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Carbon Ratings

What is the state of REDD+ carbon credits in 2022?

November 29, 2022
REDD+ carbon credits in 2022

REDD+ carbon projects account for the largest number of carbon credits in voluntary carbon markets. But misconceptions about REDD+ projects abound, and concerns about quality are drawing high levels of scrutiny to these projects around the world. Our recent State of Carbon Credits 2022 report revealed some key data-backed insights about the current state of REDD+ carbon projects around the world.

What is REDD+?

REDD+ is a type of avoidance credit that finances activities that focus on the sustainable management and conservation of at-risk mature forests. REDD+ stands for Reducing Emissions from Deforestation and forest Degradation. The ‘+’ represents activities related to the sustainable management of forests, and the conservation and enhancement of forest carbon stocks.

Some REDD+ projects around the world include Chyulu Hills in Kenya (410,000 hectares of protected forest), Keo Seima in Cambodia (a wildlife sanctuary home to 950+ wild species), and Alto Mayo in the Peruvian Andean Amazon (forest conservation).

This article will explore the distribution of REDD+ projects around the world. There are two project types that fall under REDD+ umbrella:

  • Avoided Planned Deforestation (APD): These projects prevent large-scale conversion of primary forest by commercial agents. Commercial conversion activities can range from developing crop plantations to cattle ranches. These projects also protect the forest from secondary agents of deforestation, driven by subsistence-based practices. A well-known APD project is Katingan Peatlands (VCS1477) in Indonesia.
  • Avoided Unplanned Deforestation (AUD): These projects aim to protect forests from localized agents of deforestation, such as deforestation caused by local communities growing crops for local consumption or deforestation due to illegal logging. A well-known AUD project is Kariba (VCS902) in Zimbabwe.

Here’s a look at where REDD+ projects are underway around the world

REDD+ projects are found all over the world. Here, we look at the distribution of projects, and score each region on additionality, strength of baseline and co-benefits (rated from 1-5, with 1 being the lowest).

South America

South America issues the highest number of REDD+ projects and issued credits, with 156M credits issued (38% of all REDD+ credits in Voluntary Carbon Markets), and an average of 3.5M credits per project. The region’s 44 total issuing projects make up 56% of issuing REDD+ projects on VCMs.

Our ratings reveal the scores for projects in this region range from:

Additionality: 1.7-4

Strength of baseline: 2-5

Co-benefits: 2.8

South American REDD+ projects demonstrate a wide range of additionality scores, but most scores show reasonable additionality results. Though there is some over-crediting risk according to the region’s strength of baseline scores, it ranks fairly highly globally. However, the region performs poorly on co-benefits, with many projects failing to define robust monitoring and protection plans.

Sub Saharan Africa

The next highest concentration of REDD+ projects is in Africa, whose 115M issued credits make up 29% of all REDD+ credits in VCMs, and equal an average of 6M credits issued per project. The region’s 19 total issuing projects make up 24% of issuing REDD+ projects on VCMs.

Our ratings reveal the scores for projects in this region range from:

Additionality: 2.3-4.5

Strength of baseline: 1-3

Co-benefits: 4.3

REDD+ projects in Sub Saharan Africa perform well on additionality, as many projects take place in underfunded National Parks and have a lot of positive engagement with local communities. The region performs poorly on strength of baseline due to high deforestation rates and forecasting difficulties, but scores highly on co-benefits.

Asia-Pacific (APAC)

The third highest concentration of REDD+ projects are in Asia Pacific (APAC). This region issued a little over 117M credits, which equals 29% of all REDD+ credits, and equals an average of 13,088,936 issued credits per project. The region’s 9 total issuing projects make up 12% of issuing REDD+ projects on VCMs.

Our ratings reveal the scores for projects in this region range from:

Additionality: 2.2-4.3

Strength of baseline: 2-5

Co-benefits: 3.7

APAC’s REDD+ projects show a wide variance in additionality and strength of baseline, with most projects sitting at extreme ends of the spectrum. APAC projects score well on c-benefits, as many projects take place in highly biodiverse areas and engage successfully with local communities.

Central America

Central America has the fourth highest number of REDD+ projects: its 8M issued credits make up 2% of all REDD+ credits, and equal an average of 1.3M credits issued per project. The region’s 6 total issuing projects make up 8% of issuing REDD+ projects on VCMs.

Additionality: 3.3-3.6

Strength of baseline: 2-4

Co-benefits: 4.3

Central America’s REDD+ projects reveal no major red flags around additionality, a mixed quality of baselines (and therefore some degree of over-crediting risk), and high performance on co-benefits.

Sylvera’s ratings reveal some common misconceptions about REDD+ projects

There is a misconception that all REDD+ projects are low quality, but our data proves that this is not the case. Almost a third of the credits that Sylvera has assessed through our REDD+ carbon credits rating framework are considered high quality, with strong scores across the core pillars of carbon performance, additionality and permanence. As a result, these projects are considered low risk.

The top-rated projects are characterized by conservative baselines, accurate deforestation reporting, strong evidence that the project implements activities above the business-as-usual scenario, and minimal permanence risks.

These Tier 1 projects have issued 143,452,424 carbon credits. If all of these high quality REDD+ credits were purchased and retired, it would be equivalent to offsetting 143 million tons of CO2e being offset, which is almost equivalent to the annual emissions from the entire EU shipping industry.

One example of a Tier 1 projects is the Katingan peatlands.

Katingan peatlands: A REDD+ project case study

The Katingan Peatland Restoration and Conservation Project is a popular and high-quality APD project in Indonesia. This ecosystem restoration initiative is focused on a peat swamp forest in Central Kalimantan and is managed by Indonesian company PT. Rimba Makmur Utama.

Sylvera rated this project AA: it has generally delivered on its emission reduction claims, which are very likely to be additional.

Without carbon credit funding, Katingan peatlands might not exist today. The project activities are likely additional — meaning that, without funding from carbon credits, the peatlands would likely not exist today, as the project area (PA) was under threat of conversion before project implementation.

The PA was previously zoned by the government as a production forest and would likely have been converted to industrial acacia plantations, demonstrating material risk to the forest. Further, high rates of non-compliance with a national peat conversion moratorium decrease the likelihood of forest protection in the absence of the project.

But thanks to the conservation project, a new forest patrol and observation team have been introduced in order to monitor the project and implement ecosystem restoration activities.

But scrutiny for REDD+ projects is still advised

Despite finding that a portion of REDD+ projects are of high quality, the remaining two-thirds of REDD+ projects rated by Sylvera are of mixed quality. Approximately 25% of the projects we’ve rated are considered very low quality, and consequently, high risk.

REDD+ flags

The lowest rated REDD+ projects have red flags in one or more areas. The majority of low rated projects have grossly under-reported the deforestation in the project area and have exceeded the baseline emissions. In one other extreme scenario, a project terminated carbon project activities in favor of legally deforesting the project area for agricultural production. In these cases, one carbon credit cannot be used to offset one ton of carbon.

Red flags in additionality are also drivers for projects receiving low ratings. Additionality risks can manifest in an over-estimation of the project’s baseline emissions, as well as the additionality activities.

A final word on REDD+

Avoiding planned and unplanned deforestation are crucial steps in the global climate response. Although technology-based solutions are improving rapidly and will no doubt play a role in mitigating the impact of climate change, at Sylvera, we encourage companies to also consider nature-based solutions, which are non-negotiable for achieving net zero globally. Nature-based solutions like REDD+ bring a host of co-benefits including improving biodiversity and positively impacting local communities.

REDD+ carbon credits play an important role in voluntary carbon markets, but it’s crucial that companies employ robust technology and methodologies to evaluate the quality and impact of their chosen carbon projects. That’s where Sylvera can help: our independent and in-depth carbon ratings offer companies the ability to easily filter high quality offsets and deliver on their net zero commitments.

Click here to request a demo.

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