Temasek-backed Climate Impact X (CIX) has joined a coalition of leading non-profits and organisations in mobilising support for the preservation of a quarter of the world’s forests.
This coalition is launching guidance on the use of carbon credits from High Forest, Low Deforestation (HFLD) jurisdictions, represented by a dozen countries and nearly 40 subnational jurisdictions globally.
These jurisdictions hold a quarter of the world’s forests and currently have low deforestation rates, locking in billions of tonnes of carbon and contributing to the global terrestrial sink, which absorbs some 30% of global emissions each year.
Soon, carbon credits from HFLD jurisdictions will be available under two reputable standards: the Architecture for REDD+ Transactions (ART-TREES) and the World Bank (FCPF). These credits will be available for investment and purchase, with the potential to protect some of the most critical forest areas remaining on the planet, reads a Nov 2 press release.
By using these HFLD crediting approaches, jurisdictions with extensive intact forests can access carbon finance.
CIX is a global marketplace and exchange for quality environmental credits based in Singapore. It was jointly established in late-2021 by DBS Bank, Singapore Exchange (SGX Group), Standard Chartered and Temasek.
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CIX’s exchange, launching in 2023, will enable two-way spot trading of quality credits through standardised contracts, providing the market with clearer price transparency and risk management solutions.
CIX joins Conservation International, Emergent, Natural Climate Solutions Alliance and Wildlife Conservation Society in launching a whitepaper on Nov 2, guiding companies about using credits from HFLD jurisdictions within broader climate mitigation portfolios.
The whitepaper comes days ahead of the 2022 United Nations Climate Change Conference, or COP27, starting Nov 6 in Egypt.
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Mikkel Larsen, CEO of Climate Impact X, says: “Credits from HFLD jurisdictions can help to incentivise nature preservation at scale. They offer an additional way for companies to invest in preventative actions that support forest protection, while avoiding perverse incentives that reward jurisdictions which have experienced the highest rates of deforestation.”
Larsen adds: “Carbon markets provide valuable, ongoing finance to support projects that protect as well as restore forests and other natural ecosystems. This paper offers guidance for ambitious companies that are using carbon credits to supplement their existing climate strategies, and sets out how HFLD credits can fit into a broader portfolio of climate action.”
Buttressing the integrity of forest credits
While nearly all forests will eventually face threats, carbon credits have, until now, focused predominantly on areas that have already experienced high rates of deforestation, says the coalition.
“Perversely, this has meant that forests in HFLD jurisdictions were overlooked until they were under immediate threat or after they had been cut. This oversight failed to acknowledge their significant value,” they add.
The loss of intact forests causes about six times the carbon impact, in terms of emissions and lost sequestration, than from deforestation alone. Going beyond climate, HFLD jurisdictions also promote biodiversity protection, valuable ecosystem services and support for indigenous peoples and local communities.
The whitepaper provides more context and sets out the following guidelines for businesses and governments looking to support nature preservation at scale through credits from HFLD jurisdictions.
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Credits from HFLD jurisdictions with attributes of high environmental and social quality are fungible — or interchangeable — with other types of nature-based avoidance credits such as those from existing REDD+ (avoided deforestation) projects.
Credits from HFLD jurisdictions also play an important role in minimising domestic and international leakage, by providing jurisdictions with the resources and incentives to implement programmes that resist the spread of deforestation from beyond their own borders.
Finally, credits from HFLD jurisdictions also offer jurisdictions an opportunity to continue receiving predictable carbon finance even after deforestation falls, in recognition that the threats do not cease.
The proportion of credits from HFLD jurisdictions within an overall portfolio will differ by company, according to its own priorities and goals. Companies may use this guidance alongside other considerations, such as the mix of non-forest credits, compliance needs, geography and alignment with broader benefits, as they determine their right balance.
