Financing Forest Conservation: Addressing Criticisms of Verra and Partnering with Trusted Organizations

Reducing emissions from deforestation and forest degradation (REDD+) projects has been a key part of the international effort to combat climate change. However, criticisms of the underlying baseline studies of Verra-certified forest conservation projects have raised concerns about the effectiveness and integrity of these projects. Criticism of the baseline is nothing new to market participants and in previous studies, over 50% of the carbon credits have been considered uncertain or of low quality. In our quest for trustworthy partners and quality assurance, we asked ourselves, “who can we rely on?”

Over a year ago, we concluded that collaborating with leading forest scientists, rather than Verra experts, is the way to go. The scientists we partnered with possess a comprehensive understanding of forest conservation and are strongly driven to promote transparency in the field.

Here is our take on the recent market development and how we continue to foster investments into forest conservation projects via forward carbon credits.

Part 1: Criticisms of Verra Certified Forest Conservation Projects

• The recent articles from The Guardian and Die Zeit have appropriately emphasized the importance of maintaining quality and integrity within the voluntary carbon market.
• The methodology utilized by the VERRA standard for avoided deforestation projects (REDD+ projects) has come under serious criticism.
• The focus of the criticism is on the calculation of the “baseline” of deforestation, specifically, the determination of how much deforestation would have occurred without the project’s protection of the rainforests.
• According to the studies cited, the risk of deforestation is much lower than claimed by VERRA projects. As a result, the number of carbon credits issued is believed to be overstated. stating that 90% of credits are worthless
• Conversely, well-respected entities in the voluntary carbon market, including rating agencies Sylvera and BeZero, VERRA itself, and major project developers such as Everland, have extensively criticized the shortcomings of these studies.
• Improvement: Verra will release a new consolidated REDD methodology in Q3 of 2023. The updated methodology will improve forest conservation credits issued in Verra’s flagship VCS Program

There is no doubt: badly designed REDD+ projects exist and they need to be identified and not used for offsetting due to missing additionality or credit overestimation

2. We have to protect forests — there is just no other way

• Urgency: Forests are disappearing at an alarming rate, and if we act now, there may be no left to protect in the future.
• Irreversible damage: Once a forest is gone, it’s gone forever. The damage cannot be undone, and the ecosystem cannot be restored.
• Climate change: Deforestation is one of the major contributors to climate change, and it is exacerbating the problem. The longer we wait to act, the more severe the consequences will be.
• Economic value: Forests provide economic value through ecosystem services such as clean water, air, and soil. Losing these services will have a negative impact on both the environment and the economy.
• Biodiversity loss: Forests are home to countless species of plants and animals. If we don’t act now, we risk losing many of these species forever.
• Carbon storage: Avoided deforestation projects prevent carbon that is already stored in existing forests from being released into the atmosphere. In contrast, afforestation projects involve planting new trees, which take time to grow and capture carbon. Thus, avoided deforestation projects have a more immediate impact on reducing greenhouse gas emissions.

3. Our conclusion: Finding the right partner — Wilderness International

Impact by design — Wilderness Foundation approach: Wilderness International consists of three sister foundations in Peru, Canada and Germany, founded in 2008 in Germany. Like no other, the legal form of the foundation allows a (charitable) purpose to be realized permanently and independently of outside interests, thus achieving the desired effects in the long term. A foundation is the most long-term organizational construct currently known. Not even states, companies or national parks are designed for such a long term. This makes the foundation the only organizational form that is oriented toward the lifespan of the ecosystems we protect.

Skin in the game: Errors in avoided deforestation calculations would lead to reputational losses for the foundation, making scientific and transparent calculations crucial.

Impact criteria that go beyond VERRA certification:

• Regular transparent updates with high-resolution drone aerial surveys
• Biodiversity research results mearured and shares on a constant basis with partners
• Local co-benefit projects implemented such as environmental education and agroforestry projects
• On-the-ground presence of our forest ranger and researcher teams
• Periodic follow-up measurements/updates of the biomass duration test plots in the forests
• Georeferenced mode of operation and transparency

Why PERU?

• Forest areas under threat of deforestation: In 2020 alone, an area of primary forest as large as Israel disappeared. Peru holds a sad record in third place. The main causes are forestry and mining.
• Property rights: We can buy land in a legally secure way and protect it in the long term. The land law in Peru works reliably.
• This ecosystem is highly relevant to a healthy climate: The forests of the Amazon basin are the largest contiguous rainforests on earth. They even make their own weather: a unique water cycle that brings the rain from the Atlantic Ocean up to 5,000km to the west of the continent. The vast extent of the contiguous rainforests is what sustains this Water cycle.

4. Using Forward Carbon Credits to Secure More Forests Today

Carbon forward credits are access rights to carbon credits that are issued before the carbon project is certified or completed. They provide a win-win-win situation for project developers, corporate buyers and the environment.

Benefits of Forward Credits for project developers:

• Provide upfront financing for carbon reduction projects, allowing project developers to secure the necessary funding to get their projects off the ground
• Provide price certainty, allowing project developers to lock in a price for their carbon credits before the project is completed
• With the help of forward credits, project developers can significantly increase the size of forests they can conserve today

Benefits of Forward Credits for corporate buyers:

• Align your long-term carbon reduction strategy with a long-term compensation strategy
• Turn carbon credit from a liability into an asset by supporting news carbon projects that create additional environmental and social impact
• Easy ways to enter long-term partnerships as contractual framework has already been agreed on
• Create a competitive advantage by differentiating yor company from competitors and appealing to customers and investors who prioritize sustainability
• Secure access to carbon credits and lock in a price today, mitigating the risk of price volatility in the future.

At GreenTrade, we place great emphasis on the value of long-term partnerships. We believe that working with trusted partners that have “skin in the game” is essential to maintaining the integrity of our projects and providing a valuable tool for companies to offset their carbon emissions while supporting sustainable development.

Although carbon credits are not a perfect solution for directing funds towards forest conservation, they are a useful tool available to us now, instead of waiting until it’s too late to act.