September 2018 – Preserving and enhancing forests is an essential part of global efforts to mitigate climate change. To increase finance for forest-related mitigation, some countries and stakeholders call for funding to be mobilised by ‘transfer-based finance’, where payments are made in return for the rights to the emission reductions or removals being transferred to the country or entity providing the payments. This can include crediting the emission reductions or removals under carbon market programmes to meet demand from international compliance markets, including under Article 6 of the Paris Agreement and under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) implemented under the International Civil Aviation Organization.
While this could bring a number of opportunities – including the potential for increased finance for forest-related mitigation, a possible reduction in the cost of achieving mitigation targets, and non-carbon benefits – it also involves a number of challenges and risks. A new discussion paper explores what environmental risks could arise if offset credits from forest-related mitigation activities were to be used towards nationally determined contributions (NDCs) and CORSIA, and what options could be pursued to manage such risks. It specifically focuses on risks surrounding environmental integrity as well as environmental and social safeguards.
The paper finds that some of the risks and challenges associated with crediting forest-related mitigation are common to other activities implemented under greenhouse gas (GHG) crediting programmes, while some are specific to – or are heightened in the context of – forest-related mitigation. Moreover, the Paris Agreement provides a new context that is essential to consider when analysing these issues and developing solutions.