Alternative Approaches to Addressing the Risk of Non-Permanence in Afforestation and Reforestation Projects under the Clean Development Mechanism

Summary

This report examines alternative approaches for addressing reversals to inform ongoing UNFCCC discussions on (1) the effectiveness of various approaches in handling real-world reversal scenarios in ways that ensure net carbon balance and integrity of the A/R offsets; and (2) the economic and practical feasibility of various approaches, taking into account the costs and returns of A/R projects. It provides a conceptual basis for viewing the non-permanence issue, evaluating current approaches to address reversals and highlighting implications for policy and investment decisions. The key policy issues include: 

• Risk screening requirements for A/R projects. 
• Whether to issue credits incrementally over time (rather than all at the time of initial verification). 
• If credits are issued up front, whether to classify them as temporary or permanent in nature. 
• If permanent credits are issued, what replacement requirements should be considered when reversals occur? Should these requirements differ for unintentional reversals (caused by natural disturbances) and intentional reversals caused on purpose by project participants? 
• What risk management mechanisms should be put in place (if any) to ensure that projects can meet replacement requirements?