The draft standard, which falls under Article 6 of the Paris Agreement, also known as the Paris Agreement Crediting Mechanism (PACM), was published with a call for written input by the UN Framework Convention on Climate Change (UNFCCC) on 15 July. Submissions for the standard, titled Addressing non-permanence / reversal, closed on Monday.
The International Emissions Trading Association is the latest to express concern over the draft standard, saying that it contains “a number of serious issues, including misrepresentations, ambiguities, incorrect definitions, false dichotomies, and a lack of clear structure.
“If approved in its current form, the standard would effectively exclude all land-based (carbon removal) activities from the PACM by imposing unrealistic monitoring requirements and durability provisions,” IETA said in a statement on Tuesday.
“This risks redirecting climate finance away from nature-based solutions at a critical moment, undermining our collective capacity to achieve global climate targets,” it added.
Article 6 of the Paris Agreement governs how international carbon trading can be used to help countries meet their climate targets, or Nationally Determined Contributions. The latest draft standard is meant to address the risk of reversals or non-permanence of carbon projects, ensuring that carbon removals are resilient and of high-integrity.
To do this, the draft standard outlines stringent rules for how many years carbon project developers should conduct monitoring, reporting and verification activities to ensure that the carbon they are sequestering or removing from the atmosphere is protected against risks like land use change or deforestation.
However, the Methodological Expert Panel (MEP), a group of experts tasked with developing standards and guidelines for the PACM, had not been able to agree on the structure and scope of regulations.
As such, two options were included in the draft standard – the first, backed by most of the MEP’s 16 members, proposed that certain requirements be applied to carbon project participants and other requirements applied to the methodologies.
Only one MEP member backed a second option, which is meant to “allow more equal participation opportunity to both technological and land-based activity types” without undermining the credibility of the carbon credits.
Many observers say that while the second option is preferable to the first, both would severely disadvantage efforts to advance decarbonisation using nature-based projects. More than a hundred organisations submitted responses to the UNFCCC’s call for input, including the environment ministries of Brazil, Peru, Nigeria and other developing countries.
Gabriel Labbate, head of the UN Environment Programme’s climate mitigation unit wrote on LinkedIn that the proposed standard imposes “conditions so stringent that they risk rendering nature-based mitigation – particularly forest-based projects – practically unviable.”
Labbate, who is also a member of the core expert panel for the Integrity Council for Voluntary Carbon Markets (ICVCM), also expressed concern that Article 6 risks becoming ineffective as a climate response, with the draft standard suppressing participation in global carbon markets.
Indigenous, local communities disadvantaged
Moriz Vohrer, a land use and biochar expert who is also a senior technical advisor to the UNFCCC on carbon removals under Article 6, explained on LinkedIn that the first option in the draft standard requires project proponents to prove that there is a less-than-5 per cent risk of their projects being reversed over a 100-year period, a requirement Vohrer described as “unrealistic for any land use project.”
Meanwhile, the second option would require at least 45 years of monitoring after the end of the crediting period, which would require nature-based projects to have lifetimes of a minimum of 60 years.
“No investor will commit to such long timelines,” Vohrer said on LinkedIn. “Most funding cycles, even from development banks, are capped at 20 to 30 years.”
Charlotte Streck, co-founder and director of climate advisory company Climate Focus, argued that the first option in particular was unaligned with international law, climate policy and principles of equity.
“The (first option) suffers from a stark sectoral bias which results in a hardly disguised effort to ban nature-based, conventional Carbon Dioxide Removal (CDR) projects from Article 6.4,” she wrote on LinkedIn.
“This is highly problematic considering that nature-based CDR is essential to meet the goals of the Paris Agreement… and (are) chronically underfunded.”
On top of that, the draft introduces harsh penalties for late reporting, putting community and smallholder projects at a disadvantage as they might have seasonal, logistical or consensus-related barriers to timely reporting, Vohrer said.
Streck added that banning nature-based solutions from Article 6 would all but eliminate Indigenous peoples and local communities from the benefits of carbon trading, as well as hurt the poorest of countries.
By contrast, non-profit watchdog Carbon Markets Watch supported the first option and said that the second one, which other observers have described as being preferrable, “contains many shortcomings and inconsistencies with existing guidance, and would not be able to address non-permanence and reversals in a way that is aligned with science.”
It argued that subjecting annual reversal reports to random spot-checks after the crediting period was insufficient. “Verification is a bare minimum requirement in carbon credit markets, and should happen frequently and consistently,” Carbon Market Watch said in its submission to the UNFCCC.
It also proposed minor changes to the first option, including a more definite minimum reporting period for carbon projects and consequences for incomplete reports.
