By Charlotte Streck, Timothy Pearson, Robert O’Sullivan, Donna Lee, Derik Broekhoff, Michael Gillenwater, Daniela Goehler, Igino Emmer, Sandra Greiner, Barbara Haya, Simon Koenig, David Landholm, Axel Michaelowa, Kenneth Newcombe, Till Neef, Scott Settelmyer, David Shoch, Pedro Moura Costa, Lucio Pedroni, Sandeep Roy, Joachim Sell, Gordon Smith, Mark Trexler.
On 29 March ICAO accepted ART HFLD credits as eligible offsets under CORSIA. International aviation represents almost 2% of global emissions—as such, it is imperative that offsets for aviation emissions have high integrity. While it is essential for the world to protect forests that are not under immediate threat of deforestation, treating carbon credits from their conservation as fungible compliance instruments threatens to undermine carbon market integrity.
HFLD stands for High Forest Low Deforestation and describes the situation of countries or jurisdictions that have a large amount of forest cover and historically low levels of deforestation. Examples of tropical HFLD countries include Guyana, Suriname, Gabon, Papua New Guinea and regions of Brazil, Indonesia or the Congo Basin. Forests remove 15.6 Gt CO2 per year – three times more carbon than the US emits annually. They also represent an enormous carbon sink: Tropical and subtropical moist broadleaf forests alone store 236.3 billion tonnes of CO2. Without incentives to ensure the effective protection of intact forests, we risk not only releasing huge amounts of emissions through forest clearing, but also their (underappreciated) ability to absorb CO2 from the atmosphere year after year. Forests in HFLD jurisdictions absolutely must be conserved, including through climate finance support, but not through offsetting which comes at the expense of the atmosphere.
HFLD carbon credits are not linked to emission reductions and should not be offsets
The way carbon markets ensure integrity is by demanding conservative baseline scenarios against which greenhouse gas emission reductions and removals are measured. They also require the ‘additionality’ of the activity; that is a credible argument that the climate benefits would not have happened without the carbon market incentive. This means that carbon markets credit emissions or removals that occur because carbon revenues are offered. And where such activities are used to neutralise existing emissions—such as for the International Civil Aviation Organization’s (ICAO) Carbon Offsetting of Reductions Scheme for International Aviation (CORSIA)—it is essential that the action that offsets such emissions represent at least equivalent – ideally better – environmental benefit than the harm being done (in this case, emissions from airline flights).
This is the source of the problem: Substantiating additionality and setting robust baselines for the HFLD context is problematic. Usually, jurisdictional crediting baselines are set by assuming that past trends will continue into the future. But HFLD countries have seen hardly any deforestation in the past and using past deforestation as a basis for predicting future deforestation invariably leads to very low baselines.
While one might be able to justify increasing pressure on such forests in HFLD countries, there are also reasons why they have not been cut down for hundreds of years—whether due to inaccessibility, distance to population centres, soils that discourage agriculture, among other reasons. There is not, to date, a scientifically proven method to reasonably quantify what might happen to these forests in the absence of carbon revenue—which is a fundamental condition to prove additionality of policy action and define conservative deforestation baselines, i.e. to assure carbon market integrity.
The Architecture for REDD+ Transactions’ (ART) TREES HFLD crediting seeks to solve this problem by allowing jurisdictions meeting a scoring threshold based on combined higher forest cover (>50%) and lower deforestations (rates of <0.5% annually) to adjust their historical baseline upward—based on a formula related to the area of standing forests—without having to prove that forests are under imminent threat. This means that countries are not paid to reduce emissions or protect threatened forest, but simply for hosting forests that serve as carbon sinks, biodiversity hotspots or freshwater reservoirs.
Carbon markets are ill suited to protect forests that are not yet – or not any longer- under imminent threat
Forest conservation is chronically underfunded and there is a glaring financing gap specifically for forest protection. One might guess that the desire to bring dearly needed funding to forests could be what is behind the ICAO acceptance of HFLD credits. However, the ART TREES approach of increasing the delivery of climate finance to HFLD jurisdictions through offsets defies carbon market logic because the baseline is neither a conservative reflection on historic deforestation trends nor does it offer an argument of a business-as-usual scenario for the country. Therefore, such “credits” run against critical principles of a credible carbon market.
ART HFLD credits are not fungible with legitimate forest carbon offsets. What the ART HFLD approach is trying to do is offset units of emissions with units designed to protect against a threat to intact forests that is felt now but for which the emissions will not be realised for many years to come. In other words, emission reductions from HFLD jurisdictions are not equal to the emissions from airlines they are meant to offset. ICAO is effectively giving airlines permission to exchange fossil fuel emissions from international flights for payments to conserve forests that may not represent additional reductions in greenhouse gas emissions to the atmosphere.
As if it wasn’t risky enough, the implications go beyond ICAO and the aviation industry. ICAO-eligibility represents an imprimatur for voluntary markets—defining a quality criterion for traded carbon credits in a nascent marketplace. Corporates buy ICAO-grade carbon credits against a premium, convinced of their environmental integrity as compliance-grade offsets. The acceptance of HFLD credits by ICAO undermines this belief and risks to cast an overall shadow over forest carbon markets writ large.
Other instruments are needed to protect forests
There is no question that HFLD countries have an urgent need to access finance to pay for the environmental services these forests provide. Different options could be explored to harness private investment appetite with the goal to reward the environmental and climatic benefits of these forests. HFLD scenarios could generate credits that are non-fungible conservation instruments in the form of carbon credits that are not eligible for the use as offsets. Financing instruments could also be designed outside of carbon markets by defining the climatic benefit of forests without drawing on any logic imposed by carbon markets.
To effectively contribute to the Paris Agreement climate goals, carbon markets must follow strict science-based standards. The HFLD approach risks creating carbon credits that are non-additional. A new mechanism of conservation credits is essential to support intact forests—at the same time, ICAO must exclude ART HFLD credits from CORSIA eligibility.
Author list:
- Charlotte Streck, Sandra Greiner, Simon Koenig, David Landholm: Climate Focus
- Timothy Pearson, Robert O’Sullivan: GreenCollar
- Igino Emmer: Silvestrum Climate Associates
- Scott Settelmyer, David Shoch: TerraCarbon
- Donna Lee: Calyx Global
- Daniela Goehler: GiZ
- Joachim Sell: First Climate
- Lucio Pedroni: Carbon Decisions International
- Axel Michaelowa: Perspectives / University of Zurich
- Sandeep Roy: VNV Advisory
- Pedro Moura Costa: BVRio
- Derik Broekhoff: Stockholm Environment Institute
- Barbara Haya: UC Berkeley
- Mark Trexler: The Climatographers
- Michael Gillenwater: GHG Management Institute
- Ken Newcombe: C-Quest Capital
- Till Neeff: Independent consultant
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