Monthly Methodology Updates (November)
This article is an automatically translated version of the original Japanese article. Please refer to the Japanese version for the most accurate information.
This is sustainacraft Inc.'s newsletter. This edition of Monthly Methodology Updates primarily covers news related to VCS Methodologies announced in November 2023.
Monthly Methodology Updates
This month, we cover the following topics:
- Public Consultation on Requirements for the ABACUS Label (Verra)
- Public Consultation on Requirements for Monoculture Plantations with Non-Native Species (Verra)
- Feedback Solicited on Jurisdictional-Level Baseline Validity Period for REDD Projects (Verra)
(1) Public Consultation on Requirements for the ABACUS Label (Verra)
(link)
On November 15, Verra announced a public consultation on the requirements for the ABACUS label, which is awarded to high-quality ARR projects.
When the pre-public consultation was conducted approximately a year ago, our company also submitted comments. The content was introduced in the following newsletter:
While there is significant overlap with the previous consultation, this time we focus on four specific points, outlining the fundamental principles, detailed requirements, and future discussion points for each. The four points and their fundamental principles are as follows:
- Additionality and Baseline: Throughout the project crediting period, a dynamic performance benchmark that tracks changes in carbon stocks of a control group must be used.
- Leakage: Leakage must be effectively eliminated by maintaining or enhancing agricultural production within the project area or surrounding regions.
- GHG Quantification Method: Project quantification must be based on directly measured field survey data and publicly reported data and models.
- Permanence: Projects must be explicitly designed to reduce reversal risk, monitored annually for transparency, and designed to maintain carbon stocks even after the crediting period.
In the following sections, we will delve into each of these points in detail.
The ABACUS label applies to ARR projects implemented under the new ARR Methodology VM0047 Afforestation, Reforestation, and Revegetation (v1.0). VM0047 was introduced in our previous Newsletter.
ABACUS and VM0047 are interconnected, and meeting the VM0047 requirements can sometimes partially fulfill the ABACUS requirements. However, there are also areas where additional requirements are set beyond VM0047, and we will highlight those points.
Please note that the requirements introduced below do not cover all proposed elements. For full details, please refer to the report itself.
Additionality and Baseline
Principle: Throughout the project crediting period, a dynamic performance benchmark that tracks changes in carbon stocks of a control group must be used.
This means that a Dynamic Baseline approach must be used in accordance with VM0047.
Additionally, the ABACUS label requires the following:
The time series of vegetation indices used for matching with Control Plots must consider at least 5 time points.
VM0047 requires considering at least 3 time points over the past 8-10 years.
Considering a longer period reduces the possibility of Project Developers arbitrarily selecting plots convenient for them.
In addition to the Performance Benchmark, an Investment Analysis must be conducted to demonstrate additionality from a financial perspective. Expected Credit Issuance at the start of the project must also be calculated.
In VM0047, Investment Analysis is a step only required if the project has non-Credit financial incentives, but it is mandatory for the ABACUS label.
Regarding the above requirements, the public consultation anticipates discussions on the following points:
- Is considering a 5-point time series sufficient to prevent arbitrary plot selection (adverse selection)?
- Is Investment Analysis sufficient to verify additionality from a financial perspective? If more rigorous verification is needed, what methods could be used?
Leakage
Principle: Leakage must be effectively eliminated by maintaining or enhancing agricultural production within the project area or surrounding regions.
This principle is essentially similar to the content of VMD0054 Module for Estimating Leakage from ARR Activities, v1.0, a sub-module of VM0047. It is stated that VMD0054 will be revised based on the results of this public consultation.
The main focus here is on achieving the following two points:
Minimize the displacement of agricultural production locations.
It is assumed that 100% of the reduced agricultural production in the project area will be compensated by new land-use conversion elsewhere (primarily natural forest to agricultural land).
Therefore, the aim is to establish mitigation areas in surrounding regions to absorb all impacts of reduced production there.
Invest in improving agricultural productivity within the project area or surrounding regions to compensate for reduced agricultural production due to the project.
Since existing land-use practices in the project region may not always be optimal, the aim is to replace existing levels of agricultural production with less land by improving agricultural efficiency or changing crops.
This prevents adverse effects on food production stability.
However, discussions regarding the above requirements notably include the following points:
- From the perspective of climate action and food security, is the method of substituting production with similar crops appropriate?
- Assuming the above is acceptable, what alternative crops would be suitable?
GHG Quantification Method
Principle: Project quantification must be based on directly measured field survey data and publicly reported data and models.
This means that because carbon stocks vary significantly depending on local land characteristics and climate, referencing generally available databases or past similar studies is insufficient. Instead, field surveys within the project area must be conducted to demonstrate validity. Furthermore, all data necessary for decision-making must be made open to ensure transparency.
Specifically, the following requirements are stipulated:
Publicly disclose field survey data.
For transparency, reproducibility, and promotion of related research.
However, the precise geospatial location of plots may be kept confidential to protect landowner privacy.
Disclose all allometric equations and related parameters used for quantifying carbon stocks and verify their validity.
Demonstrate that the equations and parameters used are valid and conservative.
Furthermore, verify the representativeness of samples and the adequacy of sample size, considering local tree species and environmental conditions.
Verify estimation biases in the PDD and Monitoring Report.
Describe potential sources of bias that may arise during the estimation process and specific efforts to eliminate such biases.
If claiming no bias, provide quantitative or qualitative indicators to support this claim.
Discussions regarding the above include the following points:
- Estimates of carbon stocks heavily depend on allometric equations and associated parameter values, but it is often difficult to find prior research results that strictly match the target region or tree species. In such cases, how should the validity and conservativeness of the selection be determined?
- Is it operationally feasible to mandate the identification of all possible biases?
Permanence
Principle: Projects must be explicitly designed to reduce reversal risk, monitored annually for transparency, and designed to maintain carbon stocks even after the crediting period.
This item adds more detailed requirements to project design to ensure that carbon sequestration continues as expected both during and after the project.
Specifically, the following requirements are stipulated:
Implement 'ecologically appropriate' afforestation/reforestation.
'Ecologically appropriate' means that the climate, natural features, and topography are suitable for vegetation, allowing the system to sustain itself autonomously without human intervention (e.g., irrigation).
Demonstrate the above through various data1 and mathematical modeling.
Monoculture plantations are not permitted.
Even within a multi-species plantation, ensure that no continuous single-species area exceeds 1 hectare.
The reasons are that monoculture plantations are often for commercial purposes, thus lacking financial additionality and potentially permanence of carbon sequestration (as harvesting is implied). They are also less robust compared to multi-species plantations (e.g., more susceptible to pests and diseases).
To monitor carbon stock losses due to natural disasters, annually publish maps indicating biomass quantity (spatial resolution < 1ha).
During project Validation, specify the method for ensuring carbon stock maintenance after the crediting period ends.
The crediting period is a maximum of 30 years.
In response to the above, the following discussions are anticipated:
- Is the definition of 'ecologically appropriate' as stated above suitable?
- What constitutes appropriate evidence to verify the method of ensuring permanence after the crediting period?
Items for Future Consideration
The items covered so far are those that are slated to be reflected in the requirements in some form, even if subject to modifications. However, the report also mentions items that may be included in future requirements. As many of these points are interesting, we will introduce them as well.
Additionality considering regulatory impacts (regulatory additionality): If the Dynamic Benchmark method is appropriately implemented, in principle, non-project effects such as regulatory changes can also be reflected in the Baseline. Is it acceptable to consider this as accounting for regulatory changes?
→ For more on this point, please refer to the following Newsletter:Causal Inference Methods for Baseline EstimationThis is sustainacraft Inc.'s 6th Newsletter. In our 3rd edition, we introduced the issue of junk Carbon Credits, one of the causes of which was the difficulty in setting the Baseline. The Baseline refers to the trend of deforestation in a counterfactual scenario: 'What if a forest conservation project had not been undertaken?' However, current Credit quantification Methodologies do not always adequately account for this counterfactual setting. Meanwhile, estimation methods that consider such settings have a rich body of research in the field called Causal Inference, and it is expected that this knowledge will be utilized in Methodologies in the future.
Biophysical impacts: Afforestation/reforestation causes various physical changes, such as surface albedo, energy partitioning, and turbulent fluxes. Recent research indicates that their impact on warming effects can be significant and non-negligible, requiring appropriate consideration.
→ For more on this point, please refer to the previous Newsletter:Various Discussions on Permanence (1/n: Economic Equivalence, PACT, Ton-Year Accounting, Article 6.4 Public Consultation)This is sustainacraft Inc.'s Newsletter (Special Edition). This time, we address discussions related to the permanence of carbon sequestration. While our company primarily deals with Nature-based Solutions projects such as REDD and ARR, Nature-based Solutions projects are temporary as carbon storage in the long carbon cycle (here, 'temporary' means not permanent compared to the timescale of accumulation in or emission from fossil fuels). The question of how to quantify the value of such temporary carbon storage compared to permanent carbon storage has long been debated.
Effective permanence: Improve existing Buffer Pool calculation methods to ensure permanence.
Adverse selection: When matching Control Plots during Baseline estimation, there is a risk that the Baseline could be arbitrarily underestimated depending on the choice of covariates. Improved requirements are needed to prevent this.
→ For this point, the criticism by Renoster introduced in the following Newsletter might be helpful (Section 1)Monthly Methodology Updates (October)This is sustainacraft Inc.'s newsletter. This Monthly Methodology Updates edition primarily covers news related to VCS Methodologies announced in October 2023. Monthly Methodology Updates This month, we cover the following topics: Release of the new ARR Methodology: VM0047 (Verra) First VCS project using the new ALM Methodology completed registration (Verra) Amendments and clarifications related to the VCS Standard announced (Verra)
Non-destructive allometric equations: Allometric equations are often constructed based on destructive samples, which can raise issues regarding the representativeness of samples across various factors such as climate, site conditions, and stand age. Therefore, it is desirable to have methods to verify allometric equations at project sites using non-destructive approaches or to develop equations specific to each project.