A new White Paper published by IETA warns that REDD+ results generated through Article 5 of the Paris Agreement, but marketed as carbon credits, may negatively affect the reputation of credits that are generated following agreed international procedures.

A number of countries have announced that they intend to generate units known as REDD+ Results Units (RRUs), issued through the REDD.plus platform created by the Coalition for Rainforest Nations (CfRN).

REDD stands for “reducing emissions from deforestation and forest degradation”, while the “plus” refers to the additional activities of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.

RRUs are linked to emission reductions reported by countries to the UNFCCC’s REDD+ Info Hub, a system set up under the Warsaw Framework for REDD+ and which is referred to in Article 5 of the Paris Agreement. IETA’s paper emphasises that “RRUs are not verified carbon credits that meet foundational thresholds that assure integrity and fungibility in markets.”

“IETA’s current position is that 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,” the paper adds.

Article 5 of the Paris Agreement encourages countries to take action to conserve and enhance carbon sinks including forest cover, and refers to “results-based payments”, but IETA’s paper underlines that “the results reported on the REDD+ Info Hub are not verified carbon credits that can be transacted in global carbon markets.”

Both IETA and the International Carbon Reduction and Offsetting Accreditation (ICROA) support and encourage the deployment of international finance for forest protection, including for countries that have preserved vast amounts of intact forest and historically kept low levels of deforestation.

“IETA and ICROA wish to express their deep concern about the use of any issued units that do not comply with a recognised standard designed for market purposes,” the paper concludes, recommending that in order to scale climate investment through market mechanisms, “it will be essential to comply with market grade standards” such as those being established by Article 6 of the Paris Agreement and by existing programmes in the voluntary market.

This discussion paper aims to highlight important elements that governments need to consider and address to mobilise private sector resources and investment towards Article 6 mechanisms. The key elements were identified in discussions with our members and other business organisations, and we hope that, by articulating them together in this paper, IETA can help advance the use of Article 6 across relevant stakeholders.

Please, find the discussion paper here.

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IETA has published its governing Council’s vision for how the organisation will pursue the “net zero” climate ambition in policy advocacy, in support of the Paris Climate Agreement. 

The document can be found here.

This paper is designed to provide high level guidance to governments who are interested in attracting private investment to finance activities being implemented within the context of a national or subnational REDD+ program.

The estimated amount of finance needed to halt deforestation globally through sustainable agriculture and REDD+ is US$200 billion annually, of which current funding levels are around US$1 billion mostly provided from donors, governments and other non-private investor sources. This leaves a large gap that needs to be sourced through the financial sector and market-based investments.

To attract these private investments to sustainable agriculture and REDD+, governments and business/project owners are going to have to make it appealing to these investors. This paper outlines 7 key components that governments can adopt to maximize opportunities to attract private sector investors:

1. Recognize and promote projects within national/subnational REDD+ programs
   
2. Create REDD+ related policies and processes that drive private sector investments
   
3. Implement frameworks for stakeholder engagement, safeguards and monitoring of non-GHGs to meet private sector priorities
   
4. Structure mechanisms for attributing/recognizing results that incentivize emission reductions and removals and provide predictable revenue streams
   
5. Adopt technically robust, spatially explicit methods for quantification and verification for GHG emissions from deforestation and degradation that applies at the national/subnational and project levels
   
6. Apply processes for registration of REDD+ activities and elimination of double counting risk
   
7. Create other opportunities to connect private sector with REDD+ actors on your country
   

IETA's report can be accessed:

• In English here
• In Spanish here

While the Straw Proposal remains the main repository for IETA’s comprehensive vision for Article 6, we felt it could be beneficial to organise our thinking along the lines of the key areas identified in the SBSTA Chair’s informal notes, released in March 2018. This document therefore largely builds on our Straw Proposal and outlines IETA’s priorities for the key design options listed in the informal notes. 

This document outlines IETA’s proposed thinking on Article 6 of the Paris Agreement in a negotiated text format that we call a ‘straw proposal’ for consideration by Parties to the Paris Agreement. Our intention is to contribute thinking from the private sector to the formal Article 6 negotiations by providing this straw-man proposal in the lead up to COP 24 in 2018. 

Please find here IETA's Straw Proposal

In A Vision For the Market Provisions of the Paris Agreement, IETA notes the long-term durability of the Paris Agreement, making it especially crucial that its implementation incentivises the maximum level of emissions reductions – including via harmonised carbon pricing systems.

This can be achieved through linking systems, which in turn enables the transfer of emissions units between various systems. Such transfers are also encapsulated in the Paris Agreement, with paragraph 2 of article 6 establishing internationally transferable mitigation outcomes (ITMOs) as means of accounting for such linkages between systems.

The paper also highlights the role of the Emissions Mitigation Mechanism (EMM), as established by paragraph 4 of article 6. This mechanism can cut emissions in countries which are currently not in a position to establish a carbon pricing system yet which need the climate finance that the EMM can bring, says IETA. Robust accounting and governance provisions are again crucial to ensuring environmental integrity of any resultant reductions which are counted towards a country’s Paris Agreement goal.

Click here to download the full paper.

The EDF-IETA report, “Doubling Down on Carbon Pricing: Laying the Foundation for Greater Ambition”, illustrates a number of possible routes for achieving the dramatic expansion of carbon pricing envisioned by the Panel. The report presents four scenarios for meeting both of the Panel’s targets, to increase carbon pricing coverage from the current level of 12% of global emissions to 25% in 2020, and doubling to 50% coverage in the next decade. The scenarios show that the Panel’s goals are ambitious, in the sense that they will require action beyond what is currently anticipated — especially to reach the 50% goal.  At the same time, the report finds that the goals are achievable, given the existence of multiple plausible scenarios to meet them.

Carbon pricing creates a powerful economic incentive to reduce emissions at the lowest possible cost, generating momentum and impetus for more ambitious climate action. As a result, carbon pricing can play a critical role in meeting the objectives of the Paris Agreement by helping countries to implement their targets and cut emissions even more in the future.  Nonetheless, simply expanding the coverage of carbon pricing will not meet long-run climate goals: the underlying policies must be sufficiently ambitious. The ultimate test of any climate policy is the emissions reductions it achieves. 

EDF and IETA are partners of the Carbon Pricing Leadership Coalition. The Coalition brings together leaders from across government, the private sector and civil society to share experience working with carbon pricing and to expand the evidence base for the most effective carbon pricing systems and policies.

Download the report here.

Please find here (printer friendly version available here) an executive IETA briefing highlighting the importance of INDCs on the development of carbon markets and carbon pricing worldwide.

This is crucial for countries that are fully industrialised and have high carbon abatement costs and for countries where emissions originate in sectors with limited abatement opportunities because of technology constraints. The UNFCCC’s INDC Synthesis Report, released on 30 October, highlights that over half of the INDCs submitted to date plan to use or are considering the use of market mechanisms. 

Carbon markets not only bring a needed source of finance, but they also provide good governance and strong accounting frameworks that allow for technology transfers to be a win-win for both participants in a transaction.

Please see the briefing for more on how the Paris agreement can enable the spread of carbon markets around the world and facilitate a link between systems.