Comment Log Display

Support for ARB staff thinking on technical design elements of
sectoral crediting for tropical forests under AB32
Jonah Busch, Ph.D.
Senior Fellow, Center for Global Development (jbusch@cgdev.org) 
Berkeley, CA. April 5, 2016.

Dear Air Resources Board staff,

Thank you for the opportunity to comment on the ARB Staff Technical
Paper of March 18, 2016[1]  and the ARB slideshow presentation of
March 22, 2016.[2] 

I applaud and support the Air Resources Board staff in moving
forward on technical design elements for sectoral crediting for
tropical forests under AB32. Sound technical rules are necessary to
ensure confidence by all stakeholders in the integrity of the
credits used by regulated companies in California to offset their
greenhouse gas emissions. By setting high standards for other
states and provinces to follow, California can once again lead in
the global effort against climate change.[3]
 
When it comes to developing rules for sectoral credits for tropical
forests, there are important but surmountable design challenges.
Fortunately there are many ways to get these issues right. The
technical paper and slideshow show that ARB staff are considering
the right issues and appear well on track to addressing these
issues sensibly.
 
As ARB staff proceed thoughtfully in developing rules, they can
draw upon several useful resources:

•	The recommendations of the REDD Offsets Working Group[4]
•	The Methodological Framework of the Forest Carbon Partnership
Facility (FCPF) Carbon Fund[5] 
•	Bilateral agreements between tropical forest countries and states
and European countries
    o	Brazil and Norway[6]
    o	Guyana and Norway[7]
    o	Acre (Brazil) and Germany[8]
•	The Jurisdictional and Nested REDD+ (JNR) Framework of the
Verified Carbon Standards (VCS)[9]

Regarding specific technical design elements, ARB may consider the
following feedback: 

Scope: It is sensible to include activities that can be monitored
using current technology (i.e. reductions in emissions from
deforestation; potentially reductions in emissions from forest
degradation) while leaving the door open to including at a later
date activities that may be monitored with emerging technology
(i.e. removals by forest growth).[10]

Crediting pathway: Partner states should issue, track, and sell
credits. Partner states should be granted broad latitude to design
their programs for reducing deforestation, including the ability to
determine whether and how nested projects are potentially eligible,
subject to California standards.

Reference Level: Historical annual emissions averaged over 10
consecutive years is an acceptable reference level and is
consistent with Brazil’s Amazon Fund and the FCPF Carbon Fund
approach for most programs. In the future, ARB should consider
allowing the use of upward-adjusted (e.g. projected) reference
levels to accommodate states with high carbon stocks, historically
low deforestation, and high deforestation threat.[11]
 
Carbon pools: Including aboveground biomass only is acceptable. In
the future, including soils would be especially pertinent for
tropical jurisdictions containing large areas of peat (e.g.
Indonesia).

Crediting baseline: Establishing a crediting baseline slightly
below the reference level to leverage partner states’ own efforts
to reduce emissions is acceptable, though not necessary. Caution is
warranted—setting a crediting baseline too far below the reference
level would dilute financial benefits to partner states that reduce
emissions, undermining their incentive to participate.

Monitoring: ARB should develop quality standards rather than
specifying a detailed set of procedures for measuring emissions.
Several tropical counties (e.g. Brazil, Mexico) already employ
sophisticated and reliable systems for measuring deforestation
which can be leveraged and built upon.
Reporting: Creating general quality standards for reporting is
acceptable. Requiring reporting at the end of each compliance
period (e.g. every three years) would be sensible, with interim
reporting potentially allowable to enable interim crediting.

Uncertainty: Small deductions or withholding of credits for
more-uncertain emission reductions are acceptable, though not
necessary. This so-called “conservativeness approach” would
incentivize investments in improved monitoring capabilities.[12]

I would be happy to discuss any of the above issues with ARB staff
in greater detail, if useful.

Jonah Busch, Ph.D. is an environmental economist and a Senior
Fellow at the Center for Global Development. He is the author of 15
peer-reviewed articles on reducing emissions from tropical
deforestation in academic journals including the Proceedings of the
National Academy of Sciences, Climatic Change, and Environmental
Research Letters. He served as Special Advisor to the President of
Guyana during its negotiation of a bilateral agreement with Norway
and as a Technical Advisor to the Carbon Fund during the
negotiation of its Methodological Framework.



[1] “Evaluation of the Potential for International Sector-Based
Offset Credits in California’s Cap-and-Trade Program.” ARB Staff
Technical Paper, March 18, 2016.
[2] “Ongoing Evaluation of the Potential for Sector-Based Offset
Credits in California’s Cap-and-Trade Program.” ARB Staff
Slideshow, Marc 22, 2016.
[3] See: “Eight Reasons for California to Lead on Climate and
Tropical Forests.” Jonah Busch, Center for Global Development blog.
http://www.cgdev.org/blog/eight-reasons-california-lead-climate-and-tropical-forests

[4]
http://www.arb.ca.gov/cc/capandtrade/sectorbasedoffsets/row-final-recommendations.pdf

[5]
http://www.forestcarbonpartnership.org/carbon-fund-methodological-framework
 
[6] https://www.norad.no/en/front/countries/latin-america/brazil/ 
[7] http://www.lcds.gov.gy/norway-partnership 
[8] https://www.giz.de/en/worldwide/33356.html 
[9] http://www.v-c-s.org/JNR 
[10] See: “Measurement and monitoring needs, capabilities and
potential for addressing reduced emissions from deforestation and
forest degradation under REDD+” Scott Goetz et al., Environmental
Research Letters 2016
http://iopscience.iop.org/article/10.1088/1748-9326/10/12/123001 
[11]  See: “Comparing climate and cost impacts of reference levels
for reducing emissions from deforestation” Jonah Busch et al.,
Environmental Research Letters 2009.
http://iopscience.iop.org/article/10.1088/1748-9326/4/4/044006/meta

[12] See: “Addressing uncertainty upstream or downstream of
accounting for emissions reductions from deforestation and forest
degradation.” Johanne Pelletier et al., Climatic Change 2015
http://link.springer.com/article/10.1007/s10584-015-1352-z