After many years of waiting for jurisdictional REDD credits to be available in the voluntary carbon market (VCM), it appears some programs are finally advancing to offer such credits. These credits are among the most controversial in the VCM and what has been said, and written, about them is often conflicting as well as politicized. Recently two (former) ICVCM expert panel members disputed the ICVCM’s decision to provide the CCP label to these credits.

In the coming weeks, we will be putting out a short series on jurisdictional REDD, or “J-REDD”. We hope these will help cut through the noise and provide companies a guide on whether, and if so, under what circumstances, to purchase J-REDD credits.

But first, in order to fully understand jurisdictional REDD, including the quality of credits it will generate, one needs to know a bit about its history. 

A short history of J-REDD

J-REDD was introduced within the United Nations Framework Convention on Climate Change (UNFCCC). In particular, the approach was developed during negotiations that led to the Paris Agreement. It is unsurprising that this would be the place where such a mechanism would emerge because J-REDD is fundamentally a government-led carbon program.

Within carbon markets, those generating carbon credits – called project developers or project proponents – are typically the private sector or non-profits. This is different from J-REDD, where the credit generator, or program proponent (distinguished from a project, since it is larger scale), is either a national or subnational (e.g., state or provincial) government.

Why was REDD+ even discussed in a negotiation that was largely sector-neutral?

The UNFCCC discusses mitigation more generally. It is rare and unusual for the negotiations to include an agenda item focused on a particular sector. However, a number of developing countries were able to launch this agenda item by forming a coalition with the objective of driving finance to forested developing countries.

Deforestation is responsible for over 10% of global emissions, though for many countries in the global south, it can be a much larger percentage of their emissions profile. Under the Kyoto Protocol (the precursor to the Paris Agreement), the way developing countries could receive finance was through the Clean Development Mechanism (CDM), the carbon market mechanism that allowed developed countries to purchase carbon credits from developing countries. However, the CDM did not allow REDD credits due to concerns about their greenhouse gas integrity and the possibility that they might “flood the market.”

So forest countries banded together to revive discussions about REDD under the Paris Agreement. Not surprisingly, their focus was J-REDD, because those at the table were governments, not project developers.

The clash of project and jurisdictional REDD

During the years in which REDD was banned from the CDM and J-REDD was being discussed under the Paris Agreement negotiations, project REDD became increasingly popular within the VCM. Project REDD grew to over 30% of VCM issuances – with companies starting to prefer such credits, not only due to their low prices but also because they provided benefits “beyond carbon.”

But project REDD had a problem: the baselines were significantly overestimated. Once a number of REDD projects were lodged into a single jurisdiction, one could add up the project baselines – which ostensibly represented “business as usual” for the project areas, or the expected deforestation in the project areas – and together the expected deforestation would not pass a laugh test. The figures were too high in aggregate.

This started to cause problems for governments that were beginning to design and plan their J-REDD programs. Many joined the Forest Carbon Partnership Facility (FCPF), managed by the World Bank, with an advanced buyer commitment from a set of developed country donors. The J-REDD programs under the FCPF began to set jurisdictional baselines – and found that projects were “eating up” any performance that the jurisdiction might claim because the projects were vastly overestimating their emission reductions.

This created a clash on multiple fronts: 

1. For J-REDD to work, projects needed to take more realistic baselines
2. Some governments, both developing and donor, preferred J-REDD over project-based REDD and started a campaign against the latter
3. Independent studies began to emerge that demonstrated that project baselines were, in fact, significantly overestimated

The fact is: stopping deforestation takes action at multiple levels. In 2020, Calyx Global’s co-founder Duncan van Bergen wrote an article addressing this very issue, “Why the World Needs Both Projects and Policies to Save Forests”.

Governments do need to take policy action and they also need finance to implement programs at larger scales to reduce deforestation. But deforestation often happens at a local level – so there is also a need for organizations to work with communities to design land use plans that meet their needs and offer alternative livelihoods and opportunities for economic development. In many places, the government is simply not present where deforestation is occurring and in others, they may not be a trusted partner for local communities.

The answer: Nesting… but it’s not so easy

If we need both project REDD and J-REDD, how can both approaches work together?  This is the nut many people have been working to crack for over a decade. The challenge occurs when projects generate credits from emission reductions that a jurisdictional program, encompassing the projects, also wishes to count. The key is to find a system whereby projects can be “nested” within a jurisdictional program, allowing both to thrive without double-counting or double-crediting the emission reductions.

In short: nesting is hard. The image below summarizes the challenges and opportunities of nesting. While many governments have been working on nesting for over a decade, no fully fledged program has emerged.

Nesting: Key challenges and opportunities

Rather than rehash too many details on “nesting” – which is not a new concept and about which much has been written – we offer a few useful resources:

• A short primer on nesting from our friends at Climate Focus
• An even shorter blog on nesting (co-authored by Calyx Global cofounder, Donna Lee): “Nesting: A Good or Bad Piece of Swiss Cheese?”
• A longer report (also co-authored by Donna) on nesting, commissioned by the World Bank: “Nesting of REDD+ Initiatives: Manual for Policymakers”

Stay tuned for more installations of this J-REDD series.

For our subscribers:
 - Read our blog post on the ICVCM’s endorsement of J-REDD
 - Or read our rating of the first ART credits issued to Guyana’s program**

**Note: We stand ready to “rate” any J-REDD program. We designed a framework with J-REDD experts and are willing to provide an assessment of any J-REDD program on request. We also have a methodology review comparing J-REDD standards (ART-TREES, VCS JNR and the FCPF Methodological Framework). If you’re interested, reach out.