Charities call for more jurisdictional, science-based approach for forest-based credits

Eight charities representing nature conservation and indigenous organizations have updated a step-by-step guide for investing in forest-related carbon credits to combat climate change, urging companies to adopt a more jurisdictional and science-based approach.

The second edition of the Tropical Forest Credit Integrity guide said companies looking to get into voluntary carbon markets needed guidance in differentiating on carbon credits based on impact, quality, and scale.

It came as the credibility of nature-based offsets and forest conservation projects have come under fire from media and academics questioning whether the programs represent genuine carbon reductions.

"We won't be able to meet global climate goals if we approach forest conservation in a piecemeal, project-oriented manner," the TFCI said, calling for increased partnership and leadership from indigenous peoples and local communities in the market. "We must shift to larger-scale strategies that align with the jurisdictional accounting framework," it said.

The guide, first issued in May 2022, said companies needed to publicly commit to "a science-based emissions reduction target" validated by the Science Based Targets initiative (SBTi) or equivalent and ensure these credits "are a complement to and not a substitute for a company's decarbonization."

Jurisdictional approach

It also called for comprehensive due diligence and pushed companies to rapidly shift demand toward credits originating from jurisdictional-scale programs.

The nature-based offsets and REDD+ market is moving towards a jurisdictional approach now known as Jurisdictional REDD+, with governments increasingly taking ownership of voluntary carbon activity.

REDD+ -- reducing emissions from deforestation and forest degradation -- encompasses all activities aimed at protecting forests from deforestation.

TFCI said a strong demand signal and up-front financing were needed to stimulate jurisdictional credits.

"Jurisdictional-scale credits include those originating directly from jurisdictions based on forest conservation activities and policies as well as those originating from projects that are fully nested into jurisdictional accounting and programs," it said.

Verra, the world's largest certifier of carbon credits is consolidating its methodology for nature and forest -based offsets to include jurisdictional baselines, shorter baseline periods in its approach along with using remote sensing and satellite imagery to verify the impact of the projects.

Reduction over removal

The guide also called for companies to prioritize purchase of high-quality emissions reductions credits like avoidance-based credits over removals credits, with a view to conserving standing forests until global goals of halting deforestation are achieved.

"Investment in removals credits should represent a smaller portfolio share in the near term and be in the form of advance purchase or forward finance agreements to ensure a supply of such credits to meet net zero targets in the future," it said.

The eight organizations behind the TFCI Guide include Coordinator of the Indigenous Organizations of the Amazon Basin, Conservation International, Environmental Defense Fund, IPAM Amazonia, The Nature Conservancy, Wildlife Conservation Society, World Resources Institute and the World Wide Fund for Nature.

Some big wildlife and forest conservation project have been deemed controversial due to allegations of over-crediting.

The Kariba REDD+ project in Zimbabwe has come under heavy criticism after a recent media report alleged the number of emissions avoided was highly overestimated.

On Jan. 27, South Pole published a response, saying it had followed the Verra methodology to the letter but conceded there was a discrepancy between the modeled deforestation rate and the deforestation rate observed in the reference area.

The intense scrutiny had a major impact on prices of and demand for nature-based carbon offsets, but the market has recovered in recent days.

Platts CNC -- a price that reflects the most competitive nature-based carbon credits was assessed at $2.60/mtCO2e on Feb 9, according to data from S&P Global Commodity Insights.

Platts CNC has rebounded from a record low $1.70/mtCO2e on Feb. 3, after a drop of 75 cents/mtCO2e from Feb. 1 after news reports emerged.

Platts Nature-Based Avoidance for 2023 was assessed at $9.35/mtCO2e on Feb. 2, a fall of almost $2mt/CO2e from a month earlier. Nature-based credits are generated from conservation, agriculture, forestry and land management.

Meanwhile, Platts CRC -- an assessment that reflects the most competitive nature-based carbon credit prices -- was assessed at $11.80/mtCO2e on Feb. 9. Platts CRC reflects removals-based carbon credit projects and comprises individual assessments of Natural Carbon Capture and Tech Carbon Capture.