Forest Carbon Standards. a WWF Assessment Guide

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1 Forest Carbon Standards a WWF Assessment Guide

2 Contents Introduction WWF has been active in the forest carbon field since Foreword Introduction Background Purpose of the guide Assessment guidance: source material and basic parameters Contributing elements Background guidance documents Assessment framework and principles WWF criteria for assessing forest carbon standards requirements Module 1 Module 2 Module 3 Module 4 Module 5 Module 6 Foreword Credible carbon accounting Social and environmental impacts Validation and registration of project design Social and environmental performance Verification Registration and determination of carbon emission reductions WWF general criteria for assessing the design and application of standards Notice Green carbon guidebook The Green Carbon Guidebook, launched in 2008, can be seen as Vol. I of the current Assessment Guide. It sets out what an appropriate meta-standard framework (MSF) must encompass in terms of both technical and methodological elements and implementation procedures to guide project developers and investors. Those issues are identified for which adequate guidance exists and it is pointed out where to find it. Topics are discussed for which further development is encouraged. Finally, it describes how WWF is already testing and helping to contribute to this emerging guidance through two field-based pilot forest carbon projects. WWF has been active in the forest carbon field since It soon became clear that this work should not only involve WWF undertaking its own credible demonstration activities, but also efforts to improve the quality of forest carbon activities in general. Given the incertitude in carbon accounting for forests and the controversies around many offset projects, it was agreed that clear guidance was needed on what constitutes a high quality forest carbon activity in terms of accountability, climate benefit and social and environmental co-benefits. This resulted in the decision to work with existing and upcoming promising standard systems. In 2008 at the Convention on Biological Diversity conference in Bonn, the Green Carbon Guidebook was launched as initial WWF guidance on this subject. At the same time, WWF started to engage in a selected number of forest carbon activities around the globe, at project, landscape and national levels, testing different project types, methodologies, and ecosystems for the best suitable forest carbon approaches. These efforts are ongoing and the lessons learned inform our principles for high quality forest carbon standards. In 2010, WWF s engagement has developed further, through the creation of the Forest Carbon Standards Advisory Committee and the launch of more detailed guidance in the form of this current book. The guide will be useful for three main target audiences: those involved in developing forest carbon standards, those involved in planning forest carbon projects, and investors wishing to sponsor forest carbon projects or buy carbon credits that are credible and low-risk. The guidance is based on seven principles that credible forest carbon standards would adhere to. These are: Credible carbon accounting; Assessing social and environmental impacts and avoiding adverse effects on communities and the environment; Independent validation of the project design and monitoring the work of the validation bodies; Assessing social and environmental performance against globally acceptable principles; Independent verification of the social and environmental project performance and the achieved GHG emission reductions; Registration of carbon emission reductions to avoid double counting; and High quality design and application of the standard itself and its creditation systems. The process of defining principles and criteria was guided by members of the WWF Forest Carbon Standards Advisory Committee, an expert panel that has been created to continually review forest carbon standards, and that will be officially launched alongside with this guide. The committee will further develop the guide based on experience in the field and would welcome feedback from third parties based on its use. Finally, many thanks to all those involved in the development of this guide. Guénola Kahlert WWF Germany Frankfurt May a WWF guide for assessing forest carbon standards 3

3 Introduction Background Forests are now widely recognised as playing a key role in regulating global carbon cycles, comprising as they do the largest terrestrial store of carbon. Deforestation and forest degradation mostly in the tropics are responsible for about 15 per cent of global greenhouse gas (GHG) emissions. 1 Managing forest carbon stocks is therefore a critical component of any comprehensive approach to keeping the rise in global temperature well below 2 degrees Celsius. Concerns about the climate change implications of deforestation have led to the development of numerous initiatives to try and harness the GHG reduction potential of efforts to reduce emissions from deforestation and forest degradation in developing countries (REDD). Some of these initiatives have focussed on developing projects for the voluntary carbon market. This market has developed over recent years as more and more companies, governments, organisations and the general public are willing to offset their climate footprint through the funding of projects, including forest projects which reduce GHG emissions. 2 Even the inconclusive results of the United Nations Conference on Climate Change in Copenhagen do not appear to have negatively impacted the demand for forestry as a voluntary offset option. 3 Voluntary carbon offsets bring together the demand for compensation of emissions from energy use with investors and project proponents who can deliver carbon emission reduction credits from forest projects. There is also a range of voluntary forest carbon activities that are aiming to reduce carbon emissions but are not ultimately seeking crediting or offsetting. These usually take place at a project or landscape level. Alongside these voluntary carbon projects is an emerging set of national REDD programs and early actions to support the development of national REDD programs. In the context of the international climate negotiations, the concept of REDD has been expanded (and renamed REDD-plus) to address not only deforestation and forest degradation, but also the conservation of forest carbon stocks, the sustainable management of forests, and the enhancement of forest carbon stocks. While the Copenhagen conference did not produce an international agreement on the post-2012 climate deal, it did move forward on developing REDD-plus. Similar issues arise in the implementation of both individual (voluntary) REDD projects and national REDD-plus programs. The main issues relate to leakage (if the emission reduction activities in one place trigger emissions elsewhere), permanence (as the carbon sequestered can be released later if the forests are logged, burned or succumb to disease) and additionality (if the forest project would have happened anyway, without the carbon financing). The design and implementation of REDD activities, whether on an individual or national level, will need to address these issues and specific safeguards will be needed to avoid negative social and environmental impacts from these REDD actions and ensure that they yield net positive reductions of GHG emissions. In the context of the United Nations Framework Convention on Climate Change (UNFCCC), the proposal for implementing REDD-plus within national programs has been viewed as pivotal in addressing risks of leakage and additionality. Implementation of such programs is vital in the future to ensure that emissions from deforestation and forest degradation are addressed at scale and to avoid the risks of displacing emissions, or in this case forest loss, from one place to another. In order to address the potential shortcomings of forest carbon projects and strengthen the credibility of the voluntary forest carbon market, a number of different standards has been developed in recent years. These standards set (more or less rigid) rules for carbon accounting methodologies and for the associated project impacts on rural livelihood and natural ecosystems. As a result, there is a growing need for a generally agreed framework which provides evidence and confidence that carbon benefits claimed by different standard initiatives deliver real, additional and permanent reduction of emissions. A plethora of different carbon standards exists today. A general framework needs to be developed, to assess the credibility and effectiveness of these standards. Through its work on forest carbon standards, WWF aims to ensure that forest carbon activities of all kinds result in climate mitigation benefits and are carried out in ways that ensure the integrity of existing forests, protect biodiversity and promote a range of other environmental and social values, including clean water, poverty alleviation and respect for the rights of indigenous peoples and other local communities. 1 Estimates vary on this. In the 1990s, the Intergovernmental Panel on Climate Change produced a figure of 20 per cent while more recent estimates by other researchers range from about 12 to 25 per cent. 2 See State of the Forest Carbon Markets See The forest carbon offsetting report a WWF guide for assessing forest carbon standards 5

4 Introduction Purpose of this document This guide has been designed to apply to standard systems for voluntary forest carbon projects. It can also be used to inform the development of rules for compliance-related forest carbon activities. This guide presents the WWF framework for assessing forest carbon standards. It represents WWF minimum requirements, drawn from existing positive examples and our own best practice experience. The guidance is intended to apply to standards used to design, validate and verify voluntary activities, such as early action initiatives under REDD-plus and voluntary forest carbon projects. This guide does not present a new forest carbon standard. Rather, it draws on a number of existing standards and related initiatives to propose a set of minimum requirements for effective standard systems. The assessment criteria are informed by and consistent with WWF s body of work on voluntary standards for aquaculture, agriculture, and forest commodities. The advice and criteria set out in this guide, and in the earlier Green Carbon Guidebook, form the basis of decision-making by a new WWF body the WWF Forest Carbon Standards Advisory Committee. This is an advisory panel composed of internal and external experts, tasked with evaluating existing and emerging forest carbon standards. We also expect these guidelines to help inform the development of rules for compliance activities (including forest carbon activities used to meet international, national or sub-national GHG reduction objectives). Finally, they can also inform approaches to scale up REDD activities to the national level. Such programs, however, will be subject to policies, regulations and legislation that are beyond the scope of this guide. The guidance in this document builds on a 2008 WWF publication, entitled Green Carbon Guidebook, which set out what an appropriate forest carbon standard would need to encompass and what kinds of social and environmental safeguards would need to be in place. This current document now aims to provide more detailed guidance in terms of a set of criteria (based on minimum requirements) which would need to be fulfilled by credible voluntary forest carbon standards. These criteria are presented in the following chapters together with the rationale for including them and setting the threshold levels of each one. The guide also provides criteria for processes to be followed in the development of standards and the governance procedures of standard initiatives. WWF s Forest Carbon Standards Advisory Committee At Carbon Expo in May 2010 WWF launched its Forest Carbon Standards Advisory Committee an expert forum comprising WWF and external experts on certification, standard systems, and issues related to climate change and forest carbon. The committee has been established with the aim of providing independent and reliable guidance to the broader community of practice, as well as to the WWF network itself on existing and emerging standards for forest carbon projects. The committee will assess and evaluate the quality of these standards on a continuing basis. Another element of its work is to engage with standards initiatives in order to improve their standards. Much of WWF s expertise and decision-making results from experience with the growing number of forest carbon demonstration projects around the world. This current document, as well as WWF s earlier Green Carbon Guidebook, provide the set of principles and criteria against which the standards are being measured. For more information on the committee, visit The principles and criteria for forest carbon standards described in this document are expected to be of interest to a wide range of players in the forest carbon market, including: Developers of standard initiatives seeking guidance on how to best design or improve a forest carbon standard system and its governance processes to meet WWF compliant quality criteria; Project proponents trying to identify the best standards available for the design of their projects; and Investors seeking opportunities to sponsor projects or potential buyers of credits from forest carbon projects with a high level of credibility, and wanting to avoid damage to their reputation from any negative impacts of these projects on communities or ecosystems. This document has been developed with these interests in mind and draws on key elements from existing guidance to create an assessment framework for credible claims from forest carbon activities. 6 a WWF guide for assessing forest carbon standards 7

5 A publication of the WWF/World Bank Global Forest Alliance July 2006 Climate, Community and Biodiversity Project Design Standards SECOND EDITION Voluntary Carbon Standard Guidance for Agriculture, Forestry and Other Land Use Projects VCS Association VCS Guidance for Agriculture, Forestry and Other Land Use Projects Contents July 2009 WWF Global Climate Policy Emily Brickell Climate & Forests Officer Forests Programme WWF-UK Tel: 0044 (0) Executive summary 4 The background 5 Where we are now 5 inclusion of REDD in the post-2012 climate agreement 6 Phasing a national-level REDD approach 7 Financing of REDD 8 Scope of forest-carbon activities to be included 8 Delivering robust climate benefits 9 Delivering broader social and environmental objectives 10 annex a : Preliminary draft of REDD national phasing IndIgenous PeoPles and ConservatIon: WWF statement of PrInCIPles WWF GlOBal ClimaTE POliCy 1 A WWF Position Paper 1 Assessment guidance: source material and basic parameters Contributing elements In setting or assessing forest carbon standards, a range of different requirements will need to be considered in order to address the multi-faceted aspects of forest carbon projects. This assessment guide therefore incorporates the following elements: General rules for standard-setting which were developed by the International Social and Environmental Labelling Alliance and the International Organization for Standardization (ISO) in order to achieve compliance with World Trade Organization rules for avoiding technical barriers to international trade; Directives available from international standards and best practice experience from the work of validation and verification bodies, including knowledge gained over recent years from certification of forest management; Credible standards for forest management practices which ensure the social and environmental integrity of forest operations; Guidance for the avoidance of detrimental social and environmental impacts from forest carbon projects developed by a wide range of organisations and institutions including among others the international finance institutions, the High Conservation Value Network and WWF itself; Appropriate ways to ensure that the benefits and opportunity costs of forest carbon measures are equitably shared between project proponents, local people, investors and other involved parties; and Tools and methodologies for ensuring credible carbon accounting. Background guidance documents Numerous existing initiatives and instruments already address the issues involved in the design and implementation of forest carbon projects and broader activities related to forest conservation, management and enhancement of carbon stocks. WWF has been participating in many of these initiatives. Since there would be little value in attempting to reinvent the thinking and guidance provided by these initiatives, the assessment criteria set out in this document are based on, or take into account, the following guidance documents: 4 Principles for High Conservation Value Forests (HCVF) The High Conservation Resource Network was established to provide guidance on the identification and management of areas and ecosystems that deliver crucial social and ecological services. This concept aims to OOOO ONSERVATION HIGH CON VALUE RESTSSS FORESTS: S The concept in theory and practice maintain these values and can be used in the design and implementation phases of forest carbon projects. The concept is integrated into this guide in order to evaluate if standards include methods to safeguard ecosystems with high conservation values. UPGRADE Gold Standard (GS) The Gold Standard was initiated by WWF in conjunction with a wide range of environmental organisations, businesses and governments. The Gold Standard is restricted to renewable energy and energy efficiency projects and does not apply to any land-use projects such as forestry. However, it does incorporate a set of basic principles and related rules governing the involvement of interested parties and stakeholders in the project design. These are considered relevant for the development of forest carbon projects and are therefore incorporated in this guide. Voluntary Carbon Standard (VCS AFOLU) The VCS has been developed by The Climate Group, the International Emissions Trading Association, the World Business Council for Sustainable Development and a range of other business, governmental and nongovernmental organisations. VCS includes a range of innovative tools to deal with problems of land-use-based carbon projects (termed Agriculture, Forestry and Other Land Uses (AFOLU)). These tools are therefore incorporated into this current document. WWF REDD-plus guiding principles Principles such as benefit-sharing, participation, recognition of rights to the land and the carbon stocks, sustainable development benefits, protection of forest biodiversity and ecosystem services provide the basis for programs and projects under REDD, including government-led programs. These principles advocated by WWF are considered in this guide and are included in the relevant criteria. Forest Certification Assessment Guide (FCAG) A FRAMEWORK FOR ASSESSING CREDIBLE FOREST CERTIFICATION SYSTEMS / SCHEMES Forest Certification Assessment Guide (FCAG) This document was developed by WWF in close collaboration with the World Bank. It includes the necessary elements for credible certification of forest management and the rules for standard-setting and governance of certification systems. The principles reflect the values that WWF adheres to in its forest program and are therefore central to WWF s position with regard to forest carbon. Position PaPer WWF position on forests and climate change mitigation WWF policy on forests and climate change mitigation This document focuses on WWF s position in relation to REDD in the UNFCCC framework, including financing, scale of implementation and safeguards to ensure that REDD delivers on climate, biodiversity and social benefits. Climate, Community and Biodiversity Alliance (CCBA) The Climate Community and Biodiversity project design standards have been developed by the Climate, Community and Biodiversity Alliance, a partnership of research institutions, corporations and NGOs. These standards evaluate land-based carbon mitigation projects in the early stages of development against a set of criteria to assess the extent to which the projects are simultaneously addressing climate change, supporting local communities and conserving biodiversity. They are considered here as a reference standard for evaluating the social and environmental benefits from forest carbon projects. 4 Websites and links to further information on these documents are provided at the end of this guide. WWF policy on indigenous peoples Indigenous peoples are the custodians of many pristine forests but are often the first victims of inappropriate development in forest regions. WWF has defined its policy commitments to indigenous peoples and their rights. As forest carbon projects are increasingly planned in regions with indigenous populations, they need to safeguard the well-being of these populations. The basic elements of the WWF position paper have been taken into consideration in developing this assessment guide. Relevant guidance available from UN climate change bodies A number of key documents have been developed by institutions established under the United Nations Framework Convention on Climate Change (UNFCCC), including the Intergovernmental Panel on Climate Change (IPCC) and the Clean Development Mechanism (CDM). Relevant documents from these bodies have been used in the development of this guide. 8 a WWF guide for assessing forest carbon standards 9

6 Assessment guidance: source material and basic parameters Assessment framework and principles The assessment criteria presented in the following sections are based on an overall set of guiding principles and a series of modules which were first introduced in the Green Carbon Guidebook. The principles, outlined in Box underneath, incorporate the different elements required of a forest carbon standard system, and the desired manner in which a credible and effective standard system would address these elements. The modules represent the key elements of a forest carbon standard (and therefore the key elements to look at when assessing these standards). WWF s principles for credible forest carbon standards Principle 1 Credible carbon accounting the standard system applies best available knowledge and conservative estimates for the calculation of GHG emission reduction benefits accruing from the project in order to ensure that credits are real, additional and permanent. The standard-setting and assessment modules are set out within a sequential framework (Figure 1), following the typical cycle of a forest carbon project. Forest carbon standard systems, and their assessment, would need to cover this entire cycle, by applying the different modules at the appropriate points. The subsequent guidance presented in this document follows the same sequence as outlined here. This guide follows the typical lifecycle of a forest carbon project, and outlines the issues that need to be examined at each stage whether for standard-setting or assessment. Principle 2 Social and environmental impacts the standard system requires the assessment of social and environmental project impacts and includes a mechanism for avoiding adverse effects on communities and the environment. Principle 3 Validation and registration of project design the standard system requires independent validation of the project design and includes mechanisms for monitoring the work of validation bodies. Fig. 1: Sequence of a forest carbon project and application points of modules that constitute a high quality standard Principle 4 Social and environmental performance the standard system ensures that the social and environmental safeguards included in the project design phase are being followed through during project implementation. Idea Design Registration Social and Environmental Performance Verification Issuance of Carbon Credits Social and Environmental Performance Verification Principle 5 Verification the standard system requires independent verification of the social and environmental project performance and the achieved GHG emission reductions. Module 1 and 2 Project Design Phase Module 3 Module 4 Module 5 Module 6 Module 4 Module 5 Project Implementation Phase Principle 6 Registration and determination of carbon emission reductions registration requirements under the standard system ensure that credits are unique and avoid double counting. Principle 7 High quality design and application of the standard itself and its creditation systems. in addition to its requirements for high quality project design, implementation, validation and verification, the standard system and its creditation systems are themselves designed according to recognised quality criteria, to ensure strong credibility and effectiveness. Module 1 = Carbon accounting Module 2 = Social and environmental impacts Module 3 = Validation and registration of project design Module 4 = Social and environmental performance Module 5 = Verification Module 6 = Registration and determination of carbon credits Notes: Green steps = those activities carried out by the project proponents. Brown steps = those activities carried out by the surveillance and registration bodies 10 a WWF guide for assessing forest carbon standards 11

7 WWF criteria for assessing forest carbon standards requirements Module 1 Credible Carbon accounting This section sets out what a good standard should look like and what it should look for in a forest carbon project before stamping it with approval. Reliable methods for measuring, calculating and monitoring the emission reductions achieved by forest-related activities are critical in assessing the credibility of claims from forest carbon projects. Uncertainties still exist in these fields and the figures produced by the currently available methods are still estimates of the real amount of carbon stored or GHG released from forest ecosystems. Inventory methods for the measurement of carbon pools are steadily improving and further progress is expected to fill the remaining gaps in these methods. The guidance in this document takes into account the methodological achievements made but also considers the still prevailing deficits for a number of issues related to GHG reduction estimates. As with all estimation techniques, there is a need to find a balance between accuracy and cost. Obtaining precise figures will entail costly measurements and calculations. Standard systems for forest carbon projects therefore have to set out the level of accuracy and the level of cost and effort required from project proponents for carbon measurement and calculation. This guide outlines what is possible and what should be expected from standard systems, taking into account the currently existing approaches and methodologies for GHG accounting. Given the uncertainties that still exist, it is crucial that the standards use the best available knowledge for their estimates and apply a conservative approach for all values. A conservative approach ensures that carbon benefits are not overestimated. Accurate estimates of the real amount of GHG require consideration of a large number of issues which are further outlined below. The rationale for the choices made in this guide on each of these issues is given below together with the minimum requirements which should be met by the standard systems. As noted, this guide is designed to be used for voluntary projects; rules for compliance credits are likely to be different in some cases. Project-type-specific methodologies No universally applicable method exists that would allow accurate GHG calculations for all project types and all project situations. Projects designed to result in voluntary carbon credits would have more rigorous requirements than projects that don t, and compliance credits (outside the scope of this guide) would have even more rigorous requirements. Consequently, the methodologies need to be tailored to either clearly described project types or to individual projects. Based on the general rules for carbon accounting, many standards such as the VCS AFOLU or the CDM require project proponents to develop methodologies for specific project types. These provide the necessary detail on the level of accuracy to be applied in inventory of carbon stocks, the pools to be considered in baseline and project scenario or the applicable default values per project type. This should be covered by the standard through the following more specific criteria: The standard should have criteria for the development of project-type-specific or project-specific methodologies; criteria should include a peer review and approval process for new methodologies. Methodologies approved by the standard system should specify as a minimum the procedures for the inventory of carbon stocks before and after project implementation, applicable default values, methodology for the determination of the baseline scenario and the eligible carbon pools. The standard should apply a conservative approach for the selection of default values, inventory methodologies and assumptions made for baseline and project scenarios. As a minimum requirement for all values and methods used, the standard system should require adherence to the guidance included in IPCC publications for land-use projects. 5 Definition of baselines The determination of baseline scenarios is a crucial element for credible carbon accounting. Baseline scenarios are therefore required by many standards as they provide the entry point for calculating additional GHG benefits over and above the business as usual scenario. When baseline scenarios underestimate the carbon stored or emitted, the amount of emissions reductions or removals achievable in the project scenario is overestimated. Therefore, in order to correctly evaluate the additionality of the anticipated and achieved GHG benefits, the baseline scenario should be set on the basis of conservative assumptions and estimates. The standard should require the use of a conservative approach for the assumptions and estimation of parameters in the baseline scenario. Carbon pools There is considerable difference between the accuracy of measurements and estimates of different carbon pools in the forest ecosystem. Therefore, the standard should define which carbon pools should be measured for the baseline scenario and for the calculation of GHG benefits accruing from the project. Only pools which can be measured with sufficient confidence levels should be included in the GHG calculations. Suggested carbon pools to be considered are: Aboveground biomass Dead wood Litter Belowground biomass Soil carbon Soil carbon increases or decreases will depend to a large extent on soil type and management regime. It is conservative to exclude soil carbon for mineral soils, as gains most likely exist but are slow. For organic soils such as peat swamps, the amount of carbon saved from release or sequestered can be enormous and should therefore be accounted for. The measurement of soil carbon should be based on sound inventory methodologies as no reliable default value exists as yet for the carbon stored in these soils. Discussions are currently ongoing about whether it is feasible and how to credibly account for another carbon pool harvested wood products and their end-of-life emissions. There is also the question of whether to assign ownership of credits to producers or consumers. Until these issues are adequately addressed at the project level we recommend that the harvested wood product pool not be accounted for. The standard should apply a conservative approach to the exclusion or inclusion of carbon pools in the baseline scenario and project scenario. This would require estimation of all sources of carbon emissions resulting from the project. The standard should only consider carbon pools in project scenarios which can be measured or for which scientifically-based estimates exist IPCC Guidelines for National Greenhouse Gas Inventories, Volume 4 Agriculture, Forestry and Other Land Use 12 a WWF guide for assessing forest carbon standards 13

8 WWF Criteria for the Assessment of forest carbon projects Module 1 Credible Carbon accounting Project boundaries and project duration The delivery of carbon credits by forest projects is limited in space and time. Project area is normally defined as the area occupied by the forest delivering the carbon credits. However a project can have influence beyond this area and these off-site impacts have to be accounted for. This is often solved by spatially defining a leakage belt. A special and widely discussed feature of forest projects is the timeframe in which the carbon used for offsetting emissions can be realistically stored in the forest ecosystem. As a permanent storage is hardly achievable, forest projects should at least ensure storage over the foreseeable future. Some standards, such as the VCS AFOLU, require project durations of up to 100 years, depending on the project type. Others, such as the CDM, issue temporary credits which have to be replaced after the end of the project. The duration of forest carbon projects should therefore be realistically set to allow sufficient time for strong carbon sequestration and climate benefits on the one hand, yet with a limited timeframe for transactions between sellers and buyers, on the other hand. A timeframe of 30 years is considered to strike a good balance between these conflicting requirements for forest projects. The standard should include criteria for the definition of project boundaries and the area where off-site impacts may occur. Measured off-site impacts should include social, environmental and emissions leakage. Project timeframes should be defined in the standard and under no circumstances should project duration be less than 30 years. Leakage In calculating the GHG balance of forest carbon projects, off-site increases in GHG emissions need to be considered. If the project is responsible for increased GHG emissions beyond its boundaries, this will significantly reduce the net GHG benefits of the projects. The standard system should account for increases of GHG emissions stimulated by the project in areas outside the project boundaries. Conservative estimates and assumptions should be applied when calculating off-site emissions of GHG caused by project activities. Additionality The estimation of additionality is an important component of project quality and environmental integrity. Most standard systems rely on the tool developed by the CDM. 6 This is the most broadly accepted instrument for evaluating additionality and should therefore be applied by standard systems. Other methodologies that meet a similar level of credibility and precision may be considered in the future. Standard systems should ensure that additionality of projects is evaluated according to the additionality tool of the CDM. Permanence With regards to permanence, a distinction needs to be made between planned and unplanned losses of carbon. Normally, the carbon losses due to harvest of wood (planned losses) are taken into account either by averaging the carbon stock over various rotation cycles or by including the wood product pool in accounting (using Harvested Wood Products accounting). Another approach is applied by the CDM, which uses a system of temporary credits that have to be replaced after the project is terminated. As the calculation of the wood product pool is still problematic and thus not recommended by WWF, and the CDM concept proved unattractive for investors and buyers, it is recommended to adhere to the rotation-based model for the inclusion of management-induced carbon losses meaning that only the average level of stored carbon is accounted for. This model is used by the Carbon Fix Standard, for example. There are also various ways to address the problems of unplanned carbon losses in forest projects. Among these, buffer systems are the most commonly used. Some standard systems apply a default value of about 20 per cent which has to be booked as insurance for unforeseen losses. The VCS AFOLU standard applies a risk-based buffer system which sets the buffer level in the reserve account on the basis of defined risk factors. In any case, permanence should be dealt with in a conservative manner, making sure that carbon benefits are not overestimated. The standard system should be able to account for regular losses through harvest of timber. The standard should provide for an insurance system allowing the compensation of random losses of carbon through fire, storm, pest outbreaks or other events. Land eligibility for afforestation and reforestation (A/R) projects In the worst case, afforestation and reforestation projects could be implemented on land that was cleared of forest prior to the project, in anticipation of the funding available on the carbon market. Rules for the eligibility of land for A/R projects are therefore indispensable. Standards should include appropriate provisions for setting these time limits. CDM applies the 1989 rule to all its A/R projects, which stipulates that no forest can have been present within the project boundaries between 31 December 1989 and the start of the project activity. The timeframe of business planning rarely exceeds ten years, so this requirement can normally be considered an adequate safeguard against misuse. The standard should have rules to ensure that there are no perverse incentives for proponents to carry out A/R carbon projects on lands they have previously deforested. 6 CDM Executive Board, August 2008: Methodological Tool Tool for the demonstration and assessment of additionality (Version 05.2) 14 a WWF guide for assessing forest carbon standards 15

9 WWF Criteria for the Assessment of forest carbon projects Module 2 Social and environmental impacts A number of safeguards need to be considered in the design of forest carbon projects in order to avoid negative social and environmental impacts. This requires close and intensive consultation with all those whose rights and interests are affected by the activities of the project. It therefore follows that standard systems need to be able to effectively assess whether these safeguards are in place and are being adequately implemented. Assessment of social and environmental impacts Forest carbon projects generally operate in environments of high ecological and social complexity. It is therefore important that the project activities do not negatively impact rural livelihoods or the environment within the project s area of influence. Existing standards have taken different approaches to evaluating and classifying the social and environmental impacts of forest carbon projects. The Gold Standard, for example, applies a classification system with five grades from -2 (for serious negative impacts) to +2 (for considerable positive impacts). Beyond this, other systems such as the CCBA require forest carbon projects to result in net positive impacts; this is the approach that is recommended by WWF. Voluntary carbon activities (the focus of this guide) can be expected to go beyond what is required by law, and beyond a do-no-harm approach, to ensure that they result in net positive impacts on local livelihoods and ecosystems. There is a particular need for safeguards to be in place to respect the rights of indigenous peoples. There should be no inherent conflict between the project objectives and activities and the rights of indigenous and other traditional peoples within and outside the project boundaries. Project activities should be carried out in line with ILO Convention 169 and UNDRIP. 7 The standard system should: Have criteria that ensure that the project has a net positive social and environmental impact. Require project proponents to carry out an assessment of the potential social impacts resulting from project activities, both negative and beneficial, particularly taking into account statutory and customary rights to land, territories and resources, quality and quantity of employment, access to goods and services, social well-being and distribution of benefits accruing from the project. Require project proponents to carry out an assessment of the potential positive and adverse impacts on the environment particularly taking into account water regime, soil conditions and biodiversity. Require project proponents to mitigate risks and impacts which may occur as a result of project activities. Include drop-out criteria established that ensure that the project is not approved in the case of severe negative social and environmental impacts. Include drop-out criteria when there is no free, prior and informed consent from indigenous peoples to projects affecting their land, territory or livelihoods. Require project proponents to establish a monitoring plan for social and environmental impacts over the project duration. 7 See International Labour Organization (1989). Indigenous and Tribal Peoples Convention. Convention No and United Nations (2007). United Nations Declaration on the Rights of Indigenous Peoples a WWF guide for assessing forest carbon standards 17

10 WWF Criteria for the Assessment of forest carbon projects Module 2 Social and environmental impacts Consultation, grievance mechanism, transparency The relevance, effectiveness and sustainability of forest carbon projects can be considerably improved by ensuring adequate consultation with rights holders and stakeholders. Input from this consultation process should contribute to: Enhancing knowledge on the social and environmental situation in the project area during project design; Providing information on potential negative impacts of the project activities on social and environmental High Conservation Values; Identifying possible approaches for avoiding, mitigating or compensating for negative impacts induced by project activities; Avoiding or significantly reducing conflicts arising from the project activities; and Ensuring the free, prior and informed consent from indigenous peoples to projects affecting them. Due to the conflictual nature of many forest carbon projects, standard systems should set criteria to ensure that the results of consultations with rights holders and stakeholders are taken into account throughout the project design phase. Participation from interested parties requires that relevant information is available in the public domain and that rights holders and stakeholders are actively made aware of when and where they have access to this information. Throughout the project design phase the project proponent should maintain the opportunity for rights holders and stakeholders to raise concerns or provide comments. The grievance mechanism to be established by the project should allow for the impartial handling of complaints. The grievance mechanism should be independent from the project proponent organisation. The standard should: Include guidance about how to go about identifying legitimate and appropriate representatives and should have provisions that consultation is carried out with appropriate representatives of rights holder and stakeholder groups. Require that the project s consultation process address the needs of indigenous peoples and be designed r to ensure that activities are based on the free, prior and informed consent of affected indigenous peoples. Require project proponents to undertake proactive and culturally appropriate consultation with rights holders and stakeholders. Meetings should be held with these groups commensurate with the scale, intensity and complexity of the project. Require project proponents to provide the public with, at a minimum, the project design document translated into the local language(s), a map with the delineation of the project area and information on project impacts on the identified High Conservation Values. Ensure that rights holders and stakeholders comments are considered in the project design. Require project proponents to establish a grievance mechanism which allows affected rights holders and stakeholders to bring forward their case to an independent third party. Ensure that comments and complaints are answered in a timely way and within a defined timeframe. Identification of High Conservation Values WWF strongly supports the application of the High Conservation Value (HCV) concept over the lifecycle of forest carbon projects. This would entail the development of safeguards to ensure that implementation does not destroy or threaten to destroy important natural ecosystems. The standard should: Require project proponents to identify HCV areas and provide an analysis of potential project impacts on HCVs inside the project area or beyond (as a result of leakage). Set rules for the determination of a management regime appropriate to maintain or enhance any identified High Conservation Values inside the project s area of influence. Long-term viability Project cycles for forest projects differ from other sectors as the planning horizon can extend into several decades. In order to achieve sustainable forest management, forest conservation or enhancement of carbon stocks, and the anticipated climate, social and environmental benefits, sufficient resources need to be available as a guarantee for the long-term project viability. The standard system should require project proponents to demonstrate long-term financial viability. The standard should require that sufficient financial resources are available for the disbursement of funds to local people for compensation or mitigation measures for the project duration. The standard system should have criteria to ensure that sufficient human and technical resources are available for the project duration. Criteria should be set by the standard system to ensure that the management or conservation regime is viable and sustainable for the duration of the project. Legal compliance Standard systems need to ensure that project proponent organisations have all the necessary legal rights of the land and/or the resources on the land to pursue the activities outlined in the project design. More important still is the ownership of rights to the carbon stocks on the land to which the project proponents should have undeniable rights. In addition, the project should be compliant with all applicable laws of the country where the project is located. The standard system should require compliance with all applicable laws, the availability of all necessary approvals from local authorities before the project begins, and measures to prevent illegal activities in the project zone. The standard system should include criteria to ensure that the project proponents have legal rights to the land and the carbon on the land which is covered by the project activities. The standard system should require project proponents to enter into a legally enforceable agreement with affected groups or individuals on measures for mitigation or compensation, if any. 18 a WWF guide for assessing forest carbon standards 19

11 WWF Criteria for the Assessment of forest carbon projects Module 3 Validation and registration of project design Validation of the project design and anticipated emission reductions It is good practice for standard systems to validate a project s anticipated GHG benefits prior to the start of the project activities. This can ensure that the project is not based on unrealistic assumptions which could jeopardise the financial basis of the project. Standards also need to validate, via independent third parties, the social and environmental impacts assumed by the project proponents, in order to avoid the implementation of any activities that would have detrimental effects on local ecology and/or communities. The standard system should therefore employ rigorous third-party control of all the elements of the project design phase. The bodies involved in the validation of project design should follow clear standards which ensure their independence and the quality of their work. The standard system should require independent third-party validation of the project design against the requirements for carbon accounting and social and environmental impact assessment in the standard. Validation procedures under the standard system should require field visits to the project area under evaluation. The standard system should set criteria to ensure that validation bodies undertake proactive and culturally appropriate external consultation as part of the validation process. The standard system should require validation bodies to make key results of their assessments publicly available, preferably by posting information on the Internet and making the information available locally in an easily accessible form. The validation bodies should also use appropriate procedures to take rights holders and stakeholders comments into account in the decision-making process for validation of project design. Registration requirements for the project design Normally the certification/validation process leads to a registration of the project with the certification/validation bodies. In the case of climate standards this task is often performed by the standard systems themselves after successful validation. This is at least meaningful for all standard systems which issue credits, as registration is the basis for the issuance of carbon credits through the system. The standard system should have clear rules for the registration of projects after successful validation. Accreditation of validation bodies Accreditation is a key instrument applied in many fields including certification of forest management, to supervise the work of validation bodies and provide an additional level of assurance that the requirements for independence and performance of validation bodies are met. It is critical that accreditation is granted for the specific standard against which the validation takes place. Only in this case accreditation bodies carry out surveillance against the specific requirements of the standard system. Validation bodies should be accredited for the respective standard system. Accreditation of validation bodies should follow ISO standard The accreditation body should be affiliated with the International Accreditation Forum (IAF) and the International Social and Environmental Accreditation and Labelling Alliance (ISEAL). Accreditation requirements should specify the evaluation and surveillance intensity to be applied by validation bodies. 20 a WWF guide for assessing forest carbon standards 21

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