Reference levels are expressed in tonnes of carbon dioxide equivalent per year and defined as “benchmarks for assessing each country’s performance” in implementing REDD+ activities. Countries are currently given flexibility to develop their own methodologies for reference level construction, but must take into account historic data and maintain consistency with national GHG inventories. Adjustments for national circumstances are allowed, but information to substantiate such adjustments must be provided. Reference levels submitted to the UNFCCC are subject to a technical assessment (further information on this assessment covered under “Process”).
International Law (UNFCCC)
Accounting for afforestation, reforestation, and deforestation is different than for forest management. For the former, countries can be credited for the net GHG flow from afforestation, reforestation and deforestation in a given year (subject to a cap). If, for example, 100 tons of CO2e are sequestered in year X, then 100 tons are credited in year X (unless the assigned “cap” for a country is below 100 tons). For forest management, however, countries set a “forest management reference level” (FMRL) against which performance is measured. In other words, if the FMRL is “-50 tons” (e.g. a country suggests its business-as-usual scenario is that 50 tons are sequestered annually) and in year X the country measures 100 tons sequestered, it would only get credit for 50 tons.
For the second commitment period Parties are required to propose a methodology for their FMRL following agreed guidelines for submission of information on such reference levels, which are reviewed by Expert Review Teams and subject to a Technical Assessment Report. In 2011, 38 countries submitted country-specific information and data on their proposed FMRL. Methodologies ranged from using historical data (e.g. a base year, base period or extrapolation) to projections using a variety of models. These submissions were assessed by expert review teams, which raised inconsistencies and provided recommendations; several countries revised their FMRL based on the reviews.
The baseline for a JI project is “the scenario that reasonably represents the anthropogenic emissions by sources or anthropogenic removals by sinks of greenhouse gases that would occur in the absence of the proposed project”. Baseline methods must be justified, can take into account relevant national and/or sectoral policies and circumstances, and should also take into account uncertainties and use conservative assumptions. Methodologies approved by the Executive Board of the CDM may be applied to JI projects.
Baselines generally are based on “business-as-usual” scenarios. Small-scale A/R projects can use a continuation of pre-project land use (e.g. the assumption that existing carbon stocks are constant throughout the crediting period) as a baseline.
Social and Environmental Standards
The assessment of social and environmental impacts are “relative to the reference scenario which is the most likely land-use scenario in the absence of the REDD+ program.”
Project developers establish a “Point Zero” baseline using the standard’s indicators, which determine the degrees of sustainability of the six resources: social, human, financial, natural, biodiversity and carbon. Developers must demonstrate an improvement along the project’s lifetime in relation to this baseline, evidence of which is established through the monitoring reports (see Measurement and Monitoring).
Project proponents must develop a defensible and well-documented ‘without-project’ reference scenario that describes the most likely land-use scenario in the absence of the project and how it would affect the climate, communities, ecosystem services, and biodiversity. They must also provide a description of the original conditions in the project area, as well as baseline projections for all the categories of interest, i.e. climate, communities, and biodiversity.
Donor Financed Initiatives
For the construction of reference levels, REM prefers the usage of historical deforestation data (not projections) to ensure transparency and credibility. Where a sub-national or biome level approach is pursued, the methodology applied should be compatible with the construction of a national reference level.
In order to receive (non-performance based) support from the REM programme, a reference emission level must be set up in the first half of the funding period. If an applicant aims to receive performance-based payments, a reference level should be established prior to the programme start and its methodology assessed by the REM programme in dialogue with the applying country.
The Carbon Fund has taken a historical approach to setting reference levels, i.e. the reference level is the average annual historical emissions over the reference period. For a limited set of ER Programs (i.e. high forest cover, low deforestation countries where historical data underestimates future rates of deforestation), the reference level may be adjusted upward by a limited amount (0.1% per year of carbon stocks) above average annual historical emissions. The reference period is generally defined by an end date that is the most recent date prior to 2013 for which forest cover data is available to enable IPCC Approach 3 (i.e. spatially explicit data), and a start data that is about 10 years prior to the end date.
In addition, the development of a Reference Level should be informed by (or inform) the development of a forest reference emission level or forest reference level for the UNFCCC. It should be expressed in tonnes of carbon dioxide equivalent per year and explain its intent for consistency with the existing or emerging national GHG inventory. The forest definition used should be specified and follow guidance from UNFCCC decisions.
Key data and methods that are sufficiently detailed to enable the reconstruction of the reference level must be documented and made publicly available online.
Developing Country Programmes
Guyana is currently using an interim national reference level under the framework of its MOU with Norway. Under the MOU Guyana uses a “Combined Incentives” reference level using a combination of the average deforestation rate for Guyana between 2000 and 2009 (0.03%) and the average deforestation rate for developing countries between 2005 and 2009 (0.52%), giving a reference level of 0.275%. This reference level will be further revised if and when a methodology is agreed under the UNFCCC. The reference level of 0.275% is intended to be used to determine payments under the MOU with Norway, but should the annual deforestation rate exceed the rate for 2010 of 0.056% Guyana will receive a reduced payment, with the reduction in payment increasing up to 100% at a level of 0.1%, above which Guyana will receive no payments. In addition, the Joint Concept Note relating to the MOU establishes a carbon proxy loss of 100tC/ha from deforestation, to be revised as more information arises from the establishment of Guyana’s MRV system.
Payments made to Guyana are calculated using the following steps:
- Subtracting Guyana’s reported and verified deforestation rate from the agreed interim reference level (0.275%)
- Calculating emission reductions by applying an interim and conservative estimate of carbon loss (100tC/ha)
- Subtracting from that number an estimate for forest degradation (using agreed indicators and a conservative carbon density)
- Multiplying the tons of “avoided emissions” calculated above by $5/ton.
- As mentioned above, if the deforestation rate exceeds 0.056%, payments are reduced on a sliding scale, and will cease if the rate is at, or above, 0.1%.
The Amazon Fund uses a rolling average historical deforestation rate for the Amazon biome. This average is calculated using deforestation rates over a 10-year period. This reference level is fixed for 15 years between 2006 and 2020.
Voluntary Carbon Standards
Reference levels are constructed as Business-As-Usual (BAU) baselines, and are revalidated every ten years. Baseline development and information inputs vary by the methodology applied, but in all cases alternative baseline scenarios must be identified and selection of the most plausible scenario justified.
Jurisdictional baselines are fixed for a period of between 5 and 10 years (defined by a jurisdictional proponent) and subsequently updated with the same periodicity. Where no UNFCCC baseline has been established for the purposes of crediting in a market-based mechanism, the proponent must develop at least two alternative baseline scenarios: (1) historical annual average emissions or removals over an 8 to 12 year period; and (2) historical trend of emissions or removals based on changes over at least 10 years, both ending within 2 years of the start of the current jurisdictional baseline period. Modeled adjustments reflecting national or subnational circumstances may be presented as alternative baseline scenario(s). After presenting the options the jurisdiction must determine the most plausible baseline and justify its selection.
Project baselines are developed to reflect a conservative estimate of business-as-usual practices and are determined through analysis of current forest conditions and indicators of threats to forest cover. Baselines must conform to legal constraints and financial constraints. Baselines do not include trends of forest carbon declines as, in Mexico, avoided emissions accounting will be conducted through jurisdictional frameworks. The crediting period for project baselines is 25 years and can be renewed indefinitely.
Under the Gold Standard A/R Requirements the baseline is established by calculating the sum of carbon stocks on the eligible planting area prior to planting. Carbon pools include above and below ground tree and non-tree biomass.
Plan Vivo requires projects to develop a baseline scenario for both socio-economic conditions and ecosystem services at the start of the project in order to measure impacts. The baseline scenario should describe current land uses and habitat types, existing major ecosystem services provided in the area, the socio-economic context, and how these are likely to change with and without the project. More specifically, information on socio-economic conditions should include details on demographics, access to and use of land and natural resources, income levels and livelihood activities, and local governance structures.
For projects generating climate services, an approved approach in line with IPCC Good Practice Guidelines for land-use, land-use change and forestry (LULUCF) must be used to quantify initial carbon stocks and emission sources and estimate how these are likely to change over the lifetime of the project as part of the baseline scenario.
The Natural Forest Standard requires projects to apply a risk-based approach to baseline quantification. This risk-based method has been designed to protect large areas of forest over relatively long periods of time and involves using performance benchmarks instead of predictive temporal analysis, offering a performance metric that reflects the on-going conservation of carbon at risk within natural forests.
The Natural Forest Standard requires projects use Ecometrica’s Normative Biodiversity Metric (NBM) to provide quantified information on the biodiversity value of the project area. The NBM is designed to assess the habitat quality of all the land within the project area. This assessment may also be used to verify the no net loss of biodiversity commitment of NFS projects.
Developed Country Programmes
ARB Regulations for California’s cap-and-trade system require all compliance offset protocols to “establish a project baseline that reflects a conservative estimate of business-as-usual performance or practices”. For domestic forestry projects, reference levels are determined according to the ARB Compliance Offset Protocol for U.S. Forest Projects. A business-as-usual baseline must be modeled over a 100 year period for onsite carbon stocks as well as baseline harvested wood products. Baseline modeling must conform to legal constraints, financial constraints, and constraints imposed by predefined common practice criteria (for forest management projects) or default land-conversion rates (avoided conversion projects). The crediting period for offset projects using the Forest Offset Protocol is 25 years, but crediting periods may be renewed any number of times.
The CFI legislation defines a baseline for offsets project to be calculated on the assumption that the project were not carried out. The Guidelines for Submitting Methodologies also states that the “key purpose of setting the baseline is to ensure that any credited abatement for the activity is genuinely additional”. Depending on the proposed activity, baselines can be historic, projected, or standardized baselines. Reference level methodologies must conform to Australia’s National Greenhouse and Energy Reporting Act 2007 and National Greenhouse and Energy Reporting Regulations 2008 and must be supported by peer reviewed science.
Unless specified otherwise in regulations, a crediting period is 20 years for native forest protection projects, 15 years for reforestation projects and 7 years for all other offset projects. Projects can be approved for a subsequent crediting period.