Appendix I of Decision 1/CP.16 states that when undertaking REDD+ activities, actions to reduce displacement of emissions should be promoted and supported. As this is not qualified, it can be interpreted that both subnational and national level implementation should address leakage.
International Law (UNFCCC)
There is no (international) leakage requirement. Use of national reference levels captures in-country leakage.
Increased emissions and reduced removals directly attributable to the JI project outside the project boundary are to be accounted for. The project must undertake an assessment of the potential leakage of the proposed JI project (provide an ex-ante estimate) and explain which sources of leakage are to be calculated and which can be neglected. Leakage within a country may also be captured via national accounting.
Approved project methodologies must provide information on how the project intends to estimate leakage, have operational and management structures to monitor leakage, and measures to be implemented to minimise potential leakage. A procedure for the periodic review of implementation of activities and measures to minimise leakage, if required by the approved methodology, must also be documented in the project design document.
Social and Environmental Standards
Leakage is not addressed under REDD+ SES.
Leakage is expected to be addressed by the methodologies of the greenhouse gas standard applied to the project.
Project proponents must assess and mitigate increased GHG emissions that occur beyond the project area and are caused by project activities. They must determine the types of leakage expected, estimate potential offsite increases in GHGs and, where relevant, define where such leakage is likely to take place. Mitigation measures must be documented and the impact of such measures must be calculated and subtracted from the climate benefits being claimed.
Donor Financed Initiatives
No specific requirements beyond measures adopted for conservativeness. REM considers that a focus on sound national and sub-national approaches will reduce displacement.
The ER Program should be designed and implemented to prevent and minimize potential leakage. Deforestation and degradation drivers that may be impacted by the proposed ER program measures are identified and their associated risk for displacement is assessed, as well as risk mitigation strategies. This assessment categorizes displacement risk as high, medium, or low. The program must have in place an effective strategy to mitigate or minimize potential displacement and, by the time of verification, implemented this strategy.
Developing Country Programmes
Leakage is assumed to be captured in the national accounting system.
Leakage is not addressed.
Voluntary Carbon Standards
For VCS REDD+ projects, leakage may be addressed through leakage sharing agreements, a leakage belt, or simplified leakage deduction factors. The VCS requires monitoring of market leakage, activity-shifting leakage, and ecological leakage, where applicable. The VCS AFOLU Requirements provide significant guidance for monitoring leakage for REDD, IFM and ARR projects. For example, for avoided unplanned deforestation projects, this involves the establishment of a leakage belt. Activities to mitigate leakage such as leakage management zones outside the project area are encouraged to minimise displacement of land use activities.
National jurisdictions do not need to account for leakage (i.e., international leakage) but should identify and mitigate it to the extent possible. Subnational jurisdictions also must identify the potential of baseline drivers to cause leakage and develop and implement measures to avoid or reduce the risk of leakage. Subnational jurisdictions are further required to estimate and deduct any residual leakage that may occur outside the jurisdiction but within the country (i.e., where there is no national REDD+ programme with national monitoring in place). Three types of leakage are considered: activity-shifting, market and ecological leakage. GHG emissions from leakage may be determined either directly from monitoring, or indirectly when leakage is difficult to monitor directly but where scientific knowledge or research provides credible estimates of likely impacts. Subnational jurisdictions may optionally use the JNR Leakage Tool to estimate leakage, or may justify use of their own method(s).
Leakage is managed through a standardised accounting of ‘secondary effects,’ including activity shifting and a standard deduction for market leakage in harvested wood products (20% of difference in harvested volume between baseline and project scenario). Additionally, landowners must monitor vegetation shifts throughout their ownership to ensure sustainable management in areas not directly associated with project activities.
All project activities with a potential impact on leakage are to be accounted for under the Gold Standard A/R Requirements. Market leakage is not accounted for.
Leakage causing activities (drivers) are to be accounted for including: collection of wood (firewood, charcoal etc.), agriculture (crop cultivation, shrimp cultivation etc.), timber harvesting, and livestock grazing. Depending on the activity chosen different formulas for calculation are implemented. Inter-ecosystem leakage must also be considered, particularly for landscape scale activities.
The Carbon Performance section of the A/R Requirements lists a number of compensation activities that project owners can undertake to make up for any leakage or event causing a reduction in the project carbon stocks in relation to the number of issued CO2-certificates over time. This includes replanting forests, planting of new areas, or purchasing Gold Standard credits from other projects (which can be from other project types such as renewable energy). In the interim period whilst carbon stocks are being restored an equal amount of credits will be put ‘on hold’ from the Gold Standard Compliance Buffer to cover the gap and ensure the integrity of the standard and all of its issued CO2 certificates.
The Plan Vivo approach to integrated land use planning is designed to minimise the risk of leakage. Sources of leakage should be identified and mitigation measures implemented. For example, establishing woodlots to meet energy needs can reduce pressure on forests as can the introduction of alternative livelihood incomes to charcoal production, e.g. from PES payments or by developing other sources of income, such as non-timber forest product (NTFP) processing, sustainable timber production, beekeeping, etc. In areas where it is likely that there will be leakage that could lead to >5% reduction of climate services, an approved approach must be used to monitor leakage, and a conservative estimate must be deducted from any actual climate services claimed.
The Natural Forest Standard recommends that a buffer zone of 10km from the boundaries of the project is established. If leakage is identified within the buffer zone, measures should be taken to reduce or minimise the activities contributing to the leakage. The project management plan and monitoring system should be designed with this in mind and project developers should aim to reduce leakage through improved project management and the encouragement of sustainable economic activities within the project area, thereby dis-incentivising the displacement of deforestation activities.
Emissions from land use change within the buffer areas are assumed to result from the displacement of activities from within the project area unless they can be shown to be externally driven. Emissions from deforestation occurring in the buffer area should therefore be counted as project emissions and quantified using methods consistent with those used for estimating changes to carbon stocks within the project areas, unless the project can demonstrate the emissions are caused by external pressures. Annual reports from project developers to the NFS Secretariat should include details of any leakage identified and demonstrate the measures being taken to counteract this.
The standard does not require projects to estimate the potential impacts of project activities on national or international markets.
Developed Country Programmes
Leakage is managed through mandatory accounting of ‘secondary effects,’ including activity shifting and a standard deduction for market leakage in harvested wood products (20% of difference in harvested volume between baseline and project scenario). In addition, to guard against shifting harvests to a landowner’s other properties, the Forest Offset Protocol requires land owners to demonstrate, for all of their landholdings, that they maintain a minimum of 40% canopy cover, have obtained certification from a recognised program (SFI, FSC, or Tree Farm System), or that they operate under a renewable long-term management plan that demonstrates harvest levels that can be permanently sustained over time and is sanctioned and monitored by a state or federal agency.
The Guidelines for Submitting Methodologies (see External Links) defines leakage as “the increase of greenhouse gas emissions from an activity or area outside the control of the project proponent, occurring as a result of undertaking the project activity”. The CFI requires the estimation of, and accounting for (e.g. a discount rate), leakage in cases where there is a decrease in production. Market leakage is set at the regulatory level and deducted by the Clean Energy Regulator for Native Forest Protection Projects. Activity shifting leakage is dealt with within the design of methodologies and must be accepted prior to the Domestic Offset Integrity Committee endorsement of a methodology. The CFI does not, however, require accounting for leakage to other countries.