Integrity in carbon markets

• Free and prior informed consent of local communities
• Respect for human rights
• Fair benefit sharing
• Empowering local communities

Protecting local communities and ensuring they benefit from carbon projects

To achieve a just climate transition, it’s vital that carbon emission reduction/removal projects respect and protect local communities and involve them in the benefits carbon projects bring.

Key considerations

• Protecting human rights, particularly in relation to existing use of land earmarked for the project and surrounding land.
• Free prior informed consent (FPIC) – vital as part of respecting the rights of local people and promoting the long-term success of the project to minimise land rights disputes and emissions reversals and leakages.
• Considering, promoting and mitigating negative impacts on related environmental and social factors that could impact local communities eg biodiversity, access to water, and rights of way.

Benefit sharing

Where land belonging to or used by local people is used for carbon emissions reduction projects or an emissions reduction project could, even after mitigations, negatively impact communities, the benefits of the project should be shared with the local community.

Participants should consider whether a benefit-sharing proposal provides a tangible benefit to local communities. Sharing revenue and carbon credits fairly and meaningful reinvestment are usually appropriate alongside project‐specific and incidental benefits (eg ongoing use of land, shade, harvests).

• Climate action isn’t “at all costs” – projects should respect and ideally enhance the contribution to mitigating other key concerns eg biodiversity.
• Projects that actively promote co-benefits like empowerment of women.
• Used only alongside independent progress towards near-term emissions reduction targets.
• Additionality – ensuring that credits are only generated in respect of GHG emission reductions or removals that wouldn’t otherwise have occurred.

Making sure carbon credits generate real change

Many stakeholders are concerned that using carbon credits could hinder, delay or replace companies’ efforts to reduce greenhouse gas (GHG) emissions in their operations and supply chains.

To prevent the voluntary carbon markets just “moving emissions around” rather than reducing them, industry codes and standards (eg the VCMI Claims Code of Practice) require that users of carbon credits demonstrate independent progress on near-term emission reduction targets.

The idea is that carbon credits can be used to offset emissions that can’t currently be removed or to bridge gaps where implementing targets will take time but shouldn’t distract the entity or provide an excuse for not reducing emissions.

• Scientifically accurate basis for calculating tonnes of CO2e reduced/removed (carbon accounting).
• Third-party verification of carbon accounting.
• Regular review of scientific basis for calculating credits.
• Updates to carbon accounting if scientific knowledge progresses (for instance, if our understanding of soil carbon sequestration changes).
• Adjustment to carbon accounting if sequestered carbon is unexpectedly released.

What if emissions are later released?

If carbon credits are used to offset an entity’s emissions, but the carbon sequestration represented by those credits is later released into the atmosphere, those credits lose their integrity.

One way to mitigate this risk is to use buffer pools.

Projects contribute a percentage of credits to the buffer pool. If there are reversals, an equivalent number of credits is cancelled in the buffer pool, so the issued credits maintain validity.

But there are concerns about the sufficiency of buffer pools. So some carbon standards require the affected project to replenish the buffer pool.

For example, VERRA’s AFOLU buffer account deed requires project proponents to:

• report any reversals that happen during the crediting term or within 40 years of the start date of the project;
• if there’s an unavoidable reversal: credit the buffer pool with credits equivalent to the buffer pool credits cancelled after the reversal above the project’s previous buffer contributions; and
• if there’s an avoidable reversal: credit the buffer pool with credits equivalent to the buffer pool credits cancelled after the reversal.

• They have sufficient public information so users of the credits and others can assess the claims underlying the issuance.
• Robust system for creating and transferring credits to avoid double-counting.
• Used to make factual claims that aren’t misleading.