• Mark Alexander

Can REDD+ generate high-integrity carbon credits and support the achievement of the Paris Agreement

The world is facing a twin crisis both in climate change and the loss of biodiversity, which are interconnected. There is general consensus that valuing the environmental services provided by initiatives such as REDD+[1] is key to promoting an economic transition in tropical forest countries, leading to the development of innovative approaches and sustainable businesses that aim to conserve threatened forests and ecosystems and improve local livelihoods.

According to the Global Forest Watch platform (GFW), from 2002-2020, the world lost over 64M hectares of primary tropical forests, an area of the size of France and the equivalent of an estimated 23GtCO2 tonnes of carbon[2]. Promoting a rapid transition towards sustainable landscapes, that reverse deforestation trends and recover degraded lands, will be essential to mitigate climate change and secure the achievement of the 1.5 degree target by the end of the century. The achievement of this complex goal will also require mobilising much greater investment now and over the coming years towards nature-based solutions, including REDD+ activities.

Financing opportunities for reducing deforestation and leveraging local and sustainable enterprises may come from a wide variety of sources, including market and non-market approaches. Recent corporate net-zero pledges may be a key opportunity for attracting much needed additional investment at scale to protect and recover degraded ecosystems. The current Taskforce on Scaling Voluntary Carbon Markets (TSVCM) estimates that annual global demand for carbon credits could reach up to 1.5-2 GtCO2 by 2030, which could represent a market size between USD$5-30 billion in 2030 (depending on different price scenarios and underlying drivers).

REDD+ is an incentive framework recognised by the UNFCCC and adopted as a key element under the Paris Agreement. The main goal of the REDD+ mechanism is to finance activities that avoid and reduce deforestation and forest degradation trends in natural ecosystems.

However, there are legitimate concerns arising from the increasing appetite of corporates to purchase carbon credits from nature-based solutions (including REDD+) as part of their net-zero commitments. In a nutshell, some of the questions raised about the voluntary carbon market include:

  1. Could the use of offsets be a potential ‘free-pass’ for corporates to keep polluting?

  2. Is the additionality and permanence of carbon credits robust enough?

  3. Is there a transparent and comprehensive framework for assessing the net-zero commitments assumed by major corporations, in terms of ambition, scale and speed?

If not answered and implemented properly, these questions could undermine the potential of the voluntary carbon market to enable a cost-effective solution to reduce GHG emissions and accelerate the transition to a low-carbon economy in the next decade.

Due to the fast-growing rate of the voluntary carbon market, there is a clear need for market players (project proponents, investors, corpora

tes, etc) to engage and agree upon a set of criteria aimed at establishing more transparent and ambitious net-zero targets (on the demand side) and accurate and conservative carbon credits estimates and issuance (from the supply side).

This piece aims to contribute to this debate and present a potential set of principles that could address the main concerns and dilemmas surrounding the voluntary carbon market, in terms of both demand and supply.

As a starting point, nature-based solutions can play an important role and provide an interim compensation pathway within the next years towards achieving net-zero targets, when connected to a broader strategy that also includes cutting operational and supply chain emissions at scale. In this way, REDD+ credits can be part of the transition to net-zero, compensating residual emissions and accelerating overall emissions reductions, and not an incentive or excuse to delay emissions reductions within a company’s operation and supply chain.

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