The world needs to drastically reduce global emissions. However, decarbonization will take time. One way to progress faster towards a net zero future is for companies to offset hard-to-abate, residual emissions with emission reductions or removals created elsewhere. Forests store carbon and provide multiple biodiversity, hydrological, social, cultural and livelihood benefits. Fossil fuels also store carbon while they remain buried, but keeping them in the ground does not have the same inherent co-benefits as storing carbon in a forest. A question that has been fought over for almost 30 years is whether emission reductions from protecting forests (reducing emissions from deforestation and forest degradation, or REDD) are a credible option to offset emissions from fossil fuels or industrial emissions.
There has been a recent bombardment of reports that credits from protecting forests should be considered worthless (e.g. 1, 2) and that using carbon markets to protect forests harms local populations (e.g. 1, 2). Most recent critiques are leveled at Verra’s Verified Carbon Standard (VCS) Program as the dominant carbon standard in the market, but jurisdictional programs such as ART TREES are also criticized for issuing hot air and disregarding the rights of Indigenous Peoples and Local Communities (IPLCs).
These problems have arisen in the context of a voluntary carbon market that does not (yet) have adequate infrastructure or governance to meet the needs of a rapidly growing and evolving market. Cracks in the system can grow over time and, when not repaired, lead to problems with integrity and media scandals. The recent criticisms of REDD are like an earthquake that hit a town with weak building codes and insufficient oversight. Some buildings that were constructed properly will be fine, but others that cut corners have been cracked and damaged and will likely collapse or require significant repairs. Just as it would be ludicrous to conclude we should abandon buildings or building codes after an earthquake, it is wrong to conclude from the current media critiques that carbon markets and forest protection are automatically incompatible.
Some of the criticisms of REDD projects and jurisdictional programs and methodologies are debated (e.g. 1 and 2), but the critiques are based on genuine issues that need to be confronted. Problems with the greenhouse gas integrity of REDD credits and the negative social impacts that can occur are unacceptable and need to be addressed. For example, where REDD projects have overstated deforestation risks in their baselines and consequently enormously inflated the claimed emission reductions, such credits are, undeniably, unacceptable as a means to offset emissions.
But it is also wrong to conclude that because of these problems the world should walk away from using carbon markets to finance forest protection. Stopping deforestation by 2030 is estimated to cost $130 billion per year, and multiple policy, financial, and market incentives are needed to halt deforestation. Current funding already falls short, and carbon markets can be one part of the solution to protect forests and mitigate climate change – if the forest protection initiatives can demonstrate environmental and social integrity.
Is it possible to have high-quality, high-integrity REDD credits? Ones that measurably reduce greenhouse gas emissions AND protect critical biodiversity and ecosystems AND strengthen rights and benefits for IPLCs who live in and near forests?
The problems with REDD methodologies were known well before the recent barrage. Verra has been working since 2020 to revise and improve its REDD methodologies. Verra should have acted faster, but this three-year process has reached an important milestone with a new REDD Methodology that will (eventually) replace all the existing REDD+ methodologies that have come under fire. Some of the authors of this blog have been part of the team working with Verra to produce the new methodology. We believe the new methodology – if implemented well and accompanied by robust validation and verification procedures and strengthened governance to increase transparency of the market and reduce conflicts of interest among its actors – can provide a solid basis to accurately quantify and account for emission reductions from REDD projects.
The most high-profile technical issue for avoided deforestation offsets is that the baselines are often inflated, as illustrated by scientists and ratings agencies. Baselines tell us what to compare forest protection achievements against – in this case, the deforestation that would have occurred without the protection activities. Baselines present a challenge because the moment a project is implemented it becomes impossible to see and measure exactly what would have happened if the project didn’t exist. Inflation in existing REDD project baselines is largely driven by projects choosing inappropriate reference areas to justify what would happen in the absence of the project, and by aggressively modeling rapidly rising rates of deforestation.
Picking a reference region and modeling its future is not necessarily a poor method to estimate a baseline – but it is prone to abuse and creates an inherent conflict of interest, as project developers that inflate their baseline will generate more credits.
The new REDD methodology fixes this by removing project developers from setting the baseline. Under the REDD Methodology Verra will use third-party service providers to determine historical rates of deforestation for whole countries (or very large subnational jurisdictions), then model where in the jurisdiction that deforestation is most likely to occur based on well-documented and defensible indicators of risk. From this model, Verra will present a baseline to each project using this new technical approach. This approach should protect the atmosphere and integrity of emission reductions in the following ways:
- Rates of deforestation are based on historical averages. In a world in which rates are often rising, a historical average will often underestimate the area of deforestation each year.
- Verra will use advanced satellite observations and peer-reviewed open-source science-based data to quantify historical rates of deforestation.
- Projects represent a subset of the total forest area in any given country. Under the new approach, projects are allocated a portion of expected national deforestation. As a result, the sum of all project baselines can never exceed the national total.
- With Verra taking responsibility for setting the baselines, the risk is substantially lowered that baselines will be manipulated to benefit project developers.
To strengthen IPLC safeguards, Verra released updates to its Verified Carbon Standard Program on 29th August 2023 which includes enhanced environmental and social safeguards. Verra’s changes increase the requirements for free prior and informed consent (FPIC) with stakeholders and strengthen safeguards to promote no-net-harm. While we believe safeguard requirements can still be improved, projects and project developers can also go beyond the standards to implement and support IPLC-led projects and initiatives such as the Peoples Forest Partnership.
It is easy to criticize and there can be no question that accurately accounting for emission reductions by protecting forests, restoring grasslands, or implementing agroforestry practices is complex. But this doesn’t mean we can’t transparently and conservatively estimate nature-based emission reductions.
The changes Verra is making now are like new building codes for REDD. They have the potential to create a higher-integrity REDD credit that can be differentiated from credits generated under the old methodologies. As current projects shift to the new methodology and new projects come online, we expect there will be renewed scope for high-quality REDD projects to enter the market with a new asset. For many projects, there may be fewer credits generated under the new methodology, but we expect the market will recognize the increased integrity and price the new credits accordingly. The new REDD Methodology should be accompanied by ongoing efforts to improve the governance and strengthen the infrastructure of the market, improving estimates of leakage and management of reversal risks, and resolving issues related to overlapping claims – all of which should be subject to continued public and academic scrutiny. Such steps will ensure REDD remains an important part of the solutions that benefit IPLC stewards, biodiversity, and the climate.
