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The evolution of methodologies in carbon markets

Updated: Mar 15, 2023

This article is written in response to the latest Guardian articles here and here.

Authored by Pablo Fernandez & Alexis Massot

The carbon offsets market is continuously evolving and adapting to the latest scientific knowledge, lessons from the past and changing circumstances. The Clean Development Mechanism (CDM), the oldest carbon standard, and other standard-setters always had a team of experts responsible for reviewing proposed new methodologies and existing methodologies. It is part of a continuous improvement process.

The CDM approved its first methodology in 2003. In 2004, CDM was already reviewing a series of methodologies and consolidating them into a single one - more modern and aligned to science (the consolidated methodologies). Today, the two most used CDM consolidated methodologies are versions 19 and 21 respectively, indicating how frequent the revisions and adjustments have been. Voluntary standards are no different. For example, Verra, through the Verified Carbon Standard (VCS) Program reviewed its plethora of REDD+ approaches last year. One of the most significant recent developments is the shift towards more systemic/jurisdictional approaches. This shift has been driven by advances in science and governance, leading to the recognition that achieving significant emission reductions and protecting large areas of forest requires a coordinated effort involving multiple stakeholders at the jurisdictional level.

This shift can be explained by the increase in the number of REDD+ and AFOLU projects with hectares protected continuing to grow at scale. According to Verra, there are currently over 100 registered REDD+ projects globally, protecting over 70 million hectares of forest and generating 106 million tons of CO2 emission reductions yearly. In Brazil alone, there are now 24 registered REDD+ projects, up from just 3 in 2018. In the same year, there was only one project registered in Indonesia, today more than 200 have been reported in the pipeline. REDD+ projects are shifting from a rare initiative and scattered across large areas, to different and contiguous projects, influencing the land use in a landscape.

However, this success has not come without its challenges. The original methodologies used by REDD+ projects, even if technically sound and aligned to the density of projects and science knowledge from the past, were not designed to handle the scale and density of interventions in particular landscapes. Such situations may apply to REDD+ projects, cookstoves, renewable energy projects and any other intervention that shifted from marginal to dominant in sector, geography or landscape. As a result, Verra and other standard-setting organizations have been reviewing and updating their methodologies to ensure they remain effective in measuring and verifying additional emission reductions. There is nothing wrong or problematic with it.

Such a shift has also brought a greater focus on social and environmental safeguards and the participation of local communities and indigenous people. This has led to the development of methodologies and guidelines that address the potential risks and impacts as well as stakeholder consultation and engagement in the project design, baseline evaluation process and benefit-sharing schemes.

In conclusion, REDD+ and other carbon methodologies have come a long way since their early days. Today, the market continues to evolve and adapt, driven by climate urgency and the need to mobilize vast levels of capital to achieve significant emission reductions, protect large areas of forest, restore forests, improve livelihoods, and decarbonize our economies. The development and implementation of more robust and transparent methodologies are essential to ensure that REDD+ and all types of projects continue to play a vital role in mitigating carbon emissions, conserving biodiversity, and promoting sustainable development at scale.

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As the methodologies and markets improve, it is critical to push constantly for a parallel reform of the #vcms business model. As long as profits remain entrenched on the institutional side of most carbon trades, we won’t be able to secure our future. The time has come to develop true partnerships to benefit us all.

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