agreement goals  

Indigenous peoples, traditional owners, and local communities (IPLC) safeguard vast reservoirs of forest carbon. Worldwide, IPLC manage more than one-fifth of the forest carbon stored in tropical and subtropical countries.1 Indigenous communities have proven to be the world’s most effective guardians against tropical deforestation. Indigenous territories in the Amazon lost less than 0.1% of their aboveground carbon stocks between 2003-2016, compared to 3.6% for other lands.2   

IPLC stewardship of forests comes at increasing costs: forest defenders face accelerating violence, political repression, and deforestation and degradation pressures from fires, agricultural interests, logging, mining, land grabbing, and other illegal activities on indigenous and other forest communities’ lands. Yet, these communities receive virtually no climate finance to support their efforts: International aid supporting IPLC forest protection is equal to less than 1% of overall Official Development Assistance for climate mitigation and adaptation.3   

Peoples Forests Partnership Aims  

The Peoples Forests Partnership aims to mobilize at least $20 billion per year in long-term, private-sector investments as well as public funding, and channel it directly to forest community projects by 2030. This could reduce CO2 emissions from deforestation each year by at least 2 billion tonnes, protect at least 500 million hectares of threatened tropical forest and their biodiversity, and support livelihoods and bioeconomy development for over 50 million people in forest communities.  

In the coming year, additional Partnership goals are to mobilize funds for capacity-building for forest communities so they can fully participate in and benefit from carbon finance, and to advance new alternative financing instruments including for high-carbon low-deforestation forests that are particularly difficult to finance through current mechanisms.   

The facilitating members of the Peoples Forests Partnership are Forest Trends, RECOFTC, Wildlife Works Carbon, Everland, and GreenCollar. The members collectively represent a portfolio of community-based forest conservation projects in more than a dozen countries across Latin America, Africa, Southeast Asia, and the Pacific.   

In total, the current members have secured initial financing for a portfolio of projects that will generate $2 billion in private investment and at least 20 million tonnes per year of Verified Emission Reductions. Globally, the financing is being channeled to a quarter million indigenous and other forest community members already managing over two million hectares of tropical forests.   

Call for Expressions of Interest  

From today, the Partnership is actively seeking expressions of interest from organizations and individuals from forest communities, business, government, philanthropy, and civil society.   

A consultation period also invites interested stakeholders to offer their input on documents of engagement, including membership criteria for high-integrity community-based projects and operating principles. A draft set of documents has been developed in consultation with select Indigenous Peoples leadership and other stakeholders.

Mateo Estrada, Organization of Indigenous Peoples of the Colombian Amazon (OPIAC); lead author of the Peoples Forests Partnership’s consultation document on Working with Indigenous Peoples, Traditional Owners, and Local Communities on Climate & Conservation Finance Projects, said:  

“We, the indigenous peoples of the Colombian Amazon and the South American Amazon are very important for humanity, because we are the bearers of the knowledge to keep nature intact. It is for this reason that indigenous peoples have decided to coordinate with the Peoples Forests Partnership in their work to drive resources directly to indigenous management, so that [indigenous peoples] can improve their quality of life, improve their economy, improve their health, improve their vocation, so that women can participate, and so young people can have a better future.  

“We want to be part of this, and we are already part of it, because we have participated in its design. We hope that companies, governments, and international organizations can support this great initiative.”  

Beto Borges, Director of Forest Trends’ Communities and Territorial Governance Initiative, a facilitating member of the Peoples Forests Partnership, said:  

“We cannot achieve Paris Agreement goals without our Indigenous and forest community partners. The world is beginning to realize this truth. We welcome recent government and philanthropic commitments to increase aid to IPLC. The Peoples Forests Partnership provides a complementary platform for increasing private-sector investment in community-based forest projects at meaningful scale with long-term durability.   

“The climate finance system is still not designed to work with indigenous and traditional peoples, at a moment when they should be at the center, as equal partners in the battle against climate change. New flows of finance must reach IPLC directly and must come hand in hand with consultation as recommended in the Cancun Safeguards.”  

David Ganz of RECOFTC, a facilitating member of the Peoples Forests Partnership, said:  

“Very little climate finance directly benefits forest communities. Systems like REDD+ can be difficult for communities to navigate. Safeguards and requirements for free, prior, and informed consent are inconsistently followed. Benefits-sharing programs are not designed in culturally appropriate ways.”  

Francisca Arara, President of the Regional Committee for Indigenous Peoples and Traditional Communities, Governors Climate and Forests Task Force, and former Political Advisor for the Association of the Movement of Indigenous Agroforestry Agents of the State of Acre, Brazil, said:  

“The root of the problem is this: whoever deforests the most, earns the most. And whoever preserves, sometimes they don’t earn anything. This situation exposes the problems of climate funding. It is difficult for indigenous peoples to access these resources. Indigenous women receive even less. The world needs to know the work we do in the forests, for the climate, for the planet, and for the world. The world needs to know our culture.”  

Seraphine Charo, Carbon Committee Representative, Wildlife Works Kasigau Corridor REDD+ Project, Marungu, Kenya, said:   

“When a member of a forest community can feel the recognition from an international audience that becomes very empowering, and it gives more motivation for them to continue with their efforts. The next step is for that voice to be heard during discussions and decision making about forest conservation and climate change. It is also very important that funding for forest conservation reaches them on the ground.”  

Mike Korchinsky, Founder and CEO of Wildlife Works, a facilitating member of the Partnership, said:  

“Wildlife Works has been working directly with forest communities to protect their natural environment for over 20 years and we have seen firsthand how hard it is for them to access climate finance, and how transformative it can be when they succeed. This partnership is positioned to dramatically scale the supply of market and non-market climate finance flowing directly to forest communities, so they can play their essential role in creating global solutions to climate change.”  

Joshua Tosteson, President of Everland, a facilitating member of the Partnership, said:

“At COP26 the leaders of the world have now agreed to end deforestation. But how will we accomplish this? Because forest conversion is driven by economic forces, we’ll only successfully halt deforestation if we create meaningful, durable value for forest stakeholders by keeping the forests standing, especially for the local and indigenous communities who safeguard most of the world’s remaining forests. Community-based initiatives to stop deforestation and degradation (REDD+), supported by private sector market finance, have already delivered hundreds of millions of tonnes of emissions reductions over the past decade through a ‘bottom-up’ approach that directly addresses the drivers of deforestation active in highly threatened forest areas. Through the Peoples Forests Partnership, we aim to scale this successful model by recognizing the central role of IPLCs in addressing our planetary emergency. Everland is proud to be a facilitating member of this partnership.”

Robert O’Sullivan, Chief Adviser, International Markets, GreenCollar Group, a facilitating member of the Partnership, said:  

“If IPLCs receive direct and equitable access to climate finance there is tremendous potential to rapidly protect and restore international forests at scale and help meet the global pledges to halt deforestation by 2030. IPLCs are not limited to small, isolated projects. Indigenous and traditional communities manage global forest carbon stores equal to at least 33 times the worlds’ energy emissions in 2017. This under-represents the amount of stored carbon managed by IPLCs, and these forests are at risk if we do not move quickly to support communities in protecting them.”   

 

Article 6 Negotiations to Resume Saturday Morning

GLASGOW | 5 November 2021 | Article 6 negotiators this morning released new negotiating text for articles 6.2, which covers internationally-transferred mitigation outcomes (ITMOs), article 6.4, which covers the creation of a centralized hub, and article 6.8, which covers non-market mechanisms.

Negotiations then continued through the day, with an emphasis on crystallizing the language around areas of disagreement to be passed up to the higher-level negotiations next week – namely, the role of corresponding adjustments under both Articles 6.2 and 6.4, the fate of old Kyoto offsets under Article 6.4, and the shares of proceeds from a centralized market developed under Article 6.4, as well as the governance structure for that entity.

One of the more interesting developments is the emergence of Article 6.8 as a possible home for many of the sectoral pledges and initiatives that have emerged recently.

Article 6.8 was introduced in the closing days of the Paris climate talks at the insistence of Bolivia, which had taken a position opposed to market mechanisms. It calls for the need to recognize “integrated, holistic and balanced non-market approaches being available to Parties to assist in the implementation of their nationally determined contributions, in the context of sustainable development and poverty eradication, in a coordinated and effective manner, including through, inter alia, mitigation, adaptation, finance, technology transfer and capacity building, as appropriate.”

The final negotiating text is due Saturday, but there is a chance it could be delayed.

Here are the Friday morning texts:

For a deep dive into the intricacies of Article 6, check out Episode 71 of the Bionic Planet Podcast, available on all podcatchers, including iTunes, TuneIn, and Stitcher, as well as on this device here:

UN Tourism Agency Sees Net-Zero Tourism Globally Through Ecological Restoration, Innovative Finance

GLASGOW | 4 November 2021 | The World Tourism Organization (UNWTO), which is the United Nations specialized agency charged with promoting sustainable tourism, today unveiled the “Glasgow Declaration for Climate Action in Tourism” at the UN Climate Change Conference (COP26) here.

The Declaration commits companies to cut their emissions in half by 2030 and achieve net-zero emissions by 2050, with all residual emissions being absorbed through ecological restoration by 2050 at the latest.

More than 300 stakeholders are represented in the declaration, largely through the World Travel & Tourism Council (WTTC), which represents more than 70 percent of global tourism.

“The commitment is to not only reduce the footprint by changing business as usual operations but also offsetting…through blue carbon, for example,” said UNWTO Executive Director Zoritsa Urosevic in an interview with Ecosystem Marketplace.

She added that ecological restoration is particularly important to the tourism sector, which depends on natural beauty for its survival, and she said the UNWTO is in the process of launching a net-zero tourism fund, with contributions from tourists being matched by tour operators.

UNWTO Secretary-General Zurab Pololikashvili conceded the gains that individual companies have made but stressed the need for a sector-wide effort involving government and international organizations as well.

“The Glasgow Declaration is a tool to help bridge the gap between good intentions and meaningful climate action,” he said.

Urosevic described an ambitious strategy for using tourism to promote regeneration, especially of coral reefs, but emphasized it would take time to get there.

“That’s the ambition, but we’re not there yet and we need your help,” she said.

“We need everyone’s help,” she added.

To hear our full conversation with UNWTO Executive Director Zoritsa Urosevic, check out episode 70 of Bionic Planet, available on all podcatchers, including iTunes, TuneIn, Stitcher, and this device here:

Here is a list of the initial signatures to the declaration:

  • Accor
  • AITO – The Specialist Travel Association
  • ANVR – Dutch Association of Travel Agents and Tour Operators
  • Asian Ecotourism Network
  • Panama
  • Barbados
  • Bilbao Convention Bureau
  • Bucuti & Tara
  • Cairngorns National Park Authority
  • Dallas Fort Worth Airport
  • ETOA – European Tourism Association
  • Forum Anders Reisen
  • Future of Tourism Coalition
  • GSTC – Global Sustainable Tourism Council
  • Iberostar Group
  • Innovation Norway
  • Intrepid Travel
  • Legacy Vacation Resorts
  • Much Better Adventures
  • Netherlands Board of Tourism & Conventions
  • NECSTouR – Network of European Regions for Sustainable and Competitive Tourism
  • Organisation of Eastern Caribbean States
  • Pacific Tourism Organization
  • Federated States of Micronesia
  • Skyscanner
  • Sustainable Hospitality Alliance
  • The Long Run
  • Tourism Authority of Kiribati
  • Travalyst Limited
  • VisitScotland
  • World Travel & Tourism Council (WTTC)

LEAF Says it’s Hit its $1 Billion Target

GLASGOW | 2 November 2021 | The LEAF Coalition (Lowering Emissions by Accelerating Forest Finance) says it has achieved its goal of mobilizing $1 billion for countries and states looking to reduce greenhouse gas emissions associated with deforestation and degradation of forests (REDD+).

The achievement was announced today at the World Leaders Summit, which is the opening segment of the 26th Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC).

LEAF is a voluntary global coalition bringing together the private sector and governments to provide finance for tropical and subtropical forest conservation commensurate with the scale of the climate change challenge. Reversing deforestation is essential to achieve the goals of the Paris Agreement and for any pathway to a 1.5-degree future.

Costa Rica, Ecuador, Ghana, Nepal, and Vietnam will sign the first Letters of Intent with Emergent, which is acting as the intermediary for the Coalition.

Seven new buyers also joined the coalition: BlackRock, Burberry, EY, Inditex, Intertek, SAP, and Walmart.org. They join Amazon, Airbnb, Bayer, BCG, Delta Air Lines, E.ON, GSK, McKinsey, Nestlé, PwC, Salesforce, and Unilever, as well as several governments, including the United Kingdom.

“The UK is proud to be part of this ambitious coalition that is massively scaling up the amount of finance available to support efforts to stop deforestation, cut global greenhouse gas emissions and put nature on the path to recovery,” said UK Prime Minister Boris Johnson.

Reductions are measured and verified to an independent third-party standard called The REDD+ Environmental Excellency Standard (TREES), developed by the Architecture for REDD+ Transactions (ART). Forest protection programs that operate across entire states matter not only for achieving results at scale, but also because acting at the jurisdictional level supports critical public policies to address deforestation.

As required by TREES, before funding is provided, independent third-party validators will ensure total deforestation across a jurisdiction has been reduced, that efforts to reduce deforestation have not negatively impacted local communities, and that plans are in place to equitably share benefits with local communities.

For more details on LEAF:

United States Joins Global Effort to Forge Sustainable Ocean Economy

GLASGOW | 2 November 2021 | The United States has joined the High Level Panel for a Sustainable Ocean Economy (Ocean Panel), which is comprised of 14 nations representing nearly 40 percent of the world’s coastlines, 30 percent of its exclusive economic zones (EEZs), 20 percent of its fisheries, and 20 percent of its shipping fleet.

Members of the Ocean Panel coordinate policies with the goal of creating a “sustainable ocean economy” across their jurisdictions. The organization has endorsed sustainable management of wild fish stocks as well as the deployment of carbon capture and storage in the sub-seabed through growing and sinking massive kelp beds. Such strategies sequester carbon in sub-seabed geological formations, but there have been fears of unexpected consequences if they are not deployed properly and with international cooperation.

“I have long followed the work of the Ocean Panel, and I am in complete agreement that creating a sustainable ocean economy, informed by the latest science, is essential to secure a prosperous future for our communities and for our planet,”  said John Kerry, the US Special Presidential Envoy for Climate.

Co-chaired by Norway and Palau, the Ocean Panel includes Australia, Canada, Chile, Fiji, Ghana, Indonesia, Jamaica, Japan, Kenya, Mexico, Namibia, Norway, Palau, and Portugal.

The panel had earlier published a 24-page roadmap to achieving a sustainable ocean economy, with 100 percent of the oceans under their jurisdictions operating under Sustainable Ocean Plans by 2025.

The document sets several goals to be achieved by 2030, including the restoration of wild fish stocks to sustainable levels and the reduction of dead zones caused by excess agricultural runoff that nourishes massive algae blooms. The roadmap also calls for increased farming of seaweed for food, fuel, and sustainable plastic alternatives, in addition to carbon capture.

New Effort to Fast-Track $2 Billion for African Forests by Next COP

GLASGOW | 2 November 2021 | Africa has lost more than 700 million hectares of forest since the beginning of the colonial era, and several donor groups have joined African finance ministers in a push to raise $2 billion within the coming year for the restoration of 100 million hectares under the African Forest Landscape Restoration Initiative (AFR100).

AFR100 was launched by several African countries in 2015 with the goal of restoring 100 million hectares by 2030 in support of the Bonn Challenge, the New York Declaration on Forests, and the African Resilient Landscapes Initiative, each of which has differentiated but overlapping commitments to restore forests. The coalition has since grown to 31 countries pledging to restore 128 million hectares of degraded forest.

The short-term objective of raising $2 billion was initiated by the environment ministers of three countries – Jeanne d’Arc Mujawamariya of Rwanda, Nancy Tembo of Malawi, and Mohammad Abubakar of Nigeria – and is now backed by several donors, including the African Development Bank, the Government of Germany, the  Global Environment Facility, the Bezos Earth Fund, the Global EverGreening Alliance, and the Green Climate Fund.

The donors have jointly pledged to scale up investment in land restoration across Africa by 2026 through the TerraFund for AFR100. That initiative aims to finance African non-profit community organizations and for-profit businesses that are restoring trees to suitable African landscapes. They will provide funding of $50,000 to $500,000 in the form of grants and loans to each of these innovators.

After receiving more than 3,200 applications for funding across 31 African countries, the World Resources Institute (WRI), One Tree Planted and Realize Impact will provide 100 grants and loans of $50,000 USD to $500,000 USD to community-based non-profits and local businesses. The first cohort of 20 organizations that will receive capital from the TerraFund was announced yesterday.

The next Conference of the Parties (COP) to the UNFCCC will be held in Africa, probably Egypt.

The most recent report by the Intergovernmental Panel on Climate Change (IPCC) shows that several African regions like the Sahel will experience rising temperatures, exacerbating the vulnerabilities of people and nature. If desertification continues to advance unchecked, the decline in revenue from cereal crops alone could cost people in Africa $4.6 trillion through 2030.

An initial $2 billion investment in the work of NGOs, entrepreneurs and government-led projects could catalyze $15 billion of funding, according to the World Resources Institute (WRI). That larger sum could begin the restoration of a potential 20 million hectares by 2026 and bring an estimated $135 billion in benefits to 40 million people, according to WRI analysis.

“Local communities own and manage nearly 70 percent of Africa’s land,” said Wanjira Mathai, who oversees WRI’s activities in Africa. “That is why a future where rural Africa’s landscapes are fully restored is only possible if we believe in and fund the work of thousands of community groups and leaders, especially young people, women, and entrepreneurs.”

Despite plenty of attention for the Great Green Wall, no one really knows how much land the massive project has restored. Partners in AFR100 say they will independently monitor and report on each project with a combination of field verification techniques and satellite monitoring with support from the new Land & Carbon Lab initiative.

“AFR100 presents an opportunity for both the private and public sectors to demonstrate large-scale transformative action to restore degraded land,” said Charles Karangwa, Regional Head of Land Systems for Africa, International Union for Conservation of Nature (IUCN). “That action would not only mitigate climate change, but also help secure millions of livelihoods and agricultural supply chains. Diversified financing instruments are needed now if we are to achieve this grand ambition by 2030,”

Climate Finance and Article 6 Feature Prominently in Early Glasgow Days

GLASGOW | 2 November 2021 | World leaders have set an ambitious agenda for the 26th Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC) here, with developing nations making both more promises and more demands and developed nations offering more finance than in years past.

What is the Future for Carbon Credits in the UN System?

At press time, the Subsidiary Body for Scientific and Technological Advice (SBSTA) has just released a new draft negotiating text for Article 6 of the Paris Agreement. Article 6 is the portion of the Paris Agreement focused on cooperative mechanisms, including cross-border carbon transactions. SBSTA is a negotiating track within the UNFCCC that focuses on technical issues. It is chaired by Tosi Mpanu Mpanu of the Democratic Republic of the Congo, who is charged with forging an agreement that can be passed up to ministers next week at the COP itself. Negotiating texts are rough drafts of the final agreement, with all areas of disagreement included, but in brackets. It is not uncommon to see long texts with multiple and contradictory statements in brackets in the early days before the areas are boiled down over the course of the week.

Article 6 negotiations are focused on three key elements: rules for carbon credits that cross borders (Internationally-Transferred Mitigation Outcomes, “ITMOs”), specifically when to apply corresponding adjustments; rules for a centralized hub to handle ITMOs, and means of implementing non-market procedures.

Here are links to the negotiating texts for three paragraphs of Article 6:

Article 6.2 (related to ITMOs): https://unfccc.int/sites/default/files/resource/DT.SBSTA52-55.i15a.pdf

Article 6.4 (related to a central ITMO hub): https://unfccc.int/sites/default/files/resource/DT.SBSTA52-55.i15b.pdf

Article 6.8 (related to non-market mechanisms): https://unfccc.int/sites/default/files/resource/DT.SBSTA52-55.i15c.pdf

A clean draft is expected by Saturday.

Signals from On High: Anger and Offerings

If the high-level pledges are to be believed, there should be progress, as the pledges from developed countries are much higher than previously offered, while demands of vulnerable countries, both individually and through various negotiating blocks that have formed over the past 30 years, are more aggressive.

“Vulnerable countries, after compromising in Paris by not using the words ‘compensation,’ and ‘liability’ under the Paris Agreement, are really showing their frustration,” said Yamide Dagnet, director of climate negotiations for the World Resources Institute (WRI), referencing a joint announcement by Gaston Browne, The Prime Minister of Antigua and Barbuda, and Kausea Natano, the Prime Minister of Tuvalu regarding an accord to sue developed countries for damages n behalf of Small Island States. The agreement establishes a Commission of Small Island States on Climate Change and International Law.

On the pledge front, the United States is expected to announce a major financing package today, while several countries have announced dramatic increases to the Adaptation Fund. Spain, for example, announced a contribution of $30 million in 2022 with further increases through to 2025.

At the same time, more than 100 leaders, accounting for more than 86 percent of the world’s forests, committed to cooperating on halting and reversing forest loss and land degradation by 2030 – a commitment we will be examining in more detail over the course of the week.

More than 70 leaders also endorsed the Global Methane Pledge, committing to slash methane emissions by 30 percent within the decade – a significant move because methane captures more than 80-times as much heat as carbon dioxide does in the short term.

Developing Countries Step Up

In addition to demanding more accountability from developed countries, developing countries are pledging to reduce their own emissions dramatically – pledges that could have an iterative effect of pressurizing developed countries to produce more finance. India, for example, commitment to achieving net-zero emissions by 2070, along with reaching 50 percent renewable energy by 2030. Although the target date is 20 years beyond the date the world should achieve net-zero, it is a significant – and detailed – pledge from a developing country.

“Net-zero only became a topic of public discourse six months ago, this is something very new for Indians,” said Ulka Kelkar, who heads WRI’s climate program in India. “Just having this concept understood in India is going to give a very strong signal to all sectors of industry and society.”

Further Reading

For a detailed (but often technical) summary of ongoing negotiations, we recommend the International Institute for Sustainable Development’s daily updates. Today’s update is available here.

Carbon Markets at COP26: Here’s What to Watch for

 

Stephen Donofrio

Genevieve Bennett: Hi Stephen! COP26 starts this weekend. How are you preparing right now? 

Stephen Donofrio: It’s been busy! After announcing last month that the voluntary carbon markets are on track to hit $1 billion for the first time in a calendar year in 2021, the Ecosystem Marketplace team has been greatly encouraged with incredible interest in our data and insights. This is both from our returning stakeholders, as much as from those who are new to carbon markets. 

I’ll be at COP for the full two weeks, presenting data and market developments on a number of panels (listed here – and for any readers of this blog who will also be in Glasgow, let’s find a time to meet!). In general, there seems to be conclusive awareness that in order to achieve the infamous 1.5 degree C Paris Agreement goal, companies and governments to invest in all types of carbon credit projects. And all the while, climate change has become impossible to ignore with as its influence on our natural world are becoming all too regular and familiar. It’s now at a point of “climate action or bust.” 

In response to this, we’ve officially activated our daily-capable on-demand online trade reporting for carbon credit sellers to update their Ecosystem Marketplace Global Carbon Survey profiles as trades occur. We have also pushed up our release date of two new versions of the EM Data Intelligence & Analytics Dashboard.  

We’re really excited to be able to offer our EM Respondents first access to the more advanced data filters and tools to create customized views of trades prices and volumes, as well as meta-registry issuances and retirements. Additionally, we have updated the public version of our data dashboard, fulfilling our mission of offering the public data, insights, and information. 

Article 6, which governs carbon trading, is the one of the last pieces of the Paris rulebook where an agreement still needs to be hammered out. What do we need to know about those negotiations?

Genevieve Bennett

In 2019 in Madrid, negotiations got a long way toward designing a pretty solid and transparent system under Article 6. But they didn’t finish, and honestly we’ve saved a lot of the hard stuff for COP26.  

The issues left to negotiate are pretty technical, but the gist of it is we need to decide, one, how to handle accounting around internationally traded emissions reductions to avoid countries and private actors “double counting” the same reductions, and secondly the question of how to wind down the CDM.  

These issues, by the way, come into play only with a centralized system for emissions trading, i.e., a global carbon market. There is a much clearer path forward for bilateral cooperation between countries, or regional carbon clubs.  

There is so much going on at these negotiations. We’re hearing how countries aren’t being ambitious enough, finance is inadequate, this country or that country is going to torpedo the whole thing. How big a deal is Article 6? 

Two thirds of countries have said they definitely are going to use Article 6 to meet their NDCs. So it’s important. The upside is I think that means there’s a sense of urgency among a majority of people at the negotiation table to get this done. 

With a working Article 6, you create incentives for countries to go beyond their NDCs because they can sell that extra mitigation to other countries. That opens up an express lane for climate solutions.  

Carbon market mechanisms help you seek out lower cost solutions. There’s economic analysis showing that with the cost savings you can get from markets, if you reinvested those into climate mitigation, you could double climate ambition at no extra cost.  

Second, you create a demand signal that will pull in more private investment into mitigation projects, with huge potential implications for sustainable development. This is a huge opportunity to drive a wave of green finance to countries and places that really need it.  

Let me put you on the spot. Are we going to see an Article 6 agreement in Glasgow? 

These are tough negotiations, but again there’s a sense of urgency this year. But also there’s a sense that it needs to be the right agreement or you create all these loopholes that undermine the whole Paris effort. So there’s potentially a tension there between getting it done and getting it right.   

A lot of people watching this would agree that no agreement would be better than a weak agreement. Especially since you can accomplish quite a lot outside of the UN framework in the meantime even while Article 6 remains unresolved. 

Yes, it doesn’t seem like the private sector is waiting on the UNFCCC. That’s been a really interesting dynamic in the last couple of years. For me, honestly a little unexpected too – that despite these delays, despite the global pandemic, that so many companies and cities and universities have grabbed the baton and kept moving forward on their own plans for action.  

Absolutely – in the purely voluntary carbon markets we are seeing an incredible surge in demand.  

Companies have set ambitious net zero targets, and a lot of them are using carbon credits to tackle that last five percent or so of emissions that are really tricky to address. Things like emissions from business travel, or coming from elsewhere in your supply chain that you don’t have direct control over. 

We projected in September that this would be a billion-dollar year for voluntary markets for the first time ever. Demand is higher than we’ve ever seen in the sixteen years we’ve been tracking markets. And that’s starting to move prices upward.  

Personally, I think that’s a very good thing. We’re seeing emitters willing to pay more for emissions reductions, and especially for credits that come from projects with all of these other benefits for sustainable development, whether that is protecting forests in the Amazon, or getting clean cookstoves to families in Africa – which especially is good for women – or sustainable agriculture, or so on.  

Carbon markets are becoming a bigger and bigger driver of finance for sustainable development. I think that sometimes gets missed in all of this focus on the technical aspects of COP negotiations or the market opportunities that everyone’s excited about in London and New York.  

Shades of REDD+
Managing expectations for Glasgow: Art. 6 of the Paris Agreement and the Voluntary Carbon Market

28 October 2021. In November 2021, the world’s attention will zoom in on Glasgow. Expectations are great for the 26th session of the Conference of the Parties to the UN climate change convention (COP-26) to deliver the implementation modalities for the carbon market mechanisms defined under the Paris Agreement. Many have high hopes that finalizing the implementation arrangements for the ‘carbon market’ Article 6 will open the financial floodgates for unrestricted carbon finance to flow into mitigation projects and programs, which is urgently needed, particularly in developing countries. While this is unlikely to happen, Glasgow may still send important signals to international carbon markets.

Carbon finance is certainly needed….

Climate finance must be urgently scaled – more money is needed, and pledged amounts need to be effectively and efficiently deployed. Carbon finance offers a financing modality that channels foreign direct investment into developing countries. Private sector driven carbon markets cannot replace public policy, but they can help to realize mitigation potentials in sectors, industries or regions where the reach of public policy is weak — due to a lack of political agreement, limited public finances, or difficulties reaching remote areas.

This is particularly relevant in the land sector which offers few bankable investment opportunities and is generally stripped of cash. A newly published paper finds that three quarters of cost-effective land-based mitigation potentials can be found in developing countries (10.7 GtCO2e annually). This makes about a third of the mitigation potential needed to achieve the 1.5 C Paris temperature goal. Activities such as reduced deforestation, restoration of forest ecosystems, carbon-rich agriculture, promotion of healthy diets yield high environmental, development and health benefits and can be implemented without further delays. However, so far only very small share of climate finance goes into the sector.

Carbon markets can help to fill this enormous financing gap. Sure, they are not without problems. They come with the risk of inflated emission reduction claims for the sake of profits; they draw finance only to a portion of available mitigation opportunities; and without safeguards tend to cement existing power structures. However, if backed by safeguards and robust accounting systems, they can deploy finance quickly and channel it into sectors in developing countries that offer mitigation opportunities while yielding additional sustainable development benefits. It is therefore understandable that many actual and potential market participants hope that an agreement on the implementation rules of Article 6 of the Paris Agreement may reduce implementation barriers and liberate this mitigation potential.

…but a UNFCCC-regulated carbon market may turn out to be a mirage

The question is whether the completion of the Article 6 negotiations will indeed mobilize new demand for carbon credits and opportunities for scaled carbon finance. This is certainly the preferred outcome. However, the agreement on the rules for carbon trading in Glasgow may also turn out to be another step towards a mirage of an internationally regulated and liquid carbon market — a mirage that won’t die, regardless how often it has gone up in scintillating air.

With few exceptions, developed countries have made it clear in their nationally determined contributions (NDCs) that their targets are to be met through domestic mitigation measures. A few countries, such as Switzerland and Sweden, have invested in Art. 6 pilots, but no country – with the exception of Japan – runs a substantive and large carbon credit purchase program. Instead, the development of new pilots has slowed down since 2019, as pressure on developed countries is increasing to refrain from acquiring carbon offsets. Twenty years have passed since the start of the Clean Development Mechanism (CDM, agreed in Marrakech at COP-7), and while acceptable back then, public opinion has since withdrawn permission for developed countries to use offsets to meet their climate targets. Even if donors decided to engage with Article 6, it would most likely be through public trust funds, where funds notoriously sit parked for a long-time before being deployed. It is therefore rather unlikely that public finance will flock towards Article 6 mitigation upon return from Glasgow.

Companies also remain tepid with respect to a UNFCCC-regulated carbon market. Until now, companies have been largely absent from efforts to develop projects under emerging Article 6 modalities. This is unlikely to change. Subjecting their efforts to the rules of Article 6.4 Paris Agreement—the article that foresees non-government engagement—does not seem an attractive proposition to corporate buyers.

There is no ‘compliance push’ driving corporate buyers to Article 6 approved “internationally transferred mitigation outcomes,” which, so far, are not recognized compliance instruments under domestic carbon pricing schemes. Whatever the results of Glasgow will be, regulation of carbon trading under Article 6.4 of the Paris Agreement will depend to a significant extent on host country regulation, oversight, and institutions, such as registries, and public offices ensuring proper accounting and issuing approvals. To be able to issue and track tradable units and to make ‘corresponding adjustments,’ countries will have to have built sophisticated institutions and capacities. This is unlike the CDM, which benefitted from tight international regulation and integration into the cap-and-trade infrastructure of the Kyoto Protocol. The CDM also generated credits that had compliance value under the EU Emissions Trading Scheme. From the perspective of private investors and project developers, engagement with Article 6 amounts to a looming nightmare of bureaucracy, which is unlikely to be worth engaging  with to meet voluntary corporate commitments.

By contrast, the private sector is ready to invest and has shown a boom of interest in carbon market activities. While investments in decarbonizing their own operations and supply chains must take priority, companies have shown strong interest in investing in voluntary carbon markets—including in developing countries—as part of broader climate engagement strategies. For many companies, the voluntary carbon market is tested, and methodologies known and available.

However, agreement on Article 6 implementation rules is still relevant.

Article 6 may not result in large new investments. However, for a number of reasons the finalization of the ‘market’ rules of the Paris Agreement is still relevant:

  1. The insecurity around Article 6, paired with a lot of confusion around its relation to the voluntary carbon market, holds back investments. Clarifying what Article 6 is, can, and will be, and what it is not, cannot, and will not be, is essential. For example, it is important to confirm that the UNFCCC has no jurisdiction over voluntary carbon market transactions governed by private standards. Some clarification on which market functions, in particular in the case of Article 6.4, will be fulfilled at the level of the UNFCCC, and what remains to be decided at the country level, can also help to unlock mitigation finance, in particular for developing countries.
  2. While diversity is good, obscurity is bad. Clear and transparent accounting is essential for any functioning market. COP-26 can help to foster a common understanding of when and how activities that generate carbon credits under Article 6 and the voluntary carbon market contribute to host countries’ NDCs under the Paris Agreement. The Glasgow meeting can provide guidance on how countries may account for voluntary activities that contribute to domestic mitigation, with and without ‘corresponding adjustments.’
  3. Governments may also consider developing broader mitigation and development programs under the more loosely regulated Article 6.2 of the Paris Agreement. Such programs can consider sectoral or jurisdictional programs that combine government and private engagement in carbon markets. Voluntary carbon standards can guide private project development and crediting, while multilateral and bilateral development partners can support policies that lead to sectoral transformation through grants, loans or results-based payments. Emerging jurisdictional REDD+ programs with their investments in readiness activities, diversity of finance streams, and rules on ‘nesting’ projects hold important lessons learned in that respect.

A completed Paris Rulebook provides an important element of the regulatory puzzle. Government engagement in carbon markets has obvious benefits: it reduces investment risks and ensures alignment of investments with policies. By contrast, voluntary carbon markets have the benefit of being flexible and independent of government regulation, bureaucracy, and they are less exposed to government challenges such as corruption.

Article 6 may motivate governments to engage more strategically with carbon markets. This includes a decision on how carbon markets can drive mitigation, and complement public efforts to reduce greenhouse gas emissions and enhance removals. Clarity on Article 6 can provide clarity on carbon accounting and empower countries to clarify where and when they support carbon market transactions, including those related to the voluntary carbon market. In the best case, Glasgow can ‘settle the case’ of Article 6 rules, and provide confidence to investors that it is worthwhile to invest in nature.

 

Shades of REDD+
Filling an Urgent Need: New Guidance for ‘Nested REDD+’ Published

19 October 2021 | The successful implementation of efforts to reduce deforestation and forest degradation (REDD+) depends on a close collaboration of governments, communities, and private entities. Governments have to take the lead in improving legal frameworks and investing in forest governance. Low levels of law enforcement, weak and contested land titles and rampant corruption undermines public goals to reduce and halt deforestation. At the same time, corporations must achieve transparency in their operations and eliminate deforestation from their supply chains. In addition, private investments into projects and programs that reduce forest loss can help to conserve forests at deforestation hotspots. They mobilize emission reductions and removals in a bottom-up, non-state approach to REDD+ that allows the forging of local multi-stakeholder coalitions around conservation.

In a rather unfortunate way, the interests of governments and the private sector around REDD+ have been described as diverging – governments with an interest in monopolizing forest protection despite serious governance challenges and private investors driven to conservation by short-term financial interests. This juxtaposition of interests found its expression in a fierce debate on whether private investments in projects have a role to play in the context of REDD+, backed by mutual suspicion that private or public actors seek to undermine REDD+ accounting frameworks to maximize payments. It is time to bury the hatchet and champion all actors with an interest in protecting the forest.

‘Nested’ REDD+ can help to bring this short-sighted debate to an end and focus the collective attention on halting deforestation.

Nesting is a tool to implement forest conservation strategies, harnessing the financial muscle and implementation capacities of private not-for-profit and for-profit actors while aligning such activities with public policies around REDD+. Well-designed nesting systems align public policies and accounting frameworks with private projects that seek to avoid deforestation. Nesting recognizes the existence of project investments and acknowledges their contribution to realizing the mitigation potential of forests. However, it also appreciates the need for coordinated systems that ensure that REDD+ emission reductions are aligned with policy and conservatively measured. Considering budgetary constraints, policymakers may consider foreign-direct investments in avoided-deforestation or forest restoration projects as one – among several – valid REDD+ financing strategies. A nested system can actively encourage the development of future REDD+ projects and embrace them as a valid, private sector driven mitigation strategy.

However, so far, no fully developed nested system exists. For a reason: developing policy and institutional frameworks for nested REDD+ is no easy feat. It requires taking strategic decisions, while building technical capacities, assessing carbon rights and legal challenges, strengthening institutions, and managing performance risks. A recently released World Bank publication is offering help to policymakers: the “Nesting of REDD+ Initiatives: Manual for Policy Makers” discusses the operational details that need to be considered when implementing a nested REDD+ system.

Over the last 18 months, the authors had the opportunity to support the World Bank on developing practical guidance on how to implement nested REDD+ systems that take into account the different realities of REDD+ countries. Nested REDD+ systems can come in different shapes and forms and can be tailored to different country contexts. They differ in the degree of decentralization of REDD+ implementation and the role that they assign to nonstate actors (private entities, communities, and nongovernmental entities) in conserving and restoring forests. Decentralized REDD+ systems focus on allowing direct investments into projects while harmonizing and integrating accounting methods as well as defining common criteria for safeguards and stakeholder participation. Centralized REDD+ systems seek to achieve REDD+ outcomes primarily through public policies and allowing governments to (exclusively) receive and allocate REDD+ payments through benefit-sharing systems.

After multiple rounds of consultations with government officials, private sector entities, and practitioners working to reduce forest loss in tropical countries, the Nesting Manual presents four general models for REDD+ implementation:

A jurisdictional REDD+ program with no crediting of greenhouse gas (GHG) results at the sub-jurisdictional level. This model relies on the government’s ability to achieve emission reductions via public programs, and to monetize those emission reductions at the jurisdictional level. Local actors contribute by implementing activities defined by the REDD+ program and receive carbon benefits from the government as part of a benefit sharing arrangement.

A REDD+ program with jurisdictional and project-level GHG accounting and government distribution of funds to projects. Under this “centralized nested” model, the government encourages programs and projects and allows for the sharing of emission reductions or equivalent monetary benefits with programs or projects. REDD+ benefits are shared based on GHG performance. However, the rewards for projects depend on jurisdictional performance and government distribution of benefits.

A REDD+ program with jurisdictional and project-level GHG accounting and independent project financing. Under this “decentralized nested” model government allows the crediting and monetization of emission reductions at both the jurisdictional program and project scales. Projects can issue tradable carbon credits that do not depend on jurisdictional performance. In this model, the government can regulate the MRV and safeguards of the projects to ensure that they are in alignment with the national approach. 

Finally, governments can define criteria for project crediting without engaging in jurisdictional REDD+. This model does not foresee crediting of emission reductions at the jurisdictional level. Where countries are unable, or do not wish, to develop jurisdictional REDD+ crediting programs, they may still welcome investments in avoided-deforestation projects. In this case, the government may regulate projects, for example, to enhance the environmental integrity of claimed mitigation outcomes from projects, to provide guidance on benefit sharing by projects to ensure vulnerable populations are well served, or to ensure compliance with national safeguards.

The Nesting Manual elaborates on these four models, discussing design elements and ways to operationalize them. It thus enables governments to design nesting systems that are suitable to national circumstances, while ensuring the environmental integrity of mitigation outcomes from forests. A Decision Support Tool accompanies the manual, offering policymakers assistance in building a nested system. The Nesting Manual and Decision Support Tool represent a first attempt at a comprehensive analysis of the different elements that influence the design and implementation of REDD+ nesting. As time goes on, it is expected that the Manual and Decision Support Tool will be enriched with REDD+ nesting experience from different countries.

Nesting is pragmatic and action oriented. It rejects narrowly defined REDD+ implementation approaches and embraces instead a more integrated and holistic view of landscape conservation strategies. The Manual marks a step towards a scaled and multi-layered REDD+ implementation, which will help to conserve tropical forests. It is urgently needed.

Additional links in reference to excerpt that references investments “an aggregate of more than two billion dollars”:

Opinion: A New Wave of Global Resolve to Protect Tropical Forests around the World

28 September 2021 | Protecting and restoring tropical forests is one of the most powerful tools to slow and ultimately halt climate change. They store up to a quarter of all the above ground carbon and represent 50 percent of the world’s terrestrial biodiversity. Unfortunately, the world is losing forests at an alarming rate.

The international community has long recognized that action to protect forests is a central part of action to combat climate change. In fact, more than a decade ago, the international negotiations were kicking off on the rules for how countries should work together to reduce emissions from deforestation, promote conservation and sustainable management of forests, and enhance forest carbon stocks in tropical forest countries – actions collectively known as REDD+.

The results of these negotiations were enshrined in the Paris Agreement, where under Article 5, industrialized countries are encouraged to make results-based payments to developing countries for emissions reductions achieved at the jurisdictional level.

But, that was just the first step. To date, donor governments together with multilateral institutions, such as the World Bank and the UN Green Climate Fund, have committed more than $7 billion under the REDD+ framework. But much more finance is needed if the world is to meet its globally-agreed targets for climate, biodiversity, and land degradation, estimated to be $4.1 trillion financing gap for nature by 2050. Even funding support amounting to hundreds of millions of dollars is not always sufficient to give forest countries the confidence to embark on ambitious forest protection and emission reduction programs, which require significant investment of financial and political capital.

Simply put, the vast potential for climate action from REDD+ will not materialize in the absence of massively increased levels of visible demand. On the other hand, many potential providers of results-based finance are unwilling to make large-scale funding commitments in the absence of visible supply. In the REDD+ community, we called this the “chicken or egg” problem.

As someone who has been working in impact investing and climate finance while the REDD+ negotiations were unfolding, it was clear that forests needed a new business plan, and that a new strategy had to be adopted to solve this chicken-egg challenge. Ultimately, this mission led to the formation of Emergent in 2019. Our goal was to create a non-profit intermediary that could engage between tropical forest countries and the private sector to mobilize finance to support emissions reductions in deforestation. In its most distilled form, the theory of change was simple: if we can rally a big enough demand signal, the supply of large-scale forest protection solutions would materialize.

The LEAF Coalition Receives Overwhelming Response to Its Call for Proposals

It was this same vision that drove the launch of the LEAF Coalition earlier in the year. Coordinated by Emergent, LEAF is on track to become the largest ever public-private initiative designed to accelerate climate action by providing large-scale results-based finance to countries committed to protecting their tropical forests. Backed by the integrity of ART’s leading TREES standard, the aim is to unlock ambition in tropical forest countries to halt deforestation by sending an unprecedented demand signal. The Coalition is growing and just last week Delta Air Lines and PwC became the latest private sector participants to join. 

When we launched the initiative, we didn’t know exactly what response to expect from the Coalition’s call for proposals (CFP). Based on previous work and outreach, we knew there would be significant interest from tropical forest countries, but we couldn’t have put a specific number on it.

Well, if there was ever any question if the interest (and supply) is out there, the response to LEAF’s CFP answered it, and answered it definitively.

LEAF received more than 30 proposals from jurisdictions that together encompass over half a billion hectares of forest. Proposals were received from jurisdictions on four continents representing the world’s three great tropical forest regions: the Amazon basin, the Congo basin and the forests of South-East Asia. Jurisdictions’ estimated self-reported volumes totaling more than 1 billion tonnes of Emissions Reductions over a five-year period.

For those of us who have worked in this space for a long time, there was a definite feeling that an important milestone in the REDD+ journey was reached with this response; a significant step forward toward the goal of the Green Gigaton Challenge. It showed the tremendous resolve and political willingness from forest countries to protect their forests. Now it is time for the demand to respond and to step up at even greater scales.

In the period ahead, Emergent will be working closely with participants of the LEAF Coalition to carefully review the proposals to identify those able to meet Call for Proposals’ rigorous selection criteria and ambitious timelines. Discussions with jurisdictions are taking place over the next few months, with the aim of announcing the first set of agreements by the end of this year. 

But LEAF’s $1 billion target is just a start. These proposals have unlocked an enormous opportunity for the world to come together and support an end to tropical deforestation. Emergent’s mission and ambition is to mobilize enough finance to unlock all of the potential represented by these proposals and beyond. We have entered a new phase in the global REDD+ effort, and I for one am excited for what’s next.

Voluntary Carbon Markets Rocket in 2021, On Track to Break $1B for First Time
Press Release

Washington DC (15 September 2021) 

In the first eight months of 2021, voluntary carbon markets have already posted a near-60% increase in value from last year, driven by corporate net-zero ambition and growing interest in carbon markets to achieve Paris climate goals, a new report finds.

“We’re seeing record market volume and value in 2021,” said Stephen Donofrio, a lead report author and Director of Ecosystem Marketplace. “The markets are on track to hit $1 billion in transactions this year if current levels of activity and growth continue. It’s not just companies who are buying carbon credits as a small piece of their corporate net-zero strategy. There’s an increase in speculators purchasing credits. The combined value of those deals is becoming a serious source of finance for green projects around the world.”

Data from the State of the Voluntary Carbon Markets 2021 shows that as of 31 August 2021, voluntary carbon markets had already posted $748.2M USD in sales for 239.3 million credits, each representing one ton of carbon dioxide equivalent, reflecting a 58% year-to-date jump in value (up from $472.9M), and growth in credit volume of 27% over 2020 performance (up from 188.2 million credits transacted). 2020 was already a banner year for voluntary carbon markets, continuing 2019’s strong growth trajectory despite the emergence of COVID-19, says Donofrio—making 2021’s performance all the more striking.

The most active buyers in the market are the energy, consumer goods, and finance and insurance sectors. All are sectors that face challenges in quickly cutting climate impacts both in direct as well as financed emissions, says Donofrio, since a large share of their emissions come from an infrastructure or technological base they can’t quickly upgrade, or from parts of their supply chain or portfolio they have less influence over than direct operations. Carbon offsets are being purchased by companies to immediately reduce their net emissions footprint as they work to abate these more costly and difficult-to-address emissions in the medium to longer term.

The world needs to cut climate pollution in half from current levels by 2030, and bring them down to net zero by 2050, to meet the Paris Agreement’s 1.5°C target. To support such rapid decarbonization, voluntary action through the carbon markets will need to increase 15-fold by 2030 and 100-fold by 2050 from 2020 levels, according to the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), an initiative led by Mark Carney, UN special envoy for climate action and former Governor of the Bank of England. The TSVCM is currently forming an independent Governance Body tasked with ensuring carbon credit quality and standardization.

“Ecosystem Marketplace’s latest report provides insights into the swift growth of voluntary carbon markets and emphasizes the need to guide the markets to deliver the highest quality possible,” says Annette Nazareth, Operating Lead for the Taskforce on Scaling Voluntary Carbon Markets and former SEC commissioner and Senior Counsel at Davis Polk & Wardwell. “I’m delighted to see the significant market momentum of the past year, as ever more companies and individuals are taking action. The new Governance Body being established by the TSVCM will play a key role in ensuring the large volume of carbon credits traded are of high quality and integrity.”

Tightening supply lifts prices for many credit types

“Carbon credit projects and retailers are struggling to keep up with demand in a hot market,” says Patrick Maguire, a lead author of the report and Senior Manager of Ecosystem Marketplace.

A tightening supply has also driven up prices for many types of credits. The weighted average price per ton for credits from forestry and land-use projects that reduce emissions or remove carbon from the atmosphere has been on a steady upward path, rising from $4.33 per credit in 2019 to $4.73 per credit so far in 2021, with a spike to $5.60 per credit in 2020. Prices for waste disposal credits (from projects such as landfill methane capture or diversion of organic waste for composting/digestion) and clean-burning cookstoves have also jumped so far in 2021 from their 2020 levels, by 42% for waste disposal and 16% for clean cookstoves.

“Whether higher prices will entice new supply to enter the market quickly enough to meet rising demand is still an open question,” says Maguire. “Most carbon projects typically take years to develop.”

But higher prices are certainly good news for project developers. The vast majority of credit transactions are for projects based in Asia, Latin America, and Africa, report authors say.

“Voluntary carbon projects have played a tremendous role in financing innovative projects for communities on the frontlines of the climate crisis,” says Jennifer Morris, Chief Executive Officer of The Nature Conservancy. “While the increased demand is encouraging, we need to move further, faster – it is imperative that this upward trend in prices reported by Ecosystem Marketplace accelerates if the voluntary carbon market is to play its full role in supporting sustainable development around the world.”

Demand for credits from nature-based solutions continues to be particularly high, says Donofrio. Projects that reduce emissions by protecting or sustainably managing at-risk forests, grasslands, and other ecosystems saw the volume of demand more than double in 2021 from 2020’s already-record high levels. Transactions of REDD+ credits, which generate emissions reductions by harnessing carbon finance to protect tropical forests from human-caused destruction or degradation, exploded in 2021, growing 280% between 2020 and 2021 year-to-date.

“We simply can’t meet the Paris goals without nature-based solutions,” says Dan Lambe, President of the Arbor Day Foundation. “Voluntary carbon markets are an important tool to help the world move much faster to restore and protect nature. It’s certainly exciting to see the markets reaching this new level in Ecosystem Marketplace’s latest market update.”

Experts see renewable energy’s 2021 rally as a “last hurrah” in voluntary carbon markets for some regions

2021 may also mark the peak of renewable energy (RE) as a major share of the carbon markets, for projects originating in developed countries. RE volumes rose from 42.4 million credits in 2019 to 80.3 million credits in 2020 and remained steady at 80 million credits in 2021, making it the second-largest market category after Forestry and Land Use. Prices for RE credits tumbled from $1.42 per credit in 2019 to $0.87 per credit in 2020 before rising to $1.1 per credit as of September 2021.

“A surge in transactions coupled with falling prices is consistent with a shift in renewable energy credits coming from Asia, now that the financial additionality case is harder to make for RE in developed countries,” says Maguire.

All carbon projects need to demonstrate “additionality,” meaning that they could not exist without carbon finance, in order to sell credits. As renewable energy becomes increasingly competitive with other forms of energy, as it has in developed economies, it no longer needs carbon finance to survive. “RE projects may continue to meet additionality criteria in some places such as less developed countries,” Maguire says, “but particularly in developed countries we don’t expect to see significant new supply in the coming years.”

Net zero and carbon neutral ambition, global attention to climate talks, point to a strong final quarter

The report’s writers say that all signs point to continued market growth through in the final quarter of 2021. Global climate talks in November 2021 are also expected to be a key moment for new net-zero commitments to be announced.

“The challenge for voluntary carbon markets today is no longer finding credit buyers,” says Michael Jenkins, CEO of the nonprofit group Forest Trends, Ecosystem Marketplace’s parent organization. “Now, we all need to guide the markets to deliver the highest quality possible, with the greatest benefit possible for planet and communities. Market data and transparency help us ensure that level of integrity.”

 

Additional quotes

“By some estimates the voluntary carbon markets are starting to grow at speed and scale. With COP26 coming in less than two months, it is time to enhance the rules that can build higher levels of confidence, integrity and quality, while helping to unleash higher financial flows that can support stepped up climate action.”

– Professor Edgar Hertwich of the Norwegian University of Science and Technology and a lead author of the UN Intergovernmental Panel on Climate Change’s Fifth Assessment Report (AR5)

  

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Media contact: Genevieve Bennett / + 1 202 298 3007 / [email protected] 

Ecosystem Marketplace is an initiative of the non-profit organization Forest Trends, and a leading global source of information on environmental finance, markets, and payments for ecosystem services. As a web-based service, Ecosystem Marketplace publishes newsletters, breaking news, original feature articles, and annual reports about market-based approaches to valuing and financing ecosystem services. We believe that transparency is a hallmark of robust markets and that by providing accessible and trustworthy information on prices, regulation, science, and other market-relevant issues, we can contribute to market growth, catalyze new thinking, and spur the development of new markets and the policies and infrastructure needed to support them. Ecosystem Marketplace is financially supported by a diverse set of organizations including multilateral and bilateral government agencies, private foundations, and corporations involved in banking, investment, and various ecosystem services. 

However You Look at It, Our Future is Forests

  • Tropical forests are a key tool for near-term emissions reductions as part of a larger strategy to meet Paris climate targets.
  • A portfolio of market-based mechanisms including REDD+ and carbon markets can channel finance to cost-effective emissions reductions right away, and help ensure companies follow through on their long-term net-zero commitments.  
  • These mechanisms have matured over the past two decades – now it is time to scale them quickly, while maintaining the highest level of environmental and social integrity.  
  • REDD+ can’t work in the absence of inclusive and just partnerships with indigenous peoples and local communities, the planet’s best guardians of forests. 

The world is not on track to meet the Paris target of stabilizing warming in the 21st century at 1.5°C or lower, and there is very little time to change our trajectory. The IPCC estimates that global CO2 emissions in 2030 must be 40-50% lower than they were in 2010 in order to avoid the worst effects of climate change. This is still possible. 

Carbon markets allow us to lower the cost of cutting greenhouse gas emissions. When buyers can use markets to seek out the most cost-effective offsets, their savings can – and should – be used to “buy” even greater emissions cuts. This mechanism enables countries and companies to increase ambition, moving the world as close as possible to the 1.5°C target. 

Carbon markets also allow hard-to-abate sectors to play their part in achieving net zero emissions quickly. Where emissions are directly controlled by the emitter (“Scope 1” emissions) or can be cut by sourcing electrical generation, heating, or steam (“Scope 2”), this should be done. But where emissions come from elsewhere in the value chain (“Scope 3,” including for example: upstream or downstream transportation, agricultural supply chains, waste disposal), offsets may be the best option for quick action. In some cases, cutting emissions requires substantial operational, technological, and/or financial transitions that will take many years. Offsetting projects often provide immediate or short-term carbon storage. Carbon markets therefore offer companies an opportunity to immediately become carbon neutral while also pursuing a longer-term net-zero goal.  

When it comes to nature-based solutions, avoided deforestation needs to be the priority.  

REDD+ credits, generated through efforts to reduce emissions from deforestation and forest degradation, allow us to drive finance to tropical forests and their stewards. Preventing tropical forest loss is critical not only for climate stability but also for maintaining global biodiversity values, sustainable development goals, and indigenous and traditional cultures. 

Protecting existing carbon sinks from damage or conversion delivers twice as much greenhouse gas mitigation as any other nature-based strategy, including reforestation. New research also indicates that there is an asymmetry in changes to atmospheric CO2 concentrations between emissions and removals. In other words, compensating for an emission requires a greater amount of CO2 removal than avoiding that emission in the first place.  

It is especially hard to imagine how companies in hard-to-abate sectors can meet their net-zero commitments without REDD+. Tropical forests remain one of the largest – and still mostly untapped – potential sources of offset supply, and probably the only one that could be ramped up quickly enough to meet offset demand in the next decade without driving a major spike in the price of carbon. Avoided tropical forest conversion holds the potential to provide at least three gigatons per year of cost-effective emission reductions – which would cover one-fifth of the gap we need to close by 2030 to keep warming under 2°C. 

The decline of tropical forests, our planet’s great carbon sinks, thus represents an enormous stumbling block to delivering on the Paris Agreement. The longer tropical deforestation goes on, the worse the problem gets. In Amazonia, for example, mature forests more than mitigated the fossil fuel emissions of every single national economy in the region, with the exception of Venezuela, between 1980 and 2010. For most nations (Bolivia, Colombia, Ecuador, French Guiana, Guyana, Peru, Suriname) the sink probably additionally mitigated all anthropogenic carbon emissions from Amazon deforestation and other land-use change. But today that sink is in decline. Deforestation pressures from forces including land grabbing, logging, cattle ranching, agribusiness, and fires are being aggravated by climate change. This combination of forces is flipping the Amazon to a net carbon source instead of a sink, although scientists say recovery is still possible. 

There is also a moral argument for focusing climate finance on REDD+. Tropical forests cover 10% of the earth’s land area, but hold two-thirds of global biodiversity, much of which western science has yet to measure or understand. These forests are the source of livelihoods for millions of people. Many of who – particularly indigenous peoples – have always defended forests, and thereby the world’s climate future, with no recognition and in the face of violence and extreme pressure. Climate justice demands that we acknowledge the debt we owe these communities, and recognize all the values of living forests, not only the ones that can be measured by our economic system.  

We must guarantee REDD+ integrity through transparency and inclusion. 

REDD+ cannot work without a meaningful commitment to – and accountability for – participation by indigenous peoples and local communities (IPLC), given their role as the main stewards of the world’s carbon sinks and biodiversity. This commitment must include supporting IPLC in securing land tenure and carbon rights, and guaranteeing Free, Prior, and Informed Consent (FPIC). It also means that climate finance mechanisms need to do more work to incorporate indigenous perspectives and economic development strategies (as laid out through Life Plans or other tools). 

Likewise, carbon markets on the whole cannot deliver on their promises without transparency and a strong commitment to integrity. Our Ecosystem Marketplace initiative was founded with this mission: as an objective, not-for-profit information platform providing the kind of trustworthy and timely information that carbon markets and other climate finance mechanisms need to function effectively. 

We see a role for multiple REDD+ mechanisms to attract different types of funding and fit different contexts. 

One issue that seems to be dividing this space is whether resources and attention should be focused on jurisdictional or project-based REDD+. Our position is that we need more of both 

Jurisdictional REDD+ can deliver the large-scale supply and demand signals that are needed. It can also guarantee higher floor prices for REDD+ credits at a large scale. Jurisdictional approaches are uniquely equipped to incentivize governments to address many underlying drivers of illegal deforestation: weak enforcement of environmental protections, perverse economic incentives, such as taxes and subsidies that drive conversion for agriculture, and so on. 

Meanwhile project-based approaches have a long history of innovation in the voluntary carbon markets, with knock-on benefits for the entire carbon finance sector. Scaling up demand for REDD+ via the voluntary carbon markets should be an additional source of finance on the road to achieving jurisdictional outcomes, especially if nesting can provide a bridge between the innovation and targeted finance that projects can deliver, and the scale needed from jurisdictional REDD+. 

Moreover, territorially based REDD+ projects developed in partnership with IPLC are often well positioned to deliver benefits directly to IPLC. These benefits are not necessarily small-scale in nature, either; project-based REDD+ can reach significant scale considering the large territories owned by IPLCs. In the Amazon alone indigenous peoples control over 210 million hectares 

Innovations are still needed both in jurisdictional and project-based nested REDD+ to channel finance to areas with high forest cover and historically low deforestation (HFCLD), given that many of those places are increasingly at risk. REDD+ mechanisms need to better engage and benefit IPLCs with a track record of successfully protecting their forests. One path forward is for HFCLD to be seriously considered as a category for jurisdictional and project-based REDD+, although we recognize this requires resolving a number of technical limitations, particularly around how to treat additionality. 

REDD+ can’t work in the absence of inclusive and just partnerships with indigenous peoples and local communities, the planet’s best guardians of forests. 

First and foremost, jurisdictional REDD+ programs must take seriously the history of mistrust and conflict between IPLC and governments, and lingering concerns about whether governments will be good partners to IPLC. The mission to protect tropical forests, including REDD+, depends very much on IPLC: One-third of tropical forest carbon stored aboveground in the Amazon Basin lies within indigenous territories. In MesoAmerica, that share rises to nearly one-half, 31.4% in the Democratic Republic of Congo, and 36% in Indonesia. Not taking the time to build reciprocal relationships would be a substantial missed opportunity for both IPLC and jurisdictional programs, and a blow to global efforts to protect tropical forests.  

What does good partnership look like? It depends on the community, but some general principles can be established. Jurisdictional systems must clearly define, respect, and directly compensate the carbon ownership rights of IPLCs through benefit sharing mechanisms that are co-designed with IPLCs, including strong safeguards and FPIC. Jurisdictional mechanisms’ funding and policies cannot criminalize IPLC by forced removal from their lands, and must recognize and respect (via safeguards) traditional knowledge and cultures of indigenous peoples. REDD+ performance metrics also need to be culturally appropriate and co-designed with IPLCs. In addition, jurisdictional systems must provide for independent grievance mechanisms for IPLCs and other stakeholders. 

There are other ways in which jurisdictional REDD+ can better encourage IPLC participation. For example, clarifying whether indigenous territories can themselves be jurisdictions under many existing standards. Jurisdictional systems can also find ways to decrease the complexity and cost of validation and verification standards so that more IPLC territories can participate, so long as these efforts are delivering high integrity emissions reductions and fulfilling the Cancun safeguards. Doing so would  reduce the high barrier to program entry and increase the area of forest eligible for credible offsets.  

Finally, although jurisdictional REDD+ is shifting toward performance-based payments, donor governments must keep investing in governance and readiness in IPLC. Significant support is still needed to increase the capacity of IPLCs to adequately respond to REDD+ opportunities. The cost of this capacity building cannot be expected to come solely from philanthropic cooperation, but rather be a central cost in architecture and design of jurisdictional programs. 

Project-based REDD+ should of course abide by similar principles of FPIC, recognition of IPLC carbon rights and cultures, appropriate compensation, and including IPLC in design and implementation of benefits-sharing when their projects involve IPLC territory.  

More to the point, if IPLC believe their best opportunities lie in designing, implementing, and benefitting from their own REDD+ projects nested within or independent of jurisdictional programs (with questions of carbon accounting being appropriately addressed), they have every right to do so.  

Looking forward, our team will remain active partners and participants in the REDD+ space – providing data, thought leadership, opportunities for consultation and coalition-building between diverse stakeholders, demonstration where appropriate, and sustained and creative advocacy with key decision-makers in climate finance. We welcome new collaborators in this work, always. REDD+ is too important a piece of the climate solution portfolio; we need to get it right. 

(This blog first appeared on Forest Trends’ blog: Viewpoints on 25 August 2021)