Consultation raises integrity issues in China’s proposed afforestation carbon projects

Afforestation projects proposed under China’s domestic voluntary emission trading scheme have a range of integrity issues, such as inaccurate estimation of emission reductions, violation of local communities’ rights and illegitimate land use, results from the government’s consultation process suggested.

The issues could delay the approval of these nature-based projects and the supply of the carbon credits to the market, as well as challenge the integrity and capability of the overall China Certified Emission Reduction, or CCER, scheme to drive the country's decarbonization.

The results of the consultation process were posted over several weeks in September-October on the official CCER website under the Ministry of Ecology and Environment (MEE). Based on current regulations, the proposed CCER projects need to undergo a public consultation before being approved.

A total of nine afforestation projects have completed the consultations and were expected to deliver 6.7 million tCO2e of CCERs, but they now risk being rejected or delayed, or may generate fewer credits.

A large amount of the industry feedback was strongly critical of the projects, but some market participants felt it was constructive feedback and a positive signal because it reflected enhanced transparency in an opaque market. It also showed that carbon market participants can no longer be easily swayed.

“The turbulence in the international VCM [voluntary carbon market] in the past two years has made China’s carbon industry more vigilant, and thus the domestic CCER market has also faced much more scrutiny,” a Beijing-based trader said.

Some market participants were worried that the negative feedback would damage the reputation of the CCER mechanism and China’s carbon industry.

“The reputation of China’s VCM projects has already been damaged terribly. Now they put CCERs in the spotlight,” a Sichuan-based consultant said, referring to recent investigations by Verra, the world's largest VCM credit issuer, into the country's VCM projects.

He said some responses in the consultation may have been from competing project developers and could be biased.

None of the afforestation projects have been approved by MEE yet.

Inaccurate estimation

All the nine afforestation projects had some problems with estimating emission reductions, according to the industry feedback.

The problems included overestimated durations for carbon crediting, overestimated afforestation areas, missing details, like tree species and conditions, and insufficient samples to justify the assumptions.

Notably, some feedback providers used high-resolution satellite data to show the inaccuracies of the estimations, following what has been done in investigations of international VCM and other regional carbon projects.

Local engagement

Among the nine projects, six projects have issues with community engagement, either lacking informed consent from local communities, or having unreasonable profit-sharing terms, the feedback showed.

Lands covered by some CCER projects are owned by a “collective,” which means a group of villagers living within a certain territory.

For these projects, some project proponents did not provide valid evidence to show consent from all villagers affected by the projects. They either simply showed an authorization letter from the village committee’s head or did not show anything, according to the feedback.

The CCER afforestation methodology recommended to give no less than 90% of the carbon trading revenues back to parties who plant the trees, own the forests and maintain the forests on daily basis.

Nevertheless, the feedback showed that some project proponents did not disclose the profit-sharing terms, and some project proponents only committed a much smaller share of revenues back to local communities.

Illegitimate land use

Eight projects saw problematic land use, according to the feedback.

Some land areas were found to be disqualified for project development due to the inconsistency with the current methodology. Satellite data also revealed that forests existed on some project areas, which means afforestation will no longer be needed.

Notably, a CCER project hosted by Shanxi province has been questioned by a local company that claimed to have exclusive rights to develop carbon projects on the respective lands.

Meanwhile, some areas covered by a CCER project in Qinghai province have also been included in an international VCM project, which was registered with Verra in 2020.

Auditing bodies

Six of the nine projects were audited by China Classification Society Certification Company (CCSC) and China Quality Certification Center (CQC).

CCSC and CQC are widely recognized as prestigious validation and verification bodies, or VVBs, in China. However, both organizations had been sanctioned by Verra in August 2024 due to non-conformity when auditing local rice cultivation projects registered with Verra.

Verra had asked CCSC and CQC to propose strong corrective plans. If they fail to take corrective actions, Verra will suspend them from auditing all types of agriculture, forestry and other land use (AFOLU) projects, according to a statement released by Verra in August.

These VVBs must properly and openly address criticisms from Verra and the CCER feedback, in order to do some damage control for their reputations, market participants said.