Policy consultation response: Meridian Institute Consensus on High Quality Tropical Forest Carbon Credits

The Meridian Institute, published this draft guidance to companies interested in investing in tropical forest credits. Sylvera's response focused on the importance of clear definitions of "high-quality" credits.

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Responses from 1 to 5 indicate levels of agreement, where 1 is low and 5 is high. 

Recommendation I: Consider including tropical forest carbon credits in corporate beyond-value-chain mitigation strategies.

1. Level of clarity: How clear is this recommendation? 4
   

2. Please specify anything that is particularly unclear or may be subject to widely differing interpretation: This recommendation would be clearer if the reference to "high-quality" units mentioned in the text were also reflected in the recommendation’s heading.
   

4. Level of agreement: Do you agree with this recommendation? 5
   

5. What further guidance does this group need to provide to corporate buyers in order to make the recommendation actionable? It would help if the group provided further detail on how "high-quality" should be defined, or who should define it, and in what circumstances. The question of what constitutes "high-quality" is one to which Sylvera has devoted considerable time and expertise over the last two years — we would be happy to discuss our latest research, evidence, analysis and methodologies with the group in order to address this important question.
   

Recommendation II: Prioritize support to programs and projects that reduce threats to standing tropical forests including through purchase of credits.

1. Level of clarity: How clear is this recommendation? 5
   

2. Please specify anything that is particularly unclear or may be subject to widely differing interpretation: When emphasizing the importance of reduction offsets over removals it is key to recognize the current tropical forests' ecosystem co-benefits, for example, whether it is a biodiversity hotspot. 
   

3. Anticipated difficulty to implement: 3
   

4. What is the time frame for, and what will be barriers to, implementation? There is currently a paucity of methodologies for crediting projects in high forest, low deforestation (HFLD) jurisdictions. 
   

5. What further guidance does this group need to provide to corporate buyers in order to make the recommendation actionable? More clarity on best practices with non-crediting finance would be useful to market participants.
   

6. Are there any other comments you’d like to share about this recommendation? We welcome the emphasis of the importance of avoided emissions credits, and the focus on protecting standing forest. Removal credits are sometimes portrayed as automatically of "higher quality", something which our in-depth technical analysis have not borne out, and it is important to recognize the value of channeling climate finance to protect forest.
   

Recommendation III: Ensure that essential components of social and environmental integrity are met for all credits purchased by starting with credible accreditation programs and standards and supplementing with targeted due diligence to address known weaknesses and risks.

1. Level of clarity: How clear is this recommendation? 5
   

2. Anticipated difficulty to implement: 4
   

3. What is the time frame for, and what will be barriers to, implementation? Stringent assessments of social and environmental quality are highly challenging to apply consistently, comprehensively and cost-effectively. This is especially true of social integrity, which currently requires extensive fieldwork to ascertain. While the latest remote-sensing methods, such as those developed by Sylvera, are capable of consistent, comprehensive and cost-effective assessments of environmental quality, they are not yet the market norm. As a result perceptions of what constitutes high-quality, and how this can be assessed vary from project to project, jurisdiction to jurisdiction, buyer to buyer, and developer to developer. 
   

4. What further guidance does this group need to provide to corporate buyers in order to make the recommendation actionable? Echoing our response to question 1, it would help if the group provided further detail on how "high-quality" should be defined, or who should define it, and in what circumstances. The question of what constitutes "high-quality" is one which Sylvera has devoted considerable time and expertise over the last two years — we would be happy to discuss our latest research, evidence, analysis and methodologies with the group in order to address this important question.
   

Recommendation IV: Actively push and support a rapid transition to jurisdictional crediting approaches.

1. Level of clarity: How clear is this recommendation? 5
   

2. Anticipated difficulty to implement 4
   

3. What is the time frame for, and what will be barriers to, implementation? As mentioned previously, jurisdictional methodologies are in their infancy and have yet to demonstrate that they can deliver high-quality credits at scale. 
   

4. Are there any other comments you’d like to share about this recommendation?

Our data and project ratings strongly support this statement: “while certification standards, methodologies, and verification procedures continue to evolve and improve, there is evidence that they are uneven in their ability to manage risks such as leakage, non-additionality, and impermanence. For example, the baselines against which some certified projects have issued credits have been shown to exceed monitored deforestation that took place within the region, suggesting that some portion of credits issued by such projects may not have been additional."

We recognize the value of jurisdictional approaches to address concerns around leakage, inflated baselines and inconsistent carbon accounting. They also have the potential to remove barriers to participation in carbon markets by maximizing efficient deployment of resources while scaling coherently.

However, we do not believe that jurisdictional programs are always the best solution to this. Jurisdictional methodologies are in their infancy and will take time to reach full efficacy. The urgency of the language in this report may discredit current valuable projects and discourage nuanced critiques of jurisdictional methodologies and nested projects. It is important to recognize that these jurisdictional nested approaches are not a silver bullet that solely guarantees environmental integrity.

In the short- to medium-term an alternative is to improve access to high-quality digital monitoring and remote sensing data, and to share best practices on these methodologies. At Sylvera we are developing highly accurate monitoring at both project and jurisdictional levels. As mentioned, we would be happy to share our insights and expertise in this with the group.

Recommendation V: Evolve portfolios over time to include more credits from jurisdictional programs and fully nested projects.

1. Level of clarity: How clear is this recommendation? 4
   

2. Are there any other comments you’d like to share about this recommendation? There is an implicit assumption that jurisdictional programs are inherently of higher quality than project-based methodologies. While conceptually we see the strong case for jurisdictional programs, in practice the quality of credits resulting from jurisdictional approaches will depend on the quality of the specific methodologies. This is why an ability to set high-quality standards, and compare across project types, including project-based and jurisdictional activities, to objectively ascertain environmental integrity and draw on raw data, as Sylvera does, is of paramount importance.
   

Recommendation VI: Incentivize alignment with Paris Agreement and enhancement and achievement of Nationally Determined Contributions (NDCs).

1. Level of clarity: How clear is this recommendation? 5
   

2. Level of agreement: Do you agree with this recommendation? 4
   

3. Anticipated difficulty to implement: 4
   

4. What is the time frame for, and what will be barriers to, implementation? At present, the international carbon accounting system is unable to fully apply corresponding adjustments, in particular as credits move between compliance and voluntary markets. However, this is likely to be resolved in the short- to medium-term. 
   

5. What further guidance does this group need to provide to corporate buyers in order to make the recommendation actionable? Guidance on how these accounting adjustments are to be applied in practice would be useful.
   

6. Are there any other comments you’d like to share about this recommendation? We fully endorse the recommendation for transparency about the details of credits purchased and canceled, which would bring increased confidence and legitimacy to the VCMs. We recognize that there is a range of views on the application of corresponding adjustments at the corporate level, however, the careful wording of this recommendation broadly aligns with our understanding of what was agreed at COP26. 
   
   

Recommendation VII: Strongly encourage forest carbon credit standard-setting organizations to drive momentum towards high-integrity, jurisdictional and fully nested credits.

1. Level of clarity: How clear is this recommendation? 5
   

2. Level of agreement: Do you agree with this recommendation? 4
   

3. What further guidance does this group need to provide to corporate buyers in order to make the recommendation actionable? More insight into what “known weaknesses” are being referred to in this recommendation could be useful to market newcomers. 
   

4. Are there any other comments you’d like to share about this recommendation? We agree in particular with the statement that “Companies should conduct additional due diligence to address known weaknesses in standards and verification processes (e.g., to ensure that baselines are sufficiently robust).” 
   

Additional questions

1. Are there any other comments you would like to provide on the draft statement?‍

Sylvera appreciates this opportunity to share input on the Draft Consensus Statement on High Quality Tropical Forest Carbon Credits. 

We are encouraged to see more activity to support and formalize the use of high-integrity carbon credits by corporations to meet voluntary climate goals and support regional and global climate ambition. We appreciate the recognition of initiatives such as Reducing emissions from deforestation and forest degradation (REDD+), and the transition to jurisdictional approaches, as important and scalable mechanisms to finance forest conservation. We also appreciate the recognition of the unique considerations for tropical forest carbon — including the urgency related to conserving standing tropical forests in order to maintain Earth’s natural carbon sink. 

We share with International Emissions Trading Association (IETA) the concern that the urgent tone used in the recommendation to transition to jurisdictional approaches could unintentionally discredit project-based REDD+ and discourage financing, when in the present and near future that finance is urgently needed.

2. In a second phase of work, regarding what additional issues or questions would it be helpful for our group to provide guidance to companies?
   

As set out above. 

In addition, we agree with IETA that it would be useful for the group to provide further clarity on their definition of which organizations or organization-types are included in the “standard-setting organ”, specifically as referenced in Recommendations VI and VII, and the role that these organizations should play.