A question for the International Emissions Trading Association: “Why beholdest thou the mote that is in thy brother’s eye, but considerest not the beam that is in thine own eye?”
An interesting discussion is taking place in the REDD world between proponents of voluntary carbon markets and proponents of what they call “sovereign carbon credits”.
In this particular part of the discussion, one corner is occupied by the International Emissions Trading Association (IETA) and the other corner by the Coalition for Rainforest Nations (CfRN).
This post will look at IETA’s arguments and in another post, I’ll take a look at the Coalition for Rainforest Nations’ response to IETA’s critique.
Both sides are right to criticise the other. And both sides are wrong to pretend that “their” carbon credits are somehow better. Both sides are walking around with a Biblical beam in their eye while offering to remove the mote from the other’s eye.
Carbon markets were created in order that the fossil fuel industry could continue to profit from burning oil, gas, and coal for as long as possible.
IETA: REDD+ Results Units “are not market grade”
On 20 April 2023, IETA put out a White Paper titled, “Valuing REDD+ activities: key differences between market-based credits & results-based payments”.
IETA’s White Paper is a critique of the REDD.plus platform’s “REDD+ Results Units” (RRUs).
The REDD.plus platform was established by the Coalition for Rainforest Nations.
The RRUs are generated based on the reports that countries send to the UNFCCC and which are available on the UNFCCC’s REDD+ Info Hub.
In March 2021, Kevin Conrad, the Executive Director of the Coalition for Rainforest Nations, signed a REDD deal with Papua New Guinea for 9 million RRUs. PNG generated these RRUs despite historically high rates of deforestation, by creating a Forest Reference Level that increases every year based on a extrapolation of the doubling of deforestation in the country between 2001 and 2013.
IETA writes that,
IETA members have expressed concern that marketing these results-based payments as carbon credits for use by corporate buyers or as Article 6.2 Internationally Transferred Mitigation Outcomes (ITMOs) has created confusion and may negatively affect the reputation of carbon credits from projects in key tropical forest countries which are subject to rigorous validation and verification. It could also potentially mislead many corporates and expose them to reputational risks if they don’t understand that the RRUs are not verified carbon credits that meet foundational thresholds that assure integrity and fungibility in markets (e.g., independent validation and verification for conformance with a standard, measures to avoid double counting and issuance, use of social safeguards, etc.) as set out by globally-recognised carbon crediting standards, and therefore should not be used to make offsetting claims.
IETA states that the “results reported on the UNFCCC REDD+ Info Hub, including RRUs, are not market grade and should not be treated as fungible carbon credits in the market . . .”
“It is clear,” IETA writes, “that the results reported on the hub are not verified carbon credits that can be transacted in global carbon markets.”
IETA argues that the Warsaw Framework and the Info Hub lay the framework for REDD+ programmes, but were not set up to function as carbon crediting standards or mechanisms.
IETA adds that the International Civil Aviation Organisation (ICAO) has approved eight crediting programmes to use in its Carbon Offsetting Scheme for International Aviation, but rejected REDD.plus for the scheme (in both 2020 and 2021 because “key elements of an emissions units programme . . . were not in place”).
Article 5 and the Warsaw Framework for REDD+
IETA notes that the UNFCCC Warsaw Framework for REDD+ encourages,
action to implement and support, including through results-based payments . . . policy approaches and positive incentives for activities relating to reducing emissions from deforestation and forest degradation, and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.
Article 5 of the Paris Agreement in turn refers to the Warsaw Framework. But, IETA argues, Article 5 “does not create a carbon trading mechanism”.
IETA argues that the results reported on the UNFCCC’s REDD+ Info Hub are not carbon credits because of the absence of the following:
robust independent third-party validation and verification for compliance with a standard;
comprehensive and standardised accounting (including baselines, leakage and uncertainty);
avoidance of double counting;
reversal risk mitigation; and
implementation of safeguards.
IETA points out that the units reported by countries on the UNFCCC REDD+ Info Hub are “assessed” but not “verified”. Assessment is defined under the Warsaw Framework as a “facilitative, non-intrusive, exchange of information”.
Verification would not be possible, IETA argues, because verification is carried out against requirements set out in a standard or methodology. The Warsaw Framework does not set out a standard or method.
Similarly, REDD.plus is not a carbon crediting standard - which is precisely why it was rejected from the CORSIA scheme.
RRUs are not carbon credits
Federica Bietta, Managing Director of the Coalition for Rainforest Nations, describes the carbon credits that Gabon is hoping to sell under the REDD.plus platform, as “sovereign carbon credits achieved under the United Nations Framework Convention on Climate Change (UNFCCC) Reducing Emissions from Deforestation and Forest Degradation (REDD+) mechanism.”
When I asked Dirk Nemitz, team leader of the Agriculture, Forestry and Other Land Use unit at the UNFCCC Secretariat, about this claim, he noted that the terms “REDD+ mechanism” and “credits” are not defined in the Warsaw Framework for REDD+ and that the UNFCCC Secretariat would therefore not use these terms.
Nemitz also said that,
“Receiving results-based payments for REDD+ actions in accordance with decision 9/CP.19 and Article 5.2 of the Paris Agreement does not require use of Article 6 in any way, as long as it does not involve the use of internationally transferred mitigation outcomes towards nationally determined contributions introduced in Article 6.2 nor of the mechanism introduced in Article 6.4 of the Paris Agreement.”
The Coalition for Rainforest Nation’s REDD.plus platform does not generate internationally transferred mitigation outcomes or ITMOs, which are the carbon credits under the UNFCCC.
But the voluntary carbon market is unregulated. While standards exist, such as those used by Verra, the Gold Standard, Plan Vivo, the Climate Action Reserve, or American Carbon Registry, there’s nothing to stop anyone from creating their own standard. ART Trees, for example. Or (perhaps) REDD.plus.
IETA exists to promote carbon markets not to address the climate crisis
In its White Paper, IETA carefully skips around the serious problems with voluntary carbon credits. Such as those exposed by The Guardian, Die Zeit, and SourceMaterial earlier this year. Not to mention the many other pieces of investigative journalism and academic research into the problems with REDD.
Instead, IETA refers to the Integrity Council for the Voluntary Carbon Market’s core carbon principles, that are supposed to be “a global benchmark for high-integrity carbon credits”. It also refers to the Voluntary Carbon Market Integrity Initiative, the Science Based Targets Initiative, and non-specified “others”, whose efforts will “define the parameters of rigorous corporate targets and claims”.
This is just wishful thinking on IETA’s part. Pretending that carbon markets can be regulated is nothing more than a smokescreen aimed at hiding the fact that carbon markets are completely unregulatable. As Larry Lohmann of The Cornerhouse pointed out in 2009, “attempts to regulate it will only entrench its status as a locus of international corruption and exploitation”.
The oil and gas companies that are so keen to buy carbon offsets are doing in order to legitimise their continued destruction.
Forest carbon offset projects have existed since 1989. These projects have been riddled with problems ever since. These problems are not going to go away through the creation of new principles, benchmarks, standards, or integrity initiatives.
The reality is that IETA is not even remotely interested in addressing the climate crisis.
IETA’s first meeting took place in 1999. That meeting took place in Shell’s headquarters.
IETA was created in order to promote carbon trading on behalf of its members, who include banks, carbon traders, consulting firms, project developers, and (of course) oil companies.
Every year, IETA is one of the largest trade associations at the UN climate meetings. At COP26, IETA had 103 delegates present. Three of those were from BP.
Murray Worthy from Global Witness told the BBC that,
“[IETA] is an association that has an enormous number of fossil fuel company as its members. Its agenda is driven by fossil fuel companies and serves the interests of fossil fuel companies.”
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Interesting to read the UNFCCC secretariat's position on this...I attended a CfRN session at an event in Singapore earlier this month where the CfRN slide deck referred to the credits with a slide titled: 'the first UNFCCC-certified credits are available'.
Of key concern is the term “ITMO” (Internationally Transferred Mitigation Outcomes).
Of course, to perform mitigation, a scenario must exist in which some operation (1) is able to mitigate some other operation (2). To complicate matters, “outcomes” is thrown into the mix, which implies that both mitigation 1 and mitigation 2 each have a measurable outcome. Then the third complication, which is that these two supposed mitigations can be exchanged across distance and perhaps time, for the International Transfer. A fallacy exists at every juncture here. It’s a shell game; you would have better luck at sports betting.
If you could peel back India, for example, and find another sub-continent under there yet undiscovered, you might reasonably sell offsets from that land. But, there being no undiscovered lands, the entire planet was already fully involved in the carbon cycle BEFORE fossil-fuel burning began, so that ARE NO possible sources of mitigation.