LEAKAGE AND CARBON ACCOUNTABILITY

LESSONS FROM REDD: LEAKAGE AND CARBON ACCOUNTABILITY

Credits are generated and sold based on the quantified amount of avoided carbon, emphasizing the crucial role of accurate estimation models. To prevent over-crediting, it is essential to strive for:

Conservativeness: Encouraging developers to make cautious choices regarding the impact of their projects.
Homogeneity: Enforce uniformity by applying scientifically proven calculations to all projects
Transparency: Mandate accessibility and clarity in both calculations and methodological choices.

TWO ESSENTIAL CONCEPTS

Offsetting projects aim to prevent the accumulation of carbon in the atmosphere. In the case of avoidance, the offsetting funds contribute to a less carbon-intensive alternative scenario, such as a wind power plant instead of a coal mine or a forest protection program in the case of REDD+ instead of deforestation. Credits are generated and sold based on the amount of carbon that is avoided. Thus, the credibility of the project relies heavily on the models used for estimating these avoided emissions.

Two key concepts are essential for making this estimation:

1. Carbon accounting: This involves quantifying the amount of carbon that the project prevents from entering the atmosphere.

2. Leakage: This concept anticipates the potential increase in emissions outside of the project's boundaries.

FOREST CARBON ACCOUNTING: ISSUES WITH FLEXIBILITY AND TRANSPARENCY

REDD+ projects aim to play a crucial role in safeguarding forests slated for deforestation. The quality of associated credits hinges on the precision of carbon estimates per hectare in participating forests. To measure this, felling and weighing trees would be counterproductive. Instead, project developers employ well-established equations derived from scientific literature.

To make it really simple, first allometric equations calculate aboveground biomass (AGB) based on specific tree measurements such as diameter, height, and wood density. Then, belowground biomass (BGB) is estimated from AGB using a root-to-shoot ratio.

Haya et al. 2023 scrutinized the four most utilized REDD+ crediting methodologies developed under Verra's Verified Carbon Standard (VCS). The study involved separate calculations for AGC and BGC, comparing results with developers' choices for credit generation.

Methodologies allowed developers to create or use a wide range equations, which don't all have the same precision. For example, locally developed ones were found to be the most accurate, and generalized equations the least.

The flexibility within these methodologies allows developers to make choices leading to high carbon estimates, potentially resulting in over-crediting. The analysis indicates over-crediting of AGB by 15.4% on average and BGC by 61.3%.

This flexibility, combined with limited transparency, enables developers to keep crucial information confidential and make equation choices without proper justification, creating room for overestimation.

In conclusion, the analysis reveals a significant potential for methodological choices that favor higher estimates of climate benefits and, consequently, more credits issued.

LEAKAGE: PERMISSIVE METHODOLOGIES

REDD+ projects can contribute to leakage through various mechanisms:

Activity-shifting leakage: This occurs when agents engaged in deforestation within the project's boundary relocate their activities to a nearby location.

Market leakage: The protection of forests may decrease timber production, leading to increased prices and inducing deforestation in another jurisdiction.

While leakage doesn't render offsetting projects ineffective, it must be carefully calculated before subtracting from the total credits generated.

Verified Carbon Standard (VCS) methodologies, used by project-based approaches, address leakage by encouraging measures to reduce it and accounting for any remaining leakage. Projects are required to monitor and quantify activity leakage over time using satellite imagery in a designated leakage zone around the project area.

Despite aligning with literature on leakage, these methodologies faced challenges during implementation.

Developers often applied inaccurate or minimal leakage deductions, deviating from scientific recommendations.

All methodologies permit a 0% market leakage rate if adequately justified, focusing only on domestic leakage and ignoring international leakage. However, international leakage can occur when the production of an internationally traded commodity is reduced in one country.

Verra's new methodology mandates that all REDD+ projects adopt a uniform approach to calculating market leakage.

Leakage is a complex criterion, challenging to quantify and monitor, involving considerable uncertainty. It requires independent, rigorous, and conservative treatment to prevent over-crediting.