Carbon offsets and forests
According to
the Corporate Finance Institute, a carbon offset “refers to the units earned by
firms that have implemented a greenhouse gases reduction project. It is issued
by a board or government authority, and one offset credit is given for every
ton of greenhouse gas that is reduced, stored, or avoided.” These offsets may
then be sold “to an investor, government, or NGO to offset their emissions or
for investment purposes.” The market for such offsets “enables private
investors, governments, non-governmental organizations, and businesses to
voluntarily purchase carbon offsets to offset their emissions. The largest
category of buyers comprises private firms that purchase carbon offsets for
resale or investment” (CFI, 2021).
Blaufelder et
al., (2020) claim that “Natural climate solutions (NCS), a category including
project types such as reforestation, avoided deforestation, improved forest
management, and agroforestry, have grown faster than any other project category
and contributed significantly to the voluntary carbon market’s growth
trajectory.” It is carbon offsets related to forests with which we are here
particularly concerned.
Streck (2021)
states that nature-based solutions alone – “in particular efforts to reduce
deforestation and restore natural forests, opportunities that are concentrated
in developing countries” – could provide “about 30 per cent of the total needed
to achieve the Paris climate goals”, and that “a significant share of the
required investment can be mobilised via projects and programmes accredited
under voluntary carbon market standards.” Reducing emissions from deforestation
and forest degradation is an important form of nature-based solution, given the
acronym REDD; when conservation, sustainable management, and enhancement of
forest carbon stocks are included the acronym becomes REDD+. Streck points out
that “voluntary carbon standards already provide a framework for collaborative
efforts” to achieve REDD+ aims, and can overcome concerns over “company
greenwashing”. She argues that these standards allied to corporate
accountability and public policy can manage the risks inherent in offsets and
give them credibility, and lists the leading standards as the Verified Carbon
Standard (Verra), the Gold Standard, the Clean Development Mechanism (CDM), the
Climate Action Reserve and the American Carbon Registry. Criteria common to
these standards include the setting of reference levels for emissions;
monitoring, verification and certification; co-benefits, participation and
consultation; and ‘additionality’, the assurance that the desired project
outcomes would not have happened anyway. In her conclusions, she notes that
well designed projects “can empower communities and increase their agency in
the national policy dialogue”, but also that despite their importance, carbon
markets “remain a transitory strategy”. This is because government regulation
should in time enforce GHG reductions, so that “fewer and fewer projects should
be able to pass the additionality threshold”. The carbon market can smooth “the
transition towards a low-carbon future” and act as “an incubator for innovation”
but should eventually have no function. Streck is a Co-Founder and Director of
the international advisory company and think tank Climate Focus.
Seymour (2020)
provides examples of reforestation projects by Shell, Mastercard and Microsoft
in “an already crowded field of initiatives”, noting that “history and science
caution that the impacts of tree-related interventions depend on a host of
social, political, and ecological factors”. She lists some of the difficulties
encountered by earlier schemes: social and ecological issues were ignored,
livelihoods disrupted, and ecosystems damaged by the planting of non-native
species; projects failed because the underlying causes of forest loss were not
taken into account. Lessons learned are “informing a more sophisticated
practice of forest landscape restoration (FLR)” which prefers the use of native
species and encompasses “activities focused on local livelihood and resilience
objectives such as agroforestry (incorporating trees into agricultural
cropping) and regreening (farmer-managed natural regeneration).” Natural
regeneration may be more effective than plantations for meeting climate
objectives. The objectives of the forest-restoration movement go beyond “either
timber production or carbon storage”, and can include “diversifying local
incomes” and “establishing wildlife corridors”. Seymour regards the most important
option of all as “protecting forests that are still standing” and points out
that “avoided emissions now are more valuable than removals later” since
planting trees will “pull carbon out of the air only gradually over the course
of decades.” The term ‘irrecoverable carbon’ refers to carbon which if released
from an ecosystem, could not be recovered by restoration before 2050. It has
been estimated that “tropical moist forests have the largest irrecoverable
carbon stock, but peatlands, mangroves, and old-growth temperate forests are
also significant.” Seymour concludes that “the new corporate interest in trees
is welcome because an all-of-the above strategy is necessary to avert
catastrophic climate change.” However for initiatives to have maximum effect
they should build on the insights of the forest landscape restoration movement,
and include commensurate support for maintaining existing forests. Seymour
declares her interest as board chair of the Architecture for REDD+ Transactions;
she is also co-author of the Center for Global Development online publication Why Forests, Why now? (Seymour and
Busch, 2016).
Fleischman et
al. (2021) refer to the recent growth of ‘forest carbon finance’, funding for forests to absorb more carbon.
While accepting that forests can mitigate climate change in this way, they note
growing evidence that “forest carbon finance often undermines the livelihoods
and autonomy of forest dwelling communities, damages natural ecosystems,
decreases biodiversity, and does little to store carbon.” Two case studies are
presented, a ‘successful’ one in the USA, and an ‘unsuccessful’ one in India. The
writers argue that political factors explain the difference in outcomes. The
American study relates to part of the traditional homeland of indigenous Yurok
people in northern California. The Yurok sought to regain control of “ancestral
territory, as well as to restore culturally important landscapes and ecosystems”
and funding for carbon storage helped them to achieve this. There has been a
resultant decrease in timber harvesting and reduction in fire risk, and “the
project is expected to result in significant additional carbon storage.” The
Indian study refers to programs “implemented through state forest departments
that have a long record of poor performance with regards to forest conservation,
afforestation, reforestation, and respect for the rights of the millions of
forest-dependent people in India.” The paper analyses the political factors
which have affected the outcomes of the two studies, particularly the
importance of “forest-dependent people living in or near forested areas”. It
concludes that schemes can work, listing criteria for success, and claiming
that political reforms that “secure land rights for indigenous and
forest-dependent people are strongly associated with improved forest cover and
condition … and represent a powerful opportunity to store carbon, protect
biodiversity, and enhance the well-being of the rural poor”.
Controversies
over forest protection offsets are illustrated in an article by Greenfield
(2021), who begins by claiming that the “forest protection carbon offsetting
market used by major airlines for claims of carbon-neutral flying faces a
significant credibility problem”. Investigations by the Guardian and Unearthed
“found that although many forest projects were doing valuable conservation
work, the credits that they generated by preventing environmental destruction
appear to be based on a flawed and much-criticised system”. A central problem is that credits are
calculated on the basis of predicted emissions prevention, and “were often
inconsistent with previous levels of deforestation in the area” and may have
been overstated. Greenfield acknowledges that “there has been work to address
this fundamental issue”, and that the results of the investigation “have been
fiercely criticised” by Verra, the American non-profit organisation which
“administers the world’s leading carbon credit standard”. He refers to the
concerns of several subject experts: one “found that projects had routinely
overstated their emissions reductions”, and another said that “although Verra
methodologies for claiming credits were a serious attempt to measure emission
reductions from reducing deforestation, they were not currently robust enough”.
Others believed that “projects have a tendency to inflate threats to the
forest” and “it was difficult to judge if the emission reductions claimed by
projects were real”. Verra acknowledged “that many of the benefits provided by
these projects were difficult to measure”, but Global Forest Watch defended
“the usefulness of conservation finance mechanisms”. While Verra “believes strongly in its Redd+
programme”, Greenfield points out that the “intense disagreement over the
global carbon market that would underpin Redd+ and other climate mitigation
systems has meant it is the only part of the Paris agreement rulebook that
governments are yet to agree.” He notes that the growth in “corporate net zero
strategies and carbon neutrality claims” increases the need for “rigorous and
accurate” calculation of the emissions reduced by forest protection offsets,
gives examples of “an inconsistent use of predictive methods and tools” in
existing projects, and refers to a study by West et al. (2020) which suggested
that “the accepted methodologies for quantifying carbon credits overstate
impacts on avoided deforestation and climate change mitigation.” Greenfield
reports that “Verra is making substantial changes to the way projects generate
credits to comply with likely changes if disagreements over the Paris agreement
rulebook covering nation-level Redd+ are resolved” and “has developed a new
risk-mapping tool to highlight areas most at risk of deforestation.”
Few issues
in climate change mitigation are simple, and while individuals considering the purchase
of credits in forest schemes may be encouraged by efforts to improve accounting
standards, it appears that caution and careful consideration remain important in
choosing projects to support.
References
Blaufelder,
C., et al., 2020, “How the voluntary carbon market can help address climate
change”, McKinsey Sustainability,
December 17, 2020, online, accessed 12 May 2021
CFI, 2021,
“What is the Voluntary Carbon Market?” Corporate Finance Institute, online,
accessed 12 May 2021
https://corporatefinanceinstitute.com/resources/knowledge/other/voluntary-carbon-market/
Fleischman,
F., et al., 2021, “How politics shapes the outcomes of forest carbon finance”, Current Opinion in Environmental
Sustainability, online, accessed 5 May 2021, https://www.researchgate.net/profile/Divya-Gupta-47/publication/349392992_How_politics_shapes_the_outcomes_of_forest_carbon_finance/
Greenfield,
P., 2021, “Carbon offsets used by major airlines based on flawed system, warn
experts”, The Guardian, online, accessed
24 May 2021
Seymour, F.,
and Busch, J., 2016, Why Forests, Why
now? The Science, Economics, and Politics of Tropical Forests and Climate
Change, Washington, Center for Global Development.
Seymour, F.,
2020, “Seeing the Forests as well as the (Trillion) Trees in Corporate Climate
Strategies”, One Earth, May 2020,
online, accessed 10 May 2021
https://www.cell.com/one-earth/pdf/S2590-3322(20)30211-6.pdf
Streck, C., 2021:
How voluntary carbon markets can drive climate ambition, Journal of Energy & Natural Resources Law, DOI:
10.1080/02646811.2021.1881275
West, T., et
al., 2020, “Overstated carbon emission reductions from voluntary REDD+ projects
in the Brazilian Amazon”, PNAS, online,
accessed 29 May 2021 https://www.pnas.org/content/117/39/24188.short
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