VI – Summary of the results


Summary of the results

Table 2 – Forestry Carbon Standards Results summarizes the results of the different carbon standard reviews. This will provide an easy comparison of the standards on each of the parameters.

The total in Table 1 may be misleading as all the criteria have the same weight and the total should only be interpreted as a brief comparison. The objective is to produce a table to compare the criteria between the standards. Different organizations will have different interests with carbon credits; therefore they should be looking at the score of the relevant criteria and not the total score. Some criteria are essential for any forestry carbon standard to guarantee that the carbon credits are real, verified, permanent, additional and unique. These criteria are highlighted on the table with an asterix (*).

Description of criteria:

REDD – Check if the standard accepts REDD projects and any singularity from a particular standard. Because this is a yes/no answer, the score will be 1 for NO and 5 for YES.

Location – This criterion will analyse any limitations in the location of projects. The more locations that are accepted for the commencement of a project, the higher the score (up to 5).

Additionality This criterion will look at how projects must demonstrate additionality. The standard that provides the most detailed information on additionality will score the most.

Methodology A methodology is a guideline taken from the standards that project developers need to follow in order to be certified. For CDM and JI, the Project Design Document needs to follow approved methodologies for the different projects. A biogas project is assessed differently from a wind power project therefore needs a different methodology to calculate the reduction in carbon emissions. Some of the standards in the VCM deal with this differently. The baseline will also be discussed. This criterion will analyse how standards use methodologies to approve the projects. The more detailed methodologies will receive the higher scores; the less detailed will receive the lower scores.

Permanence – Analysis of how permanence is dealt with in the different standards. The highest score will go to the standard that assures the most permanent carbon credits.

Leakage – Examination on how leakage is dealt with in the different standards. Standards that provide the best mechanisms to minimize leakage will receive the higher score.

Co-benefits – Assessment of co-benefits and how they are included in the standard. The more co-benefits a standard accounts for, the more points it will receive.

Registry – Inspection of the mechanisms to reduce the possibility of double accounting; in addition an indication of where the carbon credits should be registered. The greater assurance a standard will give to double counting and the more registries that accept it will receive the highest score.

Transparency – Evaluation of how transparent a standard is by looking at the amount of information a project needs to provide publicly and if there is any public consultation as part of the process. The more information about the project that is accessible to the public will receive the higher score, in addition the more public consultation provided, the more points will be added.

ICROA – The International Carbon Reduction Offset Alliance (ICROA) was formed to provide a code of best conduct in the carbon market and currently serve thousands of businesses and individuals. ICROA members can only trade carbon credits that are real, measurable, permanent, additional, third-party verified and unique. ICROA only supports credits from CDM, JI, Gold Standard and Voluntary Carbon Standard. A standard that is not accepted by ICROA will produce credits that a large part of the market will not accept. The founding members are Carbon Clear, The Carbon Neutral Company, ClimateCare (JP Morgan), Climate Friendly, Co2Balance, Native Energy, TargetNeutral (BP) and Terrapass; in addition many more companies are now members.

This criterion will check if the standard is accepted or not by ICROA. Because this is a yes/no answer, the score will be 1 for NO and 5 for YES.

US Market: As the US market will be the most important market for forestry projects. A standard that is not popular in the US will not endure. This criterion will analyse the likelihood for the standard to be widely accepted in the US market. The more likely, the higher the score will be.

Table 2 – Forestry Carbon Standards Results

Table 2 - Forestry Carbon Standard results

Highlights of the standards and recommendations

The review of each of the standards is now complete as provided in the section “Review of the standards”. This section will enhance any distinctive aspect, either positive or negative. This will be followed by the description of a new standard based on the best standard for each of the criteria.

Voluntary Carbon Standard

VCS scores 55 points, which shows that it is a high quality standard that guarantees the carbon credits are real, verified, permanent, additional and unique. VCS provides some of the most detailed methodologies to quantify a reduction in carbon emissions. It scores the highest points on all criteria aside from transparency. VCS does provide the PDD, verification and validation documentation once projects have been validated. However, VCS scored 4 on transparency because projects must have a 30 days public consultation but VCS should make it easier to access projects during the validation process and make any public comment directly on the VCS website. This information is only available on the certifier and project developer website. VCS only quantifies carbon emissions, and in order to assess co-benefits, project developers are advised to obtain double certification with CCBS. It is possible to see that where VCS does not score 5 points, CCBS does and vice-versa. A double certification VCS/ CCBS will transform a project into a high quality standard project that not only reduces carbon emissions but also preserves biodiversity and has a positive socio-economic impact in the local communities.

Climate, Community & Biodiversity Standard

CCBS scores 51, and is well positioned to quantify the co-benefits of socio-economic and biodiversity factors which illustrates why it is regarded as the most popular standard to quantify those co-benefits. However it falls short in providing carbon credits which is what the carbon market is seeking. CCBS is also the most popular forestry carbon standard with 12 projects validated so far and 66 in the pipeline. CCBS advises to use VCS to certify the carbon credits. CCBS needs to change its strategy as it could easily become worthless if the other main carbon standards begin to include co-benefits as well.

Plan Vivo

Plan Vivo scores 39, one of the lowest scores in the review that may be explained by the use of a different approach of validating carbon credits. As each project needs to produce its own methodology, Plan Vivo needs to have a closer relation with its project developer in order to assist them with this. Plan Vivo provides the contacts with experts from research institutes and universities to evaluate the projects. There is one issue with this approach; the project documents are more similar to academic papers than to assessment projects that follow international standards.

Plan Vivo’s objectives are altruistic and the projects certainly make a real difference in rural communities. In addition to the co-benefits, carbon reductions do occur, however their quantifications lack the general level of guarantee other standards provide.

Tools and guidelines that are more detailed and standardized are strongly advised in order to improve methodology, permanence, leakage, and co-benefits assessment.

Plan Vivo is working on a new website at the moment and another 6 projects are in the pipeline. A new assessment should happen once this phase is concluded, to assess if the issues have been corrected.

CarbonFix

CarbonFix scores 48. CarbonFix scores the highest on additionality, methodology, permanence, leakage and co-benefits. It is possible to see that the reason why CarbonFix does not score higher is because it scored low on the REDD, ICROA and US market criteria.

CarbonFix managed to transform a highly complex process into a simplified, user friendly standard and still guarantees high quality carbon credits. It is a standard that adapts itself as much as possible to the needs of the project developer, brokers and customers. CarbonFix offers a service that provides videos to explain how to use the website, methodologies and tools.

CarbonFix differs from VCS on permanence. While VCS calculates the most likely risk of non-permanence of each project, CarbonFix uses a fix buffer of 30%. Although some projects have a lower risk and others a higher risk of non-permanence, a fixed 30% buffer simplifies the project documentation, reducing costs and time. If three projects worth 100,000 carbon credits each allow 30% of the credits in the CarbonFix carbon pool, the pool will have 90,000 carbon credits in stand-by. If a project is completely destroyed, there will still be 20,000 carbon credits left in the pool (90,000 credits – (100,000 credits – 30% = 70,000 credits) = 20,000 credits). The more projects are validated, the larger the carbon pool is, thus reducing the risk that carbon credits destroyed are not replaced. CarbonFix ensures that the carbon pool is only used when extreme situations occur; otherwise the project developer needs to replace any carbon credit that has not been delivered.

For afforestation, reforestation and improved forest management projects, CarbonFix is highly recommended.

California Climate Action Registry

CCAR scores 45 points on the review. Version 3.0 (signed on 1st September 2009) has improved the methodology, permanence and leakage issues to the highest level with detailed tools to quantify carbon, a buffer is used for permanence and any leakage is calculated and discounted. In version 2.1, these aspects would have scored much lower. CCAR now uses a third party registry to track the carbon credits. There is still room for improvement, notably on additionality which is still too loose and transparency, where public consultation of the projects needs to be introduced.

CCAR looks at additionality differently from other standards. Most standards assess additionality project per project, in order to guarantee that the project is additional. This approach may encounter the issue that some projects that are additional do not pass the test and therefore do not assist in addressing climate change. CCAR applies additionality with a sectoral approach and is looking to establish clear rules about which projects are or are not additional. CCAR is aware that not all projects approved are additional, but its objective is to ensure that all the projects that are additional are approved.

Lucio Pedroni of Carbon Finances says “In the end, simpler methodologies are better for the climate. It’s better to have 1200 projects and ten that are not additional, than to have only two that are perfectly additional” (Coren, 2009).

CCAR is considered the most progressive carbon standard in the US.

Chicago Climate Exchange

CCX trades almost half of all voluntary market transactions in the world making it the most important platform for offset projects. However it is offering one of the worst services as a standard in the market scoring only 37 points.

There are many doubts over additionality which lacks a test to ascertain if the project would or would not have been possible without carbon finance. Like CCAR, CCX wants to address a sectoral additionality where clear rules define the boundaries between which a project must fall in order to be considered additional.

CCX does not seem to understand the meaning of permanence and the carbon cycle of forests. There are no guarantees that, after the 15 years commitment, the forest will still be managed properly, ensuring the forest will still be intact in the future and avoiding the release of the carbon sequestered during the crediting period. This also demonstrates the risk to the buyer if the standard stops activities. Due to the nature of forestry carbon credits, there is the risk that the carbon sequestered may be released into the atmosphere eventually. CCX should provide a guarantee that even if CCX closes the contract remains legally binding and that the project developer should guarantee the permanence of the credits.

CCX only accounts for leakage in the delimited area and does not expect external leakage so there is no need for assessment. A piece of land that is occupied by any form of economic activity and needs to relocate in order for a forest to be planted is very likely to produce an external leakage. This scenario is not covered.

CCX does not use a third party registry but double-checks with other registries for any double counting and issues a unique identification code for every CFI contract which is a positive aspect. However, CCX also lacks transparency as it is not possible to access the project documentation via the website. Customers or the public will have to contact the project developers individually to request the documentation.

CCX shows that the market alone is not able to provide the quality needed to guarantee that the money spent is actually reducing carbon emissions. More regulation is essential to oversee the market and make sure that the carbon credits are indeed reducing carbon emissions.

American Carbon Registry

The American Carbon Registry scores 50 points and provides a good guarantee that the carbon credits are real, verified, permanent, additional and unique. All the information provided is clear and understandable. ACR is very flexible and accepts methodologies from most standards. However, ACR does not differentiate itself from other standards; instead ACR requires the project developer to use tools from other standards in order to receive ACR certification. This explains why ACR scores particularly well. However, as a project developer, there are not many reasons to choose ACR over the other standards. The small number of projects also shows that is it going to be difficult to compete with the other standards.

The future of the forestry carbon market

The results show that some standards like Plan Vivo and CCX do not provide enough guarantees to carbon credits. Half of the voluntary carbon market is traded under CCX which demonstrates that the market is not able to select the standards based on their qualities. More regulation is highly recommended to oversee the voluntary carbon market.

The future of the voluntary carbon market is very uncertain. The standards in the US (CCX, CCAR, Climate Leaders, RGGI and ACR) are waiting to know the details of the Waxman-Markey Climate Bill. If the Climate Bill includes a large number of sectors and projects, there may be no more room for other standards. If the Climate Bill only focuses on a narrow number of sectors and projects size, there may be space for standards to fill the remaining niche. It is also possible that American standards become part of a national carbon market and no longer need to exist.

For the standards outside the US, the risks are related with the negotiations for the post-Kyoto period at the COP-15 in Copenhagen. For example, a sectoral approach for REDD might leave no space for a REDD VCM.  The risk cannot be underestimated, although it is quite likely that negotiations will provide space to the private sector to intervene and develop projects. In addition, the market will inevitably reduce the number of standards by deciding which standards will remain or not. At this moment, which methodologies and standard will win, is not clear.

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