Appendix I of Decision 1/CP.16 states that when undertaking REDD+ activities, actions to address the risk of reversals should be promoted and supported.
International Law (UNFCCC)
For the second commitment period countries have the option to exclude emissions from natural disturbances, above a country-specific “background level” for afforestation, reforestation and forest management. A default method to estimate the background level is provided, but countries may also apply an alternative approach as long as transparency, consistency and comparability are ensured, and net credits are avoided.
Annex I countries are required to account for net emissions or sequestration from afforestation, reforestation and deforestation during the first commitment period, and also forest management in the second. If a reversal occurs in a JI forestry project, this will therefore be captured in the national accounting. If a project results in a reversal, the liability falls on the host country, i.e. the country that has purchased the units gets to keep the credits generated.
Risk of non-permanence for afforestation and reforestation projects is managed through the use of “temporary CERs” (tCERs) and “long-term CERs” (lCERs). Both types of CERs require verification every 5 years – tCERs periodically expire and new tCERs are issued for the amount of carbon stored in the forest at a particular verification, whereas individual lCERs are re-verified and only cancelled during the crediting period if there has been a reversal. All tCERs and lCERs issued by a project must also be replaced at the end of the project crediting period, irrespective of the status of the forest. In addition, approaches for addressing non-permanence are to be documented in the project design document.
Social and Environmental Standards
Reversals are not addressed under REDD+ SES.
Permanence is expected to be addressed by the methodologies of the greenhouse gas standard applied to the project.
The proponent must identify likely natural and human-induced risks to the expected climate, community and biodiversity benefits during the project lifetime and outline measures needed and taken to mitigate these risks. It must also describe the measures needed and taken to maintain and enhance the climate, community and biodiversity benefits beyond the project lifetime. When combined with a carbon accounting Standard, the climate section of the CCB Standards is waived and provisions for permanence in the GHG accounting standard would apply. All GHG programmes recognised by the CCBA must employ methodologies that at least meet the permanence and other requirements of the CCB Standards.
Donor Financed Initiatives
To mitigate risk of non-permanence, REM encourages participating countries to have in place adequate measures and relies on conservative estimates. Furthermore, retiring a share of emission reductions as a country’s (or subnational jurisdiction’s) own contribution is encouraged or, alternatively, a buffer mechanism could be designed. For example, to address the risk of reversals, Acre agreed to retire one additional tCO2e for each tCO2e that is being compensated by the REM Programme as its own contribution.
The ER Program should be designed and implemented to prevent and minimize reversal risk and address the long-term sustainability of the ERs. It should undertake an assessment of the anthropogenic and natural risk of reversals that might affect ERs during the term of the ERPA and, as feasible, after the end of the term. It must also demonstrate how effective ER Program design and implementation will mitigate significant risk of reversals and address the sustainability of ERs.
During the term of the ERPA, the ER Program must also either deposit ERs into an ER Program-specific buffer managed by the Carbon Fund (the “ER Program CF Buffer”), or have in place a reversal management mechanism that is substantially equivalent to the assurance provided by the Carbon Fund buffer approach. The ER Program must monitor and report major emissions that could lead to reversals of ERs transferred to the Carbon Fund during the term of the ERPA. The ER Program must also have in place a reversal management mechanism to address the risk of reversals after the term of the ERPA.
The amount of “Buffer ERs” to be deposited into the ER Program’s chosen buffer mechanism is not yet decided and specified in the MF.
Developing Country Programmes
If the deforestation rate for a given year is higher than the reference emission level, the government will not receive funds that year and will have to compensate for those emissions the following year.
Voluntary Carbon Standards
VCS REDD+ project proponents are required to use the AFOLU Non-Permanence Risk Tool to determine the volume of buffer credits that must be deposited into the AFOLU pooled buffer account. This account holds non-tradable buffer credits which may be used to cover any reversals associated with AFOLU projects to ensure the permanence of credits issued. A 10–60% buffer is required, as determined through the application of the AFOLU Non-Permanence Risk Tool. The tool also allows projects to demonstrate where they have reduced risk by implementing risk mitigation strategies. Projects that demonstrate their longevity, sustainability and ability to mitigate risks are eligible for release of buffer credits from the AFOLU pooled buffer account.
Jurisdictional REDD+ programmes seeking to issue credits must assess risk categories such as political/governance, programme design and natural risk, using the JNR Non-Permanence Risk Tool. The tool also allows jurisdictions to demonstrate where they have reduced risk by implementing risk mitigation strategies. The overall risk rating will then determine the volume of buffer credits to be deposited in a jurisdictional pooled buffer account. This account will hold non-tradable buffer credits to cover any reversals associated with jurisdictional programmes and nested projects. Jurisdictional programmes that demonstrate their longevity, sustainability and ability to mitigate risks are eligible for release of buffer credits from the jurisdictional pooled buffer account. Nested projects use the AFOLU Non-Permanence Risk Tool to determine their non-permanence risk and the volume of buffer credits which are also deposited into the jurisdictional pooled buffer account.
Permanence is defined as 100 years (following the last issuance of offset credits for emissions reductions or removals from the project); therefore monitoring and verification activities must be maintained for at least 125 years (i.e. 100 years of monitoring and verification beyond the 25 year crediting period). The protocol allows for ton year accounting which recognises the temporal value of carbon out of the atmosphere. Credits are issued based on the portion of the 100-year permanence period landowners are able to secure the sequestered carbon. Recognizing that both natural and human-induced reversals can occur, forest owners are required to identify and quantify the risk of reversals from different agents based on project-specific circumstances. The resulting risk rating determines the quantity of Mexican Climate Reserve Tons (MCRTs) that the project must contribute to the Reserve Buffer Pool to insure against reversals. Unintentional reversals are mitigated through the Climate Action Reserve’s buffer account (i.e., MCRTs are retired from the buffer account to cover such reversals). Intentional reversals (e.g., those caused by overharvesting for period in which the credits are secured through contractual agreement) must be compensated for by the project owner through the required retirement of MCRTs.
A 20% compliance reserve contribution is required across all Gold Standard Land Use and Forestry projects to be allocated to the Gold Standard Compliance Reserve. In the event of non-compliance or a temporary disturbance affecting the total carbon stock of the project, the buffer pool will be used the balance any permanence issues or reversal risks.
Projects are required to submit a risk assessment at least every 5 years to the Plan Vivo Foundation. The risk assessment should outline risks to the delivery of ecosystem services, the sustainability of project interventions, and which mitigation measures are put in place. Risk management is applied throughout the standard, most notably through the different safeguards measures, but also in the technical specifications of the project. The technical specifications identify potential risks and prescribe risk management and mitigation measures such as patrolling requirements, fire management plans, irrigation, pest control, and plant density checks. For climate services a risk buffer of at least 10% and a maximum of 30% should be set aside to ensure permanence. This is managed as a pooled non-permanence buffer across the Plan Vivo project portfolio.
Projects should be designed and implemented to promote permanent conservation of carbon stocks and biodiversity. The aim is to build resilient conservation areas that are well governed, locally supported and aligned to economic development.
The Natural Forest Standard requires a fixed 10% risk buffer contribution to be allocated to the Natural Forest Standard Risk Buffer Reserve. This contribution is subject to annual performance-based review to ensure the appropriateness of the contribution level over time and to apply any adjustments deemed appropriate based on the nature of the risk of non-permanence in the project area. 10% is the minimum contribution for project years 1-5.
In the event of unintentional or catastrophic reversals, the Risk Buffer Reserve will be used to compensate for these occurrences. However, the project developer must compensate for intentional reversals (e.g. land clearing) and these shall not be replaced from the Risk Buffer Reserve. These reversals will be deducted from the annual project carbon quantifications prior to credit issuance.
Developed Country Programmes
Permanence is defined as 100 years (following the last issuance of offset credits for emissions reductions or removals from the project); therefore monitoring and verification activities must be maintained for at least 125 years (i.e. 100 years of monitoring and verification beyond the 25 year crediting period). Recognizing that both natural and human-induced reversals can occur, forest owners are required to identify and quantify the risk of reversals from different agents based on project-specific circumstances. The resulting risk rating determines the quantity of ARB offset credits that the project must contribute to the Reserve Buffer Pool to insure against reversals. Unintentional reversals are mitigated through the ARB buffer account (i.e., ARB offset credits are retired from the buffer account to cover such reversals). Intentional reversals (e.g., those caused by overharvesting) must be compensated for by the project owner through the retirement of ARB offset credits (not buffer pool credits), pursuant to the regulatory rules.
CFI sequestration projects are subject to permanence obligations (emissions avoidance activities are not) that seek to sequester carbon for 100 years. A risk buffer contribution of 5% is applied to all sequestration projects – i.e. 95 ACCUs are issued for every 100 tonnes of carbon sequestered. A project proponent is required to notify the Clean Energy Regulator of a reversal of carbon sequestration, if natural and human-caused disturbance results in reversal on at least 5% of the project area(s) or 50 hectares, whichever area is smaller. Proponents do not have to return credits in the event of a natural disturbance but will not receive further credits until the pre-disturbance carbon stocks are restored. Sequestration projects must be monitored throughout the 100 year permanence obligation period.